Monday, December 20, 2010

Tactics – How Knowledge Works With Tactics.

Two of the best tactics to use to try to get the Supplier to accept your position is to either explain the issue or problem and reason with them one why it should be acceptable.

Here’s an example:
The knowledge:
1.     Most jurisdictions will not allow a company to limit or disclaim liability for personal injury or death that may be sustained from the use of their product.
2.     Claims for intellectual property infringement are made by third parties so there is no way a company can limit the amount of those claims.  

The situation:
1.     The Supplier has changed a red line of your agreement to put a financial cap on their total liability.

How you would respond with tactics and knowledge.
1.     You would tell the Supplier that the change is unacceptable because of the impact it would have on their indemnifications for personal injury and intellectual property infringement.
2.     They are the ones that would have caused the problem.
3.     You can't manage the risk because.
a.     You can’t disclaim personal injury liability in your contract, as courts would consider it unconscionable as against public policy.
b.     You can’t control liability claims for personal injuries to third parties that you have no relationship with.
c.      You have no way to limit what a third party may claim for intellectual property infringement.
4.     If they were sued directly they can’t control it for the same reasons. If they were sued directly their liability would be unlimited.
5.     Since they already have unlimited liability, they are assuming no more risk in providing you with unlimited liability protection for these types of claims than they already have.
6.     Limiting the liability to you in these areas is only passing on a portion of the risk over which a) you didn’t create and b) you have no control.
7.     You don’t agree to that with their competition, so you aren’t going to agree to that with them.

One of the reasons why you invest time in building knowledge is to use that knowledge to reason or explain why something needs to change. Knowledge of Total Cost and Life Cycle Cost is used reason or explain why either the Supplier’s terms or performance is adding to the cost of doing business with them, making them less competitive. It’s intended to send the clear message that they need to either change their proposed terms, improve their performance or reduce their price to be competitive.

No comments:

Post a Comment