Caufield & James, L.L.P Caufield & James, L.L.P

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Act effectively if vendor drops the ball

Your brick-and-mortar business depends on reliable deliveries from vendors to meet customers' demands. But your supply chain could be vulnerable to any number of situations that could affect your bottom line — strikes and work stoppages, natural disasters, accidents, recalls and simple incompetence.

Your goal is naturally to get things up and running once again with the least possible down-time. Below are some suggestions to recoup your losses with the fewest possible problems.

Don't ignore the situation

Here, the aphorism, "it's the squeaky wheel wheel that gets the grease" definitely applies. If a vendor isn't made aware of a problem with their product or its arrival, they can't resolve it satisfactorily.

Without hounding or berating the vendor, put in a call alerting them to your dissatisfaction. In many cases, this is all that is necessary to get the ball rolling again.

Start a paper trail

Log every call you make to resolve the matter. Note day and time, name and title of each person you spoke with as well as their proposed solution. Ask them to follow up with an email.

If the situation escalates and/or no solution is offered, review your contract and then write a complaint letter and send it certified to the address specified in the contract.

Don't stop making payments

It may seem counterintuitive to continue to pay for a service or product that you haven't received. But failing to pay could be construed as the reason for the vendor's termination of services. You want to remain compliant with all contractual terms and obligations.

Threaten to cancel the contract

Your contract probably contains a clause giving you the right to cancel your agreement for breach of contract. While this is not the same as cutting ties for poor performance, the threatened loss of ongoing, lucrative business might be all that's needed to get your vendor compliant with the contractual terms. Just make sure that you know and understand your rights under California law.

Work out a compromise

Even in worst-case scenarios — your Midwest distributor was hit by a spring tornado — there is usually a potential compromise available. Every dispute doesn't have to end with scorched-earth terms.

Seek legal advice

Engage your San Diego business law attorney in the negotiations with the noncompliant vendor. Remember that your goal is to lose the least amount of money — and lawsuits are expensive no matter who wins.

Also, your attorney will not be as emotionally invested in the dispute as you are and may be able to reach accord with the vendor. If you are too determined to win at all costs, you could wind up spending more to get less.

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