Contract clauses impacting risk assumption and risk transfer which are integral to the capturing of recall costs are often relegated to the “boiler plate” section of many Supply Agreements or are preprinted on the reverse side of POs that are often not sent by PDF or fax.
Additionally, a 2011 Ernst & Young survey on Capturing Recall Costs reported that its survey respondents focused more on provisions of supply agreements dealing with the safety and quality of the products to be supplied and less on responsibilities of the parties in the event of a recall or other loss. Experience has also led to the conclusion that price, quantity and delivery terms are the subject of negotiation more than any other.
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