Both Parties shall bear the costs and expenses concerning the production and distribution of the Products. At its sole cost and expense, the Manufacturer shall be responsible for acquiring and maintaining the necessary licenses and certifications for the production, manufacturing, and export of the goods. Whereas the Developer shall acquire and maintain the required certification and licenses concerning the product itself. In addition, the Manufacturer shall cooperate with the Develop to certify all requirements needed to apply product licenses and certifications.

 Suggestions- I suggest both of you share the expenses and costs; the Manufacturer to bear cost manufacture and necessary certification in his jurisdiction, and the Developer to bear the cost and necessary license for distribution instead of handling all the fees.


The Developer shall place Orders for Products by submitting a purchase order to the Manufacturer. Before the Developer places the Order, all the mold expenses must be paid off, beginning with 10K for monochrome host and 10K for single cigarette cartridge. The minimum Order of 10k for all parts shall only be valid and binding. The Developer shall make the applicable payments after the Developer has confirmed and approved the final version. The purchase order shall specify the quantity of Products ordered, the desired delivery date, the cost payable for the Products, the payment terms, and all conditions applicable to such Order, including quality requirements, packaging, and labeling requirements

My suggestion- your counteroffer is valid and covers all risks and aspects of order processing.


The Manufacturer shall ensure that the products are delivered per the deadlines stipulated in the orders, the instructions, and specifications in the approval sheet approved by the Developer. The Manufacturer shall ensure adherence to all labeling and packaging rules and laws.


Unpacking damage- damage associated with natural disasters such as floods, bad weather, and other related factors.

REPHRASE- The Manufacturer shall ensure that the products comply with the gold machine and approval sheet submitted by the Manufacturer to and approved by the Developer.


The Manufacture shall handle, pack and label the Products in accordance with the requirements set forth in the approval sheet approved by the Developer, the generally accepted international standards for similar goods, and comply with (i) any applicable laws, rules and regulations as well as (ii) any other requirements of the Developer as agreed in writing provided these are reasonable in scope.

My suggestion- please insist the words (the generally accepted international standards for similar goods) be incorporated in the Agreement to prevent any conflict with the law and so that the Manufacturer can be responsible for that.

The Manufacturer shall ensure that the packaging is sufficient to prevent the products from being damaged during shipment, transportation, and storage during going to the warehouse designated as specified in the Order by the Developer. The Manufacturer undertakes to compensate the Developer for any damage caused by improper packaging, protection, and storage of the products during the arrival of the goods in the Shenzhen warehouse.


 During the term of this Agreement, the Manufacturer shall open BOM at all times, and the Product Cost charged to the Developer shall be a markup of no more than fifteen percent (15%) of the cost price of the material. The Product Cost may be adjusted according to market price fluctuation, subject to the Developer’s consent and approval. In the event of a change in pricing, the Manufacturer shall immediately notify the Developer in writing and await the Developer’s instructions regarding the Product Cost.


 REPHRASE-   (4) The Manufacturer shall timely avail all requested documents as and when required by the Developer.


The Parties agree that the Technology relating to the Products may be protected by copyright and intellectual property laws. All copyrights to the Technology and any intellectual property relating to the Products shall automatically and immediately vest in the Developer. The Manufacturer has the exclusive right to produce and manufacture the products. However, the Manufacturer is strictly prohibited from copying, reproducing, altering, sharing, selling, commercializing, distributing, leasing or otherwise lending the Technology relating to the Products to any third party other than the Developer.


During the term of this Agreement, the Manufacturer shall, at its own expense, maintain in force, a General Liability Insurance policy covering the Products on an occurrence basis against all claims. Such insurance shall be for such limits that are reasonably required but not less than a combined limit of five million dollars ($5,000,000.00 USD) per occurrence. The Manufacturer shall also be responsible for insuring Products against the risk of loss, theft, or damage while under the Manufacturer’s control or possession. The Manufacturer shall be responsible for insuring the Products’ transport until the Products have been loaded on board, per the FOB Incoterm (2020).

My suggestion – it is wise of you to insist the Manufacturer hold general product liability insurance despite Marijuana being uninsurable. The public liability insurance will be of great help in incidents like fires, floods, theft, loss, or other natural calamities.


The Developer shall not be liable to the Manufacturer for any direct, indirect, special, incidental, or consequential damages, including, but not limited to lost profits, penalties, fines, third party claims, in connection with this Agreement, unless such injuries have been caused or significantly aggravated by the Developer’s gross negligence. The Developer knew or should have known there was a possibility of such damages. Under the premise of fair and honest cooperation, any damages suffered by the Developer caused exclusively by the Developer shall be borne by the Developer. Nonetheless, the Developer shall not be expected to compensate losses suffered by the Manufacturer for any reason, except in limited cases whereby the Developer’s gross negligence exclusively and solely caused the losses.


If the dispute is not settled within thirty (30) days. In that case, any Party may proceed to arbitration by written notice (the “Arbitration Notice”) to the other Party describing the reasons for the dispute. Upon receipt of an Arbitration Notice, the dispute shall be referred to arbitration to exclude the courts. The arbitration proceedings shall occur in the city of Montréal (province of Québec) or virtually, as determined by the Developer. Considering the Developer is based in Quebec and the Product development has been handled in North America, the arbitration proceedings shall be subject to and governed according to the laws in force in Quebec and Canada’s applicable rules.

Suggestion- for convenience purposes, it is fitting that the arbitration proceedings be held virtually or in Montreal or a central physical place suggested by both parties.

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