Manufacturers of personal transportation and other micromobility devices—as well as providers of sharing networks for such devices—can save hundreds of thousands of dollars in litigation fees by taking proactive steps to avoid potential legal claims and successfully defend against claims that do occur. One area where manufacturers and retailers can mitigate risk is in their customer and vendor contracts. Manufacturers and retailers should consider these questions when evaluating their contracts:
Some companies prefer that any legal claims be settled by binding arbitration rather than pursued in court. Other companies have learned that the perceived benefits of arbitration are outweighed by its drawbacks. You should determine your desired dispute resolution forum and ensure your user agreement effectuates that choice. Enforceability of forum-selection and mandatory-arbitration clauses can vary and will depend upon the language used, the type of claim made, and the contracting procedures.
Class action claims are particularly expensive and time-consuming to defend. Companies may seek to employ class action waiver clauses in their user agreements, typically combined with arbitration agreements, to require users to arbitrate any claims on an individual basis only and prohibit pursuing class or collective claims.
Any user agreement should include appropriate safety warnings and instructions regarding use of the product. These warnings and instructions should be consistent with any local laws and regulations applicable to the particular personal transportation device.
Nearly all companies will want their users to agree to waive and release the company from liability to the extent permitted by law. Many states have specific statutes that apply to liability waivers and other release agreement. Non-compliance with these statutes may render a waiver unenforceable.
Product defect claims will often include allegations that a particular component of a personal transportation device failed or was to blame for an incident. Your agreements with manufacturers and suppliers of component parts—such as batteries or wheels—should include appropriate language that allocates risk and provides for indemnification when another company’s component is at fault.
Product manufacturers, distributors, and retailers each have independent obligations to assess product safety issues under the Consumer Product Safety Act and report incidents and product hazards to the CPSC. But contractual agreements between companies in the manufacturing and supply chain can allocate primary responsibility and costs for such recalls and reporting, and you should ensure your agreements do so appropriately
Personal transportation providers will often enter into agreements and permits with cities, which may attempt to allocate liability for claims. Cities will typically rely upon sovereign or governmental immunity to protect themselves from lawsuits involving personal transportation sharing programs. But manufacturers and providers should determine whether contract or permit language with cities may require the company to indemnify and defend the city against certain claims, and whether indemnity may be available to the company where claims are attributable to the city.
“Click-through” agreements—those e-contracts allowing a user to assent to an agreement by clicking “I agree” before proceeding—are now ubiquitous. However, their enforceability can vary depending upon the procedures used and methods for implementation. Companies should examine their click-through contracts to ensure they will be enforced.
Some user agreements and customer contracts require the user/customer to provide personal information—such as a driver’s license—in order to use the device. Companies should be aware that receiving and retaining personal information of customers may subject the company to data privacy laws and potential liability.
If your products can be used by minors, you may be unknowingly entering into agreements with minors. Most state laws will prevent a minor from entering into enforceable contracts, rendering any arbitration or liability waiver provisions unenforceable or at least “voidable” by the minor. Companies who require users to be 16 and have a driver’s license or permit should be aware that users under 18 likely do not have legal capacity to waive liability and release your company from potential lawsuits.