Product Recall: A Costly Business

The recent recall of Cadbury chocolate bars after a salmonella scare illustrates the difficulties in dealing with a potential safety problem with a product. A product recall can be expensive and a manufacturer may well look to pass that cost on to third parties and their recall or liability insurers if they can. This article examines the general duty on a manufacturer to undertake a recall and discusses whether insurers might have to pick up the tab.

Deciding whether the recall of an ‘unsafe’ product is necessary can be a difficult process. In situations where there is a risk to health, the decision will be ‘how to’, rather than ‘whether to’, recall. In other cases the safe option from a risk management and a public relations perspective is to recall, however, the merits of whether a recall is legally necessary may be more finely balanced.