Non-Alcoholic Beverages
These Contract Manufacturing Terms and Conditions (“Terms”) apply to all Sales Orders issued by Craftsmith Beverage, LLC (“Manufacturer”, “Craftsmith”, “we”, “us”, or “our”) to the customer identified in each Sales Order (“Customer” or “you”).
BY ACCEPTING A SALES ORDER THAT REFERENCES THESE TERMS BY URL OR LINK, CUSTOMER AGREES TO BE BOUND BY THESE TERMS. EACH SALES ORDER CONSTITUTES A BINDING AGREEMENT INCORPORATING THESE TERMS WHEN ACCEPTED BY CUSTOMER.
These Terms are maintained at this URL and are identified by version number and effective date. The version posted as of the date and time of Customer’s acceptance of a Sales Order shall govern that Sales Order for its entire duration, notwithstanding any subsequent update. Manufacturer shall maintain an archive of all prior versions with their effective date ranges.
Manufacturer agrees to produce and supply to Customer, upon accepted Sales Orders, the products specified in each Sales Order and accompanying specifications (“Products”).
Products may include non-alcoholic beverages, THC (delta-9) beverages, CBD beverages, functional beverages, coffee beverages, tea beverages, energy drinks, or other non-alcoholic beverages as mutually agreed.
These Terms establish general terms and conditions that apply to all Sales Orders. Each Sales Order shall specify: Product description and SKU; Specifications and formulations; Quantity and batch size; Requested production and packaging dates; Pricing per the then-current rate schedule; Delivery requirements.
These Terms do not create any exclusive relationship. Manufacturer may produce similar products for itself and other customers, and Customer may engage other manufacturers.
Customer shall provide Manufacturer with complete specifications, including recipes, formulae, processing instructions, quality standards, packaging specifications, and labeling requirements.
Manufacturer shall maintain necessary certifications for regulatory compliance, follow good manufacturing practices, produce Products in accordance with Customer’s specifications (subject to equipment limitations), and maintain appropriate quality control procedures.
After the Freeze Date (14 business days prior to scheduled production start date), any Customer-requested changes to specifications, formulas, or packout constitute a change order and may affect timing and costs. Such changes are subject to Manufacturer approval.
Customer-requested changes after the Freeze Date will incur standard fees, including:
Customer or its designated representatives shall have the right, upon at least five (5) business days’ prior written notice and not more than once per twelve (12) month period (except for cause following a confirmed Product non-conformance), to visit and inspect those portions of Manufacturer’s facility used in the production or storage of Customer’s Products, during normal business hours and at Customer’s sole expense. All visits shall be escorted by Manufacturer personnel and limited to no more than two (2) representatives and one (1) business day unless otherwise agreed.
Customer shall have no right to access areas dedicated to other customers’ products, to review records relating to other customers, or to photograph, record, or take samples of any equipment, process, or product other than Customer’s own, without Manufacturer’s prior written consent. Customer’s representatives shall abide by all facility safety, GMP, and confidentiality rules, shall execute Manufacturer’s standard visitor confidentiality acknowledgment, and shall not include any competitor of Manufacturer. Inspections shall not unreasonably interfere with Manufacturer’s normal business operations.
Customer shall disclose in writing, prior to the Freeze Date, the presence of any major food allergen as defined in 21 U.S.C. § 321(qq) (milk, egg, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame) in any Customer-Provided Material or Specification, together with any ingredient presenting cross-contact, staining, aromatic carryover, or sanitation-validation concerns. Manufacturer may, in its sole discretion, decline to produce any Product presenting unacceptable cross-contact or carryover risk to other products manufactured at the facility.
Where a Product requires allergen-specific or enhanced changeover, additional sanitation cycles, dedicated materials, or cleaning validation, Customer shall bear all incremental costs, including sanitation labor and chemicals, validation and verification testing, and production downtime at the rate set forth in Section 6.3. Undisclosed allergens or ingredients discovered after production has commenced shall constitute non-conforming Specifications, and Customer shall bear all resulting costs, including the cost of affected Product, cleaning, and downtime.
Manufacturer shall retain representative samples of each production lot under controlled conditions for the stated shelf life of the Product plus twelve (12) months, and shall retain associated batch and quality records for the period required by applicable law.
In the event of a dispute regarding Product conformance, the Parties shall first compare results from Manufacturer’s retained samples. If the dispute is not resolved, either Party may submit retained samples and Customer’s samples to an independent accredited laboratory mutually agreed by the Parties. The laboratory’s determination shall be binding on the Parties as to the factual question of conformance, and its costs shall be borne by the Party whose position is not sustained.
Manufacturer shall issue Sales Orders specifying the product, quantity, production dates, Freeze Date, and pricing.
Customer shall accept or reject Sales Orders within seven (7) business days of issuance. Acceptance creates a binding commitment, and production dates and the Freeze Date become binding upon acceptance. Where a Sales Order is accepted fewer than fourteen (14) business days prior to the scheduled production start date, the Freeze Date shall be deemed to occur upon acceptance, and all Specifications, formulas, and packout requirements are locked immediately.
Customer accepts delivered quantities within +/- 10% of ordered quantities.
Each Sales Order shall specify material sourcing. Customer must deliver conforming Customer-Provided Materials at least fourteen (14) business days before the scheduled production date, in the quantities specified in the Sales Order plus an overage of not less than five percent (5%) for cans, ends, labels, shrink, and secondary packaging, to account for normal line loss, setup, and quality sampling. Failure to deliver the required overage may result in short production, and Manufacturer shall have no liability for quantities not produced as a result.
Manufacturer may reject non-conforming Customer-Provided Materials. Failure to timely replace them shall result in downtime charges of $2,000 per scheduled production hour.
Customer acknowledges that yield loss and scrap are inherent to the manufacturing process. Manufacturer provides no guarantees regarding final yield percentages and shall not be liable for the replacement cost of any materials, packaging, or ingredients lost during production, except to the extent that such loss is directly caused by Manufacturer’s gross negligence or willful misconduct.
Pricing shall be specified in the Sales Order and may include production fees, material costs, packaging services, and applicable taxes.
Unless modified in the Sales Order:
Late payments incur a service charge of one and one-half percent (1.5%) per month, or the maximum rate permitted by applicable law if lower, accruing from the thirtieth (30th) calendar day after the invoice date. Customer shall reimburse Manufacturer’s reasonable costs of collection, including attorneys’ fees.
Downtime: $2,000 per scheduled production hour if Customer causes delays (e.g., late materials, late approvals, changes after Freeze Date).
Storage: Finished goods are stored free of charge for five (5) business days following release. Customer-Provided Materials are stored free of charge for thirty (30) business days prior to the scheduled production date. Thereafter, storage is charged at Manufacturer’s then-current published storage rate as set forth in the rate schedule referenced in the applicable Sales Order, or, if no rate is then published, at prevailing market rates for comparable ambient warehouse space in the Chicago metropolitan area. Manufacturer shall furnish the applicable storage rate to Customer upon request and prior to the accrual of any storage charge. Storage charges are invoiced monthly and are due on receipt.
Tank Residency: Charged at $5 per barrel (1 US Barrel = 31 US Gallons) per business day for delays.
Customer grants Manufacturer a security interest in, and Manufacturer shall have a possessory lien upon, all Customer-Provided Materials, work in process, and finished Products in Manufacturer’s possession, to secure all amounts owed by Customer under any Sales Order. Customer authorizes Manufacturer to file UCC financing statements evidencing this interest. If any amount remains unpaid for more than thirty (30) calendar days after the due date, Manufacturer may, after ten (10) calendar days’ written notice, sell or otherwise dispose of such goods and apply the proceeds against amounts owed, without prejudice to any other remedy.
Abandoned Property. Customer-Provided Materials or finished Products remaining in Manufacturer’s possession more than ninety (90) calendar days after the completion or termination of the applicable Sales Order, following fifteen (15) calendar days’ written notice, shall be deemed abandoned and may be sold, donated, or destroyed by Manufacturer at Customer’s expense.
If Customer fails to pay any undisputed amount when due, or if Manufacturer reasonably determines that Customer’s creditworthiness has materially deteriorated, Manufacturer may, upon written notice and without liability or breach: (i) suspend performance under any or all Sales Orders, including production, release of finished goods, and provision of storage or logistics services; (ii) require prepayment or other adequate assurance of performance as a condition of continued performance; and (iii) revise payment terms on future Sales Orders. Any resulting delay shall be treated as a Customer-caused delay under Section 6.3. Manufacturer may set off any amounts owed by Customer against any amounts owed to Customer.
Pricing in an accepted Sales Order is firm except that Manufacturer may pass through to Customer, upon written notice with supporting documentation, any increase in Manufacturer’s direct costs resulting from (i) newly imposed or increased tariffs, duties, or import surcharges; (ii) new or increased taxes, excise, or regulatory fees applicable to the Products; (iii) changes in applicable law requiring modification to the Specifications, testing, labeling, or production process; or (iv) documented increases in the cost of Manufacturer-supplied raw or packaging materials exceeding five percent (5%) between Sales Order acceptance and production. Customer may, within five (5) business days of notice, cancel the affected Sales Order and receive a refund of deposits less costs actually incurred.
Manufacturer may provide additional packaging, logistics, and storage services as detailed in each Sales Order.
Customer shall obtain and maintain, at its sole cost, all licenses, permits, and registrations required for the Products, and shall ensure that all Specifications, formulations, ingredients, and labels comply with the Federal Food, Drug, and Cosmetic Act and implementing regulations, including without limitation food labeling requirements under 21 C.F.R. Part 101, nutrition and supplement labeling, ingredient safety and GRAS status, color additive requirements under 21 C.F.R. Parts 70–82, and all applicable state distribution and registration requirements.
Customer shall provide Manufacturer, no later than the Freeze Date, with documentation of ingredient safety and regulatory status for each ingredient, including Certificates of Analysis and, where applicable, GRAS or food additive support. Manufacturer may refuse to produce any Product for which such documentation is not provided.
Manufacturer shall maintain required production licenses and facility certifications.
Customer retains all rights to its trademarks, trade names, recipes, formulations, and other intellectual property.
Manufacturer retains all rights to its production processes, technical knowledge, and manufacturing know-how.
Customer is solely responsible for the content, accuracy, and regulatory compliance of all Product labels. Labels shall comply with 21 C.F.R. Part 101 and shall bear the name and place of business of the manufacturer, packer, or distributor as required by 21 C.F.R. § 101.5. Customer shall furnish final label proofs to Manufacturer for file no later than the Freeze Date. Manufacturer’s review of any label, if performed, is for production and application suitability only and shall not constitute a regulatory review or approval, and creates no liability for label compliance.
Any modification or improvement to the Customer’s recipe or formula itself — meaning the identity, quantity, or proportion of ingredients in the finished Product — made during the course of production (“Recipe Improvements”) shall be the sole and exclusive property of Customer, and Manufacturer assigns any rights it may have in such Recipe Improvements to Customer.
For the avoidance of doubt, Recipe Improvements do not include, and Manufacturer retains sole ownership of, all process parameters, scale-up methodologies, equipment settings and configurations, processing sequences, sanitation and changeover protocols, quality control methods, and manufacturing know-how developed or applied by Manufacturer, whether or not developed in connection with Customer’s Products. Manufacturer retains a perpetual, irrevocable, royalty-free right to apply such general knowledge and know-how in its operations for any customer.
Each Party shall maintain the confidentiality of the other’s proprietary information. Obligations survive completion of any Sales Order for 2 years, except trade secrets, which remain protected indefinitely.
For two (2) years following completion of any Sales Order, neither Party shall solicit for employment any employee of the other Party involved in the performance of such Sales Order without prior written consent.
Manufacturer represents that Products will, as of release, conform to feasible Specifications and comply with manufacturing best practices and applicable laws. This does not apply to failures due to Customer-Provided Materials, technically infeasible Specifications, or acts of Customer.
Each Party has full authority to enter into these Terms, which constitute binding obligations.
Performance under these Terms will not breach any existing agreements or laws applicable to either Party.
EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN SECTION 12(a), PRODUCTS ARE PROVIDED “AS-IS” AND MANUFACTURER MAKES NO, AND HEREBY EXPRESSLY DISCLAIMS, ALL OTHER WARRANTIES OR REPRESENTATIONS AS TO PRODUCTS, INCLUDING WITHOUT LIMITATION WARRANTIES OF TITLE, NON-INFRINGEMENT, SUITABILITY AND MERCHANTABILITY, DESIGN OR FITNESS FOR ANY SPECIFIC OR PARTICULAR PURPOSE. IN NO EVENT WILL MANUFACTURER BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS), PUNITIVE, OR SPECIAL DAMAGES. CUSTOMER’S SOLE REMEDY SHALL BE REPLACEMENT OF NON-CONFORMING PRODUCTS OR A CREDIT EQUIVALENT TO PRICING PAID.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCLUDING INDEMNIFICATION OBLIGATIONS FOR THIRD-PARTY CLAIMS OR BREACHES OF CONFIDENTIALITY, EACH PARTY’S TOTAL AGGREGATE LIABILITY ARISING OUT OF OR RELATING TO ANY SPECIFIC SALES ORDER UNDER THIS AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNTS PAID OR PAYABLE BY CUSTOMER TO MANUFACTURER UNDER THAT SPECIFIC SALES ORDER IN THE THREE (3) MONTHS PRECEDING THE EVENT GIVING RISE TO THE CLAIM.
(i) Definitions. “Recall” means any recall, market withdrawal, stock recovery, or safety-related correction of Product, whether mandated by a governmental authority or undertaken voluntarily by either Party.
(ii) Notification and Control. Each Party shall notify the other in writing within twenty-four (24) hours of becoming aware of any fact reasonably likely to give rise to a Recall, or of any event requiring submission to the FDA Reportable Food Registry under 21 U.S.C. § 350f. Customer shall control all Recall decisions, regulatory communications, public communications, and logistical execution.
(iii) Allocation of Costs. Customer shall bear all costs of any Recall, except to the extent the Recall arises directly from Manufacturer’s gross negligence or willful misconduct (“Manufacturer-Caused Recall”). For a Manufacturer-Caused Recall, Manufacturer shall bear the direct costs of the Recall in proportion to its responsibility, limited to: (1) fees paid by Customer to Manufacturer for the affected lot(s); (2) the documented cost of Customer-Provided Materials consumed in the affected lot(s); (3) third-party retrieval, freight, and destruction costs for the affected lot(s); and (4) required regulatory notification costs.
(iv) Cap. Manufacturer’s aggregate liability for any Manufacturer-Caused Recall shall not exceed the greater of (A) the limitation set forth in Section 12(d), or (B) the proceeds actually recovered under Manufacturer’s applicable insurance. In no event shall Manufacturer be liable for lost profits, lost sales, loss of shelf space, listing or slotting fees, or damage to brand or goodwill arising from any Recall.
(v) Cooperation. Each Party shall cooperate in root cause investigation and shall provide production records, environmental monitoring data, and retained samples reasonably required. Neither Party shall attribute fault to the other in any public communication prior to completion of root cause analysis.
Customer shall inspect all Products promptly upon delivery. Customer shall give Manufacturer written notice of any non-conformance apparent upon reasonable inspection within ten (10) calendar days of delivery, and written notice of any latent non-conformance within thirty (30) calendar days after discovery and in no event later than the earlier of (i) the stated shelf life of the affected lot or (ii) twelve (12) months from delivery. Product for which timely notice is not given shall be deemed accepted, and Customer waives all claims with respect to that Product. Notice shall identify the affected lot codes, quantity, and nature of the non-conformance, and Customer shall preserve and make available representative samples of the affected Product.
Customer warrants its right to use all intellectual property, that Specifications comply with all laws, that Customer-Provided Materials are safe, and that labels comply with regulations.
Customer shall indemnify Manufacturer for claims arising from IP infringement, product specifications, labeling, Customer-Provided Materials, and post-delivery distribution/sale.
Manufacturer shall indemnify, defend, and hold harmless Customer from third-party claims arising solely from (i) Manufacturer’s breach of the warranties in Section 12(a), (ii) Manufacturer’s gross negligence or willful misconduct, or (iii) Manufacturer’s failure to comply with laws applicable to its operation of the facility. Manufacturer’s aggregate obligation under this Section 14.2 shall not exceed the limits of Manufacturer’s applicable insurance coverage, and shall be reduced by any amounts recovered by Customer under such insurance. Manufacturer shall have no indemnification obligation to the extent a claim arises from Customer-Provided Materials, Customer’s Specifications, Customer’s labeling, or Customer’s acts or omissions.
Each Party shall maintain:
Products shall be delivered FOB Manufacturer’s facility. Risk of loss passes to Customer upon loading onto Customer’s designated carrier. Title passes upon delivery or release from quality hold.
Either Party may terminate a specific Sales Order, or these Terms in their entirety, if the other Party commits a material breach of its obligations. The non-breaching Party must provide thirty (30) calendar days’ written notice describing the breach in reasonable detail. If the breaching Party fails to cure within that period, the non-breaching Party may terminate the applicable Sales Order(s) immediately upon written notice.
Notwithstanding the foregoing, a failure to pay any undisputed amount when due may be cured only within ten (10) business days of written notice, after which Manufacturer may terminate and/or exercise its rights under Section 6.4 and Section 6.5.
In the event that Manufacturer terminates a Sales Order or these Terms due to Customer’s uncured material breach, Manufacturer may retain any deposits and prepayments and apply them against amounts owed, unreimbursed procurement and materials costs, reserved and unrecoverable production capacity, and other damages incurred. The Parties acknowledge that Manufacturer’s actual damages from a reserved production slot are difficult to determine with precision, and agree that retention of the production deposit represents a reasonable estimate of such damages and not a penalty.
Either Party may decline future Sales Orders at any time.
Upon completion or termination:
Neither Party shall be liable for any delay or failure to perform (other than payment obligations) caused by events beyond its reasonable control, including acts of God, fire, flood, severe weather, epidemic, labor disruption, utility or municipal water interruption, equipment failure not caused by lack of maintenance, supply chain disruption, carrier failure, cyberattack, war, terrorism, or governmental action. The affected Party shall give prompt notice and use commercially reasonable efforts to resume performance.
Manufacturer may reschedule affected production to the next commercially reasonable available slot and may allocate available capacity, raw materials, and utilities among its customers in any commercially reasonable manner. If a force majeure event continues for more than sixty (60) calendar days, either Party may terminate the affected Sales Order without liability, subject to payment for work performed and materials procured.
Governed by the laws of the state where Manufacturer’s production facility is located.
The Parties shall first attempt in good faith to resolve any dispute through direct negotiation between senior executives for thirty (30) calendar days, and then through non-binding mediation administered by the American Arbitration Association. Any dispute not resolved through mediation shall be finally resolved by binding arbitration administered by the AAA under its Commercial Arbitration Rules, before a single arbitrator, seated in DuPage County, Illinois. The arbitrator’s award shall be final and may be entered in any court of competent jurisdiction. Each Party shall bear its own costs and an equal share of the arbitrator’s fees, except that the arbitrator may award costs and reasonable attorneys’ fees to the prevailing Party.
Notwithstanding the foregoing: (i) claims seeking recovery of amounts owed of less than Fifty Thousand Dollars ($50,000) may be brought in the state or federal courts located in DuPage County, Illinois; and (ii) either Party may seek injunctive or other equitable relief in such courts to protect its confidential information or intellectual property without first exhausting mediation or arbitration.
THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY AND TO PARTICIPATE IN ANY CLASS OR CONSOLIDATED PROCEEDING.
Neither Party may assign these Terms or any Sales Order, in whole or in part, without the other Party’s prior written consent. A change of control of Customer, or an assignment in connection with a merger or sale of substantially all assets, shall require Manufacturer’s prior written consent, which shall not be unreasonably withheld; provided that Manufacturer may withhold consent where the proposed assignee is a competitor of Manufacturer, where the assignee’s creditworthiness is materially weaker than Customer’s, or where production for the assignee would conflict with Manufacturer’s obligations to another customer. Any attempted assignment in violation of this Section is void.
These Terms and Sales Orders constitute the entire agreement.
Sections 6.4 (Security Interest, Lien, and Abandoned Property), 9 (Intellectual Property), 10 (Confidentiality), 11 (Non-Solicitation), 12 (Warranties and Liability, including the Recall and Inspection provisions), 13 (Customer Warranties), 14 (Indemnification), 15 (Insurance), 18.2 (Governing Law), 18.3 (Dispute Resolution), and 18.9 (Notices), together with any accrued payment obligations, shall survive the completion, expiration, or termination of any Sales Order or of these Terms.
Customer’s acceptance of a referenced Sales Order constitutes agreement to these Terms.
These Terms may be accessed electronically and are subject to periodic updates.
All notices required under these Terms shall be in writing and delivered to the addresses specified in the applicable Sales Order by (i) personal delivery, (ii) nationally recognized overnight courier, (iii) certified mail, return receipt requested, or (iv) email with confirmation of receipt to the designated contacts identified in the Sales Order. Notice is deemed given upon personal delivery, one (1) business day after deposit with an overnight courier, three (3) business days after mailing, or upon confirmed email receipt. Routine operational communications do not constitute notice under this Section.
Craftsmith Beverage, LLC | Version 2026.2 | Effective 9.16.2026