The choice of a lady? – not in this case

Monday, July 30th, 2012

Product Recalls- The choice of a lady?

In the Brian Farrington Limited work with retailers, we are aware of the negative impact a product recall programme can have, as well as
the associated cost. The trading Standards Institute publish on a regular basis product recalls. They relate to a wide variety. One of the latest is Lady’s Choice Spreads and Knorr Soups. The reason is that batches are manufactures in the Philippines using dairy, egg and meat ingredients in premises which do not have the necessary approvals for import into the EU.

There was a recall of Gelert gas double burners GAS 076/077/078. The suppliers recall stated, “it has come to our attention that the product integrity of the above items could be pose a potential safety concern during use. We advise all consumers in possession of these items to stop using immediately and return them……” As a further illustration there was the recall of Kleeneze Universal plug adaptor item number 09610-76 on a product that can potentially cause a risk of electrical shock.

The risk associated with product recalls is directly relevant to buyers. The contract should set out the consequences if there is a recall – consider:

In the event that there is a need for any product recall and it is subsequently discovered that the reason for such recall was defective Goods which formed part of the product the Seller shall:

a)     Reimburse the Company all costs of purchase of the batch of Goods which the defective Goods formed a part

b)     Indemnify the company in accordance with the provisions of Clause 5 below, which shall include (but shall not be limited  to) reimbursement of the Company’s costs  of:
i.      Stopping production and delivery, withdrawing stock rom shelves, returning products to the company and destruction of the products.
ii.     Direct communication with traceable consumers, point of sale recall notices in retail outlets, press releases and publication of recall notices in informing the relevant authorities.
iii.     Setting up a free telephone help desk, instructing a PR Agency and Instructing solicitors.

Buyer’s may now want to check how they plan to manage the risk of product recall.