how do I market a product and manage liability ? - Page 1
Forum section: electronics / general

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 11:14:41 am
content: ok so i was designing a project for the vintage car market with a friend, he was going to help me sell it through his boss. Well looks like he is not so eager now so I think I'm on my own. He suggested taking it to a certain company and let them market it if I get it to work. The main worry here is potential failures and being sued i think.so say I get this to work and wanted to market it myself what should i do about insurance and what will it cost me ? if i do hand it over to someone else to sell what sort of agreement should i look to make with them ?

author: saturation
author_rank: Super Contributor
timestamp: October 09, 2011, 11:18:07 am
content: In developed countries, you'll have least problems with liability, warranty and injury if you sell it as a kit. Then your only liability is if the shipped parts are defective.

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 11:21:28 am
content: Quote from: saturation on October 09, 2011, 11:18:07 amunfortunately that won't quite fit my market although one of the options I can explore. I have to start though on the basis that I design and build it (or subcontract part of the building) and will be liable

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 11:27:19 am
content: In the UK trading as a limited company will limit your personal liabilities, professional indemnity insurance should limit your exposure. Can you get an approval on the product ?

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 11:48:07 am
content: how do i get approval ?

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 12:31:45 pm
content: Quote from: Simon on October 09, 2011, 11:48:07 amIt depends on the product, for example if it was a communications product, you might get BABT approval. Is it an 'accessory' type product ? What can go wrong, does it actually control or monitor something ?

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 12:35:07 pm
content: it regulates the electrical system, so potential failure is over voltage i suppose, there should be nothing like EMC to worry about

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 12:55:51 pm
content: A modern alternator has a built in regulator, these sometimes fail resulting in overvoltage. I haven't heard of anybody suing the alternator manufacturer for this type of failure. If the product is designed and built correctly I don't think there is much to worry about. I would trade under a limited company to protect yourself personally, just in case. You can create a limited company online in about 5 minutes for about GBP25.Bye the way I used to work in industrial automation and designed control systems for multi million pound machines, product downtime cost 10k GBP per minute. Never had a claim against me/the company.Good luck with your product.

author: Mechatrommer
author_rank: Super Contributor
timestamp: October 09, 2011, 01:06:23 pm
content: you should get approval i think as yatchtronics said. once you get the certificate, that maybe can back you up in court. once you get all the necessary approval, make your own "agreement statement" that you will provide with the product to customer saying "i will not held liable for any damage to property or life. use at your own risk"i'm not sure how easy or practical it is (in your country) to create such statement. i wonder how those many products out there with that kind of statement get approved. maybe the next step is to get advice from your engineering board and law agency in your country about this matter.

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 01:11:56 pm
content: well you see someone with a £ 2'000'000 car may get a bit pissed off if I blow his electrics up

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 01:26:20 pm
content: Quote from: Simon on October 09, 2011, 01:11:56 pmI don't know where you pitched your price but if you're supplying niche markets then price accordingly. Can you incorporate an over voltage monitor that either warns the owner or disables the device (with warning) ?In an earlier thread you mentioned vintage cars. These can be high value, but usually they don't have a lot of electronics installed in the first place. Any additional electronics installed are aftermarket and not of the 'original vintage' The technology did not exist then so the installed electronics are unlikely to be of high value. What warranty do competing devices offer ?

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 02:41:08 pm
content: I have no idea of what warranty competing products offer and know that one of them is crap (or so i'm told), the other one costs £136 so I guess i'd pitch slightly lower to start with. But yes your right, there is not much in the way of electrics on old cars

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 04:10:59 pm
content: Does your device replace the old mechanical regulator box ?

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 04:19:58 pm
content: yes

author: djsb
author_rank: Super Contributor
timestamp: October 09, 2011, 04:53:04 pm
content: Give one to a student in the motorsports department of a university. Ask them to try it out. If it can survive that little test it should be OK.I've found that students can think of many ways to 'test' a device and you will be amazed at their creativity.David.

author: Chet T16
author_rank: Frequent Contributor
timestamp: October 09, 2011, 06:08:04 pm
content: I have a few french cars, if it can survive these electrics it'll survive anything

author: Simon
author_rank: Unknown
timestamp: October 09, 2011, 06:31:59 pm
content: I'll let you have one when i'm ready

author: ciccio
author_rank: Frequent Contributor
timestamp: October 09, 2011, 09:04:59 pm
content: Well, I admit that this (car's electronics) is not my field, but the general rule is : If you manufacture and sell a product you are obviously liable for any defect or malfunctioning of the product.Liable for what? It depends on the damages that your malfunctioning product can generate.If a malfunctioning product can cause an accident with deaths or injuries you are obviously liable both penally and economically.If a fire generated by a defective product will damage an expensive car you will be requested to pay a lot of money (and the customer's lawyers will be very capable)My suggestions are:1) ask a capable consultant for CE marking that will advise you, then have the product tested by an approved laboratory, because this certification will be useful in an (eventual) court proceeding (and in any case is required by law).The consultant will also advise you on the correct manufacturing and testing procedures to be followed, and about the documentation that shall be kept on your premises.2) look for a suitable insurance against liability for defective products. It is better to find an insurance broker, who will usually have a better choice. The insurance may require some kind of certification about your product's safety design.3) ask to a capable (and specialized) lawyer about what you must write in the commercial documents like warranties, contracts, notes to delivery papers, and in technical documents like catalogs and instructions for installer, etc.. and on how to have the customer "sign" or accept them.This is really important if you sell the product to somebody that will install it on the customer's cars. You must not be liable for damages due to an installer's non-compliance from the correct installation's procedures.The above are my opinion, but I must admit that not everybody works this way: it is simpler to "disappear" instead of standing to their own liability.I'm sure that some of the forum's British member has a direct experience on CE testing. Maybe he can be of some help.Regards

author: EEVblog
author_rank: Unknown
timestamp: October 09, 2011, 09:39:42 pm
content: In Australia, you have to form Propriety Limited (Pty Ltd) company in order to get "limited personal liability"i.e. they can usually only sue the company, not you personally to recover debts etc. And if your company has no assets, then it's not worth suing you.But if you personally deliberately do something wrong or deceptive, then limited company protection usually doesn't help you. e.g. in the case of defamation or some aspect.Even if you get professional liability insurance, it doesn't stop someone suing you, and all the legal problems and associated bad name etc that comes along with that. In fact it makes itmuch more likelythat they will sue you because there are millions of dollars to be had in the insurance company. And there are likely clauses in the contract that nullify it if you deliberately do someone deceptive or wrong, instead of just something going wrong but you used your best professional judgement at the time etc.Dave.

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 10:09:54 pm
content: Some of the big name manufacturers of GPS, explicitly state 'not to be used for navigation' on their products, also some marine chart publishers state the same. I don't know how they stand legally but the implications of their equipment failing or the information being incorrect can be a matter of life or death.I wonder if the disclaimers stand up in court.

author: EEVblog
author_rank: Unknown
timestamp: October 09, 2011, 10:22:08 pm
content: Quote from: yachtronics on October 09, 2011, 10:09:54 pmIt's worse than that. The disclaimer comes up every time to turn on the GPS, and you have to except it and press OK before it will work!I think those things are designed to stop the ridiculous law suits.Dave.

author: Unknown
author_rank: Unknown
timestamp: October 09, 2011, 10:32:29 pm
content: Quote from: ciccio on October 09, 2011, 09:04:59 pmIs automotive electronics covered by any of the new approach directives? Otherwise CE marking is not just not required, but actually prohibited. Thee-markmay apply.

author: bilko
author_rank: Frequent Contributor
timestamp: October 09, 2011, 10:34:08 pm
content: This liability business is crazy. So what if you start the car on a freezing cold day with a flatish battery. The charge current kicks in and the battery explodes (because it has a faulty cell), who's liable, the battery manufacturer because it should have warned the owner that the battery was flat, the manufacturer of the charging system because it should have monitored the external temperature and the charge current, or the owner because he should have maintained the battery ?Well maybe you need to engineer a LCD screen with an OK button and present the disclaimer to the owner before the unit is operational.

author: EEVblog
author_rank: Unknown
timestamp: October 09, 2011, 10:56:50 pm
content: Quote from: yachtronics on October 09, 2011, 10:34:08 pmWhat if the LCD warning fails?Dave.

author: IanB
author_rank: Super Contributor
timestamp: October 10, 2011, 12:20:52 am
content: Interesting point there. In the modern world, no component stands alone, it is part of a system. For instance my car has a charging system and a "maintenance free" battery designed to be part of the car electrical system. Every part is designed and warranted by the manufacturer to work together as an integrated whole.When a few months ago my car battery suffered a total failure (wouldn't turn the engine) I noted that it had a 60 month warranty. I took the car to the dealer, who tested the battery, said "yup, the battery has failed", and replaced it with a new one no questions asked. Someone, somewhere, had calculated that the recommended battery installed in that system ought to last 60 months without failure, and that they would not lose their shirt if they wrote that on the warranty.If you are supplying an individual part that might be installed in a system you have no control over, then you absolutely have to make this at the owner's own risk, due diligence expected, no warranty implied. You must make it very clear that the purchaser is responsible for any consequences of installing the part in their vehicle, and if they don't want to be responsible they must not purchase your part. I'm sure this comes up a lot in the enthusiast/hobby/restoration world. You might consult a lawyer for advice (although I know that will cost an arm and a leg, unfortunately).

author: EEVblog
author_rank: Unknown
timestamp: October 10, 2011, 03:14:27 am
content: Quote from: IanB on October 10, 2011, 12:20:52 amAnd unfortunately even if you do pay for that advice, it does not stop you getting sued anyway and/or the advice being wrong.People often fall into the trap of thinking they can't lose because they got "professional legal advice" first.Dave.

author: Simon
author_rank: Unknown
timestamp: October 10, 2011, 06:01:40 am
content: Thank you all for your comments, yes i could put on it: regulator - not guaranteed to regulate, that would sell wellI think i'll concentrate on getting it working while casting an eye on the marketing matters. One thing that is true is that I can't guarantee much if the owners car has a poor electrical system, the thing with certification is that these will be semi custom built or made to order, my guess is that once approved i can't change anything.

author: Chet T16
author_rank: Frequent Contributor
timestamp: October 10, 2011, 12:37:16 pm
content: Quote from: EEVblog on October 09, 2011, 10:56:50 pmSue the damn LCD manufacturer for every last cent of course!

author: Simon
author_rank: Unknown
timestamp: October 10, 2011, 12:48:21 pm
content: ok so to get serious again, say I wanted to take insurance - product liability insurance, what do I do, who do I go to ? I got a quote of £530 from the UK post office who act as an insurance broker

author: bilko
author_rank: Frequent Contributor
timestamp: October 10, 2011, 01:19:25 pm
content: Check what the insurance policy covers you for. You need consequential loss to cover any claims against you. The product warranty will cover replacement should the product fail within the warranty period. Find out which disclaimers you can use and are legally binding. In the end, any product can fail either in warranty or out of warranty, there is nothing that you can do to prevent that. Can you design into the system that the product fails safe, i.e. overvoltage condition is monitored and displayed using independent system and the instruction states that the owner/driver must pull over and stop the engine at the earliest opportunity as the battery will no longer be charged. What happens when your car displays 'engine fault' ?

author: Simon
author_rank: Unknown
timestamp: October 10, 2011, 01:37:16 pm
content: ok so where do I go for insurance, I spoke to an advisor about starting a business and he avised against using the post office and to find an insurance company oriented to the industry (I did in fact have a hard time getting the post office to understand what I wanted insuring).Surely you can have a disclaimer against unreasonable claims ie: I will only take liability for damaged parts and labour to replace them and not for vehicle down time etc

author: baljemmett
author_rank: Unknown
timestamp: October 10, 2011, 02:19:24 pm
content: Quote from: Simon on October 10, 2011, 01:37:16 pmYes, you want to go with a broker who knows what they're doing and specialises in professional/business insurance. If nothing else they'll understand what you're talking about!For my professional indemnity I use Caunce O'Hara (found originally just by looking at an IT contractors' advice site and picking someone from their list of brokers!), who it seems offer product liability cover as part of their manufacturers' insurance. A quick Google also finds outfits likeSimply Businesswho appear to offer a comparison service for product liability quotes.

author: ivan747
author_rank: Super Contributor
timestamp: October 11, 2011, 12:57:08 am
content: Quote from: EEVblog on October 09, 2011, 10:56:50 pmYou include a paper manual printed with size 7 fonts.Now keeping this serious, I am also interested in the topic, specially in regards to Lithium Ion batteries (you know, they cause nasty fires). I was thinking about reading the warranty in similar products to mine (a Lithium battery powered prototyping platform). The nearest products comparable to my prototyping platform are cellphones. The only difference is that mine gets "modified in any way" much more often than cellphones.