Our supply agreements were written when we had one supplier and one customer. We now have forty of each.
Manufacturing runs on paper that was usually drafted for a smaller business and never revisited: supply terms that assume one currency, quality clauses with no remedy, and purchase orders that quietly incorporate the other side's conditions. We own the contract layer and the disputes that come out of it. The pattern is familiar in every manufacturer we take on: the business has grown by winning customers and adding suppliers, each of which arrived with its own paper, and nobody has established which terms actually govern the twenty relationships carrying most of the revenue and most of the risk.
Dinmore Bell acts as the outsourced General Counsel for manufacturers: supply and distribution agreements, quality and warranty terms, retention of title, plant and equipment leases, and the disputes that arise from them. It is a retained function on a fixed monthly fee rather than a law firm billing by the hour.
How we own it
The battle of the forms, settled
Most manufacturers do not know whose terms govern their largest relationships, because each side keeps sending its own. We establish which terms actually apply, fix the order in which documents are exchanged, and make sure your conditions are the ones that land. The mechanics are unforgiving and entirely learnable. An order placed on a customer's purchase order, acknowledged on your order confirmation, and then delivered against a note referring to a third set of conditions produces a contract on whichever terms were the last to be accepted by conduct. In most businesses that is decided by an administrator in despatch rather than by anyone who has read either document. Fixing it is a process change as much as a drafting job. The order confirmation has to be the document that closes the contract, it has to be sent before performance begins, and it has to state clearly that acceptance is on your conditions and no others. Where a major customer's terms genuinely have to prevail, that is a commercial decision worth taking deliberately, once, with the specific clauses that matter negotiated rather than inherited wholesale. The practical output is a list: for each significant customer and supplier, whose terms apply, what the key numbers are, and what was conceded. Most manufacturers have never seen that list, and it changes how the next negotiation goes.
Quality, warranty and the cost of a bad batch
What happens when a component fails downstream is a commercial question long before it is a legal one. We write the specification, inspection and remedy terms so the answer is known in advance and the liability sits where it was priced. The expensive gap is almost always consequential loss. A customer whose production line stops because of your component will claim the downtime, not the component, and the difference between those two figures is the whole exposure. Where the contract is silent, or where an exclusion has been drafted so broadly that it may not survive challenge, the exposure is unquantified rather than excluded. Four terms decide the outcome. A specification that is a document rather than a conversation, with a version number. An inspection and acceptance regime that says what the customer must check and by when, so that a fault discovered eighteen months later is not treated as a fault on delivery. A remedy clause that sets out repair, replacement or credit as the primary route and the circumstances in which anything wider is available. And a liability provision with an aggregate cap expressed as a figure or a properly considered multiple, with consequential loss addressed explicitly rather than by a general exclusion. The same analysis runs upstream. A manufacturer that has accepted consequential loss exposure to its customer and buys the failing component on a purchase order with a twelve-month warranty and no equivalent liability has bought the difference, and will discover it three years later.
Getting paid, and keeping title
Retention of title that survives a customer insolvency, credit terms that are enforced rather than aspirational, and a recovery process that starts on day 31 rather than day 120. Retention of title is the clause most often relied on and least often drafted to work. A simple clause retaining title until payment for those goods is made is straightforward. An all monies clause, retaining title until everything owed is paid, is stronger and needs care. Where goods are mixed, processed or incorporated into something else, title in the original goods can be lost entirely, and a clause that attempts to claim the proceeds of sale or the new product is the part most likely to fail if drafted casually. What makes the clause usable in practice is identification and access. Goods that cannot be identified as yours cannot be recovered, so batch marking and delivery records matter as much as the wording. A right of entry to the customer's premises to inspect and repossess, expressed clearly, is what turns the clause from an argument into a recovery. Alongside it: credit limits that are applied by the system rather than by goodwill, a stop on further supply that somebody is authorised to pull, personal guarantees where a customer is thin, and a chasing sequence that escalates on fixed dates. Almost every large bad debt was preceded by a period in which supply continued past the point anyone would have chosen, because stopping it required a decision nobody had been given.
Distribution, agency and the cost of ending it
Selling through other people is where the largest hidden liabilities in a manufacturing business usually sit, and they become visible only at termination. The first question is what the relationship legally is. A distributor buys and resells on its own account. An agent sells on your behalf, and in the United Kingdom a commercial agent may be entitled to compensation or an indemnity on termination regardless of what the contract says. Businesses regularly describe a relationship as distribution while operating it as agency, and the label in the contract does not decide it. The second is exclusivity and territory, which need to be defined against products and channels as well as geography, because online sales cut across territorial carve-ups drafted before they existed. The third is what happens at the end: stock buy-back, customer lists, tooling, spare parts obligations and the right to continue servicing the installed base. We hold those agreements, the termination dates and notice periods, and a settled view of what ending each relationship would cost. That figure is worth knowing before the conversation rather than during it. The competition law boundary around resale pricing and territorial restrictions is where a specialist is brought in rather than guessed at.
How the function runs
One retained function, a fixed monthly fee, and a single register holding every contract, renewal date, break, notice period and price review across the business. The register is the reason the work is preventative rather than reactive. Across the contract estates Dinmore Bell holds, no renewal, break or expiry has been missed, and the reason is that somebody is paid to act on the register rather than to report on it. Specialist work is coordinated rather than absorbed. Advocacy in a contested dispute, competition law advice on a distribution structure, patent prosecution, tax computation and insurance placement all stay with the people who do them, instructed and managed from one place so that the business has a single point of contact rather than four relationships to hold.
Where specialists come in
Product safety prosecutions, health and safety enforcement, and any matter before a court are conducted by regulated specialists whom we instruct, brief and coordinate. Regulated advice on customs classification, duty and VAT treatment is taken from specialist advisers. We hold the budget and remain accountable for the commercial outcome.
Services we run here
- How do we make sure our terms and conditions apply rather than our customer's?
- Make the order confirmation the document that closes the contract, send it before any performance begins, and state that acceptance is on your conditions only. The legal test looks at which terms were last accepted by conduct, so the process in despatch and order entry decides the outcome as much as the drafting does.
- Is our retention of title clause likely to work if a customer goes under?
- It depends on the wording and on whether the goods can still be identified as yours. A clause retaining title until payment is straightforward; claims over mixed, processed or incorporated goods, or over the proceeds of their sale, are where clauses fail. Batch marking, delivery records and an express right of entry are what make the clause usable.
- Should we accept liability for a customer's production downtime?
- Rarely, and never without pricing it. Downtime is consequential loss and is usually many multiples of the component's value. If a customer insists, the exposure needs an aggregate cap, a clear definition of what is included, and matching protection in your own supply contracts, otherwise you have bought the difference.
- What is the difference between a distributor and a commercial agent, and why does it matter?
- A distributor buys and resells on its own account; an agent sells on your behalf. A commercial agent may be entitled to compensation or an indemnity on termination irrespective of what the contract says, which can be a substantial sum. How the relationship operates in practice decides which it is, not the label used in the agreement.
- Our purchase orders and our sales terms were written years apart. Does that matter?
- It is usually where the real exposure sits. Obligations accepted to customers have to be matched by equivalent protection from suppliers, and when the two were drafted separately they rarely line up on warranty period, liability, insurance or notice of defects. Reconciling them is a short exercise with a large return.
- Who deals with a product recall?
- Your technical and quality functions own the assessment and the corrective action. Dinmore Bell owns the contractual side: what each agreement in the chain requires, who bears the cost, who is entitled to notify and what has to be disclosed, so the commercial decisions are taken from documents rather than under pressure.