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BETTER BUSINESS

that “this may provide the supplier principles.
with an additional layer of protection In summary, the law states that if a
against any additional, unforeseen trader makes an agreement to supply
increases to raw material prices.” certain goods or services for an
The last is a change in law clause agreed price, then they are obliged to
which is particularly relevant in light provide those goods for the price
of Brexit and the pandemic. With agreed; that if a trader fails to
what has been presented by clients to perform their side of the agreement,
Maguire, it’s his view that “suppliers then they are in breach of contract,
should consider including a and the other party can seek to
provision giving them an opportunity recover any loss they suffer because
to increase prices – or at least be able of the breach; and if both sides of the
to propose an increase – to deal are contracting as businesses,
accommodate changes in law, or new the law will not interfere to any great
government procedures, etc”. extent in the agreements – the law
Almost akin to an Act of God, he feels will not prevent either side from
that no firm should be left without making a bad bargain. Langley notes
options that result from macro-level that the majority of print supplied in
events. the UK is likely to be based on
But if the position between the individual orders for jobs. Therefore,
sides is intractable, a firm may want she thinks that “the contract for the
to seek a termination of the contract. supply of the work is going to use
But this would be the nuclear option either the print company’s standard
in Maguire’s view as “termination terms and conditions of sale or the
can be minefield depending on customer’s standard terms and
provisions such as timescales and conditions of purchase”.
methods for serving notice; both
parties need to be wary of any move Decisions to make
that might put them in breach”.
Whatever they do, he emphasises Ultimately, if a printer finds that
that they should certainly try to avoid they are locked into a contract which
anything that might escalate into a is now loss-making, Langley says that
dispute. “they will have to assess the likely
outcome of failing to supply and
Own supply chains being in breach of contract”.
She continues: “This means
One last piece of advice from assessing what loss the customer will
be inserted into all new contracts and especially if the print supplier is Maguire – that printers should think suffer as a result of the failure to
unable to insert a favourable pricing review clause.” about their own supply chains and supply and the amount of that loss
not just the contracts put in place
Again, whether a customer will accept such a provision is a matter for with their customers. It’s a case of that can be recovered from the
conjecture and negotiation and Maguire says that printers may find that a ‘poacher turned gamekeeper’ where printer under the liability clause in
customer insists on a reciprocal clause. a print supplier looks at their the contract.” Simple mathematics
contracts through the eyes of a buyer may well drive the decision.
More to consider and looks to negotiate strong If in any doubt about the effect of
Other contractual elements that Maguire thinks firms should consider purchase contracts with its own raw the liability clause, Langley says that
are the insertion of a change control procedure, a material adverse change material suppliers. there is no alternative but “to get
clause, and a change in law clause. The first of these is a multi-step change But this will not always yield some legal advice before you decide
control procedure that encapsulates a formal arrangement for requesting a results in which case Maguire says to stop supply to the customer”. The
variation to the contract, and any timescales for doing so. Maguire explains that “suppliers should explore if they risk of ending up in court or in
that the procedure can be tailored to include discussions relating to pricing can source from elsewhere if the cost tarnishing a reputation become very
and it could also include any issues relating to the supply and cost of such implications are favourable real and very quickly too.
raw materials. He says that “it should also oblige both parties to act assuming, of course, that quality
reasonably to negotiate such changes. It would require that neither party remains unchanged”. Summary
could unreasonably withhold or delay agreement to a proposed variation”. Nicola Langley, head of legal at the There’s no doubt that print is
Although this procedure does not guarantee any variation, Maguire feels BPIF navigating a very difficult
that “it allows either side to understand why the other is requesting a marketplace. Those that stay the
variation to the contract and as such should encourage cooperation”. Basic principles laid out course will have taken good advice
Of the material adverse change clause, Maguire says that this allows Nicola Langley knows that and planned ahead. But those that
either side of an agreement to renegotiate the contract if an unforeseen contract law may appear find themselves in stormy seas may
situation arises which causes a severe disparity between the parties on complicated, however she says that it well be doing so after acting in haste
performance of the contract. Known as ‘material adverse change’, he says is based on three very simple only to repent at leisure.

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