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Alternatives to litigation with supplier disputes

On Behalf of | Jun 8, 2020 | Business Law |

Business owners in Syracuse understand the difficulties of working with influential suppliers. These powerful companies hold near-monopolies over supply chains. Some take advantage of clients who have few other options.

Often, these cases require small business owners to file a lawsuit to take on these large corporations. These intimidating and expensive suits are not guaranteed to favor small businesses, even those in the legal right. Thankfully, New York entrepreneurs have a few options available to rein in these powerful suppliers.

Use these four tactics in difficult supplier situations

Powerful suppliers frequently use their industry weight to intimidate their clients into agreeing to unfair prices or contracts. These four strategies can help entrepreneurs exert the surprising amount of power they have:

  1. Increase the business’ value to the supplier: Successful companies do not become successful by denying opportunities to profit. A client company can help their suppliers by becoming a gateway to new markets overlooked by bigger companies. Suppliers also appreciate opportunities to reduce their risk — offering to sign a larger-than-usual contract can help foster an equal partnership.
  2. Change buying habits: Changing one’s pattern of demand can help reduce costs in unforeseen areas. Combining orders and reducing redundancies in orders from the supplier can create opportunities for negotiation. Sometimes, a few small businesses form buying consortiums, consolidating purchase orders to secure lower prices.
  3. Locate or integrate new supply sources: Sometimes, the best way for a company to get what it needs is to make it. Once a supplier sees a company seriously explore and research what it would take to become their competitor, they may rethink whatever bad deal they are offering. Small businesses can also court suppliers in adjacent markets and directly address any concerns they may have about expanding. It may be cheaper to accommodate the increased costs of using a new supplier.
  4. The threat of litigation: Many large suppliers will not listen to anything short of legal action. Or at least, the threat of legal action. Large companies keep a fleet of lawyers on retainer to weather the worst of litigation but will balk at regulations from government agencies. Suppliers are much more likely to renegotiate a bad deal.

Legal advice for a legal solution

Small business owners have found success pursuing these alternative tactics with the help of an attorney familiar with business litigation and contract negotiation. A lawyer can help draft business agreements, review contracts and deal with government agencies.

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