Negotiating Long-Term Requirements Contracts With Suppliers

Assigning Contractual Risks, Navigating Differing Court Interpretations of UCC Section 2-306

A live 90-minute CLE webinar with interactive Q&A


Thursday, January 16, 2020

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, December 20, 2019

or call 1-800-926-7926

This CLE webinar will guide counsel in drafting, negotiating, and enforcing long-term requirements contracts. The panel will review recent case law addressing long-term requirements clauses, discuss critical clauses that should be included in the agreements to allocate risks and provide protection against market fluctuations, and outline steps counsel should take to minimize contractual pitfalls.

Description

Manufacturers along the supply chain use long-term requirements contracts to lock in middle-link buyers and other sub-tier component suppliers over the long term, ensure attractive supply volumes throughout the life of the agreement, and obtain cost-effective products designed according to specifications.

The Uniform Commercial Code (UCC) Section 2-306, which governs requirements contracts, requires buyers to place their orders for amounts determined in good faith or, depending on the jurisdiction, close to a stated estimate if one exists in the requirements agreement. On its face, Section 2-306 seems relatively straightforward. However, courts around the country have applied the statute in different ways.

Given the varying court interpretations of Section 2-306 and nuances in supply chain contracting, several grey areas are surrounding the drafting and enforcement of long-term requirements agreements. Counsel negotiating the contracts for suppliers must anticipate market fluctuations and allocate contractual risk to protect their clients. International requirements contracts, governed by the Convention for the International Sale of Goods (CISG), are governed by still different rules.

Listen as our panel of attorneys experienced in negotiating and litigating requirements contracts discusses best practices for drafting, negotiating, and enforcing these agreements. The panel will discuss specific clauses that should be included in negotiations and provide strategies for avoiding contracting pitfalls.

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Outline

  1. Drafting risk allocation provisions that address common scenarios/challenges
    1. Schedule delays
    2. Escalation
    3. Minimum quantities
    4. Amendments and variations
    5. Expected and estimated purchase levels
    6. Changes to lead time
    7. "Notice of requirements reduction" provisions
  2. Avoiding and/or addressing contractual and enforcement pitfalls

Benefits

The panel will review these and other key issues:

  • What are the benefits and legal risks with long-term requirements contracts?
  • What is the role of the stated estimated and expected levels of purchases in a requirements contract?
  • How can businesses best mitigate risk when drafting and negotiating long-term requirements contracts?

Faculty

Fromm, Andrew
Andrew B. Fromm

Member
Brooks Wilkins Sharkey & Turco

Mr. Fromm specializes in business contracts, litigation, supply chain agreements, negotiations, disputes, warranty and...  |  Read More

Hutchinson, Erin
Erin Hutchinson

Partner
Rock Hutchinson

Ms. Hutchinson offers a broad range of corporate counseling and transactional services to clients of all sizes but...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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