An increasingly common problem our clients are
confronting right now is having a supplier of goods or services who
has fallen into default.
There may be applicable
force majeure provisions or the contract may be frustrated. If
neither of those apply, then you might be thinking about
terminating for breach, but there is always a risk of a wrongful
termination claim and subsequent (costly) litigation.
If you want to try to work things out, before you start
negotiations with your defaulting supplier, consider what actions
might cause you to lose your termination right and what you can do
to protect that right.
How can you lose your right to terminate?
- If you unambiguously represent that you won't exercise the
termination right (e.g. by assuring your supplier that you
won't terminate), your supplier acts in reliance on that
representation (e.g. they order the next round of goods they need
to deliver to you), and as a result the supplier will suffer
material
