This dispute started when Campbell’s brought breach of contract claims against one of its contract manufacturers alleging that some soup broth/stock made for Campbell’s were damaged and rendered not fit for sale as a result of “improper manufacturing and packaging techniques and/or quality control in the manufacturing and packaging process” by the contract manufacturer.  Claiming problems with the product that ranged from damage to the corners of cases that caused loads to shift in transit, to improper glue residue build-up on the packaging from the packaging machines, and improper wrapping, Campbell’s sought damages for breach of warranty, breach of contract and negligence.

The contract manufacturer counterclaimed looking for payment under the contract for the product and also claiming it incurred damages for segregating the damaged product pursuant to Campbell’s request which resulted in an unreimbursed cost in excess of $75,000 – and which was the result of Campbell’s “negligence.”

The case continues, but, in this potent reminder that drafting decent packaging and shipping policies and requirements can be as important as quality control and manufacturing practice delineations in your contract manufacturing agreements, the court hearing the case recently took the “negligence” counterclaims out of the equation.

Finding that complaining that contract terms caused damage did not amount to evidence of “negligence”, the court held:

“None of defendant’s allegations articulate that plaintiff had a duty imposed by law independent of the parties’ contract. Indeed, defendant alleges that plaintiff’s own specifications in the contract caused plaintiff its damages. At most, defendant’s allegations can be read to allege that plaintiff’s specifications in the contract were inadequate to prevent the damage to the stock containers. This interpretation of defendant’s allegations does not save its negligence claim, however, because defendant’s obligation to follow those specifications in the contract was imposed by the contract and not by any other duty imposed under the law. In other words, defendant contractually agreed to follow the specifications, and it was allegedly damaged when it complied with those specifications. The remedy for this claim sounds in contact – not negligence.”

This is an expected result, the failure to follow contract terms is a breach of contract.  You don’t get outside of the contract by saying that a party was negligent in drafting their side of the contract.

While the packaging specifications are at issues here, if you are looking for a decent example of a shipping policy with terms for the conveyance of food products in a fashion geared to ensuring non-adulteration (maintenance of packager/shipper placed seals in transit), along with accurate record keeping to ensure FSMA tracking requirements, then the Shipper’s Load and Count Policy attached to the Contract Manufacturing Agreement which is a part of this Complaint, will be of interest.

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