What If This Happened To You? Evaluating Liability at the Nth degree.

Here’s a worst-case scenario that can happen to just about anyone.

Imagine you are buying batteries from a Chinese manufacturing company. Everything looks fine. You’ve negotiated the deal of a life-time. You even got the supplier to extend the warranty from one year to two explaining how you cannot accept the loss of profits from failed batteries.  The shipments are rolling in, and you think all is fine.

One afternoon you get a phone call from a retailer saying they just found out the battery you sold them caused a fire when it overheated. Fortunately no one died, but half a house is no burned to a crisp.

Next thing you know you’ve been served a summons to appear in court to defend yourself for the malfunction battery. You end up losing and end up paying a huge sum of money. Your losses don’t stop there. You were also instructed to recall the batteries still out on the shelves, and re-inspect the ones in the warehouse.

Utterly disappointed, you demand the Chinese supplier must compensate you. You argue it’s their fault, and but not for their malfunctioning battery, you would of already been able to retire.

The Supplier vehemently denies he owes you anything. Finally, you put enough pressure, he concedes and asks you, “Where in the contract does it say I owe you any money for damages caused by a malfunction battery?” You frantically scramble through the pages looking for something to cling onto, and point to the warranty clause.

Supplier says, “You got me! I owe you one battery. Where should I ship it to?”

The moral of the story is sometimes the risk of deal does not stem from the supplier failing to do what was promised (i.e. not shipping on time), but doing something that was not promised. When you talk to your supplier, think about the hazards of your product and protect yourself accordingly.


1 Comment

  1. Kay Hyde on November 19, 2012 at 3:28 pm

    Contract are legal binding agreement between two parties that is why anything that both parties have agreed should be put to writing so that any liabilitites that is covered in your contract will be shouldered by your supplier. However, if it is not list in your contract then sad to say you can not really run after your suppliers.

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