Resilient Chain Law
Ps. 27:1

The process of procurement is complex and involves many elements on both sides.
For the buyer, procurement may involve the following stages:

1. Buy-Make analysis.
2. Defining the requirements and the mode of purchasing.
3. Creating RFI, RFQ, and RFP.
4. Negotiation of contract terms.
5. Signing the contract.
6. Transacting.
7. Performance review and enforcement.

For the seller, the procurement may involve the following:

1. Market research and ideal buyer profiling.
2. RFX response.
3. Negotiation of contract terms.
4. Signing.
5. Transacting.
6. Analysis of sales and Buyer pool analysis.

Pre-qualification procedures.
Certification procedures.

Ways to improve your supplier portfolio.

RFI (Request for Information)
RFQ (Request for Quote)
RFP (Request for Proposal)

Accurate, coordinate with the internal team re capacity, promises of lead times etc.
Implications: lost trust, breach of contract.
Marketing material can become evidence of representations.
Representations in RFX may be used to show reliance (see also warranties question).
Disclaimer: the RFX response is not a binding contract, and no contract is formed until all terms are dicussed and agreed upon.
Disclaimer: the RFX response depends on the project description

Best practices in preparing RFX response.

Generally no. However, it is good to include in the RFX a disclaimer that the company reserves the right to award the contract to the most qualified supplier, regardless of cost, and that it reserves the right to withdraw an RFX for any reason.

Offer under UCC, if certain enough and contains core terms (price). More probable that will be held as a binding offer if: the RFX was directed to a specific company (not to the public), is specific enough to determine the price, and has binding language.
To avoid:

• Disclaimer re not binding, reserve the right to reject orders from buyer.
• Disclaimer that depends on the project description.

Supplier risk portfolio.

Both parties should come prepared. Things to consider for preparation may include:

• Discussing internally the goals of the contract.
• Involve cross-functional team that coordinate financial, technical, operational and other functions of the company, to present a commercially viable proposal.
• Identifying persons who should be present and available during the negotiation.
• Determining several alternative options.
• Determining the liability tolerance levels that the company is willing to agree to. This is important for discussing the warranties and indemnification provisions.

Negotiation checklist for each department.

No. While awarding an RFX indicates the willingness to transact business, if parties start transacting without negotiating the terms of a contract, it creates confusion, and may potentially bind companies to terms they did not want to agree to.

Additionally, parties have less leverage in negotiation if they already invested resources into the project. If the contract is not signed, but the company has already spent its resources, it may be harder to recover them.
Sharing information, especially trade secrets, know-how, or other intellectual property or confidential information, without proper protections in place, may waive those protections, if shared prematurely.

Yes, if it expects to disclose sensitive or proprietary information.
Protecting trade secrets.

Yes. A contract with strategic supply chain partner typically includes incentives and structure for more complex relationship. It may include provisions for:

• sharing and securing confidential information, such as market intelligence, proprietary formulas and manufacturing processes.
• longer term and options for extension of contract.
• safeguards for data protection.
• transparency and audit rights.
• added value services.
• incentive-driven pricing.

Issue checklist for strategic supplier contract.

Financial performance
Liens
Subsuppliers, transparency
If international - sanctions and AML issues

Maybe.
Samples- UCC, may become a warranty.
Proposal statements re capabilities and specs.
Can be binding. Case law.

Integration clause in contract - sample.
RFX can be incorporated in the contract. Buyers sometimes ask suppliers to guarantee statements made during the RFX process. Suppliers should be careful in agreeing to guarantee those statements.

Promise v. Sales Talk comparison chart.

p. 24. Battle of forms. UCC Knock out or default rules.
If ambiguous, contra preferentia rule. Reasonable interpretation.
Four corners - no outside evidence, unless ambiguous.
Integration clause.
When many documents (terms and conditions, purchase orders, --> Order of Precedence clause in the K.

Disclaimer: not binding?
K states "forecasts are not binding"? p. 55. Law is inconsistent how they will interpret ambiguous forecast (circumstances: is it a custom made product, what's the lead time? Did buyer know that supplier will need to invest resources? )
Requirements contract? UCC 2-306, if unreasonably disproportionate, then not binding.

Not always.
Battle of forms UCC.
Case re RFX --> Order + T&C. If Order is an offer, and supplier started performing => accepted the T&C
Contract of adhesion

Best practices in T&C.

Not always.
Battle of forms UCC.
Case re RFX --> Order + T&C. If Order is an offer, and supplier started performing => accepted the T&C
Contract of adhesion

Best practices in T&C.

Statute of frauds. $500 to

222

If not for sale of goods, then no. But better to have it in writing.

UCC 2-207, 2-201

Depends on your position, negotiation leverage, and goals.

Same as above.

Chart comparison re major differences.
Warranties, remedies, limitation of liabilities, attorney fees.

Same as above.

Same as above.

Same as above.

p. 44. Depends.
Component reliability requirement clause.
Product integration clause. --> Buyer's sole responsibility or shared responsibility.
Warranty

Recall provisions. Indemnification.

Depends. Strict liability. Design defect. Negligence.
Indemnification.

Ensure compliance, quality control. DD of sub-suppliers.
Insurance.
Samples as warranties - avoid.
Warranty provisions.
Choice of law with better warranty law.
Limitation of liabilities.
Indemnification - be careful.
Dispute resolution provisions. Attorney fee provisions.

Ensure compliance, quality control. DD of suppliers and sub-suppliers.
Understand local regulatory requirements (labeling, forced labor, chemicals, FDA approvals)
Insurance.
Samples as warranties.
Warranty provisions.
Choice of law with better warranty law.
Limitation of liabilities - be careful.
Indemnification - negotiate.
Dispute resolution provisions. Attorney fee provisions.

Ensure compliance, quality control. DD of sub-suppliers.
Insurance.
Samples as warranties - avoid.
Warranty provisions.
Choice of law with better warranty law.
Limitation of liabilities.
Indemnification - be careful.
Dispute resolution provisions. Attorney fee provisions.

Ensure compliance, quality control. DD of sub-suppliers.
Insurance.
Samples as warranties - avoid.
Warranty provisions.
Choice of law with better warranty law.
Limitation of liabilities.
Indemnification - be careful.
Dispute resolution provisions. Attorney fee provisions.

p. 44. Depends.
Component reliability requirement clause.
Product integration clause. --> Buyer's sole responsibility or shared responsibility.
Warranty

Recall provisions. Indemnification.

Depends. Strict liability. Design defect. Negligence.
Indemnification.

Ensure compliance, quality control. DD of sub-suppliers.
Insurance.
Samples as warranties - avoid.
Warranty provisions.
Choice of law with better warranty law.
Limitation of liabilities.
Indemnification - be careful.
Dispute resolution provisions. Attorney fee provisions.