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Top Articles - CONTRACTS THAT WORK! Representations, Warranties and Remedies
Representations, warranties and remedies are central to the longevity of a contract. If a representation proves to be fraudulent, the agreement may be set aside ab initio – as though it had never existed. If a warranty is breached, the agreement is subject to termination. If remedies and thoughtfully constructed, however, even serious disagreements may be re
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
solved short of termination or, perhaps worse, litigation.
REPRESENTATIONS
In legal-speak, a representation is a statement made to induce reliance or action: “Buy the new Acme carburetor because it will deliver 100 miles per gallon of water.” If the carburetor does not live up to that statement – to that representation – you have the right to return it and
REPRESENTATIONS
In legal-speak, a representation is a statement made to induce reliance or action: “Buy the new Acme carburetor because it will deliver 100 miles per gallon of water.” If the carburetor does not live up to that statement – to that representation – you have the right to return it and
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
et your money back.
In the consumer world, the principal is straight forward. If a product does not “work,” you are free to return it for a replacement or a refund. The analysis becomes more complicated in the commercial world:
➢ Consumer protection laws generally do not apply;
➢ The terms of the contract may exclude consideration of any repr
In the consumer world, the principal is straight forward. If a product does not “work,” you are free to return it for a replacement or a refund. The analysis becomes more complicated in the commercial world:
➢ Consumer protection laws generally do not apply;
➢ The terms of the contract may exclude consideration of any repr
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
sentations not set forth in the written document;
➢ Defining the meaning of “does not work” can be problematic;
➢ Determining which representations were “material” - which ones were relied upon when deciding to enter into the transaction – can be difficult;
➢ Even if the parties agree on, or the contract defines, the meaning of “work” or
➢ Defining the meaning of “does not work” can be problematic;
➢ Determining which representations were “material” - which ones were relied upon when deciding to enter into the transaction – can be difficult;
➢ Even if the parties agree on, or the contract defines, the meaning of “work” or
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
“does not work,” a question remains: Is the perceived defect “material?” Is it sufficient to set aside the contract?
Consider:
Assume the carburetor delivers only 90 miles per gallon, rather than 100. Is that a material defect? Did you decide to switch to the Acme carburetor because you wanted 100 mpg or because you believed running your car on water woul
Consider:
Assume the carburetor delivers only 90 miles per gallon, rather than 100. Is that a material defect? Did you decide to switch to the Acme carburetor because you wanted 100 mpg or because you believed running your car on water woul
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
cost less and cause less pollution than using gasoline?
➢ If you did expect 100 mpg, can you prove that claim was central to your decision?
➢ If your decision was based on what you regarded as the advantages of water over gasoline, would you have a claim if the carburetor actually used 100 gallons per mile?
➢ What if the carburetor only
➢ If you did expect 100 mpg, can you prove that claim was central to your decision?
➢ If your decision was based on what you regarded as the advantages of water over gasoline, would you have a claim if the carburetor actually used 100 gallons per mile?
➢ What if the carburetor only
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
delivers the promised mileage when used with a little known and very expensive brand of imported water?
If the deal blows up, your attorney is sure to ask, or at least mutter: “If you wanted 100 mpg of tap water, why didn't you put that in writing?”
WARRANTIES
A warranty is generally a promise that the product or service will meet certain standards or do ce
If the deal blows up, your attorney is sure to ask, or at least mutter: “If you wanted 100 mpg of tap water, why didn't you put that in writing?”
WARRANTIES
A warranty is generally a promise that the product or service will meet certain standards or do ce
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
rtain things, or the vendor will do something about it. Again the concept is familiar in the consumer world: “Try the Acme home nuclear reactor for thirty days. If you are not completely satisfied, return it for a full refund.” In the consumer world, such a solution is clean and simple, but it may not work in the commercial world:
➢ What if your com
➢ What if your com
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
any needs a reliable source of energy more than it needs the cash back?
➢ Will a simple cash refund make your company whole for the time lost testing, installing and then removing the Acme product?
➢ Who will bear the losses you will bear as the result of starting your search over?
➢ What if the Acme reactor does everything Acme promised
➢ Will a simple cash refund make your company whole for the time lost testing, installing and then removing the Acme product?
➢ Who will bear the losses you will bear as the result of starting your search over?
➢ What if the Acme reactor does everything Acme promised
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
but you cannot connect it safely to your outdated infrastructure?
➢ What if the final product costs 10% more than Acme promised, and delivers only 75% of the energy you expected?
To further complicate matters, not all warranties are made the same:
➢ “Vendor warrants that it is duly organized and recognized in accordance with law and possesses
➢ What if the final product costs 10% more than Acme promised, and delivers only 75% of the energy you expected?
To further complicate matters, not all warranties are made the same:
➢ “Vendor warrants that it is duly organized and recognized in accordance with law and possesses
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ll necessary and requisite legal and corporate authority necessary to enter into this agreement.”
While that sentence sounds impressive, it is short on substance. If vendor is not a legitimately organized business, or does not have the proper authority, you could be confronted with significant difficulties, and this sentence provides no meaningful tools to re
While that sentence sounds impressive, it is short on substance. If vendor is not a legitimately organized business, or does not have the proper authority, you could be confronted with significant difficulties, and this sentence provides no meaningful tools to re
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
olve them.
Or
➢ “Vendor warrants that the product will perform substantially in compliance with Vendor's published documentation for 120 days after delivery.”
This sentence has its own challenges. What does “substantially in compliance” mean? Does vendor have the right to change the performance standards by changing the documentation? These are que
Or
➢ “Vendor warrants that the product will perform substantially in compliance with Vendor's published documentation for 120 days after delivery.”
This sentence has its own challenges. What does “substantially in compliance” mean? Does vendor have the right to change the performance standards by changing the documentation? These are que
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
tions for another time. For the moment, the question of interest is: “What happens if the product does not work?”
If the contract contains just this one sentence, and assuming there is no dispute that the product is defective, you have two options: Terminate the agreement and start over or live with the defective product.
REMEDIES
General contract law pro
If the contract contains just this one sentence, and assuming there is no dispute that the product is defective, you have two options: Terminate the agreement and start over or live with the defective product.
REMEDIES
General contract law pro
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ides a standard set of remedies for contract disputes. These remedies are available if the contract itself does not provide any other tools. Unfortunately, these default remedies may not meet your specific situation and most require the time and expense of litigation. However, these are only default remedies. Parties are, within limits, free to decide how th
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ey will resolve claims of defect, late performance or other disagreements.
For example:
➢ “Vendor warrants that the product will perform substantially in compliance with Vendor's published documentation for 120 days after delivery. In the event of non-compliance, Vendor will repair or replace the defective product within ten days of receipt of notice
For example:
➢ “Vendor warrants that the product will perform substantially in compliance with Vendor's published documentation for 120 days after delivery. In the event of non-compliance, Vendor will repair or replace the defective product within ten days of receipt of notice
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
f defect.”
Taking the time to ask one simple question - “What if?” - and to draft one short sentence yields a concrete remedy short of termination and litigation.
➢ “Acme warrants that its home reactor will produce no less than X kilowatt hours per day, 365 days per year, in normal operation. In the event power output is less than Y% of X, Acme shall
➢ “Acme warrants that its home reactor will produce no less than X kilowatt hours per day, 365 days per year, in normal operation. In the event power output is less than Y% of X, Acme shall
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
rovide a refund of Z% of the purchase price.”
“Pay first and get a refund of it doesn't work” is not an ideal remedy, but here it illustrates one way to resolve a potential dispute short of the courthouse. A better course would be to pay most of the money up front, and to tender the balance if and when the home reactor proves itself. What constitutes a good
“Pay first and get a refund of it doesn't work” is not an ideal remedy, but here it illustrates one way to resolve a potential dispute short of the courthouse. A better course would be to pay most of the money up front, and to tender the balance if and when the home reactor proves itself. What constitutes a good
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
arranty? It protects the customer from defects or failures that would threaten the value of the contract to the customer. It is a mechanism to help ensure that customer gets what he or she is paying for.
What makes a good remedy? It must be mutually agreed and, to be practical and effective, must protect the interests of both parties. Customers want to ens
What makes a good remedy? It must be mutually agreed and, to be practical and effective, must protect the interests of both parties. Customers want to ens
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
re they receive true value for their money; vendors want to ensure that they make an appropriate profit.
Two points are central:
➢ If certain of vendor's claims are essential to your decision to enter into the agreement, spell that out in the contract. Asserting that “He/she told me X or Y or Z” after the signatures have dried is a long, expensive and
Two points are central:
➢ If certain of vendor's claims are essential to your decision to enter into the agreement, spell that out in the contract. Asserting that “He/she told me X or Y or Z” after the signatures have dried is a long, expensive and
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
often unsuccessful exercise.
➢ A warranty without a matching remedy is an incomplete mechanism. Taking the time to think through, and negotiate, acceptable solutions may seem tedious and unproductive. It is, however, far faster and efficient than heading to court fill in the blanks in the contract.
Copyright 2006, Thomas J. Hall. All rights reserved
➢ A warranty without a matching remedy is an incomplete mechanism. Taking the time to think through, and negotiate, acceptable solutions may seem tedious and unproductive. It is, however, far faster and efficient than heading to court fill in the blanks in the contract.
Copyright 2006, Thomas J. Hall. All rights reserved
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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