Liability

Anthony said...

Hi John,

I have a question with information in your book. The question is regarding the liability spread of responsibility for a product.

The designer has some liability. The importer has some liability that is countered by product liability insurance and perhaps corporate or LLC protection.

What are the legal ramifications?

Thanks John,

Anthony

Answer follows...


Anthony,

Anybody can be sued for anything anytime. Changing the legal base from caveat emptor to the anything goes system we have now introduced chaos to the system.

Even if you comply with all Consumer Product safety Commission guidelines, you can be sued. Even if you are a corporation, you can lose your personal assets. Ultimately, there are no protections.

Then why does anyone start a business? Well, most people do not start a business, and very many who would are dissuaded from starting a business for these among very many other reasons.

If you wish to join the self-employed, you minimize your risk by using the measn I have laid out. Frequency: your first order is minimum, and you make your money on frequently as possible doing minimum transactions. This gives you intense market feedback which gives you early warning of any problems.

Also, you are so small you are not worth suing. (Do you have one million dollars in ready cash sitting at hand? Then you are not worth suing.)

As you grow and have a track record, you might get liability insurance, or have your supplier cover you under theirs if they have usa liability insurance. There are many ways to manage this situation, once you are in the business.

There are a few hundred stories of small businesses being wiped out for liability issues, and so it happens. But most businesses do not. if you are looking for protection from this, it does not exist. People get run over by trucks, too. If that fear keeps you in the home, it is irrational. So is fear of liability.

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