Procurement Manager Question:
Tell us what are some appropriate remedies for a supplier’s failure to perform?
Answer:
There are a great number of remedies you can use to deal with a supplier’s failure to perform. The key is to know which remedy is appropriate for each situation and to contractually apply that remedy properly. For example, two available remedies are cover damages and contract termination. Cover damages involve you collecting from your contracted supplier any premium you had to pay to another supplier to enable you to require from the contracted supplier’s failure. Termination enables you to cancel a contract completely with a supplier. If there was one small failure in the middle of a massive and important five-year contract with a great supplier, would you want to completely terminate that contract? Probably not. In that case, cover damages would be a more appropriate remedy as your organization would be able to recover any financial loss without having the entire future of a project put at risk while you switch suppliers. Cover damages and termination are only two of the many remedies we teach in our online course, “Supply Management Contract Writing.”
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