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“When a Defective Product Becomes a Retailer’s Problem: Indemnification Agreements and Available Defenses,” Inside Counsel

September 29, 2014
Jennifer L. Rediehs

“In many jurisdictions throughout the United States, anyone within the supply chain, including the retailer, can be found liable for personal injuries caused by a defective product. Retailers can avoid potential product liability claims by entering into an indemnification agreement with the manufacturer of the products they sell. However, this form of agreement is useless if a plaintiff is unable to sue the manufacturer due to the manufacturer’s bankruptcy or some other technicality,” write Matthew R. Shindell and Jennifer L. Rediehs, attorneys in Goldberg Segalla’s Product Liability and Risk and Litigation Avoidance Strategies Practice Groups.

“Many states require a manufacturer to defend and indemnify a retailer when an issue arises with their product. However, a retailer can protect its interest even further by including some crucial information in its indemnity agreement with the manufacturer. … Such an indemnity provision protects a retailer from any personal injury or property damage claims involving the subject product.”

In this article, Matt and Jennifer provide best practices for crafting successful indemnification agreements and explain there are more options available to retailers than they might think if they face an unanticipated product liability lawsuit. By understanding defense options such as superseding cause, intervening force, or a plaintiff’s reckless conduct, retailers may better assess potential risk regarding the products they sell and will be better able to defend themselves if they do become embroiled in a product liability suit.