The pandemic has brought a lot of business disputes forward, if not always in a way we expected. The latest group of disputes involve supply chain problems, which are occurring in many sectors at once.
NPR recently interviewed a factory operator in Illinois who makes gears and pulleys. Even though she has plenty of orders and her customers are willing to pay extra to expedite things, she’s straining to meet those orders. Why? Her suppliers are understaffed. Without the parts she needs from her suppliers, no amount of overtime on her end will fill orders.
A recent monthly survey of factory managers by the Institute for Supply Management found that these issues are widespread. Factory inventories grew a bit last month, the survey found, but some of that growth comes from products that can’t be sold because parts are missing.
What can you do if a supplier breaches their contract?
While the problems are widespread, it’s not easy when they affect your bottom line. You may be considering a lawsuit to cover your losses. There are some remedies available in breach of contract lawsuits, such as:
- Money damages, including punitive damages, in some cases
- Cancellation of the contract and restitution for money already spent
- Specific performance – a court order to make the supplier hold up its end of the bargain
That said, some contracts will have clauses that limit the supplier’s liability when they can’t meet a contract due to an unforeseeable event. Have a business lawyer check to see if your supplier’s contract has such a clause.
Beyond that, you may want to attempt mediation or another alternative dispute resolution mechanism. In many cases, you may find that performance of the contract is actually impossible, at least in the short- to medium-term. It may be that no amount of force will make that change, so it could be worth attempting to resolve the dispute in a way to preserves the business relationship.
If you are struggling due to supply chain issues, an experienced business law attorney may be able to help you find and pursue a solution.