5 important “D” points of every procurement contract
These 5 “D” points are a MUST in every manufacturing contract.
It’s not easy to understand contracts, especially if they serve the business. In most cases they are written by lawyers. But how to make sure they include all needed points? What if you want to get deeper into this subject? If you feel you want to understand more of the document that lays grounds to your company’s functioning – READ THE BELOW AND LEARN THE ESSENTIALS.
When entering new agreement between producer and manufacturer always remember about these 5 “D” points.
- Define. Definitions lay grounds to every contract. Do never leave up to luck whether or not both sides have correct common understanding of terms used in the text. Make sure you talk about the same thing all along.
- Describe the product. Precise description of product will allow you to avoid any misunderstandings. Again, the way you perceive certain things does not necessarily reflect the perception of the other party. Don’t leave any field to misconception. Describe precisely the product with all its characteristics, its intended use, target consumer etc.
- Declare your acceptable quality of production. Of course you want to receive 100% . But in real life there is no such thing as perfect production. Decide with the manufacturer in advance what number of defects is still acceptable, and which defects would cause batch rejection. An AQL document (acceptable quality limit) turns out to be very useful. This standard was originally used at the American army public orders. Today is commonly used for any production worldwide and also released in standard ISO 2859. Read more about the aql here.
- Determine the conformity. According to general law the producer (the one who places the product on the market) is responsible for product compliance with all applicable legal rules. Determine ahead what are those rules and make sure appropriate obligations are introduced into the contract. For example, articles contacting food (plates, cutlery, lunch boxes etc.) shall be produced according with good manufacturing practice and have printed appropriate symbols. Read more about production of articles contacting food here.
- Distribute IP. Intellectual Property rights belong to the author, of course. But who gets to explore them in economical way? Who gets the license from the other party and when? All IP matters shall be decided within the manufacturing contract.
Remember. Well written contract:
- Lays foundations for trust between the Parties
- Gives comfort in acting
- Allows to intensify business activity
- Is a condition of fruitful cooperation