The holiday season is coming and, although it’s unseasonably warm at present, it will very soon be time to get out your scarves and hats and make yourself a hot chocolate. In addition, now is the ideal time to give your supplier contracts some much needed TLC before the festive season kicks in with help from our 5 helpful supplier contract tips.
So here we go again with what you need to consider for your supplier contracts. Here are some top tips of what to think about and look out for:
1. Scope Review: Does your business still need the services or products? Does the current scope of services or products meet your current and future needs? If the supplier contract is an important part of you delivering services or products to clients or to a specific client then you should look at the supplier contract and client contract in parallel to ensure that the scopes cover your obligations to the client.
2. Performance Review: Is the supplier doing what they should under the contract? Do you have a good relationship with them and how responsive are they to questions, requests and complaints? Are you getting the best services or products to meet your needs or could you get something better elsewhere? Look at the market to see what else is out there, and consider using that information in any discussions with the supplier about renewing the contract.
3. Financial Review: Are you still getting a good deal or could you get a better deal elsewhere? Are there any payment review clauses? You may be due a discount or a reduction for being a customer for a period of time. If the supplier has not been performing as they should have been, you may be due a refund or credit for poor or non- performance. Make sure that you know the payment terms and have internal process in place to comply with it, otherwise you may be at risk of interest penalties or in extreme cases, termination of the contract.
4. Legal Review: Are you reliant on the supplier having certain accreditations, permissions or qualifications in place and do they still have these? There could be a knock-on effect if you have an obligation to your clients to ensure that subcontractors have certain legal accreditations, permissions or qualifications in place.
5. Termination/Renewal Review: Are there any break clauses or rights of termination that could be used? Is there an auto-renewal clause? How critical is this contract to your business? Would there be any knock-on effect for your ability to perform your client contracts? If the contract was terminated by the supplier, do you have a contingency or alternative supplier you could use? Do you need to take any action to ensure renewal of the contract or if you want out of the supplier relationship to prevent any auto-renewal or to terminate the contract?
At LawBite, we can review your contracts, ensure they are compliant with any changes in law that you might not be aware of (including GDPR) and help you get things in order. For further business legal advice, contact us here.
We have previously written some key considerations for business contracts as part of Q4 planning but a general summary to consider for all contracts:
– Is the key contact information still accurate?
– Has anything significantly changed in law that needs to be addressed?
– Remember your clients and suppliers may be carrying out the same process, so it’s important that you look honestly and objectively at your own performance as well as theirs.
– Make sure you schedule the next review date and it is scheduled well in advance of any auto-renewal dates.