It seems like whenever product becomes tight or we’re experiencing a gap in production, the question arises “Tom I’m on ad with a buyer for a number of loads to ship this week at a confirmed price with P.O. numbers exchanged, however, due to weather conditions I do not have product available to fulfill my commitment with the buyer. The buyer is threatening to buy against my account if I don’t supply him with the product which has been ordered. What can I do?” Since hindsight is always 20/20, let’s start with what should have been done to avoid this type of problem. When going on ad with the customer, I always recommend that you confirm with your customer the number of units which they are going to purchase, at what price, and the total volume for the duration plus shipping dates and the volume for those individual dates. In addition, I strongly recommend that you include language in the contract that will protect you against weather conditions that prevent harvesting operations or create a temporary gap in availability of product.
It is essential that you send your customer a detailed confirmation at the time you are negotiating the contract clearly stating that availability of product is subject to exclusions when supply is limited or not available due to weather conditions, or other exceptions considered Acts of God. By documenting these exceptions to the contract, you will provide protection in many situations against the possibility of your customer buying against your account due to your inability to fulfill the contract. Acts of God, weather conditions and availability are not understood parameters that are implied into contracts, and therefore they need to be clearly defined and laid out in your confirmation of your ad contract.
For more information concerning this subject please email me at TommyO@wga.com or call me at 949-885-2269.