Legal Fallout From Supply Chain Disruption

The downside of just-in-time manufacturing has been laid bare by the Coivd-19 pandemic, and a post from Foley & Lardner looks at how supply chain disruption has played out in one major sector, the U.S. auto industry. In an analysis that likely applies, more or less, to every major manufacturing sector, the authors identify five major impacts of the disruption, with particular attention to potential legal issues. First on their list of impacts, shortage of raw materials, may for example implicate the Uniform Commercial Code, and in particular Section 2-615, which defines the doctrine of “commercial impracticability.” The authors discuss the test that courts have generally applied to determine whether that doctrine can be invoked by a “non-performing seller.” Other impacts on the authors’ list include force majeure claims and warranty claims.