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Illustration:Rebecca Zisser/Axios

AV crashes will present automakers with complicated new questions about liability. To prepare for them, they will need to rethink their warranties and indemnities with suppliers.

Why it matters: An AV accident could be caused by anything from a programming bug to a mechanical failure. Given this complexity, automakers will need contracts that protect them from assuming liability for integrated software and hardware from their suppliers.

Background: Most supplier contracts protect automakers with warranties against defects in materials or workmanship. However, those may not offer much protection in the case of AVs, where the product under contract is likely to be software, or a part so deeply integrated that it's hard to say where its role ends and another's begins.

  • Vehicles with Advanced Driver Assistance Systems already face some of these issues. After an accident involving a car with ADAS, investigators try to establish which system controlled the interaction in question.
  • Fully autonomous vehicles will contract out more software, products, and parts, most of which will then be far more deeply integrated than in older cars.

What’s needed:

  • Warranties will have to be tailored to the output and performance of software, rather than merely hardware.
  • Indemnification provisions will have to address situations in which automakers integrate a supplier’s product with other parts and unifying software. This will require broader indemnification for system failures and assessments of the impact of one software program or product on the whole system.
  • Insurance can be obtained by both automakers and suppliers, who can also add one another as additional insureds.

The bottom line: By adapting to these legal challenges now, in both supplier contracts and insurance needs, companies can better allocate risks across the supply chain and protect consumers from being left empty-handed if their AV causes an accident.

Jeff Soble is a partner in Foley & Lardner’s business litigation and dispute resolution practice and the former co-chair of its automotive industry team.

Go deeper

44 mins ago - Technology

The living room is now a virtual hub

Illustration: Sarah Grillo/Axios

Internet companies are leaning into new services that add a social component to the otherwise isolated experience of staying home in front of a screen.

Why it matters: These options for virtual watch parties, virtual concerts and communal gaming often rely on smart TVs — turning the living room back into a place to socialize with friends, even if they're not actually there.

Updated 3 hours ago - World

17 U.S. and Canadian missionaries kidnapped in Haiti

Haitian soldiers guard the public prosecutor's office in Port-au-Prince this month. Photo: Richard Pierrin/AFP via Getty Images

American officials and authorities in Haiti are working to try and free 17 hostages from a U.S.-based missionary group who were kidnapped in Port-au-Prince over the weekend, AP reported Monday.

The latest: Christian Aid Ministries said in a statement Sunday, "The group of 16 U.S citizens and one Canadian citizen includes five men, seven women, and five children." The Ohio-based organization said they were on a trip to visit an orphanage when they were kidnapped Saturday.

China's economic growth slows

A worker assembles heavy truck engines in Hangzhou in eastern China's Zhejiang Province, on Monday. Photo: Long We/Costfoto/Barcroft Media via Getty Images

China's economy grew 4.9% in the third quarter of 2021 compared with a year earlier, the country's National Bureau of Statistics announced Monday.

Why it matters: The gross domestic product growth in the July-September period in the world’s second-largest economy marked the "weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter," Reuters notes.