Negligence & Liability can Threaten a BusinessDecember 14, 2011
Managing a business involves great legal responsibilities towards your customers, employees and the public in general.
We at Hornberger & Brewer have a proven approach for getting business clients the results they are looking for when involved in disputes common to the business community.
Negligence involves the failure to exercise the degree of care that, in the circumstances, the law requires for the protection of other persons or those interests of other persons that may be injuriously affected by the want of such care.
Take for example an accountant’s failure to conduct an audit with “due care.”
- Ordinary negligence applies to judgment errors resulting from a lack of experience, training, or oversight: it is unintentional.
- Gross negligence results when the accountant recklessly disregards established accounting, reporting, and auditing standards.
You are also at risk in case you have signed a personal guarantee for a loan, do not operate your business as a separate entity, or happened to act in an irresponsible manner.
In addition to financial injury, persons can suffer from physical injury as a result of negligence on the part of a business.
All of this exposes you as the business owner to legal liability–accountability and responsibility to another that is enforceable by civil remedies or criminal sanctions.
At the very highest levels of American business, the amounts involving liability can be staggering:
- $4.8 billion proposal from American Home Products to settle the fen-phen diet drug litigation.
- $246 billion settlement between the tobacco industry and the U.S. states’ attorneys general.
A host of wrongful criminal and civil acts may expose a business to liability. Examples include a physician defrauding the Medi-Cal program, a distributor reneging on a contract to provide a fixed amount of memory chips at a preset price, or a dealership selling a car with a defectively designed fuel tank.
Of these three, tort law covers the last example – civil wrongs, other than a breach of contract, that injure persons, property, economic interests or business relationships and are caused by the acts or omissions of others.
Even the smallest business owner may have a legal responsibility to pay damages if you or your employees have been negligent and caused injury to your employees or members of the public.
You or a member of your company can make a mistake that may injure someone or damage some property. Such mistakes could ruin the company’s reputation, or worse.
Depending on the degree of harm, a lawsuit could easily bankrupt your business. The legal proceedings can be very time consuming, which adds to a significant cost of your defense. Then, the fact that about 80 percent of all U.S. businesses are partnerships or sole proprietorships adds to the forces constantly putting your business and personal assets at risk.
To avoid debilitating verdicts and bottomless attorney fees, all businesses need a basic understanding of tort principles. This will allow owners to identify and minimize potential risks and to select the best form of business.
It is also necessary to identify the safety and health needs of your business activities by carrying out a risk assessment. Keep in mind that when changes are made in your workplace, you may need to reassess the hazards, since wise business management is an ongoing process.
The Health and Safety at Work Act 1974 and its associated Regulations should serve as your guide here. You may consult with an insurance representative and your industry association, as Liability Insurance is one of the most important constituent elements of a company’s success.
Consult with Hornberger & Brewer regarding your business dispute involving purported negligence and potential liability, and you can be sure that our insight can help you resolve the case to your advantage.
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