I hope that you have enjoyed the article “Remedies For Supplier Screw-ups, Part II.”
In Part I of the series, I wrote that “If a supplier’s product fails to comply with acceptance criteria, there are five common contractual remedies that procurement professionals use: replacement, supplier repair, self-repair, refund, and contract termination.” I gave two checklists to guide your use of the first two remedies in Part I and two more checklists to guide your use of the third and fourth remedies in Part II. Today, I will provide the last checklist, which is related to contract termination.
If contract termination is your chosen option:
- Do you need to give the supplier the opportunity to fix the problem prior to invoking your right to terminate the contract?
- If you terminate the contract and you paid a deposit, what percentage of that deposit will you be entitled to recover?
- If you terminate the contract and deposit money is owed to you by the supplier, how soon must the supplier pay you?
- If you terminate the contract, how much money (if any) will you owe the supplier for work performed but not completed?
That wraps things up for this series. I hope that you never have to deal with supplier screw-ups. But, if you do – and, let’s face it, you probably will at some point in a long procurement career – I hope that you’re prepared with some contractual remedies that will make your recovery from those screw-ups much less painful.
To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing Association (NLPA)
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