Question

How could the situation have been prevented

Answer 1

VIGNETTE: CHRYSLER, LLC, VERSUS PLASTECH ENGINEERED PRODUCTS INC.

Prevention of litigation

The best way to deal with legal disputes is to do all possibilities to avoid them in the first place. The daily activities in supply chain management are subject to two major areas of the law: the law of agency and the law of contracts. The agent of the firm will be a supply manager or a buyer and the relationship is defined

and governed by the law of agency.

The purchase of materials from other firms involves the formation of a purchase contract (for each purchase).

In legal issues, the courts assume that buyer agents are familiar with the applicable laws pursuant to their particular buying situation, industry, trade custom, and practice. Any disputes arising out of this will be resolved by applying the law of contracts.

The forms procurement business is carried out by the supply manager as efficiently and expeditiously as possible.

Rather than legal consideration, it is the primary responsibility of the purchase manager to buy policies and practices In case of contractual disputes, negotiation is the best business solution in terms of cost than legal action.

The lawsuit can alienate a good supplier and could destroy the business relationships forever and the outcome of any court case is uncertain.

In the case scenario, the legal actions could have been prevented by the effective action of negotiation by the business manager. The unfavourable decision of the court must have been avoided by the expedite action of the business manager.

The dispute resolution :

a. discuss the problem with the supplier

b. consider the aspects when trying to solve the dispute: (1) time, (2) money, (3) the complexity

and/or formality of the method of dispute resolution, (4) stress, (5) visibility, and (6) damage to the

relationship.

c. Negotiation: to avoid further confrontation

d. Mediation: Introduction of the third party to suggest and encourage possible solutions - f the negotiation doesn’t come to a mutually agreeable solution

e. Litigation: the case may be brought before an arbitrator or before a court

f. Arbitration: outcome is in the hands of the third party. Usually consists of one or three arbitrators and they make a decision on the basis of the facts and the law

g. Courts: The lawsuits may be heard by a judge or by a jury and the litigation will proceed based on relevant court rules of procedure and the relevant rules of evidence

will prescribe what evidence may and may not be presented to the trier of fact.