The consumer and retail sector has faced relentless strain in recent years. How can in house legal teams ensure supply chain contracts are both robust and flexible enough for their business to thrive in the current - and future - commercial landscape?
Published: 14 August 2026
Authors: Emma Carr
Over the past five years, few sectors have faced more relentless strain than consumer and retail. Inflation, geopolitical instability, supply chain disruption, cyber-attacks, tariff uncertainty and margin compression have become recurring features of the commercial landscape.
For many businesses, disruption is no longer the exception. It is the operating environment.
For in-house legal teams, that creates a dual challenge: ensuring contracts are prescriptive enough to allocate risk clearly, but flexible enough to allow the parties to adapt to changing market forces.
Those challenges often require different legal perspectives.
In this article, Simon McArdle, a Partner in the Commercial team and co-head of the Consumer and Retail Sector considers what effective supply contracts should achieve, while Emma Carr, a Partner in the Commercial Litigation team, examines how those contracts are tested when commercial relationships come under pressure. Together, they look at some of the contractual provisions that matter most, not just when a deal is negotiated but also when it is put to the test.
Simon: “The best supply agreements aren’t designed to predict every possible disruption; they’re designed to give businesses a practical framework for managing change without renegotiating the relationship every time market conditions shift”
1. Price review clauses: Certainty and flexibility
What the contract should achieve
In a volatile market, pricing mechanisms need to do more than just state the price. They should establish a clear process for dealing with increases in raw materials, freights, energy, tariff or currency costs, identifying what can trigger a review and how negotiations will be conducted if agreement cannot be reached.
When commercial pressure tests the contract
Many disputes do not begin with a refusal to perform. They begin with suppliers issuing revised invoices, seeking temporary surcharges or asking customers to absorb part of an unexpected increase in costs.
Commercial teams quite rightly focus on keeping product moving. Temporary arrangements are agreed, payment terms are relaced and pricing concessions made.
Those decisions are often commercially sensible. The difficulty however is that unless they are carefully documented, they may later become the subject of disputes about contractual variation, waiver or estoppel.
Emma: “The difficult cases are rarely those where the contract has been followed, they’re the ones where sensible commercial decisions were made under pressure, but nobody stopped to consider how those decisions might be interpreted if the relationship later broke down”
Risk management
Commercial concessions may often be the right answer, however the risk is allowing them to evolve without recording exactly what has been agreed and on what basis. Temporary pricing arrangements should identify their duration, who approved them and whether both parties intend to preserve their underlying rights.
2. Force majeure: The clause is only the starting point
What the contract should achieve
Force majeure provisions should identify the relevant events, prescribe notice requirements, allocate responsibility for mitigation and explain what happens if disruption continues beyond a specified period. Under English law, force majeure is contractual rather than statutory; the wording therefore matters.
When commercial pressure tests the contract
Whether disruption falls within the clause is only the beginning. The debate quickly mores to whether notice was given on time, whether reasonable mitigation steps were taken and whether performance was genuinely prevented, rather than simply made more difficult or expensive.
These issues are often determined as much by contemporaneous evidence as the wording of the clause itself.
Risk management
Operational teams should be primed to anticipate when legal input is needed. A missed notice or poor record of mitigation can undermine an otherwise strong contractual position before any formal dispute has begun.
3. Termination rights: Commercial urgency and legal entitlement
What the contract should achieve
Termination provisions should distinguish clearly between material breach, persistent breach, insolvency and termination for convenience, while setting out the procedural steps required before the agreement can be brought to an end.
When commercial pressure tests the contract
When a supplier cannot perform, procurement teams understandably want certainty and alternative supply. The legal risk is different. Some of the most protracted disputes arise because a party terminates before the contractual or common law right to do so has arisen.
Emma: “Some of the most expensive supply chain disputes we see aren’t caused by the original breach. They’re caused by the otherwise innocent party terminating before it was legally entitled to do so”
Risk management
Before issuing a termination notice, ask whether the business is exercising a specific contractual right or simply reacting to commercial frustration. The distinction may well determine who ultimately becomes claimant and who becomes defendant (or receives a counterclaim).
4. Limitation of liability: Understanding the real value of the dispute
What the contract should achieve
Liability caps and exclusions should reflect the commercial allocation of risk agreed by the parties and should be tested against realistic disruption scenarios, not just negotiated in the abstract.
When commercial pressure tests the contract
The question is often not whether there has been a breach but whether the losses that matter commercially are recoverable (either at all, or up to a capped amount).
Emergency procurement costs, production downtime, retailer penalties and lost profits may all arise from the same disruption. Whether they can be recovered depends on the contractual allocation of risk. That in turn will shape litigation strategy, settlement discussions and the commercial value of the claim.
Risk management
Review limitation and exclusion clauses at an early stage, considering how they would be interpreted by the Courts if tested, how they operate in practice, and whether statutory restrictions1 might be engaged. These clauses often – assuming they are enforceable - determine the commercial value of pursuing a claim long before proceedings are contemplated.
5. Change control: Today’s solution can become tomorrow’s dispute
What the contract should achieve
Supply agreements should contain clear, practical mechanisms for agreeing changes to specifications, delivery schedules, volumes or substitution arrangements as commercial circumstances evolve.
When commercial pressure tests the contract
Periods of disruption often require pragmatic solutions. Alternative products are supplied, delivery schedules change and operational teams reach sensible commercial compromises.
Problems arise where those changes are never formally documented. Once relationships deteriorate, parties may fundamentally disagree about which version of the agreement governs their obligations.
Risk management
Ask a simple question. If this relationship ended tomorrow, could someone unfamiliar with it understand why the parties have departed from the contract? If not, document the current position and how the parties got there.
6. Notice provisions: Small details with significant consequences
What the contract should achieve
Notice provisions create certainty around price reviews, claims, termination and force majeure.
When commercial pressure tests the contract
Notice provisions are often the easiest contractual requirements to overlook. However, failure to adhere to their terms can scupper the execution of an otherwise legally and commercially sound response to a challenging situation.
By the time lawyers become involved, opportunities to preserve important contractual rights may already have been lost.
Risk management
Ensure procurement and operational teams know which contractual issues require immediate legal escalation.
7. Evidence: The contract is only half of the story
What the contract should achieve
Well-drafted contracts remain essential, but disputes are rarely won on contractual wording alone.
When commercial pressure tests the contract
Internal emails explaining why a commercial decision was taken, records of mitigation supplier performance data and correspondence with customers frequently become the documents that determine the outcome of a dispute.
Emma: “By the time external lawyers are instructed, the most important evidence has usually already been created, the question is whether it has been preserved and whether the business’s communications support the position it ultimately wants to take.”
Risk management
Document presentation should begin when a significant contractual issue emerges, not just when proceedings are threatened. Encourage disciplined communications and involving legal early enough to preserve privilege where appropriate.
Looking ahead
Supply chain disruption is unlikely to disappear. Whether driven by geopolitical events, energy market turbulence, cyber incidents or continuing economic uncertainty, commercial pressure will continue to test long-term contractual relationships.
For in-house legal teams, effective risk management therefore has two stages.
The first is ensuring that contracts allocate foreseeable risks clearly and provide practical mechanisms for managing change.
The second is equipping operational teams to recognise when a commercial issue is becoming a legal one. At that point, the quality of the business’s response often becomes just as important as the quality of the drafting.
As Simon observes:
“A good contract gives the business options when circumstances change”
Emma’s experience is that what happens next is equally important: “It is rarely the wording of the contract alone that determines the outcome of a dispute. More often, it’s how the parties exercised those contractual options once the relationship came under pressure”
For in house legal teams, that is where commercial drafting and dispute management meet. The objective is not simply to have a well drafted contract, but to ensure that when commercial reality requires the business to depart from it, those departures are managed in a way that preserves both the commercial relationship and the business’s legal position.
1 In particular the Unfair Contract Terms Act 1977