Have you ever had the experience of going into a fitting room and trying on two of the same item in the same size, perhaps only in different colors, only to find that they fit quite differently—to the point that one might not fit at all although the other did? Production line manufacturing may be efficient, but no one ever claimed it to be an exact science.
No one expects the retailer to guarantee that every item sold under the same SKU will fit exactly like every other item bearing that SKU in the same size. But in fashion licenses, that kind of elasticity in expectations can become the subject of negotiation.
It typically plays out like this: the licensee agrees to provide pre-production samples to the licensor for approval. The licensor either approves or disapproves; if it disapproves, the licensee is often entitled to a second try, adjusting the style to suit the licensor’s expectations. Once the styles are approved, the licensee initiates production. More typically in the fashion business, the licensee contacts someone else, often half a world away, and tells him or her to initiate production.
The licensor may demand, in the representations and warranties section of the license (which has been the subject of this series of posts), that the licensee warrant that production models will not deviate from approved samples. If the licensee is careful, that may be qualified by adding in any material way or by breaking the force of terms like will conform by dropping in the forgiving qualifier substantially. But bolts of cloth from different batches can easily have variations, and sometimes the chosen buttons, snaps and other accessories run out and others need to be substituted; the list of potential deviations goes on. In a seasonal business such as fashion, where a handful of weeks can make or break a SKU, a style, a look, a collection or even an entire business, the date on which finished goods are to be sent to retail doors is hardly the time to get into an argument over whether something already bought and delivered does or does not substantially or materially conform to the appearance or other attribute of an approved prototype.
The first rule of warranties applies here as it does to all others: for the licensee, never make a promise that you cannot keep; for the licensor, never ask anyone else to make a promise that you can be reasonably sure he or she will not be able to honor. To avoid surprises, it is useful for the parties to think through, and to talk through, contingencies due to variations in manufacture and to consider adding to the license, as a defined term, exactly what they mean when they say something must conform to what has been approved. Even if something is completely non-conforming, alternatives such as sale into outlets or other lower end channels, or outside the territory, perhaps with labels removed, can sometimes work.
In the end, however, all licenses, like all contracts, rely more on the element of trust (and forgiveness) than lawyers can hope to draft into them. Simply, a well-written contract can get you a favorable result in court, but working with the right people is a good way to help stay out of court.
Here as with most else in licensing, the name of the game is cooperation. The devil, as they say, will always be in the details.
Credit: Alan Behr
See previously published related posts: