LOVE ME TENDER Strategies to Transfer or Avoid Liability in Product - - PowerPoint PPT Presentation

LOVE ME TENDER

Strategies to Transfer or Avoid Liability in Product Claims

Daniel E. Tranen Partner

April 27, 2016

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The Highlights of this Webinar

• Why tender in a product liability claim?
• How, when and to whom to make a tender?
• Strategies for effective tenders (including

insurance).

• Ways to respond to, delay and/or defeat

tenders.

• A checklist for being prepared for this process.

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What is a Tender?

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Why Tender in a Products Claim?

• Shift focus to responsible party.
• Contractual/statutory/common law rights to

do so.

• Share/shift risk to other insurers.
• Consolidate defense.
• Reasons not to tender?

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Bases For Tender Requests

What to look for:

• Statutory/common law risk shifting.
• Contractual duties – most common.
• Via responsible party’s policy of insurance.

The key is to make sure to identify each and every tender opportunity and employ them all

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Tender: How, When and To Whom?

• Make the request in writing explaining the

basis for the tender.

• Make tender as soon as possible with thought

to mounting expenses, but with strategic considerations for timing of tender.

• Focus on parties “upstream” and review all

contracts.

• Look for insurance.

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• “The agreement provided…”
• Request to “indemnify, defend and hold

harmless”.

• “From any and all liabilities, claims, damages

and/or expenses”.

• Explain why the tender applies in this case.
• Issue deadlines and be prepared to force the

issue!

Language of the Tender

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Typical Product Liability Tenders: Tender From Distributors to Manufacturers

• Generally, manufacturers have a greater exposure.
• Pass-through exposure?
• State law analysis: At least twenty-five states have

enacted some form of legislative protection to shield non-manufacturing sellers from liability.

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Tender from Product Manufacturers to Component Part Manufacturers

• Where did the defect

come from?

• Quality agreements.
• Are product

manufacturers “vendors” of products sold by component part manufacturers?

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Case Study: Distributor Tender to Manufacturer

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Insurance and Tenders

• Many insurance policies cover a policyholder’s

“insured contracts” under which the policy holder has an obligation to indemnify.

• Other routes to coverage…

– Through vendor coverage. – Definition of “who is an insured?”

• In general, an insured indemnity obligation

makes an indemnitor’s insurance primary.

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Insurance Tender Strategies

• Tender to both indemnitor and its insurer.
• Tendering to indemnitor does not trigger

coverage under indemnitor’s policy.

• Insurers take duty to defend more seriously.
• Leverage “additional insured” status.
• If necessary, force key insurer to file

interpleader.

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Case Study: The Insurance Tender

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Other Insurance Strategies

• Make sure all indemnity agreements are

backstopped by insurance.

• Request a copy of the policy (now and later).
• If no insurance, review business contract for

insurance language – (you might have a separate claim for breach of contract on top

• f indemnity claim – which may offer

benefits).

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Strategies to Respond to Tenders

• Is the indemnity provision enforceable?
• What is the scope of the indemnity provision?
• Is the indemnity promise

backstopped by insurance?

• Gather all applicable insurance policies and compare

“other insurance” clauses.

• Are there benefits to delay?

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Case Study: A Tender Response

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A Checklist to be Prepared for Future Tenders

• Audit your relationships up the supply chain.
• Use Quality Agreements (and make certain others do so

up the supply chain).

• Ensure that indemnity obligations are backstopped by

insurance.

• Understand the insurance that backstops these

agreements.

• Audit your relationships down the distribution chain and

make sure your insurance protects you from tenders that may come your way.

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Q&A

Daniel E. Tranen, Esq. Partner Wilson Elser Moskowitz Edelman & Dicker LLP Edwardsville, IL/St. Louis, MO daniel.tranen@wilsonelser.com

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