Consultants in Logistics

When A Logistics Contract Is No Longer Fit For Purpose

When A Logistics Contract Is No Longer Fit For Purpose

Most managers at some time in their careers will inherit a transport or warehouse agreement that is no longer fit for purpose.  Things may have changed, or the agreement was not properly considered in the first place.  One option is to wait for the termination date but if that is too costly it may be necessary to seek to change it.  So how best to move forward.

  • The first task is to determine the correct legal position, the rights and obligations of both parties.
  • Determine what a reasonable agreement should now consist of given current commercial and economic circumstances.
  • Approach the contractor and explain the situation and ask for assistance to resolve the issue.  Most contractors will recognise a need for the agreement to be commercially viable for both parties.
  • Be prepared to consider alternative ways to achieve a commercial settlement.  Given time the contractor may be able to deploy people and resources.
  • Other than establishing the legal position, try and avoid getting into a legal dispute involving solicitors.  Involving lawyers will add to the cost and 99% of disputes are resolved without resorting to Court action.  Being firm but reasonable is likely to achieve a better outcome than becoming embroiled in a legal dispute which will be costly in terms of time and money.
  • If cooperation from the contractor is not forthcoming, consider the option of terminating the agreement.  Whilst the contractor could have a right to lost profit, they have a legal responsibility to mitigate costs which will include using reasonable endeavours to make use of spare resources.

 By parties acting reasonably most commercial issues can be resolved.  If you do require advice or assistance, please call Davies & Robson on  01327 349090.  We have extensive experience in helping to resolve both operational and commercial logistics challenges.

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