Dorsey partner and co-chair of the Product Liability group Chip Magid discussed in Condé Nast Portfolio.com the risks to American companies selling defective products assembled overseas. This year has witnessed a series of product safety scandals involving imported goods, including toy manufacturer Mattel's recent recall of nearly one million Fisher-Price toys.
Magid said that depending on contractual indemnities is not sufficient protection for a U.S. company outsourcing the manufacture of a product to a foreign supplier. "It's possible in theory to seek indemnity but also unwise to rely on that. If you have a supplier in China, Pakistan, what-have-you - how do you sue them? How do you make the judgment stick? That's one of the vexing pieces in our increasingly globalized economy." Magid also warned that in the wake of publicity surrounding tainted imports, business will find it harder to avoid legal responsibility. "You can't claim that [a defective product] caught you by surprise.... Now, it's going to be incumbent upon American companies to police their entire supply system - and not just go for the lowest price."
"The Next Big Import: Lawsuits" was posted August 2, 2007, on the online business news magazine Condé Nast Portfolio.com.