Corporate lawyer for industry: protect your operations and commercial relationships

Manufacturing companies operate with a network of supply, distribution, and collaboration contracts that are critical to their operations. A supply contract with a strategic supplier that does not provide for commodity price escalation, a distribution agreement that does not protect the channel on termination, or an industrial joint venture that does not correctly regulate governance and exit are risks that can seriously affect the business when they materialise. In the industrial sector, contracts tend to be long-term and high-value, which makes disputes more consequential.

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Why BM Consulting

Specialised advice and personal service

At BMC we advise manufacturing companies on all corporate aspects of their activity: drafting and negotiating supply and distribution contracts, industrial joint ventures, due diligence in sector acquisitions, commercial litigation, and industrial arbitration.

  • Industrial supply and distribution contracts are the highest-value and highest-risk contracts for manufacturing companies — precise definition of scope, price escalation, variation procedures, and termination consequences prevents the majority of litigation.

  • The commercial agent goodwill indemnity (Art. 28 Ley del Contrato de Agencia) is capped at one year's average remuneration but is frequently litigated — manufacturers should plan for it from contract design, not after termination.

  • UTE (Union Temporal de Empresas) members are jointly and severally liable for all UTE obligations — the UTE agreement's governance, contribution, and exit clauses determine who bears the liability when a member defaults.

  • Product liability under RD Legislativo 1/2007 is strict for manufacturers — only defences based on state-of-science or pre-market existence of defect eliminate liability; contractual B2B chain liability is separately managed.

How we work

From first contact to case completion

  1. Supply and distribution contracts

    We draft and negotiate supply contracts for raw materials and components (with price revision clauses, quality conditions, delivery timescales, and penalties) and distribution agreements — exclusive or non-exclusive — together with commercial agency agreements and industrial collaboration arrangements.

  2. Joint ventures and industrial collaboration agreements

    We structure joint venture agreements for industrial projects: choice of vehicle (EIG, SL, or UTE depending on the project), drafting the joint venture agreement with governance mechanisms, each party's contributions, profit distribution, and exit provisions.

  3. Due diligence in industrial M&A

    We carry out legal due diligence in the acquisition of manufacturing companies or industrial business lines: review of supply and distribution contracts, industrial property position (patents, trademarks, know-how), employment contracts with key personnel, and pending litigation.

  4. Commercial and industrial litigation

    We represent you before the Commercial Courts and in arbitration proceedings in disputes over supply contracts, distribution agreements, product quality, quantity claims, and conflicts in industrial joint ventures.

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The problem

Manufacturing companies operate with a network of supply, distribution, and collaboration contracts that are critical to their operations. A supply contract with a strategic supplier that does not provide for commodity price escalation, a distribution agreement that does not protect the channel on termination, or an industrial joint venture that does not correctly regulate governance and exit are risks that can seriously affect the business when they materialise. In the industrial sector, contracts tend to be long-term and high-value, which makes disputes more consequential.

Our solution

At BMC we advise manufacturing companies on all corporate aspects of their activity: drafting and negotiating supply and distribution contracts, industrial joint ventures, due diligence in sector acquisitions, commercial litigation, and industrial arbitration.

Process

How we do it

1

Supply and distribution contracts

We draft and negotiate supply contracts for raw materials and components (with price revision clauses, quality conditions, delivery timescales, and penalties) and distribution agreements — exclusive or non-exclusive — together with commercial agency agreements and industrial collaboration arrangements.

2

Joint ventures and industrial collaboration agreements

We structure joint venture agreements for industrial projects: choice of vehicle (EIG, SL, or UTE depending on the project), drafting the joint venture agreement with governance mechanisms, each party's contributions, profit distribution, and exit provisions.

3

Due diligence in industrial M&A

We carry out legal due diligence in the acquisition of manufacturing companies or industrial business lines: review of supply and distribution contracts, industrial property position (patents, trademarks, know-how), employment contracts with key personnel, and pending litigation.

4

Commercial and industrial litigation

We represent you before the Commercial Courts and in arbitration proceedings in disputes over supply contracts, distribution agreements, product quality, quantity claims, and conflicts in industrial joint ventures.

Industrial contracts: the backbone of manufacturing operations

Manufacturing companies are, in essence, companies of contracts: contracts with raw material and component suppliers, distribution agreements with their commercial networks, collaboration agreements with technology or production partners, technology licence agreements, and joint venture arrangements with industrial partners for specific projects. The quality of these contracts — their precision, their balance between the parties, their capacity to anticipate and manage contingencies — largely determines the company’s resilience when the inevitable changes in the business environment occur.

At BMC we advise manufacturing companies on the drafting, review, and negotiation of their most important commercial contracts, and represent them in the commercial disputes that inevitably arise in the course of industrial activities of any scale.

Supply contracts: managing the chain on paper

The supply contract for raw materials or critical components is one of the most important contracts for a manufacturing company. When the relationship with a strategic supplier breaks down without a solid contract governing early termination, the consequences can be severe: production stoppage, loss of customers, the urgent need to qualify new suppliers in a sector where the qualification process can take months.

The supply contracts we draft for our manufacturing clients provide for these situations: minimum notice periods for termination, supply obligation during a transition period, transfer of technical knowledge to facilitate the change of supplier, and dispute resolution mechanisms for quality disputes that allow supply to continue while the controversy is resolved.

Industrial joint ventures: when collaboration needs structure

Collaboration between industrial companies — to jointly develop a new product, to address a market that neither can address alone, or to share production capacity — is common in the manufacturing sector. But collaboration without adequate legal structure is a certain source of disputes: who decides how the jointly developed product is commercialised? What happens if one party wants to exit the collaboration? To whom does the industrial property generated during the collaboration belong?

We structure industrial joint ventures so that the objectives of the collaboration are correctly defined, the governance rules are clear, the industrial property is properly assigned from the outset, and the exit mechanisms protect each party’s interests.

Industrial M&A: due diligence of the critical contracts

In the acquisition of a manufacturing company, the analysis of supply and distribution contracts is as important as the financial analysis. A distribution agreement with change of control as a termination trigger may mean the buyer loses the distribution channel the day after closing. A supply contract with unfavourable conditions that has not been renegotiated may mean the actual margin of the business is lower than the historical financial statements suggest.

Contact our team of specialist manufacturing and industrial sector lawyers for an initial assessment of your position.

FAQ

Frequently asked questions

The most critical clauses in an industrial supply contract are: a precise definition of the subject matter of the supply (technical specifications, tolerances, quality certifications), the price and price revision mechanisms (commodity indexation, renegotiation periods), delivery conditions (Incoterms, timescales, consequences of delay), quality controls and the claims and returns procedure, exclusivities and their conditions, grounds for early termination and their consequences, and the governing law and dispute resolution clause (jurisdiction or arbitration).
An exclusive distribution contract protects the manufacturer and distributor to the extent that the contract is well-drafted. The manufacturer should protect itself by ensuring the distributor has binding minimum sales targets, a right of termination without excessive compensation if targets are not met, and that the exclusivity has a well-defined territorial and product scope. The distributor should protect itself with a minimum contractual term allowing it to recoup investments in developing the channel, compensation for goodwill on termination, and reasonable post-contractual non-competition restrictions.
The goodwill payment (Article 28 of the Commercial Agency Act) is the compensation the manufacturer must pay the commercial agent when the contract ends at the manufacturer's decision or when the agent retires, provided the agent introduced new clients to the manufacturer during the contract or materially increased business with existing clients. The maximum payment is equivalent to the average annual remuneration over the last five years (or the contract duration if shorter). In practice, it is one of the most frequent sources of dispute between manufacturers and their commercial networks.
Arbitration is preferable to litigation in industrial disputes when: both parties are companies (not consumers), the subject matter is technically complex and a sector-specialist arbitrator is preferred, confidentiality is important (arbitration proceedings are private, unlike court proceedings), the parties are based in different countries (international arbitration is more efficient for enforcement globally), or when speed of resolution is critical (arbitration is generally faster than litigation).
Price escalation clauses (clausulas de revision de precios) allow the contract price to be adjusted during the term of the agreement to reflect changes in raw material costs, energy prices, or inflation indices. Well-drafted escalation clauses specify: the index to be used (official INE indices, London Metal Exchange prices, commodity-specific benchmarks), the frequency of review (quarterly, semi-annual, annual), the floor and ceiling for any given adjustment, and the mechanism for applying it. Poorly drafted escalation clauses — or their complete absence in long-term supply contracts — are a primary source of industrial disputes when commodity price movements create unsustainable cost pressures.
Under Real Decreto Legislativo 1/2007 (the Consumer and User Protection Act), manufacturers of defective products that cause personal injury or property damage face strict liability — the injured party does not need to prove negligence, only the defect, the damage, and the causal link. Defences include: the product met the safety standards in force when placed on the market, the defect did not exist when the product was placed on the market, or the state of scientific knowledge at the time did not enable the defect to be discovered. Manufacturers of industrial products sold B2B have more limited statutory protection obligations, but contractual liability in the supply chain is equally complex and must be managed through the contract's quality, warranty, and indemnity provisions.

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Frequently asked questions

Questions about Corporate Lawyer for Manufacturing Companies

The most critical clauses in an industrial supply contract are: a precise definition of the subject matter of the supply (technical specifications, tolerances, quality certifications), the price and price revision mechanisms (commodity indexation, renegotiation periods), delivery conditions (Incoterms, timescales, consequences of delay), quality controls and the claims and returns procedure, exclusivities and their conditions, grounds for early termination and their consequences, and the governing law and dispute resolution clause (jurisdiction or arbitration).
An exclusive distribution contract protects the manufacturer and distributor to the extent that the contract is well-drafted. The manufacturer should protect itself by ensuring the distributor has binding minimum sales targets, a right of termination without excessive compensation if targets are not met, and that the exclusivity has a well-defined territorial and product scope. The distributor should protect itself with a minimum contractual term allowing it to recoup investments in developing the channel, compensation for goodwill on termination, and reasonable post-contractual non-competition restrictions.
The goodwill payment (Article 28 of the Commercial Agency Act) is the compensation the manufacturer must pay the commercial agent when the contract ends at the manufacturer's decision or when the agent retires, provided the agent introduced new clients to the manufacturer during the contract or materially increased business with existing clients. The maximum payment is equivalent to the average annual remuneration over the last five years (or the contract duration if shorter). In practice, it is one of the most frequent sources of dispute between manufacturers and their commercial networks.
Arbitration is preferable to litigation in industrial disputes when: both parties are companies (not consumers), the subject matter is technically complex and a sector-specialist arbitrator is preferred, confidentiality is important (arbitration proceedings are private, unlike court proceedings), the parties are based in different countries (international arbitration is more efficient for enforcement globally), or when speed of resolution is critical (arbitration is generally faster than litigation).
Price escalation clauses (clausulas de revision de precios) allow the contract price to be adjusted during the term of the agreement to reflect changes in raw material costs, energy prices, or inflation indices. Well-drafted escalation clauses specify: the index to be used (official INE indices, London Metal Exchange prices, commodity-specific benchmarks), the frequency of review (quarterly, semi-annual, annual), the floor and ceiling for any given adjustment, and the mechanism for applying it. Poorly drafted escalation clauses — or their complete absence in long-term supply contracts — are a primary source of industrial disputes when commodity price movements create unsustainable cost pressures.
Under Real Decreto Legislativo 1/2007 (the Consumer and User Protection Act), manufacturers of defective products that cause personal injury or property damage face strict liability — the injured party does not need to prove negligence, only the defect, the damage, and the causal link. Defences include: the product met the safety standards in force when placed on the market, the defect did not exist when the product was placed on the market, or the state of scientific knowledge at the time did not enable the defect to be discovered. Manufacturers of industrial products sold B2B have more limited statutory protection obligations, but contractual liability in the supply chain is equally complex and must be managed through the contract's quality, warranty, and indemnity provisions.
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