In today's Freedom Friday blog and email newsletter, I want to talk about a topic that often comes up in breach of contract cases, and that's vendor disputes. Relationships with vendors are critical to the success of any business, large or small.  However, if disputes arise over pricing, quality, delivery, delays, or other terms, a business owner has to decide if the relationship can be saved or if it would be better to part ways.  If a vendor dispute remains unresolved, it can significantly impact the business by leading to disruptions in the supply chain, financial losses, and other legal issues.  If your customers rely on timely delivery of products or services, a vendor's failure to perform can damage your business's reputation and customer relationships.  So, in today's Freedom Friday blog and email newsletter, I'm addressing how to handle vendor disputes in 2025.

There are several reasons why a business might want to attempt to mitigate and continue the relationship with the vendor.  First, preserving the relationship might be the most cost-effective solution.   Changing vendors can involve extensive research and time on the part of the business owner.  If your current vendor has a strong track record apart from the current issues, working through those issues may be more beneficial than starting over with a different vendor.  Second, if the dispute is an isolated issue, but the vendor has been historically reliable, perhaps opening the communication for possible renegotiations might be an effective strategy.  Many vendors are willing to adjust prices, improve service levels, or change their contracts to keep their customers.  Third, many vendor contracts require either mediation, arbitration, or both before filing suit or terminating the contract.  Make sure you review your vendor contract first before filing suit or taking steps to terminate the contract.  Lastly, consider if your vendor is willing to improve.  If the vendor acknowledges the issue and is willing to take corrective action and make it right may help resolve the dispute and save the relationship.

Unfortunately, despite our best efforts to mitigate a vendor dispute and save the relationship, sometimes the best approach in handling a vendor dispute is to terminate the contract.  Here are four reasons why you should terminate a vendor contract:

1.   Repeated Violations of the Contract

The first reason why you should consider terminating a vendor contract is that the vendor has repeatedly violated the contract.  If the vendor has consistently failed to meet deadlines, delivered poor quality goods or services, or violated other contract terms after previous discussions to deal with these issues, perhaps the vendor's unreliability would cause long-term harm to your business.  In such a situation, it might be best to terminate the contract with the vendor.

2.    Unfair Pricing

The second reason why you should consider terminating a vendor contract is unfair pricing.  If a vendor raises prices to be unreasonable, charges hidden fees, or offers prices that are no longer competitive with market rates, then it might be time to consider changing to a different vendor.

3.    Ethical Concerns

The third reason why you should consider terminating a vendor contract is ethical concerns.  If a vendor is engaging in unethical business practices like fraud, unfair trade practices, or otherwise failing to comply with legal and regulatory requirements, continuing the vendor relationship may be endangering your own business to both legal and reputational risks, and in such cases, terminating the contract might be the best course of action.

4.    Lack of Bandwidth

The fourth reason why you should consider terminating a vendor contract is lack of bandwidth to support the growth of your business.  If a vendor lacks the necessary infrastructure, resources, technology, or staff to support your growing business, it may be the best decision to switch to a better vendor more equipped to fulfill your needs.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.