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Supplier holding you to ransom? Our sector specialists can help you ensure continued supply to maintain production lines

  • United Kingdom
  • Diversified industrials - Automotive

15-06-2017

Refusal to supply

As growth in the automotive sector is at an all-time high, customers and OEMs are facing increasing pressure within the sector to maintain price. Conversely suppliers are continually looking for ways to maximise price. As margins are squeezed and as the automotive sector works predominantly on a just in time basis, it is imperative that customers can ensure continued supply. This is even more important where suppliers are the sole supplier of specialist parts which are fundamental to the manufacturing process. Should a supplier refuse to supply, even for a day, the consequences for customers and OEMs can be exponential, at their worst causing production lines to stop completely with significant effects within the industry.

Where customers and OEMs are reliant on one supplier without an immediate and comparative alternative provider within the market for the relevant product, the courts have the power to order suppliers to continue to supply. This is by requiring specific performance of contracts on the basis that the customer and other customers or suppliers within the market would suffer a far greater inconvenience should the supplier be allowed to refuse to supply.

If you are faced with similar threats from a supplier we can advise on applications for immediate injunctive relief to the court to compel the supplier to continue to supply on an interim basis until the matter is resolved. We are often able to assist in resolving disputes pre-action in these circumstances, where a supplier is making a ransom type threat in relation to product supply, enabling the customer to maintain continuity within its supply chain management.

Repossession of tooling at the end of a contract

When a supply contract is terminated, whether by the conduct of one party or the duration of the contract coming to an end, and a customer has provided tooling to the supplier, suppliers often use this as a basis to seek better exit terms or future business. This delay and refusal by a supplier to deliver up tooling, can be costly for customers at a time when a customer is engaging with new suppliers and wanting to secure continued supply of components.

Again we can advise on applications to obtain immediate injunctive relief from the courts to compel a supplier to return the tooling immediately. The key advantage being that the court hearing is quick and an order to deliver-up can be obtained within a short time frame, thus enabling the customer to obtain its tooling and provide this to another supplier to ensure continued production.

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