Vertical arrangements and the questions reviewers ask first
Reviewers look at the record around a vertical arrangement before they look at the contract. They want to know who was shut out and by how much, what the internal language says about intent, and whether the business reason was written down at the time. Answer those three questions early and most reviews stay short.
Where a review actually begins
A supply agreement rarely draws attention because of the words on its face. It draws attention because of what happened around it: the emails that set a price floor, the deck that promised a rival would be squeezed, the incentive that made exclusivity the only sensible choice for a distributor.
That order matters for a board, because it changes what the first fortnight should be spent on. Time given to polishing contract language is time not spent on the record that will be read first.
Who was foreclosed, and by how much
The first question is arithmetic before it is law. Reviewers want to know what share of the route to market an arrangement takes off the table, measured over a period that reflects how customers actually buy. If the answer is small and the period is honest, most of the theory collapses early.
Assemble that arithmetic yourself, with the assumptions written beside it. A number produced by the company and explained plainly persuades far more than the same number extracted later.
Sales language is competitive by habit. The fix is not to police vocabulary after the fact; it is to record the business reason while the term is agreed.
Serrano Litigation, partners' note
What we ask a client to do in week one
- 01
Name the custodians
One custodian for each business line and one clerk who owns the document schedule.
- 02
Freeze deletion
Suspend routine deletion in writing on the same day, and confirm it to every vendor.
- 03
Collect the planning papers
Gather the documents that explain the arrangement, including drafts that were never finalised.
- 04
Fix the cadence
Set a fortnightly call with a fixed agenda so the board hears the same shape of update each time.
What the first board update should contain
Boards rarely need the legal theory in month one. They need three things on a page: what has been asked for, what the company has committed to in writing, and which decision falls due before the next meeting.
Common questions
Are exclusive supply terms unlawful?
Not as a rule. Most are ordinary commercial terms. Scrutiny tends to follow share, duration and the evidence of purpose around them.
Should we amend the agreement now?
Usually not in the first weeks. Changing terms mid-review can read as an admission and complicates the record. Discuss timing with counsel first.
How long does a review like this take?
It varies widely. Many close within months when the arithmetic is clear and the record is produced in good order.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Every matter turns on its own facts.
