WHOLESALE DISTRIBUTION BEST PRACTICES

Leading wholesaler-distributors depend on NAW Institute for Distribution Excellence groundbreaking research studies because they help solve real-world business challenges.

 

YOUR 5-YEAR GROWTH ROADMAP


 

Order copies of Facing the Forces of Change®: Navigating the Seas of Disruption for everyone on your team!

 

NAW News

Wholesaler-distributors may be held liable for product defects

Tips from The Hartford - February 2008

Wholesaler-distributors, as well as manufacturers, can be subject to a wide variety of laws and regulations governing product liability. Bodily injury and property damage losses may arise from the product itself, the product packaging, instructions for use, labels, warnings and other "on product" messages.

The manufacturer, not the wholesaler-distributor is usually held responsible for injury arising from a defective product, because the wholesaler-distributor generally has no control over the design, assembly or quality of the item. However, wholesaler-distributors may be held liable for product defects under certain circumstances, including:

  • Some wholesaler-distributors provide installation, service or repair work as a "value-added" for their customers, which may increase their product liability exposure in the process.
  • Wholesaler-distributors that modify, repackage or re-label products may assume a greater liability than those who don't. Modification of the product can include any modification of instructions or warranties.
  • Repackaging under the wholesaler-distributor's name may increase the exposure substantially.
  • The United States has some of the most stringent product safety standards in the world. When goods are produced overseas, they do not necessarily comply with these standards. When a wholesaler-distributor imports products from a foreign manufacturer who does not carry U.S. product liability coverage, they can assume the product liability exposure.
  • If the manufacturer is insolvent or otherwise unavailable (foreign manufacturers with no coverage inside the U.S. for example) the wholesaler-distributor can be held liable for any defect in the product.
  • When the wholesaler-distributor is directly responsible for the defective condition, i.e. if they have damaged the product while repackaging, or by making product modifications, they may be held liable for product liability.
  • If a wholesaler-distributor had knowledge of the defective condition prior to the sale and did nothing, they can be held accountable.
  • If a wholesaler-distributor recommended an unsuitable product for the job they may be liable

A significant number of federal and state laws and regulations impact product liability, and it is important to be familiar with them. Two federal organizations that oversee many products going to market are:

Consumer Products Safety Commission (CPSC) - The Consumer Products Safety Commission is charged with protecting the public from unreasonable risks of serious injury or death from more than 15,000 types of consumer products under the agency's jurisdiction. These include products that pose fire, electrical, chemical or mechanical hazards as well those that could injure children such as cribs, and toys. The CPSC web site is www.cpsc.gov.

Food and Drug Administration (FDA) - The FDA is responsible for protecting the public health by assuring the safety and efficacy of human and veterinary drugs, biological products, medical devices, the food supply, and products that emit radiation. They oversee nutritional labeling, including the disclosure of fat, cholesterol, sodium, and sugar content, regulate food descriptors such as "low, "lean," and "reduced," and ensure that ingredient statements provide clear information about products containing major food allergens such as milk, peanuts, and shellfish. The FDA web site is www.fda.gov.

Because many more federal and state regulators have oversight with regard to product safety, as well as the diverse nature and applicability of state product liability laws, it is always wise to consult a qualified products liability attorney to ensure that your business is in compliance with applicable requirements.

Disclaimer

The information provided in these materials is of a general nature, based on certain assumptions. The content of these materials may omit certain details and cannot be regarded as advice that would be applicable to all businesses. As such, this information is provided for informational purposes only. Readers seeking resolution of specific safety, legal or business issues or concerns regarding this topic should consult their safety consultant, attorney or business advisors. The background presented is not a substitute for a thorough loss control survey of your business or operations or an analysis of the legality or appropriateness of your business practices. The information provided should not be considered legal advice.

The Hartford does not warrant that the information of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) will be an appropriate legal or business practice. Further, The Hartford does not warrant that the implementation of any view or recommendation will result in compliance with any health, fire or safety standards or codes, or any local, state, or federal ordinance, regulation, statute or law including, but not limited to, any nationally recognized life, building or fire safety code or any state or federal privacy or employment law.) The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf, or for the benefit of others, to determine or warrant that your business premises, locations, operations or practices are safe or healthful, or are in compliance with any law, rule or regulation. Possession of these materials by a licensed insurance producer does not mean that such producer is an authorized agent of The Hartford. To ascertain whether a producer is a Hartford agent please contact your state’s Department of Insurance or The Hartford at 1-888-203-3823.

The NAW Service Corporation receives compensation from The Hartford for NAW's endorsement and promotion of the commercial insurance products and services of The Hartford. NAW and NAW Service Corporation are not licensed insurance producers or agents of The Hartford. All Hartford insurance products and services are sold through licensed producers or independent agents of The Hartford.

©2007 The Hartford Financial Services Group, Inc. All rights reserved. No portion of this article may be reprinted, transmitted or otherwise reproduced or disseminated by any means, including electronically.