Below are items which should, at a minimum, be addressed in the contract:
What are the services you are contracting for? Who will handle raw product testing? Where are records to be kept? How will final product quality be checked?
What ingredients and supplies are you responsible for purchasing or providing? What is the disposal for excess ingredients or supplies which you purchase or furnish? Where will they be stored between processing runs?
What processing manipulations will be required for ingredients such as slicing, dicing, or blanching? Are piece sizes specified?
Will there be samples furnished for your approval prior to the first production run? Will there be storage/stability or finished product tests?
Are you to be present and consulted during processing plant runs? If so, are you covered under insurance or Workman’s Compensation?
Will you have any coverage under the manufacturer’s product liability insurance? If so,
what will it be? Note that it will be necessary for you to furnish your own liability insurance to sell your product to stores.
What are the critical factors which must be met in processing, such as pH, packing temperatures, or heat processing? Require documentation that these have been measured and met.
Are ingredient substitutions accepted? What are the limits? Are these covered in your ingredient specifications? Note that manipulation of ingredients may render your ingredient statement or nutritional information on your label inadequate.
The contract should note scheduled processes which must be filed and certifications which must be obtained. If the product is listed under a marketing program such as “Goodness Grows in North Carolina” there must be certification of use of required ingredients.
What is the delivery date of the finished product? Must it be immediately removed from the premises?
What are the payment terms? Usually these are 10% down and the remainder on delivery.
What will render the product unacceptable? What are the appearance factors such as color, separation, piece size, and texture? Who will judge adequacy of flavor and taste?
What are the appearance factors for the container, such as label placement, closure gasket materials and closure color, or neckband placement, size and color? How tight is the closure to be?
Who is responsible for disposal and disposal costs or rework of unacceptable product?
The entrepreneur should furnish labels, what size are they to be, what style and orientation, and how are they to be wound? (It is recommended you have the copacker specify the labels in writing to be sure they will run on his equipment).
How much lead-time is necessary for the next and subsequent production runs to be delivered?
Will the copacker be required to furnish grade certifications, third party audits or other certifications of lots and batches? The copacker should certify that the label statements are accurate.
What lot or batch coding is to be used? Where will it be placed on the container and how will ingredient processing and testing records be filed to correlate with the code?
What is the manufacturer’s recall plan? Be sure you have a copy. How are you to be notified?
Is there a noncompete agreement with the copacker? Are confidentiality and privacy issues covered?
What finished product testing will be provided?
While there may be many other points to be covered in the contract, the above represents those points for which many disagreements occur. While we recommend an attorney’s advice on contracts, the small entrepreneur may find the cost prohibitive.