Monday, December 17, 2012

Certifications


If you purchase items for resale, most of the time you will require certain certifications apply to the item you purchase. Certifications are to show compliance with specific laws or standards such as safety or environmental standards. Laws or standards are enacted by countries and other governmental agencies and will vary based upon the type of product or service being sold. For example, medical products are required to meet more stringent requirements than non-medical. Products intended for use by children have higher safety standard than products for adults. Standards may address the raw materials used, such as RoHS that requires certain material may not be used in products because of the environmental impact of their disposal after the product’s useful life. They may control the processes used, or the materials used in processing that are ultimately are retained on the product. Many standards address the product’s safety. Recently standards have begun to address how the product will react with the environment it operates in. For example telecommunications products have certain standards they must comply with to be used in certain countries telecommunications systems, and there are Bluetooth standards.

For compliance there are a number of organizations that publish standards:
IEC (International Electrotechnical Commission)
ISO (International Standards Organization)
CEN (European Committee for Standardization)
CENELEC (International Standards and Conformity Assessment for all electrical, electronic and related technologies)
AAMI (Association for the Advancement of Medical Instrumentation)
ANSI (American National Standards Institute)
ASTM (American Society for Testing and Materials)
NFPA (National Fire Protection Association)
FCC (Federal Communications Commission)
UL (Underwriters Laboratories)
BSI (British Standards Institute)
CSA (Canadian Standards Association)
JSA (Japanese Standards Association)
SAC (Standards Administration of China)
VDE (German Standards)

The U.S. Department of Commerce also publishes a list of standards by country at the following website:
NIST – Standards & Technical Regulations

UL , CSA, VDE, IECEE CB, TUV SUD (America), and TUV Rheinland all maintain certification databases.

There are a number of different companies and organization that provide listing of certifications. For example, Underwriter’s Laboratory issues standards, does certification testing and maintains a database of both UL listed and UL Certified products. A U.L. Listed product is one that has not gone through certification testing whereas U.L Certified has been tested for compliance. U.L has some 62 logos that are used to identify what they have been listed or tested against.

From a contracts perspective, why are certifications important? First, in many situations the failure to meet the applicable an applicable law or standard will prevent the importation or use of a product that is not in compliance. In some situations a certification may be required to show compliance with other laws. For example U.S. OSHA laws require safe materials and products be used by workers. Certifications are use by Suppliers for marketing purposes showing compliance or meeting certain quality requirements such as ISO Quality standards. Buyers may view them as an indication of potential quality in the supplier’s operation. One of the most important aspect of certifications is the management of potential liability. In the event of personal injury or property damage anyone in the sales chain may be sued. In determining whether a company has been negligent, part of the defense would be what the party has done to manage against the potential risk. That helps identify if they were negligent or the degree of their negligence. If the party did nothing, that inaction may make them liable. If a company relied on a supplier representation or warranty of compliance they may have an action against the supplier, but could still be liable to the third party for not doing enough. If the company required independent certification by an accredited agency, that action may show they took reasonable steps to prevent it the injury or damage and were not negligent. What you get as a logo or commitment can make the difference. For example, buying something that has a “U.L. Listed” code shows you provide a lesser standard of care than if you purchased a product that was “U.L. Certified” meaning it underwent testing for the specific certification.

In situations where the government could levy fines for violating certain requirements such as compliance with RoHS environmental requirements, the fact that you had something certified for compliance may not help you avoid the fine. In those situations your recourse would be to claim those fines as damages you sustained for breach of the contract requirement by supplier.

If you write contracts that commonly include requirements that suppliers must meet certain requirements or certifications, get a copy of those documents and read them so you understand what is being required.



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