Skip to main content

Cookies

We use cookies to help provide a better website experience for you, as well as to understand how people use our website and to provide relevant advertising.

By clicking "I agree", you'll be letting us use cookies to improve your website experience. To find out more or to change your cookie preferences, click "Manage Cookies".

We value your privacy

Like many other websites, our website uses cookies. Cookies are small files placed on your computer when you visit our site. They serve a number of purposes, including ensuring that certain parts of the website work properly, allowing us to understand which areas of our website are the most popular and allowing us to provide more relevant advertising messages. They don't allow us to identify you specifically and no personal data is gathered about you.

If you'd prefer that cookies weren't placed on your computer when you visit our site, you can use the controls below to allow or disallow different types of cookie. Some cookies are essential for the website to work, so they can't be disallowed.

  • These cookies give us anonymised information on how people use our website. We use these cookies to help us tailor our site to meet the needs of our visitors, for example by making sure our most popular pages are easy to find.

  • These cookies serve a number of purposes, such as allowing you to share our content with your friends and social networks. We also use these cookies to provide targeted advertising, so you may see relevant adverts based on the pages you look at on our website.

  • About
  • News & Insights
  • Careers
  • International
  • ESG
0370 1500 100
Dialog that contains search functionality
Irwin Mitchell Logo
  • Personal
    • Personal
    • Personal Home
    • Personal Injury Claims
      • Personal Injury Claims
      • Personal Injury Claims Home
      • Abuse & Criminal Injury Claims
      • Accidents In Public Places Claims
      • Accident At Work Claims
      • Air, Rail & Maritime Claims
      • Asbestos & Mesothelioma Claims
      • Changing Solicitors During a Personal Injury Claim
      • Group Claims
      • Holiday Accidents & Illness Claims
      • Illness Compensation Claims
      • Industrial Disease Claims
      • Injury Types
      • Military Injury Compensation Claims
      • No Win No Fee Personal Injury Claims
      • Personal Injury Claims In Scotland
      • Personal Injury Information
      • How To Claim Compensation For Personal Injury
      • Product Liability Claims
      • Rehabilitation & Medical Care
      • Road Traffic Accident Claims
      • Serious Injury Claims
      • Who Can Help?
      • Support Services
    • Medical Negligence Claims
      • Medical Negligence Claims
      • Medical Negligence Claims Home
      • Cancer Misdiagnosis Claims
      • Birth Injury Claims
      • Cauda Equina Syndrome Claims
      • Cosmetic Surgery Claims
      • Cerebral Palsy Claims
      • Defective Medical Device Claims
      • Dental Negligence Claims
      • Diabetes Claims
      • Fatal Medical Negligence Claims & Inquests
      • GP Negligence Claims
      • Hospital Negligence Claims
      • What Is Medical Negligence?
      • Meningitis Misdiagnosis Claims
      • Failure To Prevent Suicide Claims
      • Misdiagnosis Claims
      • Ophthalmic Negligence Claims
      • Pregnancy & Gynaecology Injury Claims
      • Sepsis Negligence Claims
      • Shrewsbury & Telford Hospital NHS Trust Maternity Care Claims
      • Stroke Misdiagnosis Claims
      • Surgery Compensation Claims
    • Family Law
      • Family Law
      • Family Law Home
      • Divorce Solicitors
      • Prenuptial & Postnuptial Agreement Solicitors
      • Child Abduction Solicitors
      • Civil Partnership Solicitors
      • LGBT+ Family Law Solicitors
      • Unmarried Couples' Rights
      • Divorce Financial Settlement Solicitors
      • Child Arrangement Orders
      • Family Mediation Lawyers
      • Out Of Court Divorce Solicitors
      • Separation Agreement Solicitors
      • Adoption & Surrogacy Solicitors
      • Counselling
    • Wills, Trusts & Estates
      • Wills, Trusts & Estates
      • Wills, Trusts & Estates Home
      • Estate Planning Solicitors
      • Powers Of Attorney
      • Trusts
      • Will Writing Services
      • Will Disputes & Contentious Probate
    • Conveyancing & Property Solicitors
      • Conveyancing & Property Solicitors
      • Conveyancing & Property Solicitors Home
      • Conveyancing Fees Calculator
      • Buying A Property
      • Selling A Property
      • Remortgage
      • Transfer Of Equity
      • Buy To Let
      • Absentee Landlord & Freeholder Tracing Service
      • Freehold Purchase (Leasehold Enfranchisement) Solicitors
      • Lease Extension Solicitors
      • Conveyancing Guide
      • Our Prices - Residential Conveyancing for properties valued above £500,000
    • Tax
      • Tax
      • Tax Home
      • Business Tax
      • Inheritance Tax
      • International Tax
      • Professional Negligence
      • HMRC Tax Investigations
      • Tax Disputes & Litigation
      • Tax Residence
      • Tax Returns & Compliance
      • Wealth Structuring
    • Probate
      • Probate
      • Probate Home
      • International Probate
      • Probate Sale Conveyancing
      • What Is Probate & How Does It Work?
    • Will, Trust & Estate Disputes
      • Will, Trust & Estate Disputes
      • Will, Trust & Estate Disputes Home
      • Trust Disputes
      • Inheritance Act Claims
      • Contesting A Will
      • Contentious Probate
      • Pre-Death Agreements
      • Professional Negligence
      • Challenging A Lifetime Gift
      • Financial Abuse
      • Statutory Will Disputes
      • Defending A Contested Will
    • Employment Solicitors
      • Employment Solicitors
      • Employment Solicitors Home
      • Employment Contract Solicitors
      • Employment Disputes
      • Dismissal & Redundancy Solicitors
      • Employment Discrimination Solicitors
      • Employment Lawyers for Legal Expenses Insurance
      • Harassment & Bullying At Work Solicitors
      • Parental & Family Friendly Employment Rights
      • Professional Discipline Solicitors
      • Recruitment & Promotion
      • Senior Executive Employment Lawyers
      • Settlement Agreements
      • Whistleblowing Solicitors
    • Elderly Legal Services
    • Protecting Your Rights
      • Protecting Your Rights
      • Protecting Your Rights Home
      • Actions Against The Police
      • Environmental & Planning Law
      • Assessment & Treatment Unit Solicitors
      • Data Protection Breach Claims
      • Education Law
      • Healthcare & Social Services
      • Human Rights
      • Judicial Review
      • Mental Capacity
      • Motoring Offences Legal Advice
      • Professional Regulation & Discipline
      • Dispute Resolution
      • Legal Aid
    • Immigration Solicitors
      • Immigration Solicitors
      • Immigration Solicitors Home
      • British Citizenship & Naturalisation Solicitors
      • EU & EEA Immigration Solicitors
      • Indefinite Leave To Remain Solicitors
      • Spouse Visa Solicitors
      • Innovator Visa
      • Tier 1 Entrepreneur Visa
      • Permanent Residence Solicitors
      • Tier 1 Investor Visa
      • Business Immigration Solicitors
    • Crime & Investigations
      • Crime & Investigations
      • Crime & Investigations Home
      • Crime
      • Fraud & Financial Crime
      • Court Martial Solicitors
      • Motoring Offences Legal Advice
      • Regulatory Investigations & Enforcement
    • Insolvency
      • Insolvency
      • Insolvency Home
      • Business Restructuring & Insolvency
      • Debt Consultancy
      • Insolvency Disputes & Litigation
    • Court Of Protection
      • Court Of Protection
      • Court Of Protection Home
      • Court Of Protection Deputyship
      • Personal Injury Trusts
      • Court Of Protection Problems & Disputes
      • Healthcare and Social Services
      • Frequently Asked Questions
      • Powers Of Attorney
      • Powers Of Attorney Disputes
      • Statutory Wills And Trusts
    • Agriculture & Rural Business
    • Landed Estates
    • Family Offices
  • Wealth Management
    • Wealth Management
    • Wealth Management Home
    • Asset Management For Personal Injury
    • Charity & Philanthropy
    • Estate Planning
    • Ethical & Sustainable Investing
    • Financial Planning
    • Intergenerational Wealth Management
    • Investment Management
    • Retirement Financial Planning
    • Succession Planning
    • Tax Planning
  • Business
    • Business
    • Business Home
    • Sectors
      • Sectors
      • Sectors Home
      • Agriculture & Rural Business
      • Consumer & Retail
      • Education
      • Financial & Professional Services
      • Landed Estates
      • Manufacturing
      • Media & Entertainment
      • Real Estate
      • Sport
      • Technology & Communications
    • Banking & Finance
      • Banking & Finance
      • Banking & Finance Home
      • Corporate Banking
      • Funds
      • Leveraged & Acquisition Finance
      • Real Estate Finance
      • Receivables Finance & Asset Based Lending
    • Business Crime
      • Business Crime
      • Business Crime Home
      • Anti-Bribery & Corruption
      • Asset Tracing & Recovery
      • Cartels & Illegal Price Fixing
      • Cybercrime
      • Dawn Raids
      • Deferred Prosecution Agreements
      • Extradition
      • INTERPOL Red Notices
      • Mutual Legal Assistance
      • Private Prosecution
      • Proceeds Of Crime Act
      • Unexplained Wealth Orders
      • Fraud Lawyers
      • Insider Trading & Market Abuse
      • Corporate Internal Investigations
    • Business Immigration
      • Business Immigration
      • Business Immigration Home
      • Business Visitor Visa
      • Innovator Visa
      • Prevention Of Illegal Working
      • Sole Representative Of An Overseas Business
      • Tier 1 Entrepreneur Visa
      • Tier 1 Investor Visa
      • Tier 2 & 5 Sponsor Licence
      • Tier 2 Visa
      • Tier 4 Sponsor Licence
    • Commercial
      • Commercial
      • Commercial Home
      • Commercial Contracts
      • Competition Law
      • GDPR & Data Protection
      • Information Technology
      • Media & Entertainment
      • Sourcing
      • Licensing
      • Notary Public Solicitors
    • Commercial Litigation & Dispute Resolution
      • Commercial Litigation & Dispute Resolution
      • Commercial Litigation & Dispute Resolution Home
      • Banking & Finance Litigation
      • Business Interruption Insurance Lawyers
      • Contract Disputes
      • Commercial Judicial Review
      • Defamation & Reputation Management
      • International & Cross-Border Disputes
      • Litigation Funding
      • Our Prices - Commercial Debt Recovery
      • Professional Negligence
    • Corporate
      • Corporate
      • Corporate Home
      • Corporate Advisory
      • Equity Capital Markets
      • Mergers & Acquisitions (M&A)
      • Private Equity
    • Costs Team
    • Environmental, Social & Governance
      • Environmental, Social & Governance
      • Environmental, Social & Governance Home
      • Environment
      • Social
      • Governance
      • International
      • ESG Legal Advisory Services
      • Cyber Security
      • Diversity & Inclusion
      • Legislation Library
      • ESG Media Library
      • Sports Sector
      • Manufacturing Sector
      • Real Estate Sector
      • Consumer & Retail Sector
    • Employment Law
      • Employment Law
      • Employment Law Home
      • Business Immigration
      • Employment Contracts, Policies & Procedures
      • Disciplinary & Grievance
      • Employee & Industrial Relations
      • Employment Lawyers for Legal Expenses Insurance
      • Employment Litigation & Dispute Resolution
      • Equality, Diversity & Discrimination
      • Flexible Working Arrangements
      • Health & Safety
      • HR Advice Service - IMhrplus
      • Managing Sickness Absence
      • Pensions
      • Recruitment
      • Restrictive Covenants
      • Restructuring & Redundancy
      • Self Employment, Contractors & Agency Workers
      • Employment Seminars, Training & Updates
      • TUPE
    • In-House Counsel
    • Intellectual Property
      • Intellectual Property
      • Intellectual Property Home
      • Defamation & Reputation Management
      • Copyright Lawyers
      • Design Rights Lawyers
      • Image Rights Lawyers
      • IP Audits
      • Online Marketplace Seller Account Or Listing Suspensions
      • Stopping IP Infringement By Sellers On Online Marketplaces
      • Patent Lawyers
      • Trade Mark Lawyers
      • Trade Secrets Lawyers
    • Legal Helpline
    • Pensions
      • Pensions
      • Pensions Home
      • Employment
      • Managing Death Benefit Trusts
    • Regulatory & Compliance
      • Regulatory & Compliance
      • Regulatory & Compliance Home
      • Road Transport & Operator Compliance
      • GDPR & Data Protection
      • Regulatory Investigations
      • Environment & Safety Regulatory Compliance
      • Financial Services Regulation
    • Real Estate
      • Real Estate
      • Real Estate Home
      • Corporate Occupiers
      • Real Estate Development and Regeneration
      • Construction & Engineering
      • Environmental
      • Real Estate Finance
      • Real Estate Investment
      • Later Living & Care
      • Planning
      • Property Litigation & Real Estate Disputes
      • Real Estate Tax
      • Residential Development
      • Strategic Land
      • Structured Real Estate
    • Restructuring & Insolvency
      • Restructuring & Insolvency
      • Restructuring & Insolvency Home
      • Corporate Insolvency
      • Partnership Insolvency
      • Directors' Duties
      • Restructuring Plans
      • Restructuring
    • Tax
      • Tax
      • Tax Home
      • Corporate Tax
      • Real Estate Tax
      • Tax Investigations
  • People
    • People
    • People Home
    • Search By Name
    • Search By Location
    • Search By Expertise
    • Business Management
  • Offices
    • Offices
    • Offices Home
    • Birmingham
    • Bristol
    • Cambridge
    • Cardiff
    • Chichester
    • Gatwick
    • Glasgow
    • Leeds
    • Liverpool
    • London
    • Manchester
    • Middlesbrough
    • Newbury
    • Newcastle
    • Reading
    • Sheffield
    • Southampton
  • Contact
  • About
  • News & Insights
  • Careers
  • International
  • ESG
Irwin Mitchell Logo
Dialog with Irwin Mitchell phone number
Call us on 0370 1500 100

We're here 24/7, 365 days a year.

  • Home
  • News & Insights
  • Newsletters
  • Manufacturing Update
  • Is Your Supply Contract Watertight?

Is Your Supply Contract Watertight?

As a manufacturing enterprise, you’re exposed to a host of legal dispute risks – here’s how to ensure your supply contracts are watertight so you don’t find yourself in deep water.

If you’ve been unfortunate enough to be on the receiving end of a litigation matter, you will be all too familiar with how reliant you can become on particular clauses in a contract. Even the hint of an ambiguous term can leave you in deep water.

The contracts you negotiate with your suppliers and customers have been designed to protect you in the event of the unexpected. A contract can easily have the impression of being watertight. How leak-proof are yours? Let’s explore some of the key issues you should look out for to limit your risk exposure.

Single points of failure

A very familiar concept on the factory floor, but how are you protecting yourself contractually? If you rely on a sole supplier for a piece of machinery, what would happen if that supplier disappeared or the supply ran dry?

Bringing to mind memories of missing fried chicken and carbon dioxide shortages, contingencies are often overlooked. You may consider that such risks have been adequately managed as you reach for your backup supplier list. But how do you recover your losses for disruption or redistribution? What would the cost be over days, weeks, months? Can you rely on a particular clause to hold your supplier to account for that figure quickly and easily? Do you have to go to court? Can you recover your losses through some other means? Working with established suppliers in trusted relationships or renewing agreements on auto-pilot increases the risk that those contracts will fail to provide adequate protection in the event of liability.

Quantity commitments

Exact quantities are often an unknown when you first engage with another party. You may be agreeing to minimum order commitments, or offering a lighter ‘option to buy’ contract without any commitment. A party may consider they have entered into a long-term relationship when they’ve only the ability to request an order. Be clear from the outset what type of supply agreement you want to create.

Reserving rights

Market fluctuations are abundant, as are contract changes in the manufacturing industry. Contract changes create risks. Consider the effect of currency or raw material price changes and how these will be incorporated into your agreements. Offering lock-in fixed-term pricing agreements can be a compelling proposition as a customer, but an inflated resource cost or sudden currency changes could bottom out profits on a supplier. Adding safeguards, such as allowing pricing reviews periodically or a right to renegotiate on certain triggering events, can be a lifeline to preserving your relationships and profitability in times of uncertainty.

Plan to escape

We report on long-term predictions and make educated assumptions that something will not come along and disrupt the market entirely. Yet products become redundant, customer trends jump erratically and new technologies do disrupt markets. Setting out an exit plan in your contract to account for uncertainty can give you peace of mind in the face of the unexpected. What termination options are available in your contracts? Is the other party free to leave at the first sign of trouble, or without needing a reason to leave at all? Measures can be included in contracts to recover costs or obligations, to offer transition support or set minimum standards for how the relationship will work in the event of termination. Planning a clear exit strategy which is fair to both parties can make it easier to preserve or recover relationships even after you have parted ways. More importantly, these terms give confidence in your organisation’s ability to manage risk and deal with change effectively.

Devil in the detail

It’s important to ensure handshake agreements are committed to writing, even those backed by an underlying supply contract. Having detailed written terms to lean on will carry immeasurable value if you find yourself in a dispute later down the line.

Relationships in manufacturing are rarely governed by a single document, and it’s easy to get lost in the legal jargon and cross-referencing. They often link between specifications, plans, technical drawings, manuals, policies or pricing schedules. One contract may also need to back off liability from another or a number of others.

Take this opportunity to review the documents that make up your relationships. Ensure your contractual relationships continue to reflect the position in practice, particularly as Industry 4.0 continues to unfold.

For general enquiries

0370 1500 100

Or we can call you back at a time of your choice

Phone lines are open 24/7, 365 days a year


Contact us today

For a free initial consultation

Freephone

0370 1500 100

Prefer not to call?

Use our form

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.

Sarah Riding Partner Meet the team

About Irwin Mitchell

Founded in Sheffield in 1912, Irwin Mitchell has always been a bit different. Our advisers really get to know the people and business that we help.

It's what we call 'expert hand, human touch'.

We have offices around the UK so wherever you are, our experts can help.

Contact Us

Give us a ring to speak to a member of our team in the strictest confidence. Or you can fill out our contact form and we'll ring you back.

0370 1500 100

Our phone lines are open 24/7, 365 days a year

Get a call back

Fill in your details below and we'll be in touch as soon as possible

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.

  • Contact
  • 0370 1500 100
  • Contact Irwin Mitchell
  • Social Media
  • Twitter
  • Facebook
  • YouTube
  • LinkedIn
  • Instagram
  • About Irwin Mitchell
  • About Us
  • Social Responsibility
  • Careers
  • Business Management
  • Alumni Programme
  • SRA Regulated
  • Terms & Conditions
  • Accessibility
  • Privacy & Security
  • Hoaxes
  • Modern Slavery Act Statement 2021
  • Manage Cookie Settings

© 2023  Irwin Mitchell LLP

Irwin Mitchell LLP is authorised & regulated by the Solicitors Regulation Authority. Our Regulatory Information

Dialog that contains a form to request a callback.

Request A Callback

Enter you details below and we'll call you back, at a time of your choice

Preferred date*
Today
Tomorrow

This data will only be used by Irwin Mitchell for processing your query and for no other purpose.