Think Twice Before Using These Contractual Shortcuts To Address Supply Chain Challenges
All manufacturers are generally tired of hearing about supply chain problems. These days companies are looking for ways to mitigate shipping delays (i.e., can we ship to a port other than Long Beach?) and the increased cost for raw materials.
Interestingly, I am starting to see consumer product companies and business-to-business manufacturers use similar language to address these issues.
Consumer Product Example for Shipping Delays:
“We are currently experiencing a high volume of orders and shipping may be delayed as a result.”
B2B Manufacturer Example for Shipping Delays:
“All existing valid quotations may be subject to additional lead time.”
B2B manufacturers are also dealing with the volatility in the cost and availability of raw materials. As a result, some companies are adding language like this to their contracts and terms and conditions of sale:
“Due to the volatility in the price and availability of raw materials, Manufacturer reserves the right to pass along subsequent price increases and surcharges from our vendors without further notification.”
Our Reaction:
As manufacturing industry lawyers, we understand the objective of adding such language. If you are considering adding such language, you should keep two things in mind: (1) consider whether the additions are actually in line with basic tenets of contract law (i.e., are you adding additional terms after the contract was accepted by the customer?); (2) consider the optics of telling all your customers in standard language that you may be late. For these reasons, manufacturers should consider managing these issues on a case-by-case basis – with assistance from legal counsel, as needed.
