Intro
Liability on your business premises or because of an activity you’re conducting is a very important and often overlooked aspect of starting up a business. Liability can actually arise from many different situations. In this article, we’re going to address liability that arises from negligence because that is the most commonly thought of liability that comes up on business premises. To best illustrate, I will use the example of a photography studio and off-site photo shoots throughout this article.
First, we will examine negligence broadly and then follow up how it would specifically apply to situations that may be faced by business owners and off-site activities. Finally, we will look at how to limit your financial exposure in the unfortunately event that you find yourself facing some liability from your negligence or that of an agent of yours.
Negligence
Negligence is fairly easy to describe when you break it up into pieces. In it’s broadest terms, it is:
- A Legal Duty,
- A Breach of that legal duty,
- Causation between the breach and the damages that result from the breach, and
- Damages.
Negligence cannot exist without all four of those elements. That means that even though their may have been three, without the fourth element, there can be no financial responsibility under a negligence theory of recovery. Frequently, this presents itself when there is no damages resulting from the act. People are negligent all the time, but if there is no injury, there is no cause of action.
Duty
In order for liability to exist, there must first be a duty. The default rule is that we owe no duty to any other person, but any action we take comes with some duties attached. For example, if we’re walking down the street and we see someone getting robbed, we have no duty to help that person; however, while walking down the street, we do have a duty to take reasonable care in how we walk so we don’t harm others. Also, if we start to rescue the person in trouble, we suddenly have a duty to continue that rescue.
Furthermore, certain types of relationships generate a duty. Police officers have a duty to the public to serve and protect. Doctors have a duty to do no operation without informed consent. Directors have a duty to their company to be loyal. And, most importantly, business owners have many duties to their customers. The type of duty a business owner owes changes state to state, but put very broadly, you must keep your premises safe for your customers. But does this same concept arise when shooting off-site? Yes. If you have control over an area, you have a duty to keep it safe for your customers. You also have a duty to keep the premises safe for your models, employees, independent contractors, and anyone you invite or reasonably expect would enter the area you currently control. If you’re doing a very public photo shoot because it will give you publicity, the pedestrians are “invited” so they must not come to harm.
On top of premises liability, you can be responsible for any changes you make to the natural landscape. If you run wires, set up tripods, add lighting, have distracting flashes pointed at cars, or anything you set up, you can be responsible if that setup causes someone to come to harm. You’re not strictly liable, so if someone walks in and purposely starts gnawing on an electrical cord, you’re likely not going to be liable unless you knew, or should have known, that person would do that.
It is once you breach one of these duties, causing someone or something to come to harm, that you will be liable for negligence.
What Can You Do?
First off, recognize the risks when you’re operating your business. The more you are able to see hazards, the better you can protect yourself from them. Negligence is the reason construction sites and rail yards have fences, it’s the reason hospitals have policies on interacting with patients, and it’s the reason for liability insurance.
That’s the second, always carry liability insurance. If your company is low risk, your premiums will be cheap, but worth it.You never know when something will go wrong, so liability insurance should be just another fee you carry as part of running a business. Note: Homeowners policies will likely not cover your business liability, even if you’re shooting out of your home. You will need a business liability policy.
The third item is proper asset protection planning. When you’re just starting out, you’re in the best position to get all of your assets in order and protect them properly with the least expense. Much like every business owner should carry business liability insurance, every business owner should take a look at asset protection to ensure that if a claim exceeds their insurance, they won’t lose everything they own. This asset protection can also be as simple as proper business planning to escape the personal liability of your business debts.
And, the fourth item is proper disclaimers and limitations on liability. These don’t always protect you, but they’re a good mechanism to use in conjunction with everything else. A good disclaimer puts the person on notice that there’s a risk and also gets them to agree to not sue in exchange for some value. The closer you are to a publicly run service, the less likely these will work, except for the portion that puts the person on notice.
I hope this article was helpful and illustrated the importance of limiting your personal liability for the increased susceptibility involved in running a business. For more information, please contact us at richard@lawplusplus.com or call (919) 912-9640.