Contract Structuring: Procurement Risk In Times Of Crisis

Pandemics, wars and climate change lead to supply bottlenecks and shortages of raw materials. This also raises many legal questions regarding the drafting of contracts: Who bears the risk for goods that have already been sold if an upstream supplier cannot or will not deliver? Can the seller contractually adjust his obligation to deliver or his liability for damages vis-à-vis the buyer? How should he actually structure the contract with his supplier?

Who bears the procurement risk?

In case of a purchase contract, the seller is obliged to hand over the sold goods to the buyer and to provide him with their ownership. This can be difficult if the seller is just an intermediary and the item is not yet even in his possession. Especially in cases where he still has to purchase the item himself, the question often arises as to who bears the risk of procuring the goods.