How to Manage Contract Claims and Prevent Supplier Disputes

Today, I was involved in a challenging discussion with a service supplier. The issue centered around a potential contract claim I was preparing on behalf of one of my clients, due to recurring delays and continuous delivery failures from the supplier.

What Is a Contract Claim?

From my contract management experience, a contract claim arises when the agreed terms are not followed, or when unauthorized work is performed, contract changes are rejected, or contractual obligations are not fulfilled by either party. In fact, claims can be initiated by both the customer or the supplier.

However, the existence of a claim often indicates that the situation has already deteriorated. Whether due to overlooked risks, poor contract monitoring, or communication failures, a claim typically reflects a breakdown that has negatively affected the business relationship.

How to Prevent Contract Claims

Whether you are managing contracts as a customer or supplier, proactive contract management is essential to avoid disputes and costly claims. Here are some key strategies:

1. Establish a clear and comprehensive contract — and more importantly, actively manage it throughout its lifecycle.
2. Include performance measurements that can provide early warnings if obligations are not being met.
3. Maintain open and regular communication with the other party to clarify expectations, identify risks early, and strengthen trust.

Contract review meetings are a valuable opportunity to evaluate both parties’ obligations, assess compliance levels, and resolve potential misunderstandings before they escalate into claims.

As a customer, don’t assume that your suppliers automatically understand your expectations. Take an active role in clearly communicating your needs, offering support when necessary, and removing potential obstacles. This collaborative approach benefits both sides: the supplier can deliver services more effectively, and the customer receives the agreed-upon deliverables.

How to Handle Contract Claims as a Contract Manager

Even with the best contract lifecycle management practices, claims can still occur. When they do, it’s important to stay calm—this isn’t necessarily the end of the business relationship.

But never ignore a claim! Every claim is an opportunity to demonstrate professionalism and problem-solving capabilities while protecting the business partnership.

First, review your contract’s change management clauses. In many cases, these mechanisms can be applied to claims resolution. Although change management and claim management are technically different, both processes share similar steps that can help restore communication, trust, and structure to the negotiation process.

Steps to Manage and Resolve Contract Claims

1. Apply the contract change control process as a framework to address the claim.
2. Identify the root cause using tools like the Fishbone Diagram or 5 Whys Analysis.
3. Validate the claim’s legitimacy and engage in open discussions with the other party to find a fair resolution.
4. Implement preventive actions to avoid similar claims in the future, and if needed, formalize these through contract amendments.

The Importance of Claim Management Skills in Contract Lifecycle Management

Claim management skills are a vital part of any contract manager’s toolkit. When handled correctly, they allow you to demonstrate leadership, resolve conflicts effectively, rebuild trust, and limit potential damage to the business relationship.

Are Contract Claims a Sign of Poor Contract Management?

In many cases, yes. The absence of proper contract lifecycle management processes often leads to misunderstandings, unmet expectations, and ultimately, claims.

By applying best practices in contract management, businesses can significantly reduce the likelihood of disputes and ensure smooth, collaborative supplier relationships.

If you agree, or would like to share your perspective, feel free to click my name below and send me an email — I would be glad to exchange ideas on effective contract management practices.