Why you want to lock in business purchases with a contract

Why you want to lock in business purchases with a contract

On Behalf of | Oct 19, 2020 | Business Law

Whether your business is a restaurant that offers a special sauce on your namesake sandwich or a factory that needs certain chemical reagents to make a product, you depend on your suppliers to provide you with materials at a predictable price and when you need them.

The more critical the supply is to your product and company, the more important contractual protections may be for your situation. Having a transaction or sales contract with your suppliers will protect you from price gouging as well as the costs that a disruption in your supply chain link produce.

Non-delivery and price increases can impact your profits

Whether a supplier runs out of certain items without warning you in a timely manner or they get an offer from a different company to buy up all of their stock at a higher price, there may be situations that tempt your supplier into ending your relationship, increasing prices without warning or failing to complete a transaction you depend on to do business.

Your company could suffer substantial financial losses if you have to make emergency arrangements for more supplies or if you have lost costs in employee wages or other perishable materials due to supply non-delivery.

A contract protects you and your business both from someone backing out of a sale and from sudden changes in price by making obligations and expectations clear. With a contract guiding your purchases, you have the right to take action when a company doesn’t deliver or fails to meet the terms that you agreed upon with them. An experienced attorney can help you.