Supply Chain Legal Aspects for Manufacturing Contracts and Agreements

As we continue to navigate in a post-pandemic world, many supply chain issues have only continued to prevail. The manufacturing industry has been hit hard by this prolonged consequence of Covid-19. In consideration for these shortages, as a manufacturer, it may be a good time to consult your contracts and agreements with both your suppliers and customers.

For a manufacturer’s contracts with its suppliers, it’s important to make sure the manufacturer is receiving the proper products. This is an easy time for many suppliers to take short cuts and supply less than desirable product when supply chains become an issue. Make sure your contracts are specific in the details of materials and quality requirements. There should be a firm minimum standard for the quality of materials, while specifying the purpose of the product and any quality-assurance tests that may be required.

As for end customers, it is important for manufacturers to understand their own obligations of performance under contracts should they run into a supply chain issue. When possible, they should include language favorable to the manufacturer should performance become impossible or too burdensome based on factors outside of the manufacturer’s control. Manufacturers should review the warranties they provide under such agreements and what the consequences may be in the event of a breach due to supply chain issues.

The best way for manufacturers to protect themselves is by having language in their contracts with suppliers and customers that allow for realistic timelines to exist under unorthodox times of supply chain issues.