"Navigating the Rising Tide of Supplier Litigation" is the latest episode of the Automotive Insiders podcast, with host Jason Stein and Warner partner Adam Ratliff discussing a surge in litigation and supply chain disputes tied to rising costs, EV volume volatility, aggressive contract enforcement and shifting legal requirements.
Ratliff, who acknowledged that suppliers almost always ultimately prefer to avoid litigation, noted the risks are real and growing. "It's a confluence of things," he said. "In addition to broad industry trends, the 2023 AirBoss decision is also seen as giving suppliers more leverage, and the specifics of that ruling are being tested in new filings."
Ratliff was referring to Warner's 2023 Michigan Supreme Court victory on behalf of client AirBoss Flexible Products Co., a precedent-setting ruling that further defined contract and purchase order requirements.
To help businesses avoid litigation, Ratliff advised suppliers to audit their supply relationships. "It's important to know your contracts and your contracting partners. Before entering a new contract, you may want to consider if your partner has a particularly litigious history.
"Be thoughtful entering new contracts, knowing the law may change. It's also important to think strategically about your exit strategy. Ask yourself how this relationship could go south, and then work to put safeguards in place," he said.
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