My supplier can’t meet their contract. What do I do?

The pandemic has brought a lot of businesses to a halt this year, and that can mean problems with your suppliers and vendors. If they can’t get you what you need to complete your contracts, you could be in breach. What options do you have if your supplier is in breach of their contract?

Communicate clearly

With the pandemic and the lockdowns, many businesses fully intended to meet their contractual obligations but are being kept from doing so by forces beyond their control. There is a possibility that they can meet those obligations at a future date. You need to know when that may be and consider whether that date might meet your needs. Communicate with your supplier to find out what their realistic chances are of meeting your contract.

Ask for a refund

If you have already paid for the goods or services you need and they are not being provided, try to get a refund directly from your supplier. Be aware that they may be in some financial distress and might be unable to comply immediately. Can you be patient about the refund? It might be in your best interest.

Resolve disputes in or out of court

If your supplier denies you have a right to a prompt refund, you have a dispute on your hands. Generally, you can resolve disputes through negotiation, mediation, arbitration or court. Find out your supplier’s reasoning for disputing your rights and offer the opportunity to resolve the dispute.

Mediation is where a neutral third-party helps you communicate effectively and stay focused on the heart of the issue. Mediators don’t resolve disputes for you but help you resolve the dispute equitably.

Arbitration is a lot like court, although the rules of evidence are somewhat relaxed, and the award generally cannot be appealed. It is often considered a cheaper alternative to courtroom litigation, but there are pros and cons you should discuss with your attorney.

Courtroom litigation can be expensive and time consuming, but it can result in a judgment that can be used as a lien on your supplier’s assets. Your lawyer can attempt to force the sale of the property in order to meet the lien. Be aware that there are strict deadlines for court actions called statutes of limitation, so you should be certain to get your judgment before the statute of limitations runs out.

Collecting on a judgment

It is generally a good idea to hire someone with experience in collections to collect your judgment. It requires identifying your supplier’s available property, filing a lien and executing the lien. At every step, be prepared to be reasonable, but also be prepared to be firm in your expectations.

To begin the process of collecting money your business is owed, contact an attorney who knows how to handle commercial collections.