This article notes that transacting with a vendor creates a special subset of problems given their ability to damage your business's brand or reputation. A common solution to this problem involves negative incentive clauses; this article makes two points which need to be kept in mind when creating these clauses. First, the article observes that courts might interpret such clauses as unenforceable penalties; second, there may be alternative means (such as via that vendor's payment schedule) to mitigate the same concerns without the same risk as a negative incentive clause.
- Summary by FizzLaw Team
Read the Article at:
Using Negative Incentives in Outsourcing Agreements to Drive Performance