The issues with the nation’s supply chain have been and continue to be well-publicised.
The ongoing implications caused by COVID-19, Brexit and many other notable political/economic events and factors continue to have a knock-on effect on the economy.
Shipping delays, staff shortages and challenges around the procurement of key components and materials are some of the evident problems as a result of these issues.
In turn they can prevent businesses from fulfilling contractual obligations and supply chains being disrupted.
The result of this is delays, distribution issues, losses and inevitably disputes between the entities within the supply chain.
If you’re facing potential supply chain issues, here are some things you should bear in mind:
- Review any contractual agreements/terms and conditions that you have entered into/have in place.
- Consider the contract and establish your position based upon the key provisions. These may deal with the right to terminate, what happens when payments are late and rights on suspending supply or increasing prices.
- Failure to distribute to one contracting party in the supply chain can often cause disruption throughout the chain. You may need to consider whether you could be liable for consequential losses from suppliers further down the chain from a breach of contract.
- Consider whether Force Majeure provisions exist in the relevant contract and whether they are applicable. These provisions may suspend obligations within the contract entirely where a party is prevented from performing the contract by events outside its control.
- Instruct specialist solicitors quickly. They will be able to advise you on the relevant provisions and potential next steps to achieve a favourable solution and way forward. Delays in getting advice can be detrimental as time could be of the essence in the contract.
- Quickly establish an understanding of the contractual position. This can help ensure that you preserve business relationships where possible and allow you to adapt to difficult circumstances diligently and cost-effectively. Protracted litigation can be avoided.
If you are experiencing supply chain issues or want advice on any of the issues above then please contact Gordon Monaghan or Harry Georgiou in the Dispute Resolution team.
If you would like advice on creating or updating a commercial contract, please contact Peter Flowerday or Tom Butcher in the Corporate & Commercial team.
Posted on May 4, 2022
