supply constraint
Definition
A supply constraint is any factor that limits a seller's ability to produce or deliver goods and services in the quantity that buyers want. This could be a shortage of raw materials, limited factory capacity, transportation bottlenecks, or regulatory restrictions that cap how much a business can produce or sell.
Example
If your contract requires you to deliver 500 custom t-shirts per month but your supplier can only provide enough fabric for 300, that fabric shortage is a supply constraint that could put you in breach of your agreement.
Watch Out
Courts rarely accept supply constraints as an automatic excuse for failing to meet your contractual obligations, so you need a force majeure or supply shortage clause written into your contracts before problems arise.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.