With the opening of businesses around the country and the loosening of restrictions, many people are starting to make purchases that they have held off on. This sudden shock however, has resulted in high prices as product production has only recently started up again. Recently the US Bureau of Labor released their data showing a 5% increase in inflation, the highest in over a decade. Categories such as gasoline, cars, and transportation all saw double digit increases. Whether these higher prices are temporary or represent a long term jump in prices, this situation has put extra costs on many businesses. Over the past decade many policy makers, economists, businesses, and consumers assumed that our low rates of inflation were the “new normal”. Prices would be mostly unaffected by Covid as they were unaffected during the ’08 crisis. Our knowledge from that situation and the years since changed our expectations for the future. Today these new costs can have major effects on business profits while also creating a desire for parties hurt by these price increases to renegotiate previous contracts.
Contracts are often seen as a system of assurances. Each party is protected against unexpected or undesirable behavior of the other and also has a legal recourse if affected by such behavior. However situations outside the control of the parties may not always be accounted in the contract. What happens if the cost of material unexpectedly increases? Can I increase the price when the cost of shipping increases? What role does the inability to purchase material at a previously negotiated rate play? All these questions are things that should be answered prior to a contract’s formation. Unfortunately even the best people cannot always predict every single possibility that may arise. When this happens, it is important to seek experienced legal assistance on these issues so that it is clear what various actions can do to a contract. Violating a contract does not necessarily mean that it is punishable. Sometimes it is used to indicate the desire to withdraw from an agreement. Other times however it can be seen as being in “bad faith”, that is to be done for the purpose of harming the other party.
With the current economic situation, and the possibility of higher prices, it is advised that businesses examine their contracts as well as their financial situation, to determine whether changes are necessary. Not only can such a situation have a detrimental effect on your business’s bottom line, but it can also affect other parties from your suppliers to transportation, and from wages to rent. It is therefore important to have a legal team on your side.
At Thooft Law we can provide the knowledge necessary to navigate this difficult time. We can review your contracts and agreements and assist you in navigating your legal options. Our team has helped clients in many different situations and can help your business as well. Our extensive knowledge of business law has made Thooft Law a go-to law firm for many clients in Minnesota and North Dakota. Call us at 651-485-1254 or email [email protected]. Check us out on Facebook, Thooft Law, LLC.