Food firms must protect against supply malpractice
Food and drink manufacturers should do more to protect themselves against supplier malpractice as the risk of reputational damage rises.
Before entering into a supply agreement with any potential supplier, manufacturers should conduct checks on the business and its products. And when negotiating the supply contract, it’s important to retain powers to audit and inspect the supplier’s premises. This will enable manufacturers to go to the premises and ensure they are adhering to the terms of the contract and to the appropriate quality standards. By having oversight, the business is given the opportunity to inspect the supplier and to spot potentially damaging issues before they arise.
Manufacturers should also ensure that any supply contract contains express liability provisions. Businesses can find themselves liable for the actions of their suppliers where the liability provisions in the respective contracts do not contain ‘back-to-back’ protections for the company involved.
On product specification, manufacturers should ensure contracts with suppliers contain an accurate and specific description of the products/services they expect to receive and under what terms the supply arrangement is to be entered into. This will ensure that both the supplier and the business are certain of the terms of the supply, and that there is no ambiguity surrounding the specification of the products and/or services to be provided and the consequences of failure to meet the specification.
Both consumers and organisations in the food and drink sector have become more aware of the dangers posed by the reliance on supply chain third parties in their offering to consumers. Many consumer-facing businesses often find themselves subject to damaging public backlash and huge criticism if a product is found to be sub-standard – or even dangerous – regardless of the fact that the problem had come from further up the supply chain. Businesses need to be live to and able to protect themselves from supply chain errors that may impact upon their reputation.
Our cross-departmental team of experts advises the food and drink sector on the full spectrum of legal services, including supply chain management, food safety compliance and regulatory issues, licensing and franchising, employment matters and corporate acquisitions and disposals. We understand the very specific needs of those operating in the sector, such as ingredients and final product manufacturers with regard to supply chain liability, the logistical needs in relation to high value or high volume or perishable goods, packaging and advertising requirements, obligations and limitations in different markets, and the protection and enforcement of rights with regard to proprietary processes and brands.
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For further information, please contact Euan Duncan, Head of Food & Drink at MacRoberts.