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Lawsuit!: Reducing the Risk of Product Liability for Manufacturers by Randall L. Goodden

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10

Contracts, Purchase Orders, and Agreements

As we focus on Product Liability Prevention we typically think about the design and function of our product, but another area we need to focus on is the potential liability we can be exposed to through the negligent actions of others. The materials and components being supplied to us from various suppliers, subassemblies from subcontractors, even the actions of installers, field service personnel, dealers and distributors, and many others can ultimately be the source of a defective condition that leads to a product liability lawsuit. So, in addition to improving our designs, warnings, and instructions, we also need to protect our interests through well written contracts and agreements.

The area of contracts and agreements is normally a legal area, either covered by the in-house Legal Department or outside attorneys working on behalf of the corporation. Nonetheless, it is beneficial for the management team and drivers of this focus area to be cognizant of what needs to be in place to help ensure the company is adequately protected in all of its dealings with outside entities.

When it comes to all the different types of contracts that could be in existence within a corporation—customer contracts, purchase orders, supplier agreements, representative agreements, installation and service agreements—a question sometimes surfaces as to “Who is really in charge of controlling all of them?” In a small percentage of the cases, and if the company ...

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