Vendor contracts are crucial for businesses. The contracts businesses have with vendors help them control their operating expenses and ensure continued operations due to a constant stream of necessary raw materials, retail merchandise or ingredients.
Unfortunately, vendor contract breaches are a relatively common issue. These breaches can disrupt company operations, trigger economic losses and damage the working relationship between the customer and the vendor.
Many types of vendor contract breaches can occur. The three below are among the most common.
1. Failing to make deliveries
Vendor contracts often include specific timelines for regular deliveries. Failing to adhere to the schedule by canceling or delaying deliveries can result in disruptions to business operations and substantial economic losses.
2. Delivering poor-quality goods or materials
Typically, vendor contracts outline expectations regarding the type and quality of materials, merchandise or goods provided. Occasionally, vendors do not conform to those standards when making deliveries. In those cases, businesses may have to scramble to find alternate sources for materials or may unknowingly use substandard raw materials, resulting in recalls or reputation damage.
3. Refusing to honor prices
Vendor contracts sometimes include language that allows for the adjustment of pricing in certain circumstances. Typically, price adjustments require prior notice and approval from the client before deliveries occur. Vendors may invoice for more than they should and expect their clients to pay.
In cases where vendor contract breaches have caused operational disruptions, brand damage or financial losses, businesses may have grounds for breach of contract lawsuits. Examining the original vendor agreement with an attorney can help frustrated business owners assess different remedies for contract breaches.