Re: Responsibility for Defective Goods Delivered by a Supplier
I don't practice law today, but Contract Law was my primary field.
Most competent lawyers would advise the two companies try to work out a compromise through non-court arbitration. This is simply because a formal court case could take YEARS to wind its way through the courts whereas arbitration is often resolved in WEEKS.
I'm pretty sure the buyer's side of the argument is damaged in regard to being able to lay claim for anything more than the replacement of the wrong material with the correct material because it appears the product was clearly and accurately marked differently from what the buyer ordered
(is this true? the phrasing in the OP seemed a little ambiguous to me as to whether the supplier sent material labeled as "zero" when it was "low.") and yet the buyer proceeded to build harnesses with the wrong material. On that factor alone, many juries would side with the supplier, saying that the buyer has a duty to return the wrong material in as undamaged condition as possible, else it is liable to pay for the material not returned.
If the material was mislabeled and buyer innocently used it without having a practical way to tell the difference (except maybe in a functional test when harness was complete), buyer would have a good chance of recovering damages for the labor and all other materials used in the nonconforming harnesses.
It is not clear from the OP's post whether the harnesses with the wrong material were declared non-conforming in-house or at a customer. In either case, the cause is failure to assure proper material before processing AND/OR shipping, clearly the buyer's error.
- What was the root cause of the error in shipment? (supplier's issue)
- What was the root cause of accepting non-conforming material? (Buyer may not have test lab, but it should have someone compare LABELS to see they match the requirements of the purchase order.)
- What was the root cause of building harnesses with the wrong material? (modern QMS systems stress that each step in a manufacturing process be able to assure it has the proper material from the preceding step.)
To understand WHY the buyer has a pretty weak case if it should elect to go to a formal court of law, folks can look up "contributory negligence" and "comparative negligence." Start with a WIKI for an overview (
http://en.wikipedia.org/wiki/Contributory_negligence) Supplier MAY argue buyer had a
duty to assure material was correct.
If the material specification was so crucial to the harness (typically, zero halogen is a life/health/safety issue in case of fires since the insulating materials of the cable do not contain halogens -fluorides, chlorides, etc.), the buyer probably should have arranged for periodic independent analysis of the material shipments by a competent third party. (contract machining companies often do this when machining specialty alloys)
This is an interesting thread - I'd sure like to learn the final outcome and all the details when it is settled.