How to Avoid a Costly Recall

Tips for U.S. companies doing business with foreign manufacturers.

Bridget Calhoun, a partner in Crowell & Moring LLP's Washington office practicing antitrust and consumer protection law, offers these basic strategies to help U.S. companies mitigate the risks of importing unsafe products when contracting with foreign manufacturers:

1. Conduct adequate due diligence of foreign manufacturers, such as:

  • Check the manufacturer's litigation and claims history.
  • Request references (preferably other U.S. customers).
  • Purchase and test products manufactured for others.
  • Investigate the manufacturer's finances and insurance status.

2. Structure protective terms and conditions in the purchase contract, including:

  • A broad indemnification clause;
  • Comprehensive representations and warranties and right to return non-confirming products;
  • Comprehensive general liability insurance;
  • Permission to conduct facility, product and records inspections; and
  • A dispute resolution clause.

3. Perform quality control checks at multiple points in the manufacturing process, including:

  • Multiple quality control checks on samples throughout the manufacturing process ;
  • Periodic inspections of the manufacturer's books and records; and
  • On-site facility inspections.

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