Watch: Reopening Business and Avoiding Liability With the Supply Chain
May 11, 2020Resuming operations is not the first step to long term recovery. Businesses must carefully plan and anticipate problems before reopening to secure success for the future. To discuss preparing to reopen and avoiding liability with the supply chain, Miller Canfield’s Brad Arbuckle, principal attorney and Richard Walawender, Corporate and Transactions Group co-leader joined Detroit Regional Chamber President and CEO Sandy K. Baruah in today’s Tele-Town Hall.
“The best policy is a practical one,” said Walawender. “To anticipate these issues, work it out with your clients and customers in advance.”
The first step is to tell your clients in writing when you plan to resume operations. Timing is key and will be different for everyone, noted Arbuckle. Communicate to make sure you’re avoiding surprises upfront.
From a practical standpoint, you should talk to your customers and suppliers to make sure you’re delivering and not overcompensating and undersupplying. This will require reviewing your contracts. What’s critical is anticipating all the problems up and down the supply chain to and your capacity to deal with that, said Walawender. The time to modify this is now.
“You need to look at almost all of your contracts and see what is putting you in breach potentially and what is putting your suppliers and customers in breach,” said Walawender. “Enforce your rights and address those issues,” before they need to be addressed in court, he said.
The problem is, COVID-19 is not going away anytime soon, and contracts don’t address how to proceed in this unprecedented time. It’s a different landscape in terms of how we’re doing business, said Walawender, and contracts don’t address this.
Provisions don’t contemplate the long term reality of COVID-19. When it’s feasible, get into discussions with your banks, suppliers, and customers to try and anticipate possible shortcomings. It’s going to be difficult, but that’s what a prudent business is going to do, said Walawender.
“We’re in uncharted territory,” added Walawender. “This truly is going to change a lot of how we think of contracts and enter into contractual relationships.”
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