Product liability refers to the legal responsibility of manufacturers, distributors, suppliers, and retailers for injuries or damages caused by defective products they have provided to consumers.

Although the absence of federal reform of products liability law means that there probably will never be complete uniformity among the 50 states on how products liability issues are confronted, chances are that if you design, manufacture, assemble or distribute goods, as opposed to providing services, you could find yourself involved in a products liability suit.

To produce, sell and distribute goods that are reasonably safe when used as intended,
businesses must focus on reducing product liability. While product liability prevention
programs differ from business to business, key areas of focus must include risk transfer: risk transfer is when one party assumes the liabilities of another and gives businesses better control of the exposures they are willing to undertake.

One way to accomplish risk transfer is definitely through contracts, specifically ones that include an indemnity clause and additional insured requirements. It's worth noting that indemnification agreements are independent of insurance and work
by transferring legal liability from one party to another.

At Linares Associates, we are proactive in product liability matters, keeping pace with
regulatory changes and horizon scanning for our clients to help them manage risks. We advise clients on product liability issues regardless of where they are in the supply chain and often before a product goes to market.

Evaluation of product liability and risk for a product manufactured outside the United
States is complex and nuanced. A necessary threshold consideration is the relationship between the non-U.S. manufacturer and its U.S. distributor. That relationship will impact numerous litigation-related issues for both parties, including jurisdiction, scope of defense and indemnification obligations, discovery, and collection of judgments.

The U.S. distributor and the foreign manufacturer should, therefore, consider a number of key elements when structuring their relationship. Regardless of whether the distributor and manufacturer are affiliates within the same corporate family, the relationship should be well-defined and address the following issues:

• A discussion about agency (or lack thereof)
• Clearly defined roles around design, manufacture, regulatory, compliance and labeling responsibilities for the product
• Clear boundaries around the sharing of information, employees, directors and officers
• Risk transfer considerations such as limitations of liability, defense and indemnification, including insurance coverage

In addition, and especially for companies that are affiliates in the same corporate family, a clear corporate distinction is critical to prevent the foreign manufacturer from being brought into court based on the court’s jurisdiction over the affiliated U.S. distributor.

At Linares Associates PLLC, we assist our clients in drafting general acceptance and hold harmless/indemnification provisions. These provisions specify that businesses will not be held liable for losses that stem from a vendor's or subcontractor's work.