Tooling ownership in a manufacturing contract: the clauses that decide who owns the mould

Contract terms · 2026-10-16

The published figures

The five exit questions, and what each one has to answer

This is not legal advice. We publish tool and moulds as a service line and a 400 m² sample room; we will put our own tooling position in writing on a defined project. Involve counsel before signing.

Field one: what is covered by the tooling fee

The word "tooling" covers more than the mould, and the difference is where the money goes. It can include the mould itself, inserts and cavity assemblies, gauges and fixtures, and jigs used in assembly.

The clause needs to enumerate what is in scope and what is not, because a fixture that was invoiced as tooling and is later found to be neither a mould nor a fixture is the kind of gap that surfaces at exit, when leverage is gone.

Field two: who pays, and when

Whether the fee is payable in full before the first trial shot, staged against tooling progress, or amortised per part against orders, changes the cash position and the negotiating position at the same time. They are not interchangeable and suppliers price them differently.

What matters commercially is that the trigger and the payment should be linked. A tool that has been paid for in full and is sitting in production is a different conversation from one that is half paid.

Field three: who owns it during the programme

The intermediate case — who owns the tool while orders are running — is the one most often left unwritten. The two extreme positions are easy: buyer owns from day one, or supplier owns and grants the buyer exclusive use for the programme.

The intermediate position is more common and more useful to state, because it settles what happens if the relationship is suspended: is production still the supplier's obligation, is the tool still producing for the buyer only, and does the buyer's access continue during a dispute.

Field four: what happens on exit — the clause that decides the outcome

Exit is where ownership becomes real, and these are the specific questions the clause has to answer:

1. Where is the tool physically located, and can the buyer verify it?

2. Under what condition does the tool transfer — on programme end, on payment of an outstanding balance, or on demand?

3. What is the transfer process, in what timeframe, and at whose cost? Crating, shipping and documentation are real expenses and real time.

4. Can the supplier sell or use the tool elsewhere afterwards, and is the buyer's product protected against that?

5. Can the tool move to a second supplier for continuation production, and what would need to change for that to work? A tool that can only be run by its original maker is a single-source dependency whatever the ownership clause says.

Item five is the one buyers most often overlook and the one that determines whether owning the tool actually bought you leverage.

Governing law belongs in a separate conversation

Contracts involving Chinese tooling commonly specify Chinese jurisdiction, and that choice has consequences a buyer should understand before accepting it rather than after a dispute. We are not in a position to advise on how those consequences are applied in a particular case, and any article that purported to would be doing you a disservice.

What we can say is procedural and non-specific: involve counsel before signing, not after a dispute starts; make sure the exit clause is specific enough that it does not need interpretation; and confirm that the tooling asset is identifiable as yours in the factory's own records.

What to settle before the tool is cut

Enumerate the tooling scope, state who pays and when, state ownership during the programme, and — most importantly — write the exit clause: location, transfer trigger, transfer process, supplier use afterwards, and whether the tool can move to a second supplier.

What we will put in writing

Our tooling position on a defined project: what the fee covers, the tool lead time, what happens to the tool if the programme ends, and whether we would run a continuation order for a programme we no longer supply. Those are the four questions buyers ask most, and they belong in the contract rather than in a conversation.

Where the figures behind this came from

Every number on this page traces to one of these.

Models this guide applies to

Coffee Makers

Primary line. Parts-intensive, so the spares plan is designed with the product.

Grills & Baking

Primary line. Seasonal shape, pairs with pizza makers and air fryers.

Pizza Makers

Primary line. Countertop heat appliance, pairs with the grill range in one programme.

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