Terms of Sale Every Manufacturer Should Have in Writing
Most disputes are not about bad faith. They are about two parties who assumed different things and never wrote either down. Quantity tolerance, price validity, payment, title transfer, rejection and delay. Each one causes a dispute when absent.
Why Written Terms Matter
This guide is for manufacturers and brand owners in India selling or buying manufactured goods.
A purchase order and an invoice describe what was bought and for how much. They do not describe what happens when the batch yield comes in slightly short, when raw material prices move between quotation and production, when a buyer wants to reject goods three weeks after delivery, or when a shipment is delayed by circumstances outside anyone’s control.
Those situations are routine, not exceptional. A set of written terms of sale settles them in advance, when nobody has a position to defend, which is the only time such terms can be agreed easily.
What follows covers the terms that most often cause disputes by their absence. This is commercial guidance, not legal drafting: have your actual terms prepared or reviewed by a qualified lawyer.
The Core Terms
Each row here is a dispute that has happened to someone.
| Term | What to Specify |
|---|---|
| Quantity tolerance | Permitted over or under delivery against order, and how it is invoiced |
| Price validity | How long a quotation stands, and what triggers revision |
| Payment terms | Period, from which date, mode, and consequence of late payment |
| Delivery terms | Who arranges transport, who insures, and the delivery point |
| Title and risk | When each passes, since they can pass at different points |
| Inspection window | How long the buyer has to inspect on receipt |
| Rejection basis | What constitutes valid grounds, and against which specification |
| Rejection process | Notification, retention of goods, independent testing if disputed |
| Shelf life on delivery | Minimum remaining shelf life at the delivery point |
| Packaging and artwork | Who approves, and liability for artwork errors |
| Lead time | Stated, and from which trigger |
| Delay | Consequences and whether any remedy applies |
| Force majeure | Defined, with notification and consequence |
| Cancellation | What happens to material already purchased or produced |
| Governing law and dispute resolution | With professional advice |
Quantity tolerance is the single most common omission in manufacturing supply. Batch yields vary, and a tolerance of a stated percentage either way, invoiced on actual delivery, prevents a recurring argument.
Terms That Protect the Manufacturer
These matter from the supply side.
Material Purchased to Order
Where raw material or packaging is bought specifically for a buyer’s order, state that cancellation leaves the buyer responsible for it. Printed packaging in particular has no alternative use.
Artwork Approval
State that the buyer approves artwork in writing and is responsible for its content, including claims and mandatory particulars. This is where label liability is allocated.
Price Revision Triggers
Define what allows a price revision mid-arrangement: raw material movement beyond a stated threshold, statutory changes, or packaging cost changes.
Storage After Production
State how long finished goods will be held before dispatch, and what happens if a buyer delays collection.
The artwork clause is the most valuable of these, because label non-compliance is a frequent problem and the written allocation of responsibility determines who carries it.
Terms That Protect the Buyer
Equally necessary from the purchasing side.
- Specification against which goods are supplied, attached and referenced.
- Documentation supplied with each batch, listed specifically.
- Minimum remaining shelf life on delivery.
- Rejection rights where goods do not meet specification, with a workable inspection window.
- Retention sample holding by the manufacturer, and your right to access.
- Right to inspect batch manufacturing records.
- Notification obligation if the manufacturer changes a raw material source or process.
- Confirmation that the manufacturer’s licence covers the product, and notification if it changes.
- Confidentiality covering your formulation and commercial information.
- Formulation ownership, where you supplied or paid for development.
- Liability and insurance positions.
The Rejection Clause
Worth drafting carefully in both directions.
A rejection clause with no inspection window leaves the manufacturer exposed indefinitely. A clause with an unreasonably short window leaves the buyer unable to reject goods whose defect only appears later, which is common with stability-related problems.
A workable approach distinguishes visible defects, rejectable within a short stated window on receipt, from latent defects not reasonably discoverable on inspection, rejectable within a longer period and on stated grounds.
Include what happens when rejection is disputed: independent testing at an agreed laboratory, who pays depending on outcome, and how the goods are held meanwhile. Without this, a disputed rejection has no route to resolution except negotiation under pressure.
And state that rejected goods must be retained and not disposed of until the matter is resolved, since disposal destroys the evidence.
Checklist
Before your next order, in either direction.
- Define quantity tolerance and how it is invoiced.
- State price validity and what triggers revision.
- State payment period, start date, mode and late payment consequence.
- State delivery terms, insurance and delivery point.
- State when title and risk pass.
- Set an inspection window and define rejection grounds.
- Separate visible from latent defects with different windows.
- Set a disputed-rejection route with independent testing and cost allocation.
- Require rejected goods to be retained pending resolution.
- State minimum remaining shelf life on delivery.
- Allocate artwork approval and content responsibility in writing.
- State buyer responsibility for material purchased to order.
- List documentation supplied with each batch.
- Include retention sample access and batch record inspection rights.
- Include a change notification obligation for materials and process.
- Cover confidentiality and formulation ownership.
- Include force majeure, cancellation, governing law and dispute resolution.
- Have the terms drafted or reviewed by a qualified lawyer.
Want Clear Terms From the Start?
Ask our team for our standard supply terms and documentation list before you place a first order.
Frequently Asked Questions
What is the most common omission in manufacturing supply terms?
Quantity tolerance. Batch yields vary, and without a stated permitted over or under delivery, invoiced on actual quantity, the same argument recurs with every order.
Why does the artwork clause matter?
Because label non-compliance is a frequent problem and the written allocation determines who carries it. State that the buyer approves artwork in writing and is responsible for its content, including claims and mandatory particulars.
How should a rejection clause be structured?
Separate visible defects, rejectable within a short window on receipt, from latent defects not reasonably discoverable on inspection, rejectable within a longer stated period. Include an independent testing route for disputes and require rejected goods to be retained.
What should a buyer insist on?
The specification attached and referenced, the documentation supplied per batch listed specifically, minimum remaining shelf life on delivery, retention sample access, batch record inspection rights, and notification if the manufacturer changes a material source or process.
Is this legal advice?
No. This is commercial guidance on what to cover. Have the actual terms drafted or reviewed by a qualified lawyer, particularly the governing law, dispute resolution and liability provisions.