Smart strategies for dealing with long-term supply contract disputes

In the previous issue’s column we looked at the types and features of long-term supply contract disputes, and in this issue we will analyse relevant strategies for dealing with and preventing the same. Dealing with long-term supply contract disputes should be divided into macro decision-making and micro decision-making, each of which should be treated differently.

Macro level

Probability of winning. The party that intends to terminate – “terminate” here should be broadly interpreted, and include rescission, invalidation, termination or other such strategic methods of avoiding performance of the contract – a long-term supply contract faces the greater risk of losing an action, mainly due to the fundamental principle of contract law theory: a “contract shall be performed”.

However, the author has noticed that in practice this principle can produce completely opposite emotional effects on the parties to a long-term supply contract. The party that intends to terminate the contract, often armed with the mindset of “it’s worth a shot”, will be more nimble in its adducement of evidence and counter-argument, while the party intent on maintaining the contract is contrarily crippled by the heavy psychological burden of “we can only win, not lose”.