Solution for dispute with a contractor

legal counsel Zbigniew Stańdo

Entrepreneurs act among each other with trust, which is necessary to perform an economic activity. It occurs that trust is abused and sometimes it leads to the serious dispute between contractors. The confirmation of mutual rights and obligations in writing could be the solution. Therefore it is worthy to conclude a written agreement in order to secure own interests.

Our client started the cooperation with a new supplier. It looked promising, however conceivable shortcomings in the supply threatened serious consequences, including the suspension of the production. Thus our client stipulated in the written contract that in case when the supplier is not able to deliver on time, our client is entitled to order the goods from the other supplier. At the same time, our client had a right to charge the contractor for any additional costs of purchase of goods from the other supplier.

At the very beginning, there were no problems with the supplies, however later it appeared that supplies were delayed. Finally, the supplier was not performing the contract at all. There was a threat that the production will be suspended, thus our client demanded from the contractor to perform the contract and threatened the contractor that undelivered goods are going to be ordered from other supplier. Demands did not succeed. Eventually, our client based on the written agreement – purchased the goods from the other supplier and charged the contractor for additional costs.

The contractor tried to avoid the payment of additional costs. Acting on behalf of our client we sued the contractor for payment. The lawsuit was justified on the grounds of the above mentioned contractual clauses.

Since the parties agreed the principles of purchasing of goods from third supplier and agreed how to calculate the compensation in the written contract, the litigation was focused to prove that contractor did not perform the contract which allowed our client to order the goods from the other supplier and to charge the contractor for compensation.

Our experience indicates that it is worthy to enter into written agreements. During the work on the contract it is important to consider how parties will cooperate, starting from the basic issues such as the object of the agreement or price, ending with the specific issues, e.g. the method of the confirmation of the delivery or the rules on the consideration of complaints. Equally important is to stipulate the clauses securing the interests of the entrepreneurs concerning e.g. the contractual penalties, the right to order performance of the contract from the third person, the rules for calculation of compensation in case of breach of the contract. A precise agreement is the best guarantee to keep good relations among contractors and it also provides the basis for settling disputes.