Toll Manufacturing Agreement Template

Create a legally-sound toll manufacturing agreement that protects your intellectual property, defines manufacturing specifications, and establishes clear responsibilities between parties. Start with our comprehensive template.

Toll Manufacturing Agreement Template

A toll manufacturing agreement is a crucial legal document that establishes the terms and conditions between a company (Principal) that provides raw materials and a manufacturer (Toll Manufacturer) that processes these materials into finished products for a fee. This comprehensive agreement protects both parties' interests while clearly defining responsibilities, quality standards, and operational procedures.

What This Template Is For

This template is designed for businesses looking to outsource their manufacturing process while maintaining control over raw materials and product specifications. It's particularly valuable for companies in industries such as chemicals, electronics, pharmaceuticals, and consumer goods who want to leverage specialized manufacturing capabilities without significant capital investment.

When To Use This Template

Use this agreement template when:

  • Outsourcing manufacturing while supplying your own raw materials
  • Protecting proprietary formulations or processes
  • Establishing quality control standards and specifications
  • Defining manufacturing fees and payment terms
  • Setting confidentiality and intellectual property protection measures

How To Customize It

Follow these steps to customize the agreement:

  1. Insert company details and contact information for both parties
  2. Define specific manufacturing processes and quality standards
  3. Specify raw material handling and storage requirements
  4. Set production schedules and delivery terms
  5. Include quality control procedures and acceptance criteria
  6. Outline confidentiality and IP protection measures
  7. Define pricing structure and payment terms

Common Use Cases

This agreement is commonly used in:

  • Chemical processing and formulation
  • Electronics manufacturing
  • Pharmaceutical production
  • Food and beverage processing
  • Textile manufacturing

Best Practices

Consider these key elements:

  • Clearly define quality specifications and testing procedures
  • Include detailed confidentiality and non-compete clauses
  • Specify inventory management responsibilities
  • Define clear dispute resolution procedures
  • Include force majeure provisions

Template Variations

Adapt the template for specific industries:

  • Chemical toll manufacturing agreement
  • Pharmaceutical toll manufacturing agreement
  • Electronics toll manufacturing agreement
  • Food processing toll manufacturing agreement

Success Stories

Companies have successfully used this template to establish profitable toll manufacturing relationships, including a chemical company that saved 40% in production costs and an electronics manufacturer that expanded production capacity without capital investment.

Frequently Asked Questions

What's the difference between toll and contract manufacturing?

In toll manufacturing, you provide the raw materials while the manufacturer provides the processing services. In contract manufacturing, the manufacturer handles both materials and processing.

How should intellectual property be protected?

Include robust confidentiality clauses, non-disclosure agreements, and specific IP ownership terms in the agreement.

What quality control measures should be included?

Specify quality standards, testing procedures, acceptance criteria, and rejection protocols.

How are pricing and payments typically structured?

Usually based on processing fees per unit or batch, with clear payment terms and conditions.

What liability provisions should be included?

Address product liability, warranties, indemnification, and insurance requirements.