HDAW Report: The risks of carrying non-brand name parts
If you’re a parts distributor, you’ve likely been there. Across the desk sits a smooth-talking salesman who’s got a slick PowerPoint presentation showcasing a new product that’s going to revolutionize the industry. Maybe it’s a friction product, with stopping distance and durability that rivals the most well-known name brands. So what if it’s made in China? So what if it comes in a white box with no recognizable logo attached to it? So what if you’ve never heard of this guy or the company he’s representing before? It works well (so he says), and better yet it’s cheap! Real cheap. How can you say no?
As a distributor or parts shop, carrying unproven, Brand X products exposes you to huge doses of liability, particularly in the US or even if that product is going to end up in the US. Sarah Bruno, a lawyer with Arent Fox, recently told delegates at Heavy-Duty Aftermarket Week that parts shops and distributors are responsible for the quality of the goods they peddle, despite the fact they likely had no part in the manufacturing of said product.
Since most problematic white-box or ‘will-fit’ parts coming into the market are imported by off-shore companies that have no assets in the US, if something goes wrong, plaintiff lawyers will usually turn their buggy, dollar sign-filled eyes on the company that sold the part in question. And according to Bruno, claiming ignorance is not a defence. She said distributors can be found liable even if they had no knowledge the part posed a risk.
So what’s a distributor to do? Let’s face it, there are valid reasons for carrying will-fit parts. The Bendix’s and ArvinMeritors’ of the world don’t ink distribution deals with every shop that comes along. And if your customer requires a common part and the only manufacturer willing to supply you with that part is not one of the big names, you owe it to your customers to carry an alternative or you risk losing their business altogether.
Bruno said it’s essential you do your due diligence before agreeing to distribute parts for a new supplier. That could get expensive. Travelling to China to visit their production facility may seem excessive, but as Arent Fox lawyer Tony Lupo said: “If you’re not going over to check out their quality, you can’t really be sure. If you’re sued, the first thing a plaintiff lawyer is going to ask is ‘What have you done to check the specifications of this product?’”
Bruno advised parts distributors to put contractual safeguards in place when agreeing to carry parts from a new supplier. At the very least, that should include indemnity clauses that protect the distributor from blame should something go wrong, she said.
With the influx of new off-shore parts into the North American marketplace, Lupo said it’s inevitable that a sup-par part will eventually cause a tragedy and when the lawyers get involved, the distributor will likely get caught in the crosshairs.
“It’s only a matter of time before something happens,” he said. “How much risk do you want to take? If we sell inferior products and that causes a tragic accident, we can’t hide behind the idea that this isn’t our problem.”
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