Knitted Bag Contract Terms: Fourteen Clauses, Answered in the Order a Buyer Actually Needs Them
Which knitted bag contract terms actually matter? Fourteen, and they matter in a specific order: the specification and its freeze come first, because every later clause is measuring against them. A contract that states the gauge, GSM, shade target and tolerances, then fixes when the clock starts, who owns the stitch file and what standard releases the goods, resolves most disputes before they arise. This article sets out the fourteen clauses as they are needed through a programme, with the figure each one should carry, and the three clauses buyers most often leave out.
What Has to Be in the Specification Before Anything Else
The specification clause is the contract: gauge, yarn count and fibre, GSM with a tolerance, dimensions with tolerances, colour reference with a Delta E target, and the component list, all attached as a signed annex rather than summarised in the body.
Everything else in a knit bag agreement measures against this annex, which is why a summary in the body of the contract is not enough. A claim that the bulk does not match the sample can only be settled if the sample was described in figures: gauge at E12 rather than at E7, GSM with a tolerance of about 5%, dimensions at about plus or minus 10 mm, and a shade target of Delta E 1.0 or tighter under a named illuminant. Where a buyer has recorded twelve figures at approval, the annex is simply that sheet. Where they have not, the annex has to be built at contract stage, which is late but still far better than not at all.
The annex should also state what happens to yarn and trim already booked against it. On a programme with a 100 pcs per style and colourway minimum, a colourway dropped after booking leaves a dyelot minimum on someone's shelf, and the contract is the only place that allocates it. A clause stating that material booked against a signed specification is the buyer's cost if the colourway is cancelled after booking is normal, and it is far easier to agree before it happens than after.
When Does the Clock Start, and What Stops It
The lead-time clause must name the event that starts the clock, because 30 days from deposit, from a signed specification and from an approved sample are three different promises, and the gap between them can be three weeks.
The clause should also say what stops it. Production completing is not the same as goods being released, and a contract that measures delivery from completion leaves the buyer waiting on an inspection booking they did not schedule. The most workable formulation is that bulk runs 30 days from the later of the approved sample and the deposit, and that the release date is the later of production completion and the inspection passing at AQL 2.5. Sampling sits separately at 7 working days from a complete technical pack, and stating that the pack is a precondition is what makes the promise enforceable rather than aspirational.
Two exclusions belong in the same clause and are routinely omitted. The first is holidays: the Lunar New Year shutdown of about two to three weeks and the National Day holiday week should be named as excluded periods, so a bulk block scheduled across one is not in breach. The second is buyer-side dependencies: approval response times, artwork delivery and trim approvals. A lead-time promise that runs while the buyer holds an approval for two weeks is not a promise anyone can keep.
- 1. Specification annex
- Gauge, count, GSM, dimensions, shade target, component list
- 2. Specification freeze
- The date after which changes are formal and carry a time cost
- 3. Lead time and clock start
- 30 days from the later of approved sample and deposit; sampling 7 working days
- 4. Holiday and dependency exclusions
- Named shutdowns and buyer-side approval windows
- 5. Minimum quantity
- 100 pcs per style and colourway, with the colourway split stated
- 6. Price and validity
- Unit price in USD with a validity period of 30 or 60 days
- 7. Change control
- Written change, effect on cost and schedule stated before acceptance
- 8. Quality standard
- AQL 2.5 under ISO 2859-1, with the defect list attached
- 9. Inspection and access
- Buyer or third-party inspection right, with the booking window
- 10. Payment and title
- Deposit and balance structure, and when title passes
- 11. Incoterm and port
- FOB Xiamen, with CIF or DDP as named alternatives
- 12. IP, tooling and confidentiality
- Stitch file and tooling ownership, and the confidentiality period
- 13. Compliance and documents
- Which declarations are delivered, and by when
- 14. Remedies, force majeure and law
- Late-delivery remedy, force majeure scope, governing law and venue
Who Owns the Stitch File and the Tooling
The IP clause should state that the stitch file, the pattern and any tooling paid for by the buyer are the buyer's property, and that they are not used for another customer's programme.
This is the clause most often left out of a first agreement and most often needed by the third season. A knitted bag is defined by a file rather than by a drawing: the gauge, loop length, panel shaping and jacquard placement all live in it, and whoever holds the file can reproduce the product. If the buyer paid for development, or paid a tooling charge for a moulded component or a custom zipper pull, the file and the tool should be theirs and the contract should say so in one sentence. It should also say the file will be handed over on request in a usable format, because ownership without delivery is not much use when a buyer moves a programme.
Confidentiality belongs alongside it, and the term is worth stating rather than leaving open. Three to five years from disclosure is the normal range for commercial and technical information on a programme of this kind, and it should cover the specification, the artwork and the volume data. Where the design itself is protectable, a registered design or a design patent application is a separate step, and the contract clause is what establishes that the disclosure to the production partner was not a public disclosure.
What Happens When the Specification Changes
The change-control clause converts a late change from a message into a decision, by requiring that any change after the freeze be written, with its effect on cost and schedule stated before it is accepted.
The reason this clause earns its place is that changes are normal and their consequences are not obvious to whoever requests them. A change to GSM of more than about 5% sends the programme back to knitting, because the stitch file has to be rewritten and the panels re-made; a change of gauge does the same and also invalidates the approved sample. A dimensional change of up to about 10 mm can usually be absorbed in cutting and assembly. Without a clause, all three arrive the same way, as a message, and the time cost is discovered later by the buyer as a slipped date. With one, the requester sees the cost before approving it.
What Standard Are the Goods Released Against
The quality clause should name the standard and attach the defect list, because AQL 2.5 alone says how many pieces to look at and says nothing about what counts as a defect.
Under ISO 2859-1 at general inspection level II and AQL 2.5, a lot of 281 to 500 pieces draws 50 with an acceptance number of 3, and a lot of 1,201 to 3,200 draws 125 with an acceptance number of 7. Those figures are the sampling plan. The defect list is the standard, and it should be attached to the contract with tolerances: dimensions, GSM, shade, seam and loop condition, hardware function and interior finish. Handle attachment failure is worth stating separately at zero tolerance, because a bag whose handle root fails is unusable rather than imperfect, and the general AQL allowance was never meant to cover it.
The clause should also say what happens on a failed inspection. Rework and re-inspection at the production partner's cost, with a stated time limit of about 5 to 8 working days, is the normal position, and it is worth stating because the alternative is an open-ended negotiation at the point where the buyer has the least time. A related point is the defect liability window: a period of about 60 to 90 days after arrival during which latent defects are the production partner's responsibility. Without it, a defect that only appears in use is the buyer's problem however clearly it originated upstream.
What Are the Payment and Title Terms
The payment clause states the structure, the currency and when title passes, and the three should be stated together because they interact: a deposit and balance structure in USD, with title passing on the balance payment rather than on shipment.
A common structure on a first programme is a deposit of about 30% with the balance of about 70% against a copy of the bill of lading, moving to open account terms of 30 or 60 days once a track record exists. Each structure allocates risk differently, and the contract should name the one being used rather than referring to standard terms that were never attached. Where the price is held in USD for a period, a currency clause stating what happens if the exchange rate moves beyond a stated band, typically about 2% to 3%, prevents a renewal conversation from becoming a renegotiation.
Which Incoterm Applies, and Who Carries What
The delivery clause should name the Incoterm and the port, and FOB Xiamen is the usual starting point, with CIF and DDP available where the buyer wants the freight leg handled.
Under FOB the buyer's risk starts when the goods are loaded, which means the buyer books and pays the freight and carries the risk at sea. Under CIF the freight and insurance are arranged to the destination port but risk still passes at loading, which is a distinction that surprises buyers regularly. Under DDP the goods arrive cleared and delivered, and the landed cost is known in advance. The clause should name the term and its edition, because the ICC Incoterms rules are revised and a bare FOB reference is ambiguous about who pays terminal handling charges at origin.
| Clause | Figure to state | What goes wrong without it |
|---|---|---|
| Specification annex | Gauge, count, GSM at about 5%, dimensions at about 10 mm, Delta E target | No measurable standard to inspect or arbitrate against |
| Lead time and clock start | 30 days from the later of sample approval and deposit | Three different promises, up to three weeks apart |
| Holiday exclusions | The two named shutdowns | A bulk block across the shutdown is technically in breach |
| Change control | Written change with cost and days stated | A GSM change is treated as an adjustment rather than a restart |
| Quality standard | AQL 2.5 under ISO 2859-1 with the defect list attached | An appearance check that passes almost anything |
| Failed inspection | Rework at the partner's cost in about 5 to 8 working days | Open-ended negotiation when the buyer has least time |
| Latent defect window | About 60 to 90 days after arrival | A defect that appears in use becomes the buyer's problem |
| IP and tooling | Stitch file and paid tooling are the buyer's property | The buyer cannot move the programme and keep the product |
| Confidentiality | About three to five years from disclosure | No term, and no protection for artwork or volume data |
| Currency | USD, with a review band of about 2% to 3% | Every renewal becomes a renegotiation |
What Compliance Documents Are Delivered, and When
The compliance clause should list the documents by name and state that they are delivered with the goods rather than on request, because a declaration sought after a shipment has sailed is a document nobody can produce in time.
What belongs on the list depends on the destination. A programme entering the EU needs a REACH Annex XVII position and, where a fibre claim is made, the supporting Textile Exchange documentation. A programme entering California needs a Prop 65 position, and one entering the US market with a children's product needs CPSIA tracking and testing. An OEKO-TEX STANDARD 100 certificate covers the restricted substance question in one document and is the shortest route where a buyer sells into several markets. The clause should state which of these are delivered for this order, and it should be checked against the destination rather than copied from the last contract.
Specification annex
The clause every other one measures against. Attach the twelve approval figures with tolerances.
Change control
Turns a late change into a decision with a stated cost in days rather than a message.
IP and tooling
Establishes that the stitch file and any paid tooling belong to the buyer and are transferable.
Latent defect window
About 60 to 90 days after arrival, covering defects that only appear in use.
How Is a Dispute Settled, and Under Which Law
The remedies clause should state the late-delivery remedy, the force majeure scope, the governing law and the venue, and the last two are what make the first two enforceable.
A late-delivery remedy of about 0.5% of the order value per week, capped at around 5%, is a standard commercial position and its purpose is to make the date matter rather than to punish. Force majeure should be defined narrowly enough to mean what it says: a shutdown ordered by authority, a natural event, or a failure of transport infrastructure, rather than a supplier's own material shortage. Governing law and venue belong in the same clause because a remedy under an unspecified law is a remedy that requires an argument about which law applies before it can be used.
The Three Clauses Buyers Leave Out
Across first agreements the three clauses most often missing are change control, IP and tooling ownership, and the latent defect window, and all three are omitted for the same reason: nothing has gone wrong yet.
That is a fair reason at the time and a poor one later. Change control is needed the first time a specification moves after bulk has started, which on a multi-season programme is close to certain. IP and tooling ownership is needed the first time a buyer wants to move or dual source, and discovering at that point that the stitch file is not theirs is an expensive lesson. The latent defect window is needed the first time a defect appears in use rather than in the carton, which is also close to certain for a product that gets carried daily. None of the three costs anything to include at the start.
Get our knit programme contract checklist
Send the style, the volume per colourway, the destination market and the required date. Our knit team will return the fourteen clauses as we write them, including the specification annex, the change-control form and the AQL 2.5 release terms. Start on the contact page.
Frequently Asked Questions
What are the most important knitted bag contract terms?
Fourteen, led by the specification annex. It carries the gauge, yarn count, GSM, dimensions, the shade target and the component list, and every other clause in the agreement measures against it. Without a measurable annex there is nothing to inspect against and nothing to settle a dispute with.
Why should the specification be an annex rather than a summary?
Because a claim that bulk does not match the sample can only be settled in figures. A summary in the body of the contract leaves nothing measurable for an inspector to check or an arbitrator to weigh. The annex should carry tolerances: GSM at about 5%, dimensions at about 10 mm and a Delta E target.
When does the 30-day bulk clock start?
It should be stated as the later of the approved sample and the deposit. Without that wording, 30 days from deposit and 30 days from approval are two different promises up to three weeks apart. Sampling sits separately at 7 working days from a complete technical pack.
Should holidays be excluded from the lead time?
Yes. The Lunar New Year shutdown of about two to three weeks and the National Day holiday week in early October should be named as excluded periods. Otherwise a bulk block scheduled across one of them is technically in breach even though the date was never achievable.
Who owns the stitch file for a knitted bag?
The buyer, if they paid for development. The clause should also state that the file is handed over on request in a usable format, because ownership without delivery is of little practical use. Five parameters plus a specification are enough for another floor to reproduce the product.
What confidentiality period is normal?
About three to five years from the date of disclosure, covering the specification, the artwork and the volume data. It also helps establish that disclosing the design to the production partner was not a public disclosure, which matters where a registered design is contemplated later. Ask for it as a figure rather than a statement, since a statement cannot be checked or compared.
Why does a change-control clause matter?
Because a GSM change of more than about 5% restarts the 30 days while a dimensional change of about 10 mm is absorbed in cutting and assembly. Without the clause both arrive the same way, as a message, and the cost in days is discovered later as a slipped date.
What should the quality clause say?
AQL 2.5 under ISO 2859-1 with the defect list attached as an annex. AQL alone says how many pieces to look at; the defect list says what counts, with a tolerance for each criterion. Handle attachment is worth stating separately at zero tolerance. It belongs in the written specification rather than in a conversation that nobody can quote later.
How many pieces does an AQL 2.5 inspection draw?
Under ISO 2859-1 at general inspection level II, 281 to 500 pieces draws 50 with an acceptance number of 3, and 1,201 to 3,200 draws 125 with an acceptance number of 7. Those are the sample sizes, and the defect list supplies the criteria they are checked against.
Which Incoterm should a knit bag contract use?
FOB Xiamen is the usual starting point, with CIF and DDP available as named alternatives. Name the edition as well, because a bare FOB reference is ambiguous about who pays terminal handling charges at origin. The term also decides who carries the marine risk. Record the figure at approval so that inspection and any later run can be measured against it.
People Also Ask
What should be in a bag supply contract?
Fourteen clauses: specification annex, freeze, lead time, holidays, minimum, price validity, change control, quality, inspection, payment, Incoterm, IP and tooling, compliance documents, and remedies with governing law. It costs nothing and prevents the argument later.
How do I protect my bag design when producing in China?
State in the contract that the stitch file and any paid tooling are your property and transferable, add a three to five year confidentiality term, and consider a registered design in the markets where the bag sells.
What is a specification freeze in a supply contract?
The date after which changes become formal. A change after it carries a stated cost in money and days, and a GSM change of more than about 5% restarts the 30-day bulk block entirely.
What is a fair late delivery penalty for bags?
About 0.5% of order value per week, capped at around 5%, with force majeure defined narrowly and the governing law and venue named alongside it so that the remedy is enforceable.
Who owns the tooling for a custom bag?
The buyer, if they paid for it. Say so in the contract along with a handover obligation, or the programme cannot be moved or dual sourced later without losing the product. Both are free to agree at the first contract.
Sources and further reading
Every figure on this page is either our own programme data or attributed below. Open the originals before you write them into a specification.
- Incoterms rulesInternational Chamber of Commerce Defines FOB, CIF and DDP and the edition that the delivery clause should name.
- ISO 2859-1 — Sampling procedures for inspection by attributes, Part 1: AQL-indexed sampling schemesISO The sampling plan named in the quality clause, at AQL 2.5.
- Substances restricted under REACH (Annex XVII)ECHA The restriction position listed among the documents delivered with the goods.
- Proposition 65OEHHA The California screen named for programmes entering that market.
- OEKO-TEX STANDARD 100OEKO-TEX The single certificate that covers the restricted substance question across several markets.
- World Intellectual Property OrganizationWIPO Referenced for the registered design route mentioned alongside the IP and confidentiality clause.
Write the Annex First
A knit bag agreement is only as good as its specification annex. Fix the figures, freeze them, then state what starts the clock, what releases the goods and who owns the file, and most of the disputes a programme might have are resolved before the first bulk run begins. The three clauses worth adding even on a first order are change control, IP and tooling, and the latent defect window.
For the payment side of the same agreement, see knitted bag payment terms guide, and for the design ownership question in more depth, see knitted bag design protection. The framework sits in the knit bag sourcing guide.