A Manufacturing Services Agreement establishes how a manufacturer will produce goods on behalf of another party, often covering quality, delivery, and intellectual property. This playbook highlights negotiation tactics for pricing, warranty coverage, and supply chain continuity.
Why This Matters: A clear governing law and dispute process reduces litigation risks, accelerates resolution, and ensures enforceability of outcomes across jurisdictions.
Negotiation strategy
If you're the Company:
Ensure the governing law is a preferred jurisdiction like New York to leverage its predictable legal framework. Advocate for arbitration to expedite dispute resolution.
If you're the Contractor:
Negotiate for a jurisdiction that aligns with your operational base to minimize travel and legal costs. Consider mediation as a preliminary step to arbitration.
Essential elements
1
Governing Law Clause
Specifies applicable jurisdiction's laws.
2
Dispute Resolution
Outlines process for handling disputes.
3
Arbitration Mechanism
Details arbitration as dispute method.
Action framework
ACCEPT
Propose edits if the jurisdiction is non-preferred or lacks clarity.
EDIT
Reject clauses that specify high-risk jurisdictions without fallback provisions.
ADD
Add clauses specifying preferred jurisdictions and ADR mechanisms if absent.
PRO TIP
Always verify the enforceability of the chosen jurisdiction and dispute resolution method.
Example clauses
FAVORABLE
Preferred New York Governing Law
"This Agreement shall be governed by the laws of the State of New York, without regard to its conflict of laws principles."
NEUTRAL
Standard Arbitration Clause
"Disputes shall be resolved through arbitration in accordance with the rules of the American Arbitration Association."
UNFAVORABLE
Unspecified Jurisdiction
"The governing law shall be determined at the time of dispute."
Fallbacks
High-Risk Projects
For high-risk projects, ensure the governing law is robust and includes comprehensive ADR mechanisms to mitigate potential disputes.
Cross-Border Transactions
In cross-border transactions, select a neutral jurisdiction with a strong legal framework to avoid bias and ensure enforceability.
Long-Term Contracts
For long-term contracts, periodically review and update the governing law and dispute resolution clauses to reflect any legal changes.
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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