Contracts and the supply chain

In its recent report, Pulling Together, the CBI found that 78 per cent of companies said improving their supply chain was important to their future growth.

Yet our experience is that many are not tackling the key issues and have inadequate contractual arrangements in place.

Your contractual relationships should be working for you to achieve your commercial goals, but how often is a long-term supply relationship governed by just a succession of purchase orders?

You might believe that if you’ve had a customer/supplier relationship for many years that an “implied contract” exists. Well, when M&S decided (without any prior warning) to stop buying on an order-by-order basis from Baird Textiles (an exclusive supplier of clothes to them for thirty years), the Court of Appeal held that:

b) M&S was not required to give reasonable prior notice of termination.