Notification of adjustments: Overview, definition, and example
What is notification of adjustments?
Notification of adjustments refers to the formal communication or notice provided to relevant parties when changes or corrections are made to a previously agreed-upon term, price, quantity, or any other aspect of a contract, agreement, or transaction. Adjustments could occur for a variety of reasons, such as price fluctuations, inventory discrepancies, contract modifications, or changes in the scope of services. The notification ensures that all parties are aware of the adjustments and can take appropriate action based on the new terms.
For example, if your business supplies products to a retailer and the price of a product increases due to higher manufacturing costs, you would send a notification of adjustment to inform the retailer of the new price.
Why is notification of adjustments important?
Notification of adjustments is important because it helps ensure transparency and clear communication between parties involved in a transaction or agreement. It provides a formal record of changes and ensures that all parties are aligned on the updated terms. Failure to notify of adjustments can lead to misunderstandings, disputes, or legal issues, especially if the changes affect pricing, deadlines, or other critical elements of the agreement.
For SMBs, having a clear and structured process for notifying adjustments ensures that customers, vendors, or partners are kept informed and can adjust their plans or expectations accordingly.
Understanding notification of adjustments through an example
Imagine your small business enters into a contract with a supplier for regular deliveries of raw materials. Midway through the contract, the supplier informs you of a price increase due to rising costs. In this case, the supplier would send a formal notification of adjustment to notify your business of the new pricing terms. This notification ensures that both parties are aware of the change and can adjust their budgets or renegotiate the terms if necessary.
In another example, if your business provides services to clients and needs to extend a project deadline due to unforeseen delays, a notification of adjustment would be sent to the client to inform them of the revised delivery date.
An example of notification of adjustments in action
Here’s how notification of adjustments might be referenced in a contract or communication:
“Due to unforeseen increases in material costs, the supplier hereby notifies the buyer of an adjustment to the price of the products as per the terms outlined in Section 4 of the agreement. The new prices will take effect immediately and the buyer will be billed accordingly from the next order onward.”
Conclusion
Notification of adjustments is the process of formally informing relevant parties about changes made to a previously agreed-upon term, price, or condition within a contract or transaction. For SMBs, ensuring that notifications of adjustments are communicated clearly and promptly helps maintain trust, prevent disputes, and ensure that all parties are on the same page regarding any updates to the agreement.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.