Purchasing Pitfalls: How To Avoid Supplier Conflicts And Legal Problems

In the automotive industry, customers deal with supplier problems every day. Most such problems are resolved at the business level, but when they escalate, legal issues of contract formation and interpretation inevitably play a central role.

Mistakes made at contract formation can be harmful to a company trying to maintain consistent supply and avoid production shutdowns. A properly structured contract can help customers avoid these "purchasing pitfalls."

First and foremost, a supply contract should clearly state that the customer's terms and conditions govern the supply relationship. Failure to do so can result in a "battle of the forms," in which the terms of the supply contract are ambiguous and a court is left to decide which terms are part of the contract.