How do you assess the risks and benefits of terminating a vendor contract due to a dispute?

In my experience due diligence is key. Gather all documentation that led to the decision of the contract termination. The first piece of documentation to reviewed is the contract/agreement. I spoke to the parties involved, contacted my account manager (Never deal with the customer service representative who has no authority)! Gather invoices, emails, customer complaints and start a conversation. Definitely assess the risk and inform your customer...Are they willing to pay the ETF? Even with a large credit dispute or contract dispute you don't want to burn your bridges. Remain calm and patient, only escalate your request to the executive level IF you have to. Again, in my experience it was beneficial to pay the ETF and change providers.

Review the contract's terms and conditions VERY carefully. Find the clauses you believe are grounds for termination or penalties. Research and pull supporting documentation. Of import, liaison with your internal teams to ensure your analysis of the terms conforms with your company as well. Ensure the authority you believe has control of the contract upon a dispute is confirmed. Ensure your company is compliant with the terms and conditions before advising the vendor of their non-compliance. Abide by all notice periods and clauses that govern your company's conduct. On the other hand, if you want to salvage the vendor contract, request a global review of the terms with the vendor. They may have the same goal in mind to amend the contract.

"Mediation" by an unbiased third party is not the scary concept you've been warned about. It does not mean you have "failed" at the negotiation. First, ask the vendor to annotate the contract. You do the same. Evaluate the proposals to identify immediate solutions. Then move to the vendor's proposed changes that may not be in the best interests for your company. Prepare a memo after this practice identifying areas with definite solutions, areas of concern and requests that just are not feasible or not in the best interest of your company. This is where the mediator comes in. I come across skilled consultants offering mediation right here on LinkedIn on a regular basis. Reach out. Request details. (Affordable consultations may be available!)

I'd agree with Ms. Ferreira's point here, pure acceptance is not an option. Even in the event that you are aware that raising the issue will have no material impact on improving the services you need to take the time to contact, raise issues, and most importantly document that these issues were raised. While each contract may outline different procedures and events of default, at least one of the factors common to all contracts is that you won't get credit for issues you haven't spoken up about. When the performance drops to the point of terminating the contract (if it's not the first instance) you'll be glad you documented all the smaller events up to the point of termination. That paper trail is critical to your vendor profile.

I disagree with the alternative of "accepting the vendor's performance or quality as is". This sets a precedent you do not want to set. Letting one vendor slide just a little can lead to complete non-compliance with that vendor, and that mindset then may result in multiple failing contracts. The contract was negotiated to outline the parties' expectations. All sign the contract indicating they understand. As soon as you see expectations not being met, do not accept this. Discuss with your point of contact first. Then, if alternative solutions are necessary explore them. Do not be afraid to bring your concerns to your legal team. Definitely do not be afraid to put the vendor on notice regarding the issues and potential consequences.