While building a good relationship with your Vietnamese supplier is crucial, a verbal agreement is never enough to protect your business. A clear, detailed, and legally sound Manufacturing Agreement is your single most important document. It acts as the ultimate reference point that defines every aspect of your order and protects you if things go wrong.
While a full contract can be lengthy, here are 5 essential clauses that you absolutely cannot afford to ignore.
1. Detailed Product Specifications & Quality Standards
This is the heart of the contract. Never assume anything is “obvious.” This clause must be incredibly detailed.
- What to include: Part numbers, technical drawings, exact materials, colors (using Pantone codes), dimensions, weight, and labeling.
- Reference the “Golden Sample”: State that the quality of mass production must be equal to or better than the approved pre-production sample.
- Define QC Standards: Specify that the goods must pass a Pre-Shipment Inspection based on AQL standards.
2. Clear Pricing and Payment Terms
This clause prevents any future misunderstandings about costs.
- What to include: The exact unit price (e.g., USD $5.72/unit), the total order value, and the currency.
- State the Payment Schedule: Clearly define the deposit amount and the exact milestone for the balance payment (e.g., “30% deposit upon signing; 70% balance within 5 business days of passing a third-party Pre-Shipment Inspection report”).
3. Production & Shipping Deadlines
This clause holds your supplier accountable for the timeline.
- What to include: The ex-factory date, which is the date the goods will be fully packaged and ready for pickup. Be specific (e.g., “No later than October 31, 2025”).
- Include a Penalty Clause: It’s common to include a clause for delays, such as a 1% discount off the total order value for every week the shipment is late, up to a certain maximum. This incentivizes the factory to stay on schedule.
4. Intellectual Property (IP) & Confidentiality
If you have a unique design or product, this is critical.
- What to include: A statement that you are the sole owner of the design and intellectual property.
- Non-Disclosure Agreement (NDA): Include a clause that prevents the supplier from sharing your designs with any other party or selling your product to other clients without your explicit permission.
5. Defect Management & Warranty
This clause defines what happens if quality issues are discovered after you’ve paid and received the goods.
- What to include: A clear definition of what constitutes a “defect.”
- Define the Resolution: Outline the process for resolving defects. Will the supplier replace the defective units in the next order? Offer a credit? Or refund a portion of the payment? Agreeing on this upfront saves major headaches later.
Drafting a robust, bilingual contract that is enforceable in Vietnam requires local expertise. While templates are a good start, having a local partner or sourcing agent review the document can help you avoid common loopholes and ensure your interests are fully protected.
A Strong Contract is a Sign of a Strong Partnership
Don’t view a detailed contract as a sign of mistrust. Professional, experienced suppliers welcome a clear agreement because it protects them as well. It ensures everyone is perfectly aligned on expectations and provides a clear roadmap for a successful production run.
Don’t leave your business exposed. The EQSource team can provide you with bilingual contract templates and review services to ensure your agreements are clear, fair, and enforceable. Contact us to learn more.
