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Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

OEM agreements are vitally important for businesses that wish to manufacture and distribute products. They provide protections, flexibility and peace of mind, allowing both parties involved in a venture to progress in a mutually beneficial way. For contract and supply chain managers, negotiating the best possible terms is key to success; legal advisors must also understand the nuances of these agreements in order to advise their clients adequately. Without an appropriate agreement in place, companies can find themselves at risk of not being able to capitalise on opportunities that arise from new ventures.

The ºÚÁÏÊÓƵ team specialises in helping firms achieve their goals by providing free OEM agreement templates and guidance on how best to use them. Our community template library provides individuals with access to millions of datapoints which teach our AI what a market-standard OEM Agreement looks like - meaning anyone can draft high quality legal documents without having to pay an expensive lawyer! We also offer comprehensive step-by-step guidance so those unfamiliar with terms and conditions will be able to read up on the topic and make sure they’re equipped with the right information before signing anything off.

So if you’re looking for top quality protection and flexibility when it comes down your OEM Agreements, why not check out our template library today? Here at ºÚÁÏÊÓƵ we’re dedicated to making sure you get what you need - without needing any kind of ºÚÁÏÊÓƵ account or subscription!

Definitions

Original Equipment Manufacturer (OEM): A company that produces and distributes goods for another company, usually under contract.
Exclusive Agreement: A type of OEM Agreement in which the OEM is the only supplier of the goods or services.
Non-exclusive Agreement: A type of OEM Agreement in which the OEM is not the only supplier of the goods or services.
Limited Agreement: A type of OEM Agreement in which the OEM is only allowed to supply a certain amount of goods or services.
Product-specific Agreement: A type of OEM Agreement in which the OEM is only allowed to supply a specific product.
Third-Party Agreement: A type of OEM Agreement in which a third party is involved in the agreement.
Governing Law: The law that applies to the agreement, usually determined by the state or country in which it is being executed.
Warranties: Promises given by the OEM regarding the quality and performance of the goods or services.
Indemnities: A legal agreement in which one party agrees to compensate another for any losses or damages that occur.
Dispute Resolution: A process for resolving disputes between two parties, usually involving negotiation or mediation.
Scope of Agreement: A description of the goods or services to be provided, the price, and any exclusivity provisions.
Contractual Terms: The payment schedules and delivery times outlined in the agreement.
Notarizing: The process of having a document signed and witnessed for legal purposes.
Regulatory Issues: Issues concerning safety and quality standards, or any other regulations that may apply to the goods or services being provided.
Fees: Any legal fees, registration fees, or other applicable fees that must be paid prior to signing the agreement.
Approvals: Any approvals from governmental agencies or other regulatory bodies that must be obtained prior to signing the agreement.
Renewal: An extension of the agreement beyond its original expiration date.
Terminating: The process of ending the agreement, usually due to a breach or a change in circumstances.
Notice of Termination: A formal notification to the other party that the agreement is being terminated.
Performance Monitoring: The process of ensuring that both parties are adhering to the terms of the agreement.
Performance Tracking: A system for tracking the performance of the OEM, as well as any changes in the quality or timeliness of the goods or services being provided.
Compliance: Adhering to applicable laws, regulations, or standards.
Communication Procedures: Procedures for distributing any updates or modifications to the agreement, as well as procedures for providing feedback to the other party.
Expirations/Renewals: A system for tracking the expiration date of the agreement and any subsequent renewals.
Dispute Resolution Protocols: Procedures for addressing any disputes that arise, as well as the remedies that are available to either party.

Contents

1. Overview of OEM Agreements
2. What is an OEM Agreement
3. Purpose of an OEM Agreement
4. Types of OEM Agreements available
5. Negotiating an OEM Agreement
6. Key points to consider
7. Determining the rights and obligations of all parties
8. Establishing the terms of the agreement
9. Scheduling of payments
10. Drafting an OEM Agreement
11. Important considerations, such as:
    #1. Governing law
    #1. Warranties
    #1. Dispute resolution
12. Crafting the agreement language
13. Addressing any potential regulatory issues
14. Executing an OEM Agreement
15. Signing and dating the agreement
16. Notarizing the agreement as necessary
17. Collecting any necessary fees
18. Obtaining any necessary approvals
19. Renewing an OEM Agreement
20. Determine whether renewal is possible or desirable
21. Negotiate the terms of the renewed agreement
22. Proper execution of the renewed agreement
23. Terminating an OEM Agreement
24. Reasons for terminating an OEM Agreement
25. Formalizing the notice of termination
26. Fulfilling any outstanding contractual obligations
27. Assessing and mitigating any potential liabilities
28. Dispute Resolution for OEM Agreements
29. Options for dispute resolution
30. Negotiating a resolution
31. Seeking outside assistance, such as mediation
32. Performance Monitoring
33. How to ensure adherence to the terms of the agreement
34. Implementing a performance tracking system
35. Regulatory Compliance
36. Identifying any potential compliance issues
37. Establishing a system for monitoring and reporting any compliance issues
38. Post-Agreement Protocols
39. Internal and external communication procedures
40. System for tracking expirations and renewals
41. Protocols for resolving disputes

Get started

Overview of OEM Agreements

• Learn about the components of an OEM agreement
• Understand the purpose and function of an OEM agreement
• Be aware of the benefits of OEM agreements
• Research applicable laws and regulations related to OEM agreements
• When you have a good understanding of the components, purpose, function, and benefits of OEM agreements, you can check this step off your list and move on to the next step.

What is an OEM Agreement

• Understand what OEM stands for and what it means - OEM stands for Original Equipment Manufacturer, and it is a type of agreement between two companies where one company (the OEM) manufactures goods that are sold to another company (the buyer)
• Learn about the different types of OEM agreements - there are two main types of OEM agreements, which are exclusive and non-exclusive agreements
• Become familiar with the terms and conditions of an OEM agreement - this includes things like pricing, quality control, delivery and payment terms, warranties and product liability
• Understand the benefits and risks associated with OEM agreements - the main benefit of an OEM agreement is the ability to outsource the manufacturing process, but there are also risks involved, such as potential intellectual property issues.

You’ll know you can complete this step when you understand what OEM stands for, what an OEM agreement is, the different types of OEM agreements, the terms and conditions of an OEM agreement, and the benefits and risks associated with an OEM agreement.

Purpose of an OEM Agreement

• Understand the purpose of an OEM agreement, which is to establish a legal relationship between an original equipment manufacturer and a product reseller
• Learn about the advantages and disadvantages of OEM agreements
• Gain clarity regarding the responsibilities of both parties
• When you can articulate the purpose of an OEM agreement, you can move on to the next step to learn about the types of OEM agreements available.

Types of OEM Agreements available

• Understand the differences between a bundled agreement and a licensed agreement. Bundle agreements allow the OEM to combine products that were created by the original manufacturer and offer them as one package. Licensed agreements allow the OEM to use the original manufacturer’s intellectual property and create its own combination of products.
• Become familiar with the sub-types of OEM agreements, such as white-label agreements, where the OEM’s branding can be used on the manufactured product, and private label agreements, in which the OEM’s branding cannot be used.
• Research the legal requirements of each type of OEM agreement, as well as the different contractual obligations that each entails.

You’ll know when you can check this off your list and move on to the next step when you have an understanding of the differences between the different types of OEM agreements and their legal requirements.

Negotiating an OEM Agreement

• Understand the basic structure of an OEM agreement
• Analyze the legal language of the agreement and identify areas that need to be negotiated
• Consider the scope of the agreement and determine the rights and obligations of each party
• Discuss and come to an agreement on the terms and conditions, such as pricing and payment terms, indemnification, warranties, and other important considerations
• Draft the agreement and make sure that both parties understand and accept the terms
• Finalize and sign the agreement
• When all parties have signed the agreement, it is ready for implementation and you can move on to the next step.

Key points to consider

• Understand the scope of the OEM agreement, including the duration, specific terms, and any potential updates or amendments
• Determine the sales channels and geographic areas covered by the agreement
• Confirm the payment terms and conditions, including payment schedules, discounts, and royalty rates
• Evaluate the quality control processes and specifications of the products or services covered by the agreement
• Identify the responsibilities of both parties, such as providing marketing support, customer service, and technical support
• Outline the intellectual property rights and confidentiality requirements of the OEM agreement

Once you have identified and understood the key points of the OEM agreement, you can move forward with the negotiation process.

Determining the rights and obligations of all parties

• Understand the scope of the OEM agreement, including the products and services covered, and any limitations on usage rights
• Identify what each party is responsible for, including any warranties or indemnities
• Review the obligations and restrictions for each party, such as delivery and payment terms, ownership of intellectual property, and non-compete clauses
• Confirm that all parties understand their obligations and rights under the agreement and that they are in agreement
• Once all parties agree, you can move on to the next step: Establishing the terms of the agreement.

Establishing the terms of the agreement

• Establish the length of the agreement and any renewal options
• Identify who will be responsible for what, such as production and delivery of products, liability, and payment obligations
• Detail the rights and responsibilities of both parties on matters such as intellectual property, patents, trademarks, and copyrights
• Establish the methods for communication and dispute resolution
• Describe how the agreement can be amended and terminated
• Identify any other conditions that need to be taken into consideration

Once you have established the terms of the agreement, you can move on to scheduling payments.

Scheduling of payments

• Determine the payment terms of the agreement, including the payment amount, frequency, and form of payment.
• Discuss and agree on the payment schedule with the OEM to ensure that the payments are made on time.
• Clarify any penalties or late fees that may be attached to late payments.
• When the payment terms have been established, document them in the OEM agreement.
• Once the payment terms are documented and agreed upon, you can check this step off your list and move on to the next step.

Drafting an OEM Agreement

• Research the terms of the agreement, including the scope of the agreement, the obligations of the parties, and the remedies for breach.
• Consult a lawyer to ensure that the agreement is legally binding and to make sure that the agreement is tailored to meet the needs of both parties.
• Draft the agreement and review it with the other party.
• Negotiate any changes and make sure all parties understand and agree to the terms.
• Sign and date the agreement.

You’ll know you’re done with this step when you and the other party have both signed and dated the agreement.

Important considerations, such as:

• Understand the terms and conditions of the agreement, including the scope of the agreement, the duration of the agreement, the payment terms, the warranties and liabilities of the parties, and any other relevant provisions
• Analyze the potential risks associated with the agreement and plan how to mitigate them
• Consider the legal and regulatory environment in which the agreement will be enforced
• Make sure that the agreement complies with all applicable laws and regulations
• When you are satisfied that all considerations have been taken into account, you can sign the agreement and move on to the next step.

Governing law

• Research the governing law that applies to your OEM Agreement. This will depend on the parties to the agreement, the location of the agreement, and other factors.
• Read the governing law to understand the rules that apply to your OEM Agreement.
• Determine if any special clauses need to be added to the Agreement to comply with the governing law.
• When you are done researching the governing law, you can check this off your list and move on to the next step: warranties.

Warranties

• Understand what the warranties are that are part of the OEM Agreement
• Learn what the legal obligations associated with the stated warranties are
• Make sure that the OEM Agreement covers any future potential warranty issues that may arise
• Ensure that all warranties in the agreement meet the standards of the governing law
• Be aware of any additional warranties that may be offered by the supplier
• Once you have reviewed and/or negotiated the warranties in the agreement, you can move on to the next step: Dispute Resolution.

Dispute resolution

• Understand the different forms of dispute resolution, such as arbitration, mediation, and litigation
• Research the differences between the various forms of dispute resolution, and decide which form is best suited for the agreement
• Draft language for the dispute resolution clause and include it in the OEM agreement
• Confirm all parties agree to the language of the dispute resolution clause
• When all parties agree to the dispute resolution language, this step is complete and you can move on to crafting the agreement language.

Crafting the agreement language

• Review the contract closely and take into account the needs of each party
• Draft the agreement language based on the specific goals of each party
• Include the OEM’s rights and responsibilities regarding the product
• Address issues related to technology transfer, licensing, intellectual property, and indemnification
• Incorporate each party’s terms and conditions
• Make sure that the agreement language is clear and concise
• When you have a complete agreement, review it with the OEM to make sure all terms are agreed upon

You’ll know that you can check this step off your list when the agreement language is drafted and reviewed with the OEM.

Addressing any potential regulatory issues

• Consult legal counsel to understand any specific regulations that must be addressed in the agreement
• Research any applicable industry-specific regulations or laws that must be followed
• Find out if any special permissions are required for use of the product
• Ensure that the agreement does not violate any local, state, or federal laws
• Once all regulatory issues have been addressed, check this off your list and move on to the next step - Executing an OEM Agreement.

Executing an OEM Agreement

• Obtain the necessary legal and regulatory approvals for the agreement
• Ensure that all parties are in agreement on the terms and conditions of the agreement
• Execute the agreement by having all the parties sign and date it
• Exchange the signed documents and make sure all parties have a copy of the agreement
• Once all documents have been exchanged, the OEM agreement has been executed and is legally binding
• You will know the OEM agreement has been executed when all parties have signed and dated the agreement and exchanged copies of the documents.

Signing and dating the agreement

• Ensure both parties have read and understand the agreement
• Both parties should sign and date the agreement
• Check that all necessary signatures are present on the agreement
• Once both parties have signed and dated the agreement, it can be moved to the next step of notarizing it if necessary.

Notarizing the agreement as necessary

• Contact a notary public to sign and witness your agreement.
• Make sure to bring two copies of the agreement and two forms of valid identification.
• The notary public will sign and date the agreement, and affix their notary seal to the document.
• Once the notary public has signed and dated the agreement and affixed their notary seal, they will hand you back the two copies of the agreement.
• You will then know that you have completed this step and can move on to collecting any necessary fees.

Collecting any necessary fees

• Check the OEM agreement to find out what fees, if any, need to be collected
• Contact the other party to make arrangements for payment
• Make sure to keep a record of any payments made or received
• Once all applicable fees have been collected, you can check this step off your list and move on to the next step.

Obtaining any necessary approvals

• Reach out to the OEM partner to determine if any required approvals are needed
• If approvals are needed, create a document outlining the details of the agreement and submit to the OEM partner for review
• Obtain any necessary signatures for the agreement
• Ensure that all agreements have been signed off on by the appropriate parties
• Once all signatures have been received, you will have obtained all necessary approvals and can move on to the next step

Renewing an OEM Agreement

• Review existing OEM agreement to determine if it can be renewed
• Contact the supplier to determine if they are willing to renew the agreement
• Negotiate any necessary changes to the agreement
• Ensure that the agreement terms are acceptable to both parties
• Sign and execute the new agreement
• You will know that you have completed this step when you have a signed agreement in hand.

Determine whether renewal is possible or desirable

• Research the original agreement to determine whether renewing is possible and desirable
• Consider the current market conditions, your product needs, and the goals of the OEM agreement
• Assess the performance of the original agreement and the other party
• Determine whether renewing the agreement is in the best interests of both parties
• Once you have considered all relevant information, you will be able to decide whether renewing the OEM agreement is possible and desirable
• Check this step off your list and move on to negotiating the terms of the renewed agreement if both parties agree to renew the agreement

Negotiate the terms of the renewed agreement

• Conduct a review of the current agreement to determine what changes, if any, need to be made
• Identify and discuss the changes needed with the other party
• Reach a mutual agreement on the terms of the renewed agreement
• Draft a new agreement outlining the changes and submit it to the other party
• Negotiate and revise the agreement until both parties agree to the terms
• Once the agreement is finalized, both parties should sign off on the document
• Once the agreement is signed by both parties, you can move to the next step of properly executing the renewed agreement.

Proper execution of the renewed agreement

• Review the finalized document to make sure all negotiated terms are included.
• Check the document for typos and other errors.
• Sign the agreement with both parties’ authorized representatives.
• Have the document notarized and/or witnessed.
• Make sure you obtain a copy of the executed agreement for both parties.

Once all of these steps have been completed, you can move on to the next step: Terminating an OEM Agreement.

Terminating an OEM Agreement

• Review the terms of the OEM Agreement to understand when, why, and how it can be terminated
• Check the clauses regarding termination and if they are satisfied, initiate the termination process
• Notify the other party in writing of the termination and provide any required legal notices
• Once the notice is sent, the agreement is terminated and the OEM partner must cease operations, unless they are able to negotiate a new agreement
• Make sure to document all the steps of the termination process and keep copies of all communication related to the termination
• Check off this step when both parties have agreed to the termination and all legal notices are sent out.

Reasons for terminating an OEM Agreement

• Review the OEM agreement to identify any breach of contract by either party that could serve as grounds for termination
• Consult with your legal team to determine if there is a legal basis for terminating the OEM agreement
• Consider if there is any way to resolve the breach of contract and continue the agreement, or if termination is the only option
• When you have a clear understanding of the reasons for terminating the agreement, you can move on to the next step.

Formalizing the notice of termination

• Draft a formal written notice which includes the date of termination and the reasons for termination.
• Ensure that the notice is signed and dated by an authorized representative of your business.
• Send the notice to the other party by certified mail, return receipt requested, or through a method that provides proof of delivery.
• Once you have proof of delivery, you can check this off your list and move on to fulfilling any outstanding contractual obligations.

Fulfilling any outstanding contractual obligations

• Determine the steps to complete in order to fulfill any outstanding contractual obligations before termination of the OEM agreement.
• Review the OEM agreement and check if there are any contractual obligations that need to be fulfilled.
• Check the timeline of the OEM agreement and ensure that all contractual obligations have been fulfilled before termination.
• Determine the terms of any warranty or indemnification clauses in the OEM agreement that must be fulfilled.
• Calculate the fees and royalties for any services or products provided by the OEM agreement.
• Make sure that all payments, goods, and services related to the OEM agreement have been completed.
• Obtain a written confirmation that all contractual obligations have been fulfilled.

Once all the above steps have been completed, you can check this off your list and move on to the next step of assessing and mitigating any potential liabilities.

Assessing and mitigating any potential liabilities

• Research, identify and review any potential liabilities associated with the OEM agreement
• Once you have identified any potential liabilities, ensure that all contractual terms meet local and industry standards
• Develop strategies to mitigate any potential liabilities and review those strategies with legal counsel
• Assess any potential liabilities and document the assessment
• When the potential liabilities have been assessed and strategies to mitigate them have been implemented, the step is complete and you can move on to the next step.

Dispute Resolution for OEM Agreements

• Make sure that the OEM agreement contains a clause on dispute resolution - this should include a specific process for resolving disputes that may arise between the two parties
• Identify an appropriate dispute resolution mechanism that both parties agree on – this could be mediation, arbitration, or litigation in court
• If a dispute arises, follow the dispute resolution process as outlined in the OEM agreement
• Seek legal advice as needed
• Ensure that the dispute resolution clause is enforceable and has the desired result
• Once the dispute is resolved, make sure to document the outcome and keep it in your records

You’ll know that you can check this off your list and move on to the next step when you have identified an appropriate dispute resolution mechanism and have documented the outcome of the resolution.

Options for dispute resolution

• Research the options available for dispute resolution: court hearing, arbitration, third-party mediation, or a combination of the three
• Decide which option is best suited for the dispute at hand
• Understand the pros and cons of each option
• Consider the costs of each option when determining the best solution
• Check off this step when you have a clear understanding of the options available for dispute resolution and have chosen the most suitable option for your case.

Negotiating a resolution

• Identify what each party wants to achieve in the resolution
• Negotiate in good faith, keeping in mind the goals of both parties
• Compromise on any issues that have not been resolved by the end of the negotiation
• Document the agreed-upon resolution
• When both parties agree on a resolution, check off this step and move on to the next step (Seeking outside assistance, such as mediation)

Seeking outside assistance, such as mediation

• Research mediation organizations in your area that specialize