Disclaimer: This article does not constitute legal advice. If you have any questions about your individual situation it is best to seek the advice of an experienced legal professional.

Dealing with disruptions to the supply chain that have affected your contracts? Don’t fear: in business mediation you can prevent the disruption from blowing up into a damaging conflict.

It’s an unfortunate reality in 2022 that many businesses will face a disruption to their supply chain. Rising fuel costs and fuel scarcity affect the supply chain, even if it isn’t directly through transport logistics. For example, staffing issues have affected the supply chain since the Pandemic. Recent railroad disputes remind the world it isn’t just the shortage of truckers, but any worker that facilitates the supply chain.

In 2020, the Pandemic reminded the world of the reality that we are an interconnected global community. So how can people in business use this new understanding to preserve important relationships and avoid damaging conflict?

Supply Chain Disputes are Contract Disputes

Supply chain disputes are essentially always contract disputes. When a company works with a supplier, the supplier works to deliver the product or service within contractually enforceable deadlines. If there is a disruption to this ability to provide a product or service, the contract is broken and both parties will lose money. Supply chain disputes have ripple effects that touch subcontractors as well as the original contractor company. The row of dominoes begins to collapse, and there is an understandable tension and stress, as everyone demands accountability and feels helpless to correct the situation.

Business Mediation Preserves Relationships So You Can Work Together On a Solution

Supply chain issues can affect everyone. Understanding that your business operates within an interconnected global whole can help bring compassion and common sense to a situation that might otherwise descend into conflict. One of the most important things about business mediation is that it preserves your business relationships so you can come together to solve problems. The following are some of the ways business mediation can help you adjust to your supply chain problems and avoid conflict:

• Free up suppliers and their customers to renegotiate contracts. This could involve setting new delivery deadlines or parting ways so both can mitigate loss. When supply chain delays hit, the quicker you react to the new reality, the more you can control the damage. If both parties waste time and money litigating a dispute, there is less time to renegotiate a more realistic contract, find a new supplier, overhaul production by using alternative materials and more.
• Rather than suing for breach of contract to recover losses, you can mediate to come to a settlement that is agreeable to you both. Litigation is not for the risk averse. With disruptions to your business already affecting profits, why would you embark on time consuming litigation that might not go in your favor? If unforeseeable events are affecting the supply chain globally, it is less likely that a judge will be sympathetic to a breach of contract lawsuit.
• Renegotiate the contract to take into account the unexpected. If your contract doesn’t yet have clauses in it that account for unexpected disruptions, you can renegotiate your contract. “Force majeure” clauses are often included in contracts to accommodate situations where sudden and unforeseeable events intervene. If you plan to continue working with your supplier, including these clauses can prevent conflicts in the future.
• Preserve important relationships that affect your business and maintain your reputation within the business community. When companies get into conflict they can gain a reputation for being difficult to work with. Whether you are the supplier or the customer, the last thing you need is to blow up your important business relationships during times of upheaval. Given that supply chain delays affect many businesses, it could even be beneficial to your business to be part of the solution rather than the problem. If you are involved in conflict it may be less likely you have a say in the kinds of decisions that local business leaders and chambers of commerce are making regarding the future of your industry.

If you are involved in a business dispute related to supply chain issues, don’t wait until conflict gets out of hand. Contact professional mediators who can help you negotiate your business dispute and avert litigation. At Boileau Conflict Solutions we are expert mediators and negotiators who work to help parties transform conflict into productive solutions. During unprecedented events, it makes sense to get a bigger perspective and work towards solutions. We have offices in Solana Beach, CA, and Silicon Valley, CA and can mediate remotely via videoconferencing app. Please contact us to learn more about our business mediation and contract dispute mediation services.