What Should Be in a Co-Packing Agreement (Contract)?

What Should Be in a Co-Packing Agreement (Contract)?

A co-packing agreement should, at minimum, cover the parties involved, the quantity to be produced, the quality and specifications required, the production timeline, and the price (including payment method and timing). Beyond those basics, a strong contract also addresses IP and confidentiality, payment terms, and who pays for failed batches. Have an attorney — and possibly an accountant — review it before you sign.

A written contract is what protects you when something goes wrong, so it's worth getting right rather than rushing.

The Contract Basics (from UF/IFAS Extension)

Once you've chosen a co-packer, University of Florida IFAS Extension says the contract should generally include:

• The parties involved.

• The quantity of product to be produced.

• The quality of product to be produced, including the specifications you require.

• The timeline for production to be completed.

• The price to be paid, including payment method and when payment is due.

It's recommended to have your attorney, and potentially your accountant, review the contract before signing, so the terms are satisfactory and you're legally and financially protected if any problem occurs.

The Terms Worth Negotiating (Beyond the Basics)

Industry guidance for beverage co-packing lists additional terms worth reviewing carefully before you sign:

• Pricing structure — the per-unit rate, what's included vs. billed separately, and how pricing changes at different volumes.

• MOQ and order flexibility — minimum per run, minimum per SKU, and reorder minimums (often lower than the first run).

• Lead times — standard lead time, capacity guarantees, and rush options.

• Quality standards — the specifications your product must meet, who pays for failed batches, and whether the policy is rework or disposal.

• IP and confidentiality — formula confidentiality, any non-compete clauses, and what happens if the relationship ends.

• Payment terms — deposit requirements (a deposit is common), balance timing, and payment methods.

• Liability and insurance — product liability coverage, recall procedures, and who bears the cost if their error causes an issue.

Don't Skip Confidentiality

Because you must share sensitive information — your formula and specifications — to get your product made and packed, confidentiality is a real concern. A confidentiality agreement to protect that information is worth putting in place before you hand over your recipe.