December 6, 2021

Volume XI, Number 340

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December 03, 2021

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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.

Copyright © 2021 Robinson & Cole LLP. All rights reserved.National Law Review, Volume XI, Number 298
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About this Author

Jeffrey White Corporate Law Attorney Robinson Cole Hartford
Partner

Jeff White provides counseling and dispute resolution advice for manufacturers and distributors. He is chair of the firm's Manufacturing Industry Team and regularly represents clients throughout the United States and globally. Jeff is significantly involved with industry issues through his participation with groups such as the National Association of Manufacturers (NAM) and the American Bar Association's International Expansion and Cross-Border Transactions Subcommittee. In 2013, he created and launched the widely read Manufacturing Law Blog, which was one of...

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