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Top Tips for negotiating supply contracts in relation to product and ingredient shortage
At Roythornes, we have created a list of ‘top tips’ for negotiating supply contracts in relation to product and ingredient shortages:
1. Manufacturers should try to negotiate leeway in delivery schedules, including suspending deliveries entirely, for unforeseen circumstances such as floods and other natural disasters or even for wars and civil disobedience. Consideration should be made for the events which might affect the countries or areas being worked in or ordered from and there should be clarity in contracts as to what the relevant events might be. It is important to act reasonably irrelevant of fault.
2. Be aware that all suppliers will be in the same position and try to come to an agreed and workable solution. Bear in mind that all parties will want to limit their liability in the same way that manufacturers will want to limit its liability to its customers.
3. If a company is contracted to supply an ingredient, cannot do so, and wants to source from elsewhere, it needs to make it clear in the contract that this is an option. (Bearing in mind traceability and quality control issues). Assurances that the third party can deliver in time should be made.
4. Good communication channels are a must – if there are shortage issues they should be communicated down the entire supply chain as soon as possible.
For more information about our services please visit our food sector page.
If you would like to find out more, speak to Peter Bennett, head of our food team on 01775 842567.