How to protect your brand against scams and defaults in outsourced production

Outsourced production is a reality in the fashion supply chain: seamstresses, workshops, printing companies, raw material suppliers, and small ateliers make up an essential network for collections to exist.

However, it is precisely in this environment that many brands suffer significant losses—from delays that compromise launches to defaults, abandonment of production, disappearance of suppliers, and deliveries that do not match the agreement.

The good news is that a large part of these risks can be avoided with an adequate legal structure. Below are the fundamental points to protect your brand.

1. Formal, detailed contract, not just WhatsApp conversations

A large part of the scams occur in informal relationships. Without a contract, the brand lacks means of accountability and sufficient evidence to claim compensation.

A robust contract should:

• detail deadlines, quantities, and values;

• establish quality parameters;

• predict delivery and validation stages;

• clearly define the consequences of non-compliance.

2. Payments in installments and conditional upon delivery

It is never advisable to pay 100% of the value upfront. A structured payment policy drastically reduces the risk of production abandonment.

Ideally, the following should be foreseen:

• Minimum down payment;

• Payments in stages;

• Final release only after quality verification.

This practice discourages fraud and encourages contractual compliance.

3. Liability clauses and penalties for non-compliance

The lack of clear liability provisions opens the door to losses that are difficult to repair.

A well-constructed clause should include:

• Liability for defects, modeling errors, or delays;

• Penalties proportional to the damage;

• Possibility of immediate termination in case of fraud.

Without penalties, the supplier has no legal incentive to comply with the agreement.

4. Confidentiality and protection of collection files

Designs, patterns, and prints are valuable assets. Without confidentiality clauses, the brand risks having information leaked or reproduced without authorization—a common situation in fashion.

5. Record of communication and continuous legal monitoring

In addition to the contract, it is essential to maintain a formal record of all approvals, changes, and disagreements. Legal monitoring ensures that the brand has immediate support in case of irregularities.

Why is this essential for fashion brands?

The market is dynamic and highly dependent on deadlines. A delay or setback in production can compromise the entire collection, affect cash flow, and damage the brand's reputation.

With specialized contracts and preventative legal support, it's possible to reduce risks, avoid losses, and structure a professional relationship with suppliers and contractors.

Carolina Lago Advocacia, a law firm specializing exclusively in Fashion Law, works on drafting tailor-made contracts and providing comprehensive legal support for brands seeking security from creation to final delivery.

To learn more about our services or understand how our firm can help your brand, visit the link https://linktr.ee/carolinalagoadvocacia.