This will be another robbery against the hard-working U.S. citizens- just like all the stock/401K $$ that “disappeared.” Where did all those funds go??? Rip-off, bigtime.

We are in for “change” alright, and it ain’t going to be pretty, people.

Wake up, get away from the TV screen long enough to research what is happening.

Google “North American Alliance” and “illuminati.”

Don’t blame the whole mess on Bush- he IS in on it, and so is Big O’brother bama…they have been planning the grinding down of America into the dust for years. The prez is just a puppet that follows instructions- the current one is sure moving along with it all pretty fast, though.

China will be the next superpower, and we are going to be 3rd-world status.

Economic downturn is more often cited in “Material Adverse Changes” clauses, though those clauses are more common to mergers and acquisitions than to procurement. However, that doesn’t mean that they shouldn’t be used to a greater degree.

Trump probably didn’t have a MAC clause so he resorted to invoking FM because their was sufficient ambiguity that may give him a leg (regardless of how weak) to stand on.

Regards,
Barb

Sorry if it sounded like I was slamming you for endorsing it. Rather, I was pointing out that most well-crafted FM clauses should never find their way into being interpreted as including economic downturn, as economic downturns ARE foreseeable activities.

Thus, if someone wants to protect themselves from continued contractual obligations in the event of depression, I recommend an economic downturn clause which details the scope of what would happen during such depression… but that in no event should an FM clause attempt to be read to include a depression.

I also agree that suppliers will be more agreeable if we have a history of fair and reasonable dealings. I just think it a little odd that NOW is when they’re looking for help…and that as recently as a year ago, the same suppliers were doing everything they could to extract every last penny out of most customers (extra/silly fees, etc). I guess I’m just having a hard time feeling sympathetic.

Thanks for taking the time to comment. I think we’re in agreement. I’m not suggesting that we, as buyers, invoke FM due to the current economic situation. However, we cannot control whether our suppliers do. In contract negotiations, we cannot anticipate every situation . Ongoing, we must be attuned to risk and take appropriate steps to mitigate. However, we may ultimately need to rely on our ability negotiate a win-win in difficult circumstances. Suppliers will certainly be more agreeable if we have a history of fair and reasonable dealings.

Thanks for sharing your perspective and starting the dialog.

Happy sourcing!

1. I’ve never heard of a force majeure clause including suppliers failing to deliver. I would automatically reject that one if a seller proposed it.

2. Fixed quantity contracts for commodity items such as cell phones and computer memory are unwise in an environment where the buyer can’t forecast well. Share of business contracts coupled with frequently updated forecasts work much better. You don’t have to be defensive about not meeting quantity commitments, you don’t have to take products you don’t need and you have protection on the upside.

The simple truth is that hardly anyone anticipates something as severe as a depression – but it is able to be anticipated. Force Majeure clauses (in most cases) aren’t written to allow for “economic downturn” … it’s not something that NO ONE can anticipate. So, if you look to things like cell phone contracts, you’ll find business downturn language in almost all of them – people take the time to consider what happens when you get rid of a bunch of employees and don’t need as many cell phones.

(I don’t know the specifics of the Trump situation) but to think that he would try to invoke FM to get himself out of a deal IS quite laughable. This man is an EXPERT in finance, deal making and the economy. He should very well be able to understand what happens if he can’t sell the units. If he was really concerned about it, he should’ve included language to that effect. But it’s still not FM.

So again, I renew my caution against trying to use contractual provisions outside their intended scope – it’s a factor in bloated and unruly contracts. Rather, you should consider all reasonable angles and draft appropriate language. If economic downturn isn’t something you thought of – well, what you’re left with is common sense and camaraderie. In other words, call the other side up, explain the situation and see if you can work together to get yourself out of the jam.

But remember that they can say no. Also, suppliers should remember that decades of “sticking it” to customers can come back to bite them if they try to renegotiate supply contracts with their customers. So the lesson to learn here is to treat each other with respect and integrity – so that when something like this happens, both sides are inclined to try to help the other out.