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Guarantees that guarantee nothing
Most supply contracts are read once, at signature, by people who want the deal to start. Three clauses repay a second read, because each looks like protection and each has a version that protects nobody.
1. The indemnity that is uncapped in one direction only
An indemnity clause promises to cover the other side's losses if something goes wrong. The dangerous version caps your liability to them but leaves their liability to you uncapped, or caps theirs at "fees paid in the preceding twelve months" while yours has no floor at all. Read both directions. A cap that only appears on one side of the clause is not a compromise, it is a gift.
2. The sole-remedy clause
"The supplier's sole obligation for defective goods is repair or replacement." That sentence is reasonable when the goods are cheap and the loss is small. It is a serious problem when the defective component stops your own production line, because it removes your claim for the consequential loss that follows. If your business depends on the goods arriving correct, the sole-remedy wording needs either a carve-out for consequential loss or a service credit that reflects the real exposure.
A remedy that is "sole" is a remedy that replaces every other claim you might have had.
3. The guarantee from a company with nothing in it
A parent company guarantee is only worth the balance sheet behind it. Ask for the guarantor's most recent filed accounts before you accept the guarantee, and check that the guarantor is the entity you think it is — group structures often place the trading company and the asset-holding company in different jurisdictions, and the guarantee sometimes comes from the wrong one. A guarantee from a shell incorporated last year is a document, not security.
What to do about it
Read the indemnity in both directions and check whether the caps and the carve-outs are symmetric. Check whether any clause describes itself as the sole remedy, and if so, what loss it removes. For any guarantee, obtain the guarantor's accounts and confirm the entity name matches the one on the register. These are twenty-minute checks against contracts that run for years.
A note on negotiation
None of this means every contract should be renegotiated. It means knowing which clauses carry the exposure before signature, so that a decision to accept the risk is a decision rather than an oversight. Where the other side will not move, the alternative is often insurance or a staged payment structure, not a longer argument.
This note is general information, not legal advice. It does not create a solicitor–client relationship and it may not reflect the law as it stands when you read it. For a matter of your own, send an enquiry.