'Rethinking the supply chain' podcast series
Listen to episode two on renegotiating long-term contracts
Beyond the pandemic: rethinking the supply chain
Escalation
If the initial, informal negotiations don’t resolve the issue, the long-term contract will need to be formally renegotiated. This means looking hard at the wording to determine where the contractual rights and duties of each party begin and end.
Contracts made under the laws of certain jurisdictions usually set out how any renegotiations should be conducted.
For example, German law may have negotiation clauses that set out a framework for the discussions.
In contrast, US contracts typically do not contain renegotiation provisions – although this doesn’t prevent parties from renegotiating, and may even allow more flexibility.
The obligation to renegotiate the contract often means acting in good faith, for example by not proposing unreasonable measures, blocking negotiations or (in Japan) betraying the other party’s trust.
What if your counterparty wants to get out of the contract altogether?
Although the contract may be long term, it’s not necessarily open ended – and may contain clauses that terminate the contract on the (non-)occurrence of a particular event.
However, such events typically cover changes in commercial circumstances not tied to unforeseen upheavals, such as lockdowns, caused by the likes of the coronavirus pandemic.
Beyond the pandemic
Rethinking the supply chain
- Why supply chains are on the agenda
- Supply-chain legal issues
- Transactions
- Collaborations
- Insolvency
- Contracts
- Technology and data
- Regulatory compliance
- Workforce
- Tax
- Renegotiating long-term contracts
- Informal renegotiation
- Escalation
- Litigation/arbitration
- Contract-renegotiation law in nine key jurisdictions – a summary
Meet the team
Timothy Harkness 合伙人
New York
Dr. Moritz Becker 合伙人
Düsseldorf
Kate Gough 合伙人
London
Giuseppe Curtò 合伙人
Milan
Dimitri Lecat 合伙人
Paris
Christophe Seraglini 合伙人
Paris
Rafael Murillo 合伙人
Madrid