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Contractual obligations amidst supply chain disruptions

Supply chain issues make the headlines nationwide. Interruptions in manufacturing times and deliveries not only affect your ability to serve customers but can leave you vulnerable to breach of contract claims. Here are steps you can take if disruptions impact your ability to perform your contractual obligations.

Review existing contracts

Certain tenets of contract law may protect you in a dispute even if the agreement language does not cover the precise circumstances in question. Your contract might include a force majeure clause, which is often invoked following natural disasters but sometimes applies to other situations. This clause may shield you from liability for circumstances beyond your control that diminish your ability to fulfill contractual duties. You might have other options if your contract does not include this clause.

Amend the contract

If both parties seek to preserve the relationship and make good faith efforts to resolve the dispute, amending the contract could prevent future conflicts and help avoid litigation. Renegotiating contract terms can save both you and the other party time and money and minimize the risk that a court might rule in favor of the opposing party.

Leverage technology

According to a recent survey, many business leaders plan to address threats to supply chains by revamping inventory management processes. If you have recently adopted digital technology to improve performance, communicating this to the opposing party may preemptively remedy the conflict and prevent the need for dispute resolution.

Supply chain disruptions can lead to costly and time-consuming business disputes. Quick action will help to prevent such disputes and allow you to focus on resolving your supply chain issues.

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