The evolution of administration has determined that “legal engineering” has evolved into a complex administrative function performed by professionals from different areas of the company. In addition, specialized systems with multiple applications (ERP) and even specific software for contract management are now used.

supplier non-compliance

Supplier control

Control must extend from the administration or management of supply contracts to the establishment of any type of preventive measures.

In the case of supplier capacity evaluation, control translates into the establishment of the different qualification factors, as well as the analysis of supplier compliance prior to contracting.

In the case of the administration or management of supply contracts, control is carried out through the process of tracking and monitoring the activity of suppliers in relation to the deliveries made to the company and their conditions. Data collection and statistical analysis are useful.

supplier non-compliance

In any case, it is advisable to automate the different data entry processes and workflows. The success of the supply chain is favored by the implementation of management tools.

Preventive measures include stock management, since the company can decide to accumulate more stock of products in the event that possible price changes, shortages of raw materials, parts or similar can be foreseen. Also, the existence of alternative suppliers duly evaluated or emergency management protocols.

Guidelines for complaining to suppliers

If, in spite of all the above measures aimed at avoiding non-compliance by suppliers, it is advisable to communicate with the defaulting supplier, informing him of the errors detected and, in short, of the non-compliance, so that the parties can solve it by mutual agreement. In this sense, the contract always constitutes a very useful legal reference framework.

If an agreement cannot be reached, any dispute resolution system must be used, and it should be noted that these are usually established in the contract. We are talking about mediation, arbitration or the system of judicial resolution of conflicts. In the case of synallagmatic obligations in which the performance of each party is the counterpart of that of the other, the exception of breach of contract or exceptio non adimpleti contractus is applicable, if the party claiming has breached its part.

Moreover, there are various remedies that can be adopted in the event of non-performance by suppliers. The aggrieved party may choose between compulsory performance or termination of the contract, which allows it not to perform its obligations in response to the non-performance of the other party, being entitled to compensation for damages and payment of interest in both cases.

In order to make the request, the injured party must apply to the competent body. The termination produces effects ex tunc (returning to the previous situation) and requires the existence of a serious breach capable of frustrating the purpose of the contract.

supplier non-compliance

Compensation for damages may extend to expenses or possible investments incurred as a result of the contract. The opportunity cost should also be taken into account. However, the requested compensation must be duly quantified and proven, our commercial lawyers at Abogados Cabo can help you. Contact us!

Finally, it is possible that a penalty clause was included in the contract in the event of non-performance by the suppliers. This type of clause establishes the obligation to pay a monetary indemnity in case one of the parties fails to comply with its obligations.

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supplier non-compliance

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