Selling prototypes, beta-versions: Liabilities?

I incorporated my consulting business for this reason. I could not buy liability insurance. Contractor's accountant put me on to this site:

You want the corporation to be liable. Contractors will incorporate every new housing project for this reason and keep little of their assets in the corporation.

That is why our small ham radio club incorporated. Only about 30 members and token dues of $ 5 a year. Even put in for a 501C3 or whatever nonprofit so some businesses would donate things such as ham sandwiches for public service events to us.

Several years ago I was subjected to a seminar run by my company's attorney. Two thoughts have stuck with me.

1) You never want to have to sit in the witness chair. 2) You don't know the answer until the judge tells you.

Be goverened by those.

I no longer will loan out ladders or power tools. I did have a neighbor fall off a ladder. No injuries but it was a warning to me.

Charlie

U-Haul builds their own trailers. They used to sell the old ones but for liability reasons they now dismantle and cut them up into pieces and sell as scrap metal.

"Existential Angst" fired this volley in news:4e74e95e$0$4393$ snipped-for-privacy@cv.net:

Yep.

My attorney (who's actually got a reputation for being good at this stuff) told me that even with a RAFT of waivers and hold-harmless agreements - which _might_ get you off the hook in court - you still can never prevent someone from suing you. And that's always costly and time- consuming.

He suggests that before you sell anything with any hazard potential at all, that you incorporate as an LLC. Then, they can sue the LLC, but if it's structured right, all they'll get is any insurance the LLC carries, while your personal assets are protected unless you've been criminally negligent in allowing something you _knew_ would cause injury to be sold to people you knew would injure themselves with it.

Incorporating that way is only a few hundred bucks in most states, and carries with it only a small burden for record keeping and reporting.

LLoyd

In addition if the state you live in has a homestead act, register your home and protect it from a lawsuit.

Best Regards Tom.

"azotic" fired this volley in news:j532ka$kf5$1 @speranza.aioe.org:

My son is handicapped. We signed everything we own into a durable trust for him; He owns it all. Because he is incompetent to enter into any agreements with anyone, he cannot be found liable for any form of tort or contract breach. The trust cannot be touched.

Even if I screwed up and was found liable, they couldn't take the house away. But the LLC helps improve even that, because it doesn't own anything but the intellectual rights to what it sells (and usually for prototypes or one-offs, the customer actually owns those, anyway).

I wouldn't ever deliberately sell anything I knew was going to hurt someone. However, if I got one of those typical suit notices on my desk where the customer was careless, and now they are going after everyone they think may pay for their stupidity, I'd just notify them that the corporation was dissolved due to insufficient resources to litigate, and that they were welcome to the proceeds of the dissolution -- which was whatever petty cash was still in the front desk's drawers when the corporation went out of business. The desk, of course, would have been leased, and had to be returned to its owners.

LLoyd

In todays world you have to make yourself judgement proof. Having been a defendant i can tell you its a major pain. It took 4 years to settle and even when you win you lose. There is no way to recover the lost time and money spent defending your self. Even if you have no assets to satisfy a judgement you will probobaly be called as a witness, at the very least you will have to give a deposition. We are in dire need of major tort reform.

Best Regards Tom.

I am not a lawyer nor do I play one on tv but... maybe you could do like the phone companies do and force people into binding arbitration as part of the terms of service?

Not gonna happen as long as lawyers are running the government. The sad thing is how few people see a conflict of interest with people who profit from complex laws making the laws.

Litigation has exploded to the point that there is a shortage of conscripts to serve as jurors for the shakedown artists. People here are asked thru summons to do thier civic duty every 18 months like clockwork. I refuse to play thier game. Soon as mention i was a defendant in a civil suit i am excused for cause.

Best Regards Tom.

Ah................ disclaimer? "due to this product being a prototype & not yet fully tested, seller assumes no responsibility to buyer for any defect,personal injury or property damage due to negligence , misuse causing failure of this product."

notery: by signing here you___________ accept the above terms & conditions date__________ buyer =20 ________________ seller

that should be enough to scare the shit out of the weak ones that dont really need the product.

the best one I've seen on milk cases ect. is:

"misuse of this container constitutes theft!"

Bastards! stolen milk case!!

Hey it keep me busy making molds for that crap , many years.

One of the biggest considerations today is to do as much as you can to protect yourself from pirate lawyers wanting to transfer wealth to themselves: "have an accident, call us first", "maybe you have been hurt and you don't even know it...call us now!"

That is a basic concept of our legal system. You can't sign away your rights.

One of the reasons for that is all businesses are portrayed as bad with those "smart" people in the government the only ones who can help us. Every business gets lumped into the same category as the Wall St pirates who were responsible for tanking the economy with the securitization of mortgages.

That idea also has downsides. A good friend was involved in a car accident (an older guy pulled out without looking at a high rate of speed and crossed over into the lane my friend was in).

Friend was young and just starting out. Guy was judgement proof (had all of his assets in trusts etc) and only had the state minimum car insurance. My friend was paying medical bills for years and still has serious medical issues that can never be repaired.

Don't ask or take legal advice from craft/trade newsgroups is one mistake you never want to mak..

Oh, nevermind..

Everyone deserves to be represented by an attorney in court. The lawyers are not the problem. The real problem is caused by gullible jurors.

Limiting awards to actual damages would be a big improvement. No money for pain and suffering. Juries need to figure out they don't have to award more than actual damages to be fair.

Best Regards Tom.