Tooling Delay Remedies

Penalty Clause

Liquidated damages are the most common form of compensation, usually calculated as a percentage of the tooling cost for each day of delay. Under the framework of tooling delay remedies, these amounts are often deducted from the final payment owed for the equipment. This creates a direct financial consequence for the supplier’s failure to manage the fabrication timeline.

The contract should define the exact point at which the tooling is considered complete, such as the approval of the first article sample.

Production Impact

Delays in the creation of molds can force a buyer to pay for air freight to meet their delivery deadlines to retailers. To recover these extra expenses, tooling delay remedies may allow the purchaser to bill the supplier for the difference between sea and air shipping costs. This ensures that the manufacturer bears the cost of the urgency they created.

If the delay is extensive, the buyer might even have the right to cancel the order without penalty.

Cure Period

Contracts often provide a short window for the supplier to fix issues before the full weight of the penalties is applied. During this time, the manufacturer can allocate additional resources or labor to get the project back on track. If the supplier fails to rectify the situation within this period, the tooling delay remedies become fully enforceable.

Some agreements also include a right for the buyer to remove the unfinished tooling and complete it at another facility at the original supplier’s expense.