Most supplier contracts are read twice: once at signing, and once when something has gone wrong. By the second reading, the dispute rarely turns on the definitions section or the notices clause. It turns on a handful of provisions that allocate money and control exit. Who pays when performance fails, who can leave and when, and what price applies in the meantime.
In our experience that handful is remarkably consistent: liability caps, termination rights, auto-renewal, indemnities and price-adjustment mechanisms. Disputes concentrate there because that is where the contract stops describing cooperation and starts allocating loss. Those clauses deserve most of your attention before signing, and they usually get the least.
Liability caps and exclusions
When a supplier's failure causes real damage, whether a production stop, a data incident or a delayed launch, the first question is what the contract lets you recover. Two mechanisms work together. The cap sets a ceiling on total exposure. The exclusions, typically of indirect or consequential loss, often cut deeper than the cap itself, because much of your actual harm, lost profit and business interruption, may fall exactly into the excluded categories.
Read both together, and read whose favour they run in. Many supplier templates cap the supplier's liability tightly while leaving the customer's payment obligations and liability untouched. Swiss law also sets outer limits: an advance exclusion of liability does not cover unlawful intent or gross negligence (Art. 100 CO), so a cap drafted to swallow everything will not hold as written. Note too that a supplier is in principle answerable for the subcontractors and staff it uses (Art. 101 CO), which is worth checking against any clause that tries to push that risk back to you.
The practical check: put your realistic worst case next to the cap and the exclusions, and see what would actually be recoverable.
Termination rights and auto-renewal
The second cluster is exit. Many supplier disputes are not really about performance. They are about whether the customer can leave a relationship that no longer works. Three things determine that: the ordinary termination mechanics, meaning notice period and earliest exit date; the grounds for extraordinary termination and how "cause" is defined; and any auto-renewal clause that silently extends the term if a notice window is missed.
The gap to watch is persistent, mediocre performance. Bad enough to hurt, not bad enough to qualify as a material breach. If the contract gives you no exit for that scenario short of waiting out the term, you are negotiating every service issue from a position of weakness.
Before signing, ask a simple question. In the worst plausible case, how long are we bound, and by which combination of initial term, renewal and notice deadlines?
Indemnities
Indemnities shift specific risks wholesale: third-party claims for intellectual-property infringement, losses from data incidents, regulatory exposure. They matter in disputes for two reasons. They often sit outside the liability cap, so they can dwarf every other number in the contract. And they are asymmetric by design, so the question is always which indemnities you give, which you receive, and whether each is capped.
A customer indemnifying a large supplier for broadly defined "use of the services" has often taken on more risk than the rest of the contract combined. Indemnities reward slow, literal reading: the defined trigger, the covered losses, the conduct of claims. Vague indemnity language is a common seed of later disputes precisely because each side signs believing it means something different.
Price-adjustment mechanisms
Long-term supply relationships eventually meet inflation, currency movements and shifting input costs. A contract that is silent on price adjustment invites renegotiation by conflict: the supplier demands an increase the text does not provide for, and the dispute is really about leverage. A contract with an adjustment mechanism avoids that fight and creates another one, over the mechanics themselves.
Check four things. What triggers an adjustment. How the new price is determined, whether by an index, by documented costs or at the supplier's discretion. Whether the mechanism works in both directions. And what your options are if an adjustment lands far above expectations. A termination right linked to significant price increases is often the most valuable protection, because it converts an open-ended exposure into a decision point.
What to check before signing
None of this requires reading the whole contract with equal intensity. It requires reading five clauses with real intensity, against your own scenarios rather than in the abstract: what happens if the supplier fails badly, if we want out, if we miss a renewal date, if a third party sues, if costs move. Whether a given cap or indemnity is acceptable always depends on the facts, on deal size, dependency and alternatives.
Reviewed this way, most supplier contracts can be negotiated to a sensible balance with a short list of targeted changes. If you are about to sign a significant supplier agreement, or want your existing ones checked against these five points, we are happy to discuss it.
This is general information, not legal advice. How it applies to your situation depends on the facts, if in doubt, ask.
