Delays in the supply chain – what can be done?

Wednesday 14 September 2022

Even those unfamiliar with the intricacies of supply chains can’t help but notice that the delivery times for lots of things seem to be taking much longer than they used to.

Whilst delays in the supply of goods can be frustrating for consumers, for businesses they can cause additional costs, significant losses and unsatisfied customers.

The question therefore arises – what can be done where the delivery of goods is delayed?

Below are a few pointers to help guide businesses in the right direction:

The starting point is the wording of any written contract that’s in place. Have any timescales for delivery been agreed and/or are there any agreed consequences of a failure to deliver on time?
If the contract says that time for delivery is “of the essence”, it generally means that the contract can be terminated if there is any delay, and damages may also be claimed, depending on the circumstances.
Even if there is no express statement that time for delivery is “of the essence”, that may be implied, depending on the wording of any written contract and its wider context. For example, if perishable goods are being sold then it may go without saying that time is of the essence, as the goods would be valueless if not delivered on time.
Termination of a contract may not be helpful if the item you’re waiting for isn’t readily available elsewhere. So, just because you might have the right to terminate, it doesn’t necessarily mean that it’s the right thing to do.
If you get termination wrong (for example by trying to terminate when you’re not permitted to do so) then that can be a breach of contract in itself.
The right to terminate can easily be lost, for example if there is a delay in exercising it.
If the contract does not say that time for delivery is “of the essence” but the delay continues for long enough, there might in certain circumstances still be grounds to terminate the contract.
If time for delivery is not “of the essence” it can be difficult to know when a delay has become long enough to justify a termination of a contract. Often, the safest course of action is for the business which is the victim of the delay to serve a notice to say that if delivery doesn’t take place by a particular date, then it will be entitled to terminate the contract.
A written contract might contain a “force majeure” clause, which could excuse late delivery if it is as a result of certain serious issues that are outside of the parties’ control, such as strikes or a pandemic. If there is no “force majeure” clause then a serious event outside of the parties’ control might excuse the parties from performing the contract any further by “frustrating” the contract, but that only applies in very limited circumstances.
The law relating to delay, the termination of contracts and the operation of force majeure clauses can be complex and so appropriate advice should always be sought before any action is taken.