The core issue is the alignment of the transfer of title/risk with the opportunity to inspect. If risk passes upon delivery, you become the owner of potentially damaged or non-conforming goods the moment they arrive, before you can check them. This undermines your right to reject faulty goods and shifts significant risk onto the buyer. While A touches on risk in transit, the clause specifies ‘upon delivery,’ which typically means once the carrier has delivered them, making transit risk a separate issue governed by the chosen transport terms.

The first practical step is to understand your contractual and legal position. The existing contract may contain clauses that protect you in the event of a supplier merger or acquisition (e.g., clauses prohibiting assignment without consent, or allowing termination for change of control). This review will define your leverage and options (e.g., renegotiation, exit) before deciding on a market test or conceding on price.

This tests the ability to evaluate early payment discounts. Paying 95% to settle an invoice 50 days early (from day 60 to day 10) equates to an annualized interest rate. The formula approximates (Discount % / (100-Discount %)) * (365 / Days Paid Early) = (5/95)*(365/50) ≈ 38.4% annual benefit. Since this 38.4% far exceeds the company’s 8% cost of capital, it is financially advantageous to take the discount.

The total number of tickets is an output or volume metric, not a performance or quality metric. It does not measure how well the service is delivered. A supplier could meet a high ticket volume KPI while providing poor service. Effective SLAs focus on outcomes (like first-contact resolution, speed, and satisfaction) that align supplier efforts with the buyer’s business needs and user experience.

Contractual integrity is paramount. All changes must be managed through the formal, agreed change control or variation procedure outlined in the contract. This ensures the variation is properly documented, priced, assessed for impact on other contract terms (like warranties), and authorized. Skipping this formal process (e.g., with verbal or email approval) creates risk, potential disputes, and ‘scope creep’.

The fundamental principle is that the contract itself is the primary source of rights and obligations. A clearly drafted clause that specifies an objective, verifiable index (like PPI) as the mechanism for price adjustment creates a valid, enforceable right for the supplier to apply the increase, provided the calculation is correct. The other factors (reputation, common use, budget) are contextual but do not provide contractual validity.

Professional contract management focuses on achieving outcomes and preserving value. The most constructive approach for a first-time, consistent underperformance in an otherwise good relationship is collaborative problem-solving. A meeting to diagnose the cause (e.g., your ordering patterns, their capacity issues, a sub-contractor problem) can lead to a joint corrective action plan. Escalating to penalties or breach notices should be reserved for situations where collaboration fails or the breach is serious.

The principle of good faith implies honesty, fairness, and cooperative conduct between parties to a contract, going beyond the strict letter of the law. It involves acting in a way that supports the mutual purpose of the contract. Scenario C exemplifies this through collaborative problem-solving. The other options demonstrate adversarial, literal, or opportunistic behaviors that, while potentially legally permissible in some jurisdictions, contravene the spirit of good faith.

Procurement governance requires transparency, accountability, and demonstrating value. If the contract contains a pre-agreed, clear extension option (often with predefined terms or a pricing mechanism), exercising that option is typically the most compliant and efficient path. It was part of the original competitive award. If no such clause exists, then C (market benchmarking) or B (new tender) would become necessary to justify the continued spend and avoid accusations of non-competitive award.

The core issue is the alignment of the transfer of title/risk with the opportunity to inspect. If risk passes upon delivery, you become the owner of potentially damaged or non-conforming goods the moment they arrive, before you can check them. This undermines your right to reject faulty goods and shifts significant risk onto the buyer. While A touches on risk in transit, the clause specifies ‘upon delivery,’ which typically means once the carrier has delivered them, making transit risk a separate issue governed by the chosen transport terms.0