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Free UK Contract Manufacturing Agreement Template (OEM)
A Contract Manufacturing Agreement (sometimes called an OEM Agreement or Manufacturing Services Agreement) is the contract under which a customer commissions a manufacturer to produce finished products to the customer's specification. Use our free UK template — uniquely depth-tested on the tooling ownership matrix, forecasting + MOQ + take-or-pay mechanics, post-2024 CE / UKCA marking regime and the modern UK compliance stack (ECCTA 2023 supply-chain flow-down).
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CONTRACT MANUFACTURING AGREEMENT
England And Wales · Sale Of Goods Act 1979 · Consumer Protection Act 1987 · 2026-06-04
CUSTOMER
Pinecrest Devices Ltd
17 Cromwell Square, Cambridge, CB4 1JZ
Companies House No. 12783901
Companies House No. 12783901
By: Helen Whitaker, Chief Product Officer
MANUFACTURER
NorthMidland Manufacturing plc
Unit 9, Lindale Industrial Estate, Stoke-on-Trent, ST5 7QP
Companies House No. 02319874
Companies House No. 02319874
By: Rajiv Singh, Operations Director
Contract Manufacturing Agreement
36 month initial term · Single product
This Contract Manufacturing Agreement (this "Agreement") is made on 2026-06-04 between Pinecrest Devices Ltd (Companies House No. 12783901) of 17 Cromwell Square, Cambridge, CB4 1JZ (the "Customer"), and NorthMidland Manufacturing plc (Companies House No. 02319874) of Unit 9, Lindale Industrial Estate, Stoke-on-Trent, ST5 7QP (the "Manufacturer"). Under this Agreement, the Manufacturer shall manufacture and supply the Product described below to the Customer for resale or further use in the Customer's business. The Agreement is governed by the law of England and Wales.
1.
DEFINITIONS AND INTERPRETATION
In this Agreement, unless the context otherwise requires:
"Business Day" means any day other than a Saturday, Sunday or public holiday in England and Wales.
"Customer's Group" means the Customer and any subsidiary undertaking of the Customer (sections 1162 and Schedule 7 of the Companies Act 2006).
"Defect" means any failure of a Product to conform with the Specification, including failure to comply with applicable industry standards or safety requirements.
"Drawings" means the drawings, technical data and supporting documentation describing the Product.
"Forecast" means the Customer's rolling forecast of expected Product volumes under Clause 9 (where the Expert section applies).
"Improvements" means any modification, enhancement, derivation or improvement to the Product, the Specification, the manufacturing processes or the technical know-how relating to the Product.
"Product" or "Products" means the products manufactured under this Agreement, as described in Clause 2.
"Purchase Order" means a written purchase order issued by the Customer specifying quantity, delivery date and shipment destination.
"Specification" means the specification of the Product, including drawings, technical data, materials, performance criteria, packaging and labelling requirements.
"Tooling" means the tools, dies, moulds, fixtures, jigs and other equipment specifically used or developed for the manufacture of the Product.
References to statutes and regulations are to those instruments as amended, extended, re-enacted or replaced from time to time. Headings are for convenience only.
"Business Day" means any day other than a Saturday, Sunday or public holiday in England and Wales.
"Customer's Group" means the Customer and any subsidiary undertaking of the Customer (sections 1162 and Schedule 7 of the Companies Act 2006).
"Defect" means any failure of a Product to conform with the Specification, including failure to comply with applicable industry standards or safety requirements.
"Drawings" means the drawings, technical data and supporting documentation describing the Product.
"Forecast" means the Customer's rolling forecast of expected Product volumes under Clause 9 (where the Expert section applies).
"Improvements" means any modification, enhancement, derivation or improvement to the Product, the Specification, the manufacturing processes or the technical know-how relating to the Product.
"Product" or "Products" means the products manufactured under this Agreement, as described in Clause 2.
"Purchase Order" means a written purchase order issued by the Customer specifying quantity, delivery date and shipment destination.
"Specification" means the specification of the Product, including drawings, technical data, materials, performance criteria, packaging and labelling requirements.
"Tooling" means the tools, dies, moulds, fixtures, jigs and other equipment specifically used or developed for the manufacture of the Product.
References to statutes and regulations are to those instruments as amended, extended, re-enacted or replaced from time to time. Headings are for convenience only.
2.
PRODUCTS AND SPECIFICATION
2.1 Product. The Manufacturer shall manufacture and supply the Product to the Customer.
2.2 Product description. PD-Smart-Hub Generation 2 — a multi-protocol wireless smart-home hub combining 2.4 GHz Wi-Fi, Bluetooth 5.3, Zigbee 3.0 and Thread, in a custom ABS housing with capacitive touch surround and 8x RGB LED indicators. Target retail price £79. Annual volume 120,000-180,000 units. UK + EU retail launch.
2.3 Specification. The Customer shall provide the Specification, Drawings and any technical information required for the Manufacturer to manufacture the Product. The Specification (as updated from time to time in accordance with Clause 2.4) is incorporated into and forms part of this Agreement.
2.4 Specification changes. Changes to the Specification require the prior written agreement of both parties. Each request shall set out the proposed change, the proposing party's assessment of cost and timeline impact, and an agreed implementation plan.
2.5 ISO 9001. The Manufacturer shall maintain an ISO 9001 quality-management system certified by a UKAS-accredited (or equivalent) certification body throughout the Term, and shall provide evidence of certification to the Customer on request.
2.6 Industry standards. The Products shall comply with the following industry standards (in addition to all applicable law):
BS EN 60950-1 (low-voltage equipment safety)
BS EN 55032 (EMC emissions, Class B)
BS EN 55035 (EMC immunity)
BS EN 300 328 (2.4 GHz radio)
RoHS Directive 2011/65/EU (lead-free electronics)
WEEE Directive 2012/19/EU + Waste Electrical and Electronic Equipment Regs 2013
2.2 Product description. PD-Smart-Hub Generation 2 — a multi-protocol wireless smart-home hub combining 2.4 GHz Wi-Fi, Bluetooth 5.3, Zigbee 3.0 and Thread, in a custom ABS housing with capacitive touch surround and 8x RGB LED indicators. Target retail price £79. Annual volume 120,000-180,000 units. UK + EU retail launch.
2.3 Specification. The Customer shall provide the Specification, Drawings and any technical information required for the Manufacturer to manufacture the Product. The Specification (as updated from time to time in accordance with Clause 2.4) is incorporated into and forms part of this Agreement.
2.4 Specification changes. Changes to the Specification require the prior written agreement of both parties. Each request shall set out the proposed change, the proposing party's assessment of cost and timeline impact, and an agreed implementation plan.
2.5 ISO 9001. The Manufacturer shall maintain an ISO 9001 quality-management system certified by a UKAS-accredited (or equivalent) certification body throughout the Term, and shall provide evidence of certification to the Customer on request.
2.6 Industry standards. The Products shall comply with the following industry standards (in addition to all applicable law):
BS EN 60950-1 (low-voltage equipment safety)
BS EN 55032 (EMC emissions, Class B)
BS EN 55035 (EMC immunity)
BS EN 300 328 (2.4 GHz radio)
RoHS Directive 2011/65/EU (lead-free electronics)
WEEE Directive 2012/19/EU + Waste Electrical and Electronic Equipment Regs 2013
3.
TOOLING OWNERSHIP, LOCATION AND CARE
3.1 Tooling cost. The Customer shall pay the agreed tooling charge as a one-off payment on or before the date of first commitment for raw materials.
3.2 Tooling ownership. The Customer shall own the Tooling from the date of its creation or acquisition. The Manufacturer holds the Tooling as bailee on the Customer's behalf.
3.3 Tooling location. The Tooling shall be located on the Manufacturer's premises in [premises address — to be inserted on the relevant Purchase Order]. The party with custody shall maintain the Tooling in good working order, fair wear and tear excepted.
3.4 Insurance of Tooling. The Manufacturer shall insure the Tooling at its full replacement value against fire, theft and accidental damage, with the Customer named as loss payee.
3.5 Identification. The Tooling shall be clearly and permanently marked as the property of the Customer (where applicable) and shall be kept separate from other property of the Manufacturer.
3.6 Return on termination. On termination of this Agreement (for any reason), the Manufacturer shall promptly return the Tooling to the Customer (or such other location as the Customer directs), in the condition existing at the date of termination, fair wear and tear excepted. Carriage shall be at the Customer's cost.
3.2 Tooling ownership. The Customer shall own the Tooling from the date of its creation or acquisition. The Manufacturer holds the Tooling as bailee on the Customer's behalf.
3.3 Tooling location. The Tooling shall be located on the Manufacturer's premises in [premises address — to be inserted on the relevant Purchase Order]. The party with custody shall maintain the Tooling in good working order, fair wear and tear excepted.
3.4 Insurance of Tooling. The Manufacturer shall insure the Tooling at its full replacement value against fire, theft and accidental damage, with the Customer named as loss payee.
3.5 Identification. The Tooling shall be clearly and permanently marked as the property of the Customer (where applicable) and shall be kept separate from other property of the Manufacturer.
3.6 Return on termination. On termination of this Agreement (for any reason), the Manufacturer shall promptly return the Tooling to the Customer (or such other location as the Customer directs), in the condition existing at the date of termination, fair wear and tear excepted. Carriage shall be at the Customer's cost.
4.
PRICING, INVOICING AND PAYMENT
4.1 Unit price. The unit price of the Product is £14.75, applicable to all Purchase Orders accepted by the Manufacturer.
4.2 Price review. Unit prices shall be reviewed annually. Unit prices shall reduce by 3% on each anniversary of the Service Start Date, reflecting expected productivity gains over the production learning curve.
4.3 Material cost escalation. If a key raw material increases by more than 10% between two reviews, the Manufacturer may, on not less than thirty (30) days' written notice, propose an interim price adjustment for the Customer's consideration. The Customer shall not unreasonably refuse a substantiated request.
4.4 Invoicing and payment. The Manufacturer shall issue an invoice on shipment. Invoices are payable within 60 days of the invoice date in GBP.
4.5 Late payment. Any undisputed amount not paid by the due date shall bear interest from the due date until actual payment at the Bank of England base rate plus 8% per annum, together with the fixed compensation and reasonable recovery costs under sections 5 and 5A of the Late Payment of Commercial Debts (Interest) Act 1998.
4.6 VAT and taxes. Prices are exclusive of VAT and any other applicable taxes, which the Customer shall pay in addition.
4.2 Price review. Unit prices shall be reviewed annually. Unit prices shall reduce by 3% on each anniversary of the Service Start Date, reflecting expected productivity gains over the production learning curve.
4.3 Material cost escalation. If a key raw material increases by more than 10% between two reviews, the Manufacturer may, on not less than thirty (30) days' written notice, propose an interim price adjustment for the Customer's consideration. The Customer shall not unreasonably refuse a substantiated request.
4.4 Invoicing and payment. The Manufacturer shall issue an invoice on shipment. Invoices are payable within 60 days of the invoice date in GBP.
4.5 Late payment. Any undisputed amount not paid by the due date shall bear interest from the due date until actual payment at the Bank of England base rate plus 8% per annum, together with the fixed compensation and reasonable recovery costs under sections 5 and 5A of the Late Payment of Commercial Debts (Interest) Act 1998.
4.6 VAT and taxes. Prices are exclusive of VAT and any other applicable taxes, which the Customer shall pay in addition.
5.
QUALITY AND BASIC ACCEPTANCE
5.1 Inspection right. The Customer shall have the right (or shall procure that an independent inspector shall have the right) to carry out incoming materials inspection, in-process inspection during manufacturing, and pre-shipment finished-goods inspection on reasonable notice and during the Manufacturer's ordinary business hours.
5.2 Acceptance. The Customer (or its inspector) shall, within five (5) Business Days of receipt of any shipment, examine the Products and notify the Manufacturer of any visible Defect. Latent Defects shall be notified as soon as reasonably practicable after discovery.
5.3 Defect remedy. Where a Product fails to conform with the Specification (whether on inspection or during the Warranty Period), the Manufacturer shall at the Customer's option, rework, replace or refund the price paid for the defective Products.
5.4 Warranty period. The Manufacturer warrants the Products for a period of 24 months from the date of shipment.
5.5 Rejection rate. If the rejection rate in any rolling three-month period exceeds 0.8%, the Customer may, in addition to any other remedy: (a) require the Manufacturer to implement a corrective-action plan; (b) suspend further Purchase Orders pending remediation; or (c) terminate this Agreement under Clause 19 (where applicable).
5.6 Implied terms. The Manufacturer's obligations under this Agreement are in addition to (and do not derogate from) the implied terms as to satisfactory quality, fitness for purpose, correspondence with description and correspondence with sample under the Sale of Goods Act 1979.
5.2 Acceptance. The Customer (or its inspector) shall, within five (5) Business Days of receipt of any shipment, examine the Products and notify the Manufacturer of any visible Defect. Latent Defects shall be notified as soon as reasonably practicable after discovery.
5.3 Defect remedy. Where a Product fails to conform with the Specification (whether on inspection or during the Warranty Period), the Manufacturer shall at the Customer's option, rework, replace or refund the price paid for the defective Products.
5.4 Warranty period. The Manufacturer warrants the Products for a period of 24 months from the date of shipment.
5.5 Rejection rate. If the rejection rate in any rolling three-month period exceeds 0.8%, the Customer may, in addition to any other remedy: (a) require the Manufacturer to implement a corrective-action plan; (b) suspend further Purchase Orders pending remediation; or (c) terminate this Agreement under Clause 19 (where applicable).
5.6 Implied terms. The Manufacturer's obligations under this Agreement are in addition to (and do not derogate from) the implied terms as to satisfactory quality, fitness for purpose, correspondence with description and correspondence with sample under the Sale of Goods Act 1979.
6.
REGULATORY COMPLIANCE
6.1 Product marking. The Products shall bear CE marking or UKCA marking (or both) as the Manufacturer determines, subject to the Customer's prior approval and the requirements of the Great Britain product category in which the Products fall.
6.2 Responsibility. The Manufacturer shall maintain the technical file required for the marking and perform the conformity assessment; the Customer shall affix the mark on or before placing the Products on the market.
6.3 Target markets. The Products are intended for the following markets: Great Britain (England, Scotland and Wales) and Northern Ireland
European Union (initial launch markets: Ireland, Germany, Netherlands, France).
6.4 General Product Safety Regulations 2005. Where the Products are placed on the market for use by consumers, both parties acknowledge their respective duties under the General Product Safety Regulations 2005.
6.5 Product Regulation and Metrology Act 2025. The parties acknowledge the framework of the Product Regulation and Metrology Act 2025 (in force 21 July 2025), under which both parties may be subject to obligations as manufacturer, importer or distributor of the Products.
6.2 Responsibility. The Manufacturer shall maintain the technical file required for the marking and perform the conformity assessment; the Customer shall affix the mark on or before placing the Products on the market.
6.3 Target markets. The Products are intended for the following markets: Great Britain (England, Scotland and Wales) and Northern Ireland
European Union (initial launch markets: Ireland, Germany, Netherlands, France).
6.4 General Product Safety Regulations 2005. Where the Products are placed on the market for use by consumers, both parties acknowledge their respective duties under the General Product Safety Regulations 2005.
6.5 Product Regulation and Metrology Act 2025. The parties acknowledge the framework of the Product Regulation and Metrology Act 2025 (in force 21 July 2025), under which both parties may be subject to obligations as manufacturer, importer or distributor of the Products.
7.
FORECASTING, MOQ, TAKE-OR-PAY AND CAPACITY
7.1 Rolling forecast. The Customer shall provide the Manufacturer with a rolling 6-month forecast of expected Product volumes, updated monthly.
7.2 Binding window. The first 3 month(s) of the Forecast are binding (the "Binding Forecast"); the remainder is advisory. The Customer commits to Purchase Orders consistent with the Binding Forecast.
7.3 Minimum Order Quantity (MOQ). The MOQ per Purchase Order shall be 5,000 units per Purchase Order.
7.4 Annual minimum volume. The Customer's annual minimum volume commitment is 120,000 units per contract year.
7.5 Take-or-pay. If the Customer's actual orders in any calendar year fall below the annual minimum volume, the Customer shall pay the Manufacturer the agreed unit price for the shortfall volume, less any agreed deduction for materials not procured. The Manufacturer's commitment to maintain capacity and Tooling is given in consideration of this take-or-pay obligation.
7.6 Capacity reservation. The Manufacturer shall reserve 40% of the nominated production line(s) for the Customer's Forecast. Surplus capacity may be used by the Manufacturer for other customers.
7.2 Binding window. The first 3 month(s) of the Forecast are binding (the "Binding Forecast"); the remainder is advisory. The Customer commits to Purchase Orders consistent with the Binding Forecast.
7.3 Minimum Order Quantity (MOQ). The MOQ per Purchase Order shall be 5,000 units per Purchase Order.
7.4 Annual minimum volume. The Customer's annual minimum volume commitment is 120,000 units per contract year.
7.5 Take-or-pay. If the Customer's actual orders in any calendar year fall below the annual minimum volume, the Customer shall pay the Manufacturer the agreed unit price for the shortfall volume, less any agreed deduction for materials not procured. The Manufacturer's commitment to maintain capacity and Tooling is given in consideration of this take-or-pay obligation.
7.6 Capacity reservation. The Manufacturer shall reserve 40% of the nominated production line(s) for the Customer's Forecast. Surplus capacity may be used by the Manufacturer for other customers.
8.
DETAILED QUALITY PLAN
8.1 Quality Plan. The Manufacturer shall maintain a documented Quality Plan covering all stages of manufacture. The Plan shall include the following obligations:
8.2 Incoming inspection. The Manufacturer shall inspect all incoming raw materials, components and sub-assemblies against approved specifications, with non-conforming items quarantined and rejected.
8.3 In-process inspection. The Manufacturer shall conduct in-process inspections at agreed control points to ensure conformity with the Specification during manufacture.
8.4 Finished-goods inspection. The Manufacturer shall conduct finished-goods inspection in accordance with an Acceptable Quality Limit (AQL) plan agreed by the Customer, with full inspection records retained for not less than seven (7) years.
8.5 Defect rate target. The Manufacturer shall manufacture the Products to a defect rate target of 300 parts per million (PPM) or better.
8.6 Corrective action. On notification of any non-conforming Product, the Manufacturer shall investigate root cause and submit a documented corrective action plan within 14 days, and shall implement the agreed remedial actions promptly.
8.2 Incoming inspection. The Manufacturer shall inspect all incoming raw materials, components and sub-assemblies against approved specifications, with non-conforming items quarantined and rejected.
8.3 In-process inspection. The Manufacturer shall conduct in-process inspections at agreed control points to ensure conformity with the Specification during manufacture.
8.4 Finished-goods inspection. The Manufacturer shall conduct finished-goods inspection in accordance with an Acceptable Quality Limit (AQL) plan agreed by the Customer, with full inspection records retained for not less than seven (7) years.
8.5 Defect rate target. The Manufacturer shall manufacture the Products to a defect rate target of 300 parts per million (PPM) or better.
8.6 Corrective action. On notification of any non-conforming Product, the Manufacturer shall investigate root cause and submit a documented corrective action plan within 14 days, and shall implement the agreed remedial actions promptly.
9.
IP DETAIL AND IMPROVEMENTS
9.1 Allocation of Product IP. All right, title and interest in and to the Specification, the Products, the Drawings, any technical information and any Improvements specifically relating to the Products shall vest in the Customer. The Manufacturer assigns, with full title guarantee, all such rights it may acquire (including by way of present assignment of future copyright under section 91 of the Copyright, Designs and Patents Act 1988).
9.2 Improvements — split. Improvements to manufacturing processes, methods and general know-how ("General Improvements") shall vest in the Manufacturer. Improvements that are Product-specific or that incorporate the Customer's Specification or design ("Product-Specific Improvements") shall vest in the Customer. The Manufacturer assigns Product-Specific Improvements to the Customer with full title guarantee; the Customer is granted a non-exclusive, royalty-free, perpetual licence to use General Improvements as embedded in the Products.
9.3 Background IP licence. To the extent the Products incorporate the Manufacturer's Background IP, the Manufacturer grants the Customer a non-exclusive, royalty-free, worldwide, transferable, sub-licensable licence to use that Background IP solely as embedded in or required to use the Products.
9.4 Technical know-how on termination. On termination, the Manufacturer shall, on the Customer's reasonable request and at the Customer's cost, provide the Customer (or a successor manufacturer nominated by the Customer) with a copy of the documented technical know-how reasonably necessary to enable continuity of manufacture, subject to confidentiality obligations.
9.2 Improvements — split. Improvements to manufacturing processes, methods and general know-how ("General Improvements") shall vest in the Manufacturer. Improvements that are Product-specific or that incorporate the Customer's Specification or design ("Product-Specific Improvements") shall vest in the Customer. The Manufacturer assigns Product-Specific Improvements to the Customer with full title guarantee; the Customer is granted a non-exclusive, royalty-free, perpetual licence to use General Improvements as embedded in the Products.
9.3 Background IP licence. To the extent the Products incorporate the Manufacturer's Background IP, the Manufacturer grants the Customer a non-exclusive, royalty-free, worldwide, transferable, sub-licensable licence to use that Background IP solely as embedded in or required to use the Products.
9.4 Technical know-how on termination. On termination, the Manufacturer shall, on the Customer's reasonable request and at the Customer's cost, provide the Customer (or a successor manufacturer nominated by the Customer) with a copy of the documented technical know-how reasonably necessary to enable continuity of manufacture, subject to confidentiality obligations.
10.
PRODUCT LIABILITY, RECALL AND INSURANCE
10.1 Product liability indemnity. Each party shall indemnify the other against third-party claims, damages, costs and expenses arising from causes attributable to that party: the Manufacturer for manufacturing defects, raw materials choice within its discretion, and breach of the Quality Plan; the Customer for defects in the Specification, design, instructions for use and intended-purpose representations.
10.2 Recall. The Manufacturer shall bear all reasonable costs of any recall of defective Products attributable to a manufacturing defect, including notification, reverse logistics, refund and replacement.
10.3 Recall management. The party with primary responsibility for the recall shall manage the process in consultation with the other party, including liaison with the Office for Product Safety and Standards (OPSS) and trading standards.
10.4 Insurance. The Manufacturer shall maintain product liability insurance of not less than £10,000,000 per occurrence and £20,000,000 in aggregate throughout the Term and for six (6) years afterwards.
10.5 Recall insurance. The Manufacturer shall additionally maintain product recall insurance with a market-standard sub-limit.
10.6 Additional insurance. The Manufacturer shall maintain the following additional insurance:
Public liability: £10,000,000 per occurrence
Cyber liability: £5,000,000 per occurrence
Employer's liability: £10,000,000 per occurrence
10.2 Recall. The Manufacturer shall bear all reasonable costs of any recall of defective Products attributable to a manufacturing defect, including notification, reverse logistics, refund and replacement.
10.3 Recall management. The party with primary responsibility for the recall shall manage the process in consultation with the other party, including liaison with the Office for Product Safety and Standards (OPSS) and trading standards.
10.4 Insurance. The Manufacturer shall maintain product liability insurance of not less than £10,000,000 per occurrence and £20,000,000 in aggregate throughout the Term and for six (6) years afterwards.
10.5 Recall insurance. The Manufacturer shall additionally maintain product recall insurance with a market-standard sub-limit.
10.6 Additional insurance. The Manufacturer shall maintain the following additional insurance:
Public liability: £10,000,000 per occurrence
Cyber liability: £5,000,000 per occurrence
Employer's liability: £10,000,000 per occurrence
11.
COMPLIANCE STACK
11.1 Modern Slavery. Each party shall comply with the Modern Slavery Act 2015. The Manufacturer warrants that, to the best of its knowledge after due enquiry, neither it nor any sub-contractor has used slavery, servitude, forced or compulsory labour or human trafficking in the supply of the Products. Where required by section 54, each party shall publish an annual modern-slavery statement.
11.2 Bribery. Each party shall comply with the Bribery Act 2010, in particular sections 1, 2, 6 and 7, and warrants that it maintains adequate prevention procedures within section 7(2) of that Act.
11.3 Failure to Prevent Fraud (ECCTA 2023 s.199). The Manufacturer acknowledges that, from 1 September 2025, large organisations are criminally liable under section 199 of the Economic Crime and Corporate Transparency Act 2023 for failure to prevent fraud committed for the organisation's benefit by associated persons (which can include suppliers). The Manufacturer shall maintain reasonable prevention procedures and shall not commit any fraud offence for the Customer's benefit.
11.4 Corporate Criminal Offence (CCO 2017). Each party shall not commit any UK or foreign tax-evasion facilitation offence as defined in Part 3 of the Criminal Finances Act 2017, and shall maintain reasonable prevention procedures under sections 45(2) and 46(3).
11.5 Sanctions. Each party shall comply with the Sanctions and Anti-Money Laundering Act 2018 and all UK, EU, US and UN sanctions regimes. Each party warrants that neither it nor any of its directors, officers or beneficial owners is a designated person, and shall not perform any obligation where to do so would breach an applicable sanctions regime.
11.2 Bribery. Each party shall comply with the Bribery Act 2010, in particular sections 1, 2, 6 and 7, and warrants that it maintains adequate prevention procedures within section 7(2) of that Act.
11.3 Failure to Prevent Fraud (ECCTA 2023 s.199). The Manufacturer acknowledges that, from 1 September 2025, large organisations are criminally liable under section 199 of the Economic Crime and Corporate Transparency Act 2023 for failure to prevent fraud committed for the organisation's benefit by associated persons (which can include suppliers). The Manufacturer shall maintain reasonable prevention procedures and shall not commit any fraud offence for the Customer's benefit.
11.4 Corporate Criminal Offence (CCO 2017). Each party shall not commit any UK or foreign tax-evasion facilitation offence as defined in Part 3 of the Criminal Finances Act 2017, and shall maintain reasonable prevention procedures under sections 45(2) and 46(3).
11.5 Sanctions. Each party shall comply with the Sanctions and Anti-Money Laundering Act 2018 and all UK, EU, US and UN sanctions regimes. Each party warrants that neither it nor any of its directors, officers or beneficial owners is a designated person, and shall not perform any obligation where to do so would breach an applicable sanctions regime.
12.
SUB-CONTRACTING
12.1 Sub-contracting. The Manufacturer may sub-contract any part of the manufacture only with the Customer's prior written consent (not to be unreasonably withheld or delayed).
12.2 Flow-down. The Manufacturer shall impose on each sub-contractor obligations equivalent to those in this Agreement (including IP, quality, compliance and audit), and shall remain primarily liable to the Customer for the acts and omissions of each sub-contractor.
12.2 Flow-down. The Manufacturer shall impose on each sub-contractor obligations equivalent to those in this Agreement (including IP, quality, compliance and audit), and shall remain primarily liable to the Customer for the acts and omissions of each sub-contractor.
13.
AUDIT RIGHTS
13.1 Factory audit. The Customer (or its appointed independent auditor) may, on reasonable advance notice, audit the Manufacturer's premises, Quality Plan, Tooling, books and records relevant to the Products, once per calendar year. Audits shall be conducted during ordinary business hours, subject to confidentiality, and shall not require disclosure of trade secrets or third-party confidential information.
13.2 Findings. The Manufacturer shall promptly remedy material non-conformity identified by audit at its cost. The Customer bears its own audit costs, save where the audit reveals material non-conformity, in which case the Manufacturer shall reimburse reasonable audit costs.
13.2 Findings. The Manufacturer shall promptly remedy material non-conformity identified by audit at its cost. The Customer bears its own audit costs, save where the audit reveals material non-conformity, in which case the Manufacturer shall reimburse reasonable audit costs.
14.
FORCE MAJEURE
14.1 Suspension. Neither party shall be liable for any failure or delay in performing its obligations (other than payment obligations) to the extent caused by events beyond its reasonable control, including acts of God, war, terrorism, civil disturbance, pandemic, government action, fire, flood, failure of utilities, shortage of raw materials, energy shortage or major supply-chain disruption.
14.2 Notification + mitigation. The affected party shall promptly notify the other and use reasonable endeavours to mitigate the impact.
14.3 Termination right. If a force majeure event continues for more than sixty (60) consecutive days, either party may terminate this Agreement on written notice, without liability save for accrued obligations.
14.2 Notification + mitigation. The affected party shall promptly notify the other and use reasonable endeavours to mitigate the impact.
14.3 Termination right. If a force majeure event continues for more than sixty (60) consecutive days, either party may terminate this Agreement on written notice, without liability save for accrued obligations.
15.
STOCK BUY-BACK ON TERMINATION
15.1 Buy-back. On termination of this Agreement (otherwise than for the Manufacturer's material breach), the Customer shall buy back at the agreed unit price: (a) all finished Products held in the Manufacturer's stock that conform with the Specification; (b) all work in progress, valued at cost plus reasonable margin; and (c) all raw materials and components specifically procured for the Products at the Customer's direction and not redirectable to other uses, valued at cost.
15.2 Documentation. The Manufacturer shall provide the Customer with a detailed stock and WIP report within ten (10) Business Days of the termination notice, and the parties shall agree the final buy-back amount within thirty (30) days.
15.2 Documentation. The Manufacturer shall provide the Customer with a detailed stock and WIP report within ten (10) Business Days of the termination notice, and the parties shall agree the final buy-back amount within thirty (30) days.
16.
TERM, TERMINATION AND TRANSITION
16.1 Term. This Agreement commences on the date above and shall continue for an initial term of 36 months, after which it shall continue on a rolling 12-month basis until terminated by either party on not less than 6 months' prior written notice.
16.2 Termination for cause. Either party may terminate this Agreement immediately on written notice if the other: (a) commits a material breach incapable of cure, or fails to cure a curable material breach within thirty (30) days of written notice; (b) becomes insolvent, has a receiver, administrator or liquidator appointed, or enters into any arrangement with creditors; or (c) ceases or threatens to cease trading.
16.3 Effect of termination. On termination: (a) all outstanding Purchase Orders shall be fulfilled by the Manufacturer (subject to the Customer paying any required milestone-equivalent payment); (b) the Customer shall pay all accrued and undisputed amounts; (c) the Tooling shall be returned (where applicable, under Clause 3.6); and (d) confidential information shall be returned or destroyed.
16.4 Surviving clauses. Definitions, IP allocation, product liability, indemnities, confidentiality, compliance, insurance (where applicable), and governing law shall survive termination.
16.2 Termination for cause. Either party may terminate this Agreement immediately on written notice if the other: (a) commits a material breach incapable of cure, or fails to cure a curable material breach within thirty (30) days of written notice; (b) becomes insolvent, has a receiver, administrator or liquidator appointed, or enters into any arrangement with creditors; or (c) ceases or threatens to cease trading.
16.3 Effect of termination. On termination: (a) all outstanding Purchase Orders shall be fulfilled by the Manufacturer (subject to the Customer paying any required milestone-equivalent payment); (b) the Customer shall pay all accrued and undisputed amounts; (c) the Tooling shall be returned (where applicable, under Clause 3.6); and (d) confidential information shall be returned or destroyed.
16.4 Surviving clauses. Definitions, IP allocation, product liability, indemnities, confidentiality, compliance, insurance (where applicable), and governing law shall survive termination.
17.
LIABILITY
17.1 Excluded losses. Neither party shall be liable for any loss of profits, loss of revenue, loss of goodwill, loss of opportunity, loss of anticipated savings, pure economic loss or any indirect or consequential losses, whether or not the possibility of such loss was contemplated.
17.2 Aggregate cap. Subject to Clause 17.3, the aggregate liability of either party under this Agreement, whether in contract, tort (including negligence), breach of statutory duty or otherwise, in any rolling 12-month period shall not exceed the greater of (a) the aggregate amounts paid (or payable) under this Agreement in that period, and (b) £1,000,000.
17.3 No exclusion for fraud, etc. Nothing in this Agreement excludes or limits liability for: (a) fraud or fraudulent misrepresentation; (b) death or personal injury caused by negligence; (c) liability under Part I of the Consumer Protection Act 1987 for defective products; (d) the Customer's obligation to pay undisputed amounts; or (e) any liability that cannot lawfully be excluded.
17.4 Reasonableness. The parties acknowledge (as sophisticated businesses contracting at arm's length) that the limitations in this Clause are reasonable for the purposes of section 3 of the Unfair Contract Terms Act 1977.
17.2 Aggregate cap. Subject to Clause 17.3, the aggregate liability of either party under this Agreement, whether in contract, tort (including negligence), breach of statutory duty or otherwise, in any rolling 12-month period shall not exceed the greater of (a) the aggregate amounts paid (or payable) under this Agreement in that period, and (b) £1,000,000.
17.3 No exclusion for fraud, etc. Nothing in this Agreement excludes or limits liability for: (a) fraud or fraudulent misrepresentation; (b) death or personal injury caused by negligence; (c) liability under Part I of the Consumer Protection Act 1987 for defective products; (d) the Customer's obligation to pay undisputed amounts; or (e) any liability that cannot lawfully be excluded.
17.4 Reasonableness. The parties acknowledge (as sophisticated businesses contracting at arm's length) that the limitations in this Clause are reasonable for the purposes of section 3 of the Unfair Contract Terms Act 1977.
18.
GOVERNING LAW AND GENERAL PROVISIONS
18.1 Governing law. This Agreement and any dispute or claim arising out of or in connection with it shall be governed by the law of England and Wales. The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales.
18.2 Entire agreement. This Agreement (together with any Schedule and Purchase Order) constitutes the entire agreement between the parties and supersedes all prior drafts, proposals and understandings. No variation shall be effective unless in writing and signed by or on behalf of each party.
18.3 Third-party rights. A person who is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999, save that any member of the Customer's Group may enforce the Manufacturer's warranties and indemnities in its own right.
18.4 Counterparts and execution. This Agreement may be executed in counterparts and by electronic signature in accordance with section 7 of the Electronic Communications Act 2000.
18.5 Notices. Notices shall be in writing, delivered by hand, first-class pre-paid post or email to the addresses set out above. Notices delivered by hand are deemed received on delivery; by first-class post on the second Business Day after posting; by email on the next Business Day after transmission (subject to no bounce-back).
18.6 Severability. If any provision is held invalid or unenforceable, the provision shall be modified to the minimum extent necessary to render it enforceable, and the remainder shall continue in full force.
18.2 Entire agreement. This Agreement (together with any Schedule and Purchase Order) constitutes the entire agreement between the parties and supersedes all prior drafts, proposals and understandings. No variation shall be effective unless in writing and signed by or on behalf of each party.
18.3 Third-party rights. A person who is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999, save that any member of the Customer's Group may enforce the Manufacturer's warranties and indemnities in its own right.
18.4 Counterparts and execution. This Agreement may be executed in counterparts and by electronic signature in accordance with section 7 of the Electronic Communications Act 2000.
18.5 Notices. Notices shall be in writing, delivered by hand, first-class pre-paid post or email to the addresses set out above. Notices delivered by hand are deemed received on delivery; by first-class post on the second Business Day after posting; by email on the next Business Day after transmission (subject to no bounce-back).
18.6 Severability. If any provision is held invalid or unenforceable, the provision shall be modified to the minimum extent necessary to render it enforceable, and the remainder shall continue in full force.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
CUSTOMER
Helen Whitaker, Chief Product Officer
Pinecrest Devices Ltd
Date: ____________________
MANUFACTURER
Rajiv Singh, Operations Director
NorthMidland Manufacturing plc
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is a Contract Manufacturing Agreement?
A Contract Manufacturing Agreement (often called an OEM Agreement) is a B2B contract under which a Customer commissions a Manufacturer to produce finished products to the Customer's specification, typically for the Customer's own brand. The Customer usually owns the IP (designs, drawings, technical know-how) and the Manufacturer provides the production capacity, tooling, quality systems and supply chain.
For UK B2B manufacturing — electronics, consumer goods, medical devices, automotive components, FMCG — a properly drafted Manufacturing Agreement is critical because it allocates: (a) tooling cost and ownership; (b) capacity and volume commitments (forecasting, MOQ, take-or-pay); (c) IP and improvements; (d) product liability and recall risk under the Consumer Protection Act 1987; (e) regulatory marking responsibility (CE / UKCA); and (f) supply-chain compliance under the new ECCTA 2023 s.199 failure-to-prevent-fraud regime (live 1 September 2025).
This template is comprehensive: the Free version covers all market-essential terms including the tooling ownership matrix, pricing with annual cost reduction, basic quality and acceptance, and the post-2024 CE / UKCA marking regime. The Expert version adds forecasting + MOQ + take-or-pay + capacity reservation, a multi-stage detailed Quality Plan (incoming + in-process + finished goods, with PPM defect targets), full IP and Improvements split, product liability and recall allocation, full insurance covenants, the modern UK compliance stack and sub-contracting + audit + force majeure + stock buy-back mechanics.
What's Covered in This Template
This Manufacturing Agreement template addresses the full UK B2B manufacturing contract stack.
Products + Specification
Single or multi-product; specification by Customer, Manufacturer or jointly; change control.
Tooling Ownership Matrix
Funding (upfront, amortised, manufacturer-funded, shared), ownership, location, return on termination, insurance.
Unit Pricing + Annual Cost Reduction
0-5% per year or negotiated; material cost escalation triggers above 10%.
Payment Terms + Statutory Late Interest
30-90 days; Late Payment Act 1998 statutory rate as default.
Quality + Acceptance
Inspection rights, 6-36 month defect warranty, rejection rate triggers, defect remedy options.
CE / UKCA Marking
Post-2024 indefinite CE acceptance in GB across 21 product regs; UKCA, CE or either; responsibility allocation.
Forecasting
3, 6 or 12-month rolling forecast with 0, 1 or 3 month binding window (Expert).
MOQ + Annual Minimum + Take-or-Pay
Per-order MOQ, annual volume commitment, take-or-pay obligation (Expert).
Capacity Reservation
20-100% line dedication for guaranteed launch supply (Expert).
Detailed Quality Plan
Incoming + in-process + finished-goods inspection, PPM defect target, corrective action response (Expert).
IP + Improvements Split
Customer-owns / Manufacturer-owns / joint; general vs product-specific improvements (Expert).
Product Liability + Recall
Indemnity allocation under CPA 1987 Part I, recall responsibility (Manufacturer / Customer / joint 50-50) (Expert).
Insurance Covenants
Product liability £10M+, recall cover, public liability, cyber liability (Expert).
Compliance Stack
Modern Slavery, Bribery Act 2010, ECCTA 2023 s.199, CCO 2017, UK Sanctions (Expert).
Sub-Contracting Control
Consent / notice / no restriction; flow-down obligations (Expert).
Factory Audit Rights
Annual, biennial or on-demand; Quality Plan + books + tooling (Expert).
Force Majeure
60-day termination right for prolonged disruption (Expert).
Stock Buy-Back
Customer buys back finished goods + WIP + raw materials on termination (Expert).
How to Create a Contract Manufacturing Agreement
Follow these steps to draft a UK Contract Manufacturing Agreement.
- 1
Enter Party Details
Provide Customer and Manufacturer details with signatories.
- 2
Describe the Product(s) and Specification
Product description, single or multi-product, who provides the specification, change control mechanism, ISO 9001 + industry standards.
- 3
Configure the Tooling Matrix
Who funds, who owns, where the tooling is kept, return on termination, insurance.
- 4
Set Pricing + Payment
Unit price, currency, review frequency, annual cost reduction (UK mid-market 3%), payment terms (60 days default), late interest.
- 5
Set Quality + Acceptance
Inspection right scope, defect warranty period, rejection rate trigger, defect remedy.
- 6
Choose CE / UKCA Path
CE (now accepted indefinitely in GB) / UKCA / either; allocate responsibility for technical file and marking.
- 7
Add Expert Clauses
Forecasting + MOQ + take-or-pay, multi-stage Quality Plan, IP + Improvements split, product liability + recall + insurance, compliance stack, sub-contracting + audit + force majeure + stock buy-back.
- 8
Choose Governing Law and Download
England and Wales / Scotland / Northern Ireland; preview and download as PDF.
Why Doxuno documents are different
Four things that make our templates more thorough than AI-generated drafts and more current than static template libraries.
Always current
Always current with the law
Templates carrying statute references are continuously updated as the law changes. Your document always reflects the current legal framework.
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Print-ready PDF
Free to download. Vector text, embedded fonts, statute citations baked in. Print, sign, file. Ready for any signing flow including electronic signature.
Word · .docx
Editable Word (.docx)
Continue editing in Word after download. Add custom clauses, reuse the template for similar agreements, or share with a colleague for collaborative review.
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Legal Considerations
UK manufacturing contracts operate within an evolving regulatory framework. The 2024-2026 reforms have changed CE / UKCA marking and added ECCTA supply-chain compliance.
This template is for informational purposes only and does not constitute legal advice. For high-value or regulated manufacturing (medical devices, pharma, automotive safety-critical, defence), professional legal advice is strongly recommended.
Reviewed for England & Wales, Scotland and Northern Ireland law
CE vs UKCA Marking — Post-2024 Reality
Under the Product Safety and Metrology (Amendment) Regulations 2024 (in force May 2024), the UK government has accepted CE marking indefinitely in Great Britain across 21 regulated product categories (machinery, electrical equipment, EMC, radio, toys, PPE, gas appliances, pressure equipment, etc.). UKCA remains valid but is no longer mandatory for most products. Construction products: CE is now accepted in GB (previously a divergence point). Medical devices: UKCA is required for GB sales (no indefinite CE acceptance). Northern Ireland: EU rules apply via Windsor Framework.
Product Regulation and Metrology Act 2025
In force from 21 July 2025, the Product Regulation and Metrology Act 2025 is a framework Act giving the UK government broad powers to make future product regulations. It applies to manufacturers, importers, distributors, installers, certification bodies and online marketplaces. The Act does not itself create new product safety requirements but establishes the legal basis for the UK to respond to emerging threats and regulatory divergence with the EU.
Consumer Protection Act 1987 — Strict Product Liability
Part I of the Consumer Protection Act 1987 imposes strict liability on the "producer" of defective products causing death, personal injury or property damage to consumers. The producer can be (a) the actual manufacturer, (b) the own-brander or (c) the first importer of the product into the UK. In OEM arrangements, the Customer is often the own-brander and so jointly liable with the Manufacturer. The Manufacturing Agreement must allocate this liability by indemnity — the "allocated" option (manufacturing defect to Manufacturer, design defect to Customer) is the UK fair-balance market standard.
ECCTA 2023 Section 199 — Failure to Prevent Fraud
From 1 September 2025, large organisations (more than 250 employees, £36M turnover or £18M assets) are criminally liable under section 199 of the Economic Crime and Corporate Transparency Act 2023 if they fail to prevent fraud committed for their benefit by associated persons — which includes manufacturers and sub-contractors in the supply chain. Large customers now flow-down anti-fraud compliance to manufacturers through Manufacturing Agreements to satisfy the "reasonable prevention procedures" defence.
Tooling Ownership and Bailment
Tooling is the most disputed item in manufacturing contracts. Where the Customer funds tooling, the contract should make clear that title vests in the Customer immediately and that the Manufacturer holds the tooling as bailee (with associated duties of care and return). The bailment relationship is regulated by common law and the Sale of Goods Act 1979 (where relevant). The tooling should be marked as the Customer's property and segregated from the Manufacturer's other assets.
Late Payment Act 1998
The Late Payment of Commercial Debts (Interest) Act 1998 gives manufacturers a statutory right to interest on overdue debts at the Bank of England base rate plus 8%, plus fixed compensation (£40-£100) plus reasonable recovery costs. This is the UK B2B default and protects smaller manufacturers contracting with larger customers on 60-90 day terms.
Frequently Asked Questions
Create Your Manufacturing Agreement Now
Allocate tooling ownership, set forecasting and MOQ commitments, choose CE or UKCA marking (post-2024 indefinite acceptance), add the modern UK compliance stack — ECCTA 2023, Modern Slavery, Bribery, CCO, Sanctions — and the multi-stage Quality Plan with the Expert version.
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