In the absence of favorable contractual language, consider the common law of the
jurisdiction. For example, in New York, "a party/distributor lower in the chain of distribution is
entitled to common-law indemnification from the one highest in the chain of distribution."[1]
Similarly, in Texas, any member of a product's "marketing chain," including a manufacture
who incorporates defective products into its own product, "may receive indemnity from the
manufacturer of the defective [part] or product."[2] Other states have similar provisions that
may apply in the right circumstances.
A state statute may also provide the basis upon which to tender the defense of a claim. In
Texas for example, Section 82.002 of the Texas Civil Practice and Remedies Code provides
that "[a] manufacturer shall indemnify and hold harmless a seller against loss arising out of a
products liability action.
Sellers under this statute, include distributors or retailers seeking indemnification against
manufacturers as well as finished-product manufacturers seeking indemnification from
component manufacturers."[3]
Practical Tips for Tender Letters
Once you determine that it is appropriate to tender a claim, it is important to make sure it is
done correctly. The timing and content of a tender letter often have a direct correlation with
the efficacy of the tender.
For example, a tender made too late, may be denied solely on the basis of timing. In most
states, a statute of limitations governs when indemnity actions can be brought, and such
statutes should be considered even at the point at which a claim is initially tendered.
It is also important to consider whether the agreement or the law of the jurisdiction provides
a specific time period in which a tender can be made. Additionally, some contractual
provisions, and the common law of some jurisdictions, require only that a tender of defense
and indemnity be made within a "reasonable" time.
In a tender letter, a party should lay out the basis for the tender, including specific citation to
contractual provisions, common law or statutes and include a copy of the relevant contract, i
applicable.
The language in the letter should mirror that of the contractual provision relied upon and/o
law on which the tender is based, but should always request full indemnity as to any
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