Co-Packing Agreements

September 14, 2021 | Category: Uncategorized

The agreement must stipulate that the title of the products and all materials and documents provided by the customer as part of the co-packaging of the products always remain in the hands of the customer. The service agreement should clearly indicate when the agreements will begin and when they will end (duration of the agreement) and may also contain an extension provision. It is appropriate to specify which party may terminate a contract before the expiry of its duration, under what circumstances, in what form and with what period of notice. Early termination may be justified if one of the parties commits a material breach, becomes insolvent, in liquidation or bankruptcy. From the point of view of pure and simple utility, a co-packer contract is a great investment. The agreement gives the distributor reliable access to a production site. There is also a huge added value for a co-packing agreement – the exercise of discussing and designing a co-packer agreement with a lawyer is a detailed diagnostic tool for determining the overall health of a food business. It is recommended to define the product specifications and instructions in the co-packing agreement. Specifications should contain information on design, packaging and labelling instructions, a complete list of parts lists (BOMs) as well as the configuration of suitcases and pallets. The information may be indicated in technical data sheets and annexed to the agreement as an exhibition. In addition, the agreement should specify whether the customer can enter the co-packer`s premises in order to verify the methods and conditions of the co-packaging as well as the quality of the co-packaged products.

The agreement may also stipulate that the client or an external audit firm performs an annual audit of the co-packer. It is difficult for a company to maintain the integrity of the product when manufactured in a third-party organization. A food company needs two things to maintain product quality during co-packing: detailed product specifications and product samples from each production batch. The product formula must be detailed and the specifications must be as objective as possible. Salinity, viscosity, and pH are examples of appropriate descriptors, but the more co-pack chord contains, the better. For sampling, a distributor must send their QA team representative and statistically relevant product models. The QA team authorizes the release of goods as soon as the product meets the criteria prescribed by the specifications. Rigour, coordination and flexibility are essential. Perhaps the most important part of a co-packing agreement is the description of the services provided by the co-packer. The workload should be defined as clearly and concretely as possible.

For some co-packing services, it may be useful to also indicate what is not included in the workload. Trust in an outsourcing relationship is key, but a well-designed co-packing or co-manufacturing contract can help reduce risk and define obligations and requirements for both parties. • Intellectual property – A good confidentiality agreement can protect your trade secrets as it should at the beginning of the relationship. Before manufacturing, it is not uncommon for product formulas to be modified to satisfy the equipment and personnel of the copacker. Formula changes may be “assigned” to the distributor under a copacker agreement if they are minor. If the formula changes are larger, it may be advisable to enter into a product development agreement before the copacker agreement. Non-competition or non-avoidance clauses may be supplemented by these agreements in order to continue to protect the distributor against commercial intervention. One of the main causes of food recalls is the undeclared allergen. A list of approved suppliers is a simple tool used during co-packing to prevent unintentional falsification of foods containing undeclared allergens….

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