Managing risk in supply chain contracts

When you're managing contracts across a supply chain, you're also managing risk, especially in an uncertain trading environment.

The logistics of manufacturing and transporting goods during a global supply chain crisis have become increasingly complex, with rising fuel costs, shortages of HGV drivers, escalating raw material prices, and post-Brexit regulatory changes all adding pressure. If you're dealing with late deliveries, inflated costs, or supplier disputes, it’s not just frustrating; it can be financially damaging.

You need to know that your supply contracts are protecting your business, not exposing it. Our commercial law solicitors work with you to build strong contractual protections, clarify liability, and effectively manage risk allocation, enabling you to operate with greater confidence and fewer commercial vulnerabilities.

Our commercial contract dispute solicitors often deal with requests for legal advice on supply chain contract topics such as:

• Can a transport company escape a supply chain contract that is no longer economic to fulfil for a transport company because of the sudden rise in salaries for HGV drivers and rapid increase in petrol prices?
• Can a manufacturer sue their sub‑contractor as the company has not met an agreed delivery timescale resulting in the manufacturer being in breach of their sales contract with a retailer?
• Can a company terminate a contract for non‑performance when the fault lies with the supply of goods rather than their quality?
• Can a retailer claim reputational damage and consequent loss from a manufacturer or supplier as failure to supply goods to the end consumer has led to complaints and refunds?

Whether your company is a start‑up, a well‑established retail brand or is at the top or bottom of a vertical supply chain contract chain, you must have a specialist commercial solicitor on board to ensure that your business is not the one ‘holding the can’ for all the supply chain issues. Especially as others in the vertical supply chain will have ensured their contracts include review clauses, termination clauses, and liability limitation clauses that work in their favour.

In today’s economic climate, it’s more important than ever that your supply chain contracts are robust, forward‑thinking, and designed to withstand disruption. For context on the legal framework around these arrangements, take a look at how horizontal and vertical agreement structures can affect your position.

Gone are the days when a company could contract with another company to supply or deliver goods and ignore any associated legal or reputational risks. When it comes to supply chain contracts, price is not always the determining factor of who wins a tender or gets the contract or  the opinion of commercial solicitors, choosing the cheapest supplier or haulier may actually increase your risk of commercial litigation through contract disputes, ultimately costing your business more and damaging your reputation with a manufacturer further up in the supply chain or with the end consumer.

Supply chain risk factors include:

Risk
factor
Issues

Governance:
Any hint of bribery, corruption or tax evasive practices can not only result in investigation that damages your supply chain but can also risk your reputation, even if you are only part of the supply chain and not directly concerned in the governance issue.

Data protection and confidentiality:
It is inevitable that those in a supply chain need to share data but contractors may not be as diligent as your company in complying with data protection, client confidentiality, cyber security and GDPR. This can lead to breaches of data protection legislation that may not directly result in GDPR non‑compliance for your business, but can still cause significant reputational damage if your company is linked to a data breach.

Following recognised principles of supply chain security can help you assess and manage these risks more effectively across your supplier network.

Treatment of supply chain workforce:
However far removed your company may be in a vertical contract supply chain your business can still be affected if a supplier or carrier fails to treat…