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Pulling The Plug

» Posted on: 14 August 2007
» Posted by: Barry Challender
» Service area: Commercial Property

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It’s a situation faced by many businesses – you have a supplier of some specialised equipment which fails to perform to your satisfaction or the installation is postponed again and again. You start to argue over what the equipment was supposed to do; when it was meant to be on site; who said what to whom - the blame game begins.

If the situation is beyond salvation the question then arises – how do you pull the plug and terminate your agreement? More importantly, how do you make sure you recover your losses?

The first thing to understand is that you have just entered a legal mine field. If you seek to terminate the agreement and are later found to have insufficient cause or terminated in the incorrect manner, then your company may become liable and you could end up paying the supplier! Even if you do have sufficient “cause” to sack your supplier, the terms of your agreement may seek to limit or even exclude completely all your losses.

The courts have recently dealt with a number of cases where suppliers have tried to exclude liability for late or incomplete delivery of services and equipment. These cases have highlighted the need to take expert advice before “pulling the plug”.

It is vital that you understand the terms of the agreement with the supplier and plan carefully the termination of any agreement. This is one of the most critical phases of any potential dispute and if handled correctly can greatly minimise the costs of any arguments and maximise the recovery of any losses. With some forward planning and the correct advice, the termination of any arrangement with a supplier can be handled smoothly and effectively.

If you have any issues or concerns about your existing arrangements with suppliers then please contact Nick Scott on 0844 8000 263 or email nick.scott@taylors.co.uk.

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