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Editor's Note: The following sample letter may be modified by a customer or purchaser to request information from a critical supplier about its operational readiness and business outlook in the context of a significant change in circumstances such as the novel coronavirus (Covid-19) pandemic.
[Vendor Name and Address]
[Vendor Contact Person]
Re: Sales Agreement dated [Date]
Dear [Vendor Contact Person]:
The worldwide impacts of the Covid-19 (coronavirus) pandemic are having a devastating effect on global supply chains. We are taking this opportunity to contact you, one of our major suppliers, to request information regarding the extent to which your operations are being affected, including an estimate of likely duration, and steps you are taking to prevent any future anticipated disruptions. We believe it is in both of our interests to assess the strength and resilience of our business relationship during these unsettling times.
In this regard, we request a meeting with your senior financial, operating and risk management personnel in the next [two weeks] to review in broad terms your business readiness and emergency plans as they relate to our commercial relationship. In particular, we are interested in [reviewing your critical parts and raw materials sourcing strategy, including any plans to diversify and qualify additional supply sources, your assessment of any potential vulnerabilities or problem areas, and back-up, disaster recovery and emergency readiness capabilities. Finally, we request that you share with us your short- and long-term outlooks for your business as it relates to our relationship.]
Comment: Parties will be assessing their important commercial relationships particularly supply chain relationships as businesses stabilize in the face of the coronavirus pandemic. The pandemic has highlighted the vulnerabilities and interdependence of global transportation and supply relationships. The benefits of supply diversity and flexibility – both geographic and numerical – may lead to new paradigms and reconsideration of existing business practices.
Your vendor agreement may contain information-sharing obligations, in addition to representations and warranties concerning the state of the parties’ overall business and operations. If so, you may consider mentioning that your request is generally or specifically consistent with these contractual commitments.
[We will be prepared to execute a customary confidentiality agreement with you to protect the confidentiality of any information you make available.]
Comment: Should the vendor agreement contain confidentiality obligations, you may wish to review those provisions to determine if they are adequate to cover the topics to be discussed in the meeting.
Information sharing in these customer/supplier meetings will likely be two-way, and protection of business sensitive data is customary. Some disclosed corporate information may be considered material and, for public companies, individual recipients should be reminded of the rules against insider trading.
Please contact the undersigned to discuss additional details and to schedule the requested meeting.
Very truly yours,