Stage 7 of eight. This article is one step in the production line buyer’s roadmap — the full sequence from defining the product to the first year of operation.
Who this is for
You have chosen a supplier and you are about to commit money. What you have is a proforma invoice or a short sales contract: a machine list, a price, a payment schedule, a delivery period, and a warranty sentence.
That document is adequate for buying a machine. It is not adequate for buying a line, because it describes an event — delivery — rather than an outcome, and every dispute that follows will be about the outcome. This article is about what to add. It is written for the commercial terms of the purchase, not as legal advice: the drafting and the enforceability are for your attorney, and where the contract is with a Chinese supplier the governing-law and dispute clauses deserve their specific attention.
One warning before the list. Everything here is negotiable before a deposit and almost nothing is negotiable after. A buyer who has paid 30% has spent most of their leverage, as an experienced importer put it plainly: “before you transfer that deposit — do you actually know if this factory can deliver what they promise?”
1. The output commitment
The most important clause in the document, and the one most often absent. It should state a number of good, saleable units per hour, on your product, measured at the end of the line — not a machine rating, not a nameplate, not “design capacity”.
Machine ratings are quoted under ideal conditions and a line does not run under ideal conditions; the gap between the two is normally 40–50%, for reasons set out in why a new line misses its rated output. If the contract commits to machine ratings, that entire gap is yours. If it commits to line output, it is the supplier's problem to engineer around — which is exactly where it belongs, because they are the ones who chose the machines.
A supplier who will not put a line output in writing has told you something useful at no cost to you.
2. The acceptance protocol, written before the build
The protocol is the document that says how the output commitment will be tested: what product, what material, how long the run, what counts as a good unit, what reject rate is permitted, who witnesses, what instruments are used, and what happens on failure.
It must be attached to the contract at signature. A protocol written after the machine is built is written by whoever built it, around what it can do — and at that point you cannot fail the machine. Our factory acceptance test checklist and FAT vs SAT cover what the protocol should contain and which test proves what.
Two details that get traded away and should not be: the run must be sustained (hours, not a demonstration burst) and it must use your material, including your worst realistic material rather than a selected sample.
3. Payment tied to acceptance, not to events
A typical schedule is a deposit, a balance against shipping documents, and a small retention. The problem is that shipping is an event the supplier controls entirely and that proves nothing about whether the line works.
What to aim for: a meaningful portion payable only on site acceptance — the line demonstrated at the committed output on your floor. Retention alone is usually too small to motivate anyone across an ocean. The mechanics of structuring this safely, including letters of credit and what each payment method actually protects, are in how to pay a Chinese supplier safely.
4. What is in scope, itemised
The scope clause should list every item, and explicitly name the ones commonly assumed: conveyors and accumulation between machines, the electrical panel and inter-machine cabling, utilities connection from your supply point, installation labour and who pays travel and accommodation, commissioning, operator and maintenance training with a number of days, the first-year wear-part kit, and change parts for each product size.
Add a line stating that anything not listed is excluded. It sounds obvious; it is the sentence that prevents the argument.
5. Materials and components, specified
Grades and thicknesses for every product-contact surface, and a bill of materials with real manufacturer part numbers for bought-in components — motors, gearboxes, bearings, pneumatics, PLC, drives. Attach it as a schedule, and make substitution require your written approval.
Without this clause, “equivalent” is defined by the supplier. With it, substitution is a conversation. How to read those choices when comparing quotations is covered in judging a line beyond price.
6. Documentation as a named deliverable
List the documents and the language: general-arrangement drawing, electrical schematics, P&ID where relevant, the bill of materials, operation and maintenance manuals, the spare parts list with recommended holdings, factory test records, and calibration certificates.
Then tie the final payment to their delivery. Documentation is the single easiest deliverable to defer indefinitely once the money has moved, and a line whose drawings never arrive is a line only its builder can maintain — the failure mode described in maintainable controls on an imported line.
7. Control system access and intellectual property
Three sentences worth their space: you receive the PLC program and the HMI project files; you receive any passwords required to view and modify them; and you may modify the program without voiding the mechanical warranty.
The third is the one that gets omitted. A warranty that is void the moment your own technician connects to the controller is a warranty that makes you dependent for its whole duration. Decide deliberately what you are agreeing to.
8. Spare parts: price, availability and a lock
Four elements: a recommended wear-part list with intervals, a price list for those parts, a commitment to make parts available for a stated period (five to ten years is a reasonable ask), and a cap on price escalation for a defined term.
Spares are where a low equipment price is sometimes recovered afterwards, and it is entirely avoidable by pricing them at purchase. Which parts to hold on day one is covered in our spare-parts strategy.
9. Warranty, defined properly
“Twelve months warranty” is not a clause; it is an adjective. Define:
- When it starts — at shipment, at installation, or at acceptance. The difference can be six months of a twelve-month warranty consumed by freight, clearing and a site that was not ready.
- What it covers — parts only, or parts and labour; whether an engineer travels, and who pays for the travel.
- What voids it — and whether normal operation by trained staff can void it.
- Response time — a warranty with no response obligation is a promise to eventually care.
10. Delay, and what it costs whom
Delay damages, usually a percentage per week with a cap, and a long-stop date after which you may cancel and recover payments. Without them, a supplier's delay costs them nothing while it costs you a stalled project, a financing bill and a market opportunity.
Be even-handed here for a practical reason: a clause that also recognises delays you cause — a site not ready, an approval not given — is more likely to be agreed and more likely to be enforceable. Realistic durations for each stage are in production line project timelines.
11. Governing law, dispute resolution, and language
Which law governs, where disputes are resolved, and in what language the contract is authoritative. Where a contract exists in both English and Chinese, state explicitly which version prevails — divergence between the two versions is a real and avoidable problem.
This clause is the one most worth an attorney's time, and the least worth a template's. Enforcement realities differ substantially depending on what you agree here, and by the time it matters you cannot change it.
The eleven, and what each one prevents
| Clause | What it prevents | Cost of omitting it |
|---|---|---|
| Output commitment on your product | Accepting machine ratings as line output | Typically 40–50% of expected production |
| Acceptance protocol attached at signature | A test designed around the finished machine | You cannot fail the machine |
| Payment on acceptance | Full payment against a shipping document | All leverage gone before the line runs |
| Itemised scope with an exclusion line | “That was never included” | Conveyors, training, spares bought twice |
| Materials and BOM as a schedule | Substitution defined by the supplier | Thinner steel, unobtainable parts |
| Documentation named and paid against | Drawings that never arrive | A line only its builder can maintain |
| PLC access and IP | A locked controller | Every future change priced by one party |
| Spares price and availability lock | Recovery of a low price through parts | Open-ended running cost |
| Warranty start, scope, response | A warranty consumed by freight | Cover that expires before ramp-up ends |
| Delay damages and long-stop | Delay being free to the supplier | A stalled project you finance |
| Governing law and prevailing language | Two contracts that disagree | A dispute you cannot practically pursue |
The sequencing point
Read that table as a schedule, not a checklist. Every clause is negotiable while the supplier is still competing for the order and essentially none of them are afterwards. The practical consequence is that contract work belongs before supplier selection is final, not after — because the willingness to accept these terms is itself one of the better signals about which supplier to choose. Two firms quoting within 5% of each other, one accepting an output commitment and one not, are not offering the same thing at all.
What CISH does in this part of the process
Where we deliver a line, the contract is with CISH: the output commitment, the acceptance protocol, the materials schedule, the documentation list, controller access, spares pricing and the warranty terms are written in before it is signed, and the supplier contracts behind it are ours to manage. Where a buyer is contracting directly with a supplier, we will read the draft against these eleven headings and tell you which are missing and which are worded in a way that does not do what you think. That review is a defined piece of work, not a sales conversation.
Frequently asked questions
What should a production line purchase contract include?
Beyond the machine list, price and delivery date: an output commitment in good units per hour on your own product; an acceptance protocol attached at signature; payment tied to acceptance rather than to shipping; an itemised scope with an explicit exclusion line; materials grades and a bill of materials as a schedule; documentation named as a deliverable; PLC program access and IP terms; spare-parts pricing and availability; a properly defined warranty; delay damages with a long-stop date; and governing law, dispute resolution and which language version prevails.
What is the single most important clause?
The output commitment, expressed as good saleable units per hour on your product measured at the end of the line, tied to a written acceptance protocol and tied to the final payment. Machine ratings are quoted under ideal conditions and real line output is typically 40 to 50% lower; if the contract commits to machine ratings, that entire gap is your risk. If it commits to line output, it belongs to the party who selected the machines.
When should the warranty period start?
At acceptance, or at installation — not at shipment. A twelve-month warranty starting at shipment can lose six months to freight, clearing, a site that was not ready and a slow installation, leaving cover that expires in the middle of the ramp-up period when faults are most likely. Also define what the warranty covers (parts only, or parts and labour, and who pays for an engineer to travel), what voids it, and what response time applies.
Should I get the PLC program with the line?
Yes, and write three things into the contract: that you receive the PLC program and HMI project files, that you receive any passwords needed to view and modify them, and that modifying the program does not void the mechanical warranty. The third is the one usually omitted. A locked controller means every future change — a new product size, a modified recipe, a retimed sequence — goes through the supplier at whatever price applies then.
When is the right time to negotiate these clauses?
Before any deposit, and ideally before supplier selection is final. Every one of these terms is negotiable while a supplier is still competing for the order and almost none are afterwards — a buyer who has paid a deposit has spent most of their leverage. Willingness to accept these terms is also a useful selection signal in itself: two suppliers quoting within 5% of each other, one accepting an output commitment and one refusing, are not offering the same thing.