What is the Relevance of “Industry Standards” Under the Law?
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Many people have heard the term “industry standard” bandied about during legal discussions, whether in contract negotiations or during lawsuits, but most may not know what this really means. Indeed, many practitioners may be unclear on the meaning and use of “industry standards,” as well.
As the name implies, an industry standard is the average by which those in a particular field govern themselves. It is the ordinary manner of doing things in that field and can serve to establish different things in various legal settings. For example, in a contract negotiation, an industry standard could refer to the average rate one charges for a particular service or good, the quality of workmanship, or the manner of conduct the parties will observe in fulfilling the obligations of the contract.
In a lawsuit, the industry standard is usually used to establish negligence or failure to perform under a contract. If one performs at a level lower than the industry standard, the plaintiff may say that the defendant failed to meet the applicable standard, and should therefore be found liable.
Industry standards are, in essence, criteria within a particular field of business, and are generally the minimal accepted requirements followed by the members of that industry. In this way, it provides those in a legal setting with an easier to define guideline for defining what is and is not reasonable, even if the standard relates to a field that is outside the ordinary knowledge of normal people. For example, while most people may know nothing about the appropriate industry standard of care for cardiac repair surgery, the standard can be used to identify whether a doctor committed malpractice. Similarly, without having to incorporate specifics for industry standards of mechanical parts into a contract, referring to the standard can create the minimal accepted quality levels for purposes of defining precisely what one party to a contract intends to procure from the other.
In essence, industry standards facilitate global and domestic understandings of what is acceptable, while fostering appropriate levels of competitiveness. It creates a means to communicate simply and concisely, and allows those within the industry to develop goals both internally and with their business trading partners. It also creates means to improve the experience for consumers outside the industry, such as creating standard sizes and performance specifications for frequently manufactured parts, and creating minimum performance standards for those providing services. Standardization creates a simply quality check for any industry and a means of allowing consumers, as a group, to express the minimum qualities they are willing to accept for a product or service.
Governments rely on industry standards when crafting legislation, as well. Numerous laws across the US make reference only to “industry standards” as governing the safety, reliability, qualifications, and other characteristics of various products and services. In fact, without the term “industry standards,” already voluminous state and federal laws would grow far larger with exacting lists of specifications.
Of course, the term “industry standard” also creates problems in a legal setting. It inherently carries some inaccuracy, leaving a definition of what actually is standard in an industry up for interpretation. In the case of a legal dispute, this means calling expert witnesses who are members of the industry in question to testify to what they believe the industry standard truly is. Establishing the standard usually involves showing that a majority of those in the industry agree as to the minimum threshold for quality for the product or service.
That is why, when dealing with legal matters involving industry standards, it would be wise to consult with an experienced attorney. Not only will a lawyer be able to help you define an industry standard, he or she can also facilitate identifying the requisite industry experts who can conclusively testify about what that standard actually is. Of course, it is possible for different attorneys to form different opinions about what an industry standard is, and to massage a court and jury’s understanding of that standard in trial. Thus, having an attorney draft a contract with “industry standard” language in it may be a good place to start, but not following through and continuing to use that attorney in the face of a coming legal battle would be most unwise.
To find an attorney in your area who can help you to establish what the industry standard is and ensure that you receive the benefit of that standard, you can search for lawyers in your area using HG.org’s attorney search feature.
- GUIDE TO BUSINESS LAW
- » Business Formation
- » Business Contract Law
- » Shareholders and Business Partners Rights and Regulations
- » Mergers and Acquisition
- » Franchising and Purchasing a Business
- ⇒ Business Litigation Law
- » Selling a Business
- » Legal Guidelines for Online Business
- » Business Start-Up Law
- » How Can a Business Lawyer Help?
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Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case.

