From time to time, The Flowers Counsel Group receives requests for resources for procurement managers and attorneys.  The following is a list of resources (including the corresponding website, where applicable) that the firm recommends:

·         Harvard Business Review (www.hbr.org);

·         Inside Supply Management Magazine;

·         Institute for Supply Management (www.ism.ws);

·         Journal of Supply Chain Management;

·         National Purchasing Institute (www.nationalpurchasinginstitute.org);

·         New York Times (www.nytimes.com);

·         Purchasing Magazine (www.purchasing.com)

·         The Flowers Counsel Group website (www.flowerscounselgroup.com);

·         The Uniform Commercial Code; and

·         Wall Street Journal (www.wsj.com).

If you have any additional questions regarding the list of procurement resources, please feel free to contact us.

An indemnification provision can be included in an agreement to establish which party will assume liability upon the occurrence of a specified event. This provision’s importance lies in the fact that it provides additional protection to a party for the other party’s breach of its obligations under the agreement.  Events that can trigger indemnification liability include, but are not limited to, the following: breach of a representation, warranty or covenant of the agreement; negligent misconduct; and/or copyright or patent infringement.  The party agreeing to provide indemnification should consider the ramifications relating to indemnification and craft the provision in a manner that focuses on the issues as they relate to the relationship between the parties.  Ultimately, it is important to include an indemnification provision to ensure that in the event the other party breaches the agreement you have adequate recourse to recover your losses or damages.

With rising pressure to reduce supply costs occurring throughout numerous organizations, many supply chain managers are using a troublesome tactic to address their unprofitable or problematic procurement contracts – threatening to breach or not pay under such contracts. Supply chain managers using this tactic hope that their significant leverage and bargaining power over suppliers can force a renegotiation of unfavorable provisions to their benefit. However, not only is such tactic unwise from a supplier-buyer relationship vantage, but it also could trigger some unfortunate remedies. Under Sections 2-609 and 2-610 of the Uniform Commercial Code in the State of Delaware (the “U.C.C.”), a supplier is entitled to recover damages or suspend performance, among other things, if a buyer repudiates or threats to breach a contract – even if the breach is cured or the threat is retracted. As such, buyers should refrain from using this tactic, because the consequences could be detrimental to the organization and/or supply chain. If a supply chain manager desires to use this tactic, legal counsel should be consulted immediately.

In the course of drafting a master agreement, you should always consider including a provision that allows for the termination of a statement of work (“SOW”) separate from the termination of the master agreement.  Since a master agreement allows you to commence several projects under one agreement through the issuance of SOWs, the ability to terminate any SOW without actually affecting the master agreement itself is ideal.  In circumstances where a termination of SOW provision is not included in the master agreement, unless otherwise addressed by the parties in the master agreement, termination of the master agreement will also terminate any SOW issued under such agreement (potentially, jeopardizing outstanding projects under other SOWs).  Overall, a termination of SOW provision provides you with the flexibility to terminate a specific SOW without having to terminate the master agreement and undertake the monetary expense and time required to the draft and/or renegotiate a new master agreement.

Protecting your company’s name, logo and/or mark (collectively, the “Company Marks”) from unauthorized use should always be a priority when drafting an agreement.  Including a use of name/advertising provision in the agreement that limits the use of the Company Marks in any advertising or promotional literature without your company’s prior written permission can protect unauthorized use.  Such a provision puts the opposing party on notice that the use of the Company Marks without permission is a breach of your legal right and can result in a potential claim by your company.  It is important to remember that the Company Marks can be a valuable marketing tool that an opposing party to a contract could potentially use to gain additional customers for its product or service (resulting in monetary gain for the opposing party, not your company). Consequently, a use of name/publication provision should, at minimum, require the opposing party to seek written permission from the owning party (the company) prior to each instance of use of the Company Mark.

In determining whether to use a statement of work or a purchase order, you must evaluate your goal.  Typically, a party issues a purchase order for the purpose of payment, while a statement of work is used to modify the terms of the agreement.  Purchase orders may or may not incorporate the terms and conditions relating to a main agreement between buyer and sell, but usually sets forth payment terms relating to the purchase. Moreover, a purchase order provides a legal document by which all parties are bound and illustrates the buyer’s intent to purchase a set quantity of goods and is a mechanism to facilitate collection of funds.  Statements of work usually incorporate the terms and conditions of a main agreement and specify specific terms and specifications relating to the goods or services being provided by the vendor.  Accordingly, a statement of work expressly describes the work requirements necessary to fulfill the terms of the main agreement and usually serves as the standard for determining whether a vendor has met the stated performance requirements.

Purchasing goods and services in foreign jurisdictions can be both advantageous and disadvantageous for a potential buyer. Often, the pros of purchasing in a foreign jurisdiction include lower costs, speed of delivery of the goods and/or services and less restrictive terms and conditions. On the other hand, the cons of purchasing in a foreign jurisdiction have the potential to be more extensive. Some of these issues include, but are not limited to, determining the governing law of the contract, communication between the parties, upfront payment for the goods and/or services without mitigating the risk of receiving compliant goods, and culture/language limitations. The key to the purchasing of goods and/or services in foreign jurisdictions is to address the aforementioned issues prior to entering into the agreement, to the extent possible (particularly, structuring a payment schedule that will limit your risk exposure). Addressing these issues can potentially limit confusion with the terms of the agreement at a later date.