Challenges Of Switching To New Product Lines – Contractual, Legal And Technical Considerations

The recent outbreak of Covid-19 has probably had the biggest global impact of any event since 1945. It has led many businesses to adapt their strategic plans and extend their product lines, not only in an effort to preserve their economic viability but also to provide the much needed support and supplies that are in high demand across the globe. It is inevitable that each country around the world will feel the impact of Covid-19, particularly with the medical and healthcare systems being pushed to the limits and supply chains in other sectors disrupted. These circumstances have shown a huge surge in demand for products such as ventilators and personal protective equipment such as surgical gowns as well as hand sanitising products, with businesses such as Dyson, McLaren, Burberry and Kylie Skin all looking to make a positive difference through the development and launch of new products to help ease the ever-increasing demands.

Whilst the good intention of businesses to develop and launch new product lines is undoubted, challenges are likely to arise in doing so and contractual, legal and technical considerations should not be overlooked. By taking preliminary precautions, businesses can ensure that both safe and compliant products are made available and that they are protected in their new trading activity.

Contractual Considerations

Firstly, whether new contracts are being entered into or the status of current contracts is being reviewed, it is important to ensure that the manufacture, supply and distribution of any new product adopted is borne in mind and that the urgency to meet the new demands does not result in costly mistakes. Substantial changes may be required to fit the contract to the new product. With the development of products outside a business' usual sphere of interest, new contractual relationships may need to be put in place with suppliers, manufacturers and distributors.

An additional contractual consideration is that of insurance and whether by entering into a new consumer market, such as healthcare or medical supplies, protection against end user liability and product liability are appropriately provisioned for. Premiums may also go up significantly.

Legal Considerations

The development and launch of new product lines also has the potential to lead to legal challenges. These include, but are not limited to, intellectual property ("IP") and regulatory considerations.

1. Branding

   In respect of legal challenges relating to...