Executive Briefings

How to Avoid Lawsuits When It's Time to Say Good-Bye to Supplier

Organizations frequently seek to terminate a supplier relationship through litigation. Frankly, the use of litigation to wind down, or abruptly end, such agreements may not be productive. To be sure, litigation likely will end the relationship, but it entails more than that. Litigation can be distracting, divisive, time-consuming and expensive, even if the organization eventually wins the case. More important, there is never a guarantee that at trial's end, a court or arbitrator will rule in your organization's favor, even when the circumstances overwhelmingly support your position.
One way to avoid the burden, expense and uncertainty of litigation is to concede to the supplier all points of contention. But organizations rarely encounter situations in which it is advisable to capitulate completely to supplier demands, reasonable or unreasonable. Even when reasonable demands are made, capitulation may set a bad precedent that will encourage other suppliers to make unreasonable demands in wind-down situations. And so, litigation ensues.
What can your organization do to avoid litigation when it is time to wind down a supplier relationship?
Source: Inside Supply Management

Organizations frequently seek to terminate a supplier relationship through litigation. Frankly, the use of litigation to wind down, or abruptly end, such agreements may not be productive. To be sure, litigation likely will end the relationship, but it entails more than that. Litigation can be distracting, divisive, time-consuming and expensive, even if the organization eventually wins the case. More important, there is never a guarantee that at trial's end, a court or arbitrator will rule in your organization's favor, even when the circumstances overwhelmingly support your position.
One way to avoid the burden, expense and uncertainty of litigation is to concede to the supplier all points of contention. But organizations rarely encounter situations in which it is advisable to capitulate completely to supplier demands, reasonable or unreasonable. Even when reasonable demands are made, capitulation may set a bad precedent that will encourage other suppliers to make unreasonable demands in wind-down situations. And so, litigation ensues.
What can your organization do to avoid litigation when it is time to wind down a supplier relationship?
Source: Inside Supply Management