Vendor agreements are an important form of protection for modern businesses. A vendor contract helps ensure that companies have competitively-priced materials available on a specific schedule. Vendor agreements help keep operating costs predictable and ensure that a company has a steady supply of necessary ingredients or components.
Organizations occasionally find themselves dealing with frustrating breach of contract scenarios. Such situations can harm a company’s daily operations and bottom line. When vendors fail to uphold their contractual obligations, businesses may need to initiate litigation in response.
When does a vendor contract breach warrant legal action?
When vendors refuse to uphold their pricing agreements
Locking in pricing is one of many reasons why businesses may sign long-term agreements with vendors. They want to secure necessary components or items at a price point where profit for the business is still possible.
Companies that provide goods or materials may increase what they charge others to optimize profits or avoid taking a loss. Sometimes, vendors work in special clauses that allow them to adjust or correct prices based on market rates or inflation. Such terms may lead to last-minute surprises on invoices.
Even as inflation slows across all industries, many suppliers and vendors continue to try to increase their pricing. Reviewing the terms of any price adjustment clause or pointing out the absence of one can help businesses hold vendors accountable for trying to change price points mid-contract.
When vendors fail to make timely deliveries
A vendor’s deliveries may be crucial to a company’s ongoing operations. Without certain components or chemicals, industrial manufacturing may not occur. If deliveries come late at night or in the early hours of the morning, there may not be adequate workers on hand to unload the shipment.
Having clear terms for the timing of deliveries and also communication rules when there are delays or other complications can help protect the clients signing vendor agreements. Delays in delivery might lead to the client organization defaulting on contractual obligations to a third party or ceasing operations temporarily.
Both of those scenarios can prove very expensive. Damages may be available through litigation when a contract breach results in economic harm to the business that signed a vendor agreement. The courts may also enforce the terms of the agreement if the vendor didn’t include clauses intended to provide flexibility when prices change.
Holding companies accountable for contract breaches may require business litigation. Vendors who cannot uphold their promises to clients may be liable for the harm that their misrepresentation or failures cause.