As a buyer for a large stationery company you have been notified of an upcoming price increase from your provider for paper. When you check the contract you realise that it expired 30 days ago so you are no longer in contract. You realise the supplier can now charge what they like.
You call the supplier and attempt to negotiate over the phone but are unsuccessful.
What would be the best thing to do?
A. Cancel the contract immediately without attempting any negotiations
B. Accept the price increase as it appears reasonable
C. Threaten the supplier that you will cancel all contracts unless they retract the price increase
D. Try to bargain with the supplier offering a further contract
Explanation:
Once the contract has expired, the buyer no longer has contractual protection on pricing, which significantly weakens their position. However, this situation also creates an opportunity to re-establish leverage by offering future value. By proposing a new or extended contract, the buyer introduces certainty, continuity of business, and potential volume commitment for the supplier, which can be traded in return for moderated pricing. Accepting the increase without challenge offers no commercial control, while threats or immediate cancellation risk damaging the relationship and supply continuity. CIPS guidance emphasises using future commitment as a bargaining lever, especially when informal negotiations fail and contractual leverage no longer exists.
Reference: CIPS L4M5 Commercial Negotiation (CORE), 2nd edition C LO 1.2: Applying negotiation techniques in real commercial situations.
