30-second answer
A brand may demand targets while being unable to supply, or may allocate popular SKUs to DTC and other regions. A target miss can therefore reflect both distributor performance and brand supply failure.
Applied situation (illustrative)
Consider a Australian distribution scenario: Demand rises just as production falls short, and the supplier reallocates limited stock between channels. Purchase-order acceptance, forecast commitments and allocation communications become central evidence.
Classify the problem before calling everything “breach”
What the brand should focus on
Brands need transparent forecasting, confirmed lead times, shortage notices and allocation rules, especially where exclusivity depends on supply.
What the distributor/agent should focus on
Distributors should preserve purchase orders, confirmed dates, delays, customer cancellations and lost deals to quantify supply-caused performance gaps.
Clauses and records to check
- Accepted orders
- Forecast status
- Allocation priority
- Delay notice
- Substitute supply
Compare accepted purchase orders with forecasts and the supplier’s allocation notices during the shortage. For an Australian transaction, identify the contracting party and location of performance. If the model operates as a franchise, check current applicable requirements before changing fees or exit terms.
Additional point for Australia
Check the Australian contracting entity, the actual course of dealing and the market in which obligations were performed.
Financial exposure and response options
Compare accepted orders with actual delivery, alternative sourcing cost and provable customer losses.
Settlement terms worth writing down
For this Australian arrangement, write down how accepted orders, allocation priority and substitute supply will be handled. Set dates and responsibilities for payment or handover, and state what happens if an agreed step is missed.