Business law is the body of laws that govern business entities and commercial transactions. Business law may also be referred to as commercial law. For example, if an individual wanted to start a company, business laws would dictate how to organize and register that company.
Business laws would also govern how the individual would pay their employees and how to ship their merchandise overseas. It is important to note that business laws will vary based on several factors, including:
- The type of business, for example private vs. public;
- The structure of the business, such as a corporation vs. a general partnership; and
- By jurisdiction.
What are Some General Liability Disputes in a Business?
In the context of business, general liability refers to a business being held liable for damages that are caused to visitors who are visiting the premises, for example, customers and vendors.
These types of accidents are often covered by the commercial insurance policy of the business, which is also referred to as a Commercial General Liability (CGL) policy. Commercial insurance policies protect a business from financial losses that are associated with running the business.
It is important to note that these policies will not apply to harmful actions done by employees while working. Although the majority of businesses carry general liability insurance in order to protect themselves, legal disputes may still arise between the business and visitors who are injured while on the premises.
In these instances, a lawsuit may be filed if the amount of insurance does not cover the medical bills of the injured party or if the insurance company denies coverage for an accident. Common examples of situations in which a business may face general liability include:
- Slip and fall accidents: Slip and fall accidents are some of the most common claims that are raised against businesses, especially retail stores;
- Slip and fall is a general term which is used to refer to a range of personal injury claims that occur when an individual slips or falls on another individual’s property;
- This may be the result of the presence of a dangerous condition, such as poor lighting or broken handrails to a staircase;
- Accidents caused by a dangerous structure: A structure itself may sometimes present dangers to visitors if they break or are displayed in a manner that is unsafe. Examples may include:
- display shelves;
- tables;
- overhanging legs; and
- broken furniture; and
- hazardous waste spills;
- Stairway accidents: Poorly maintained stairways and walkways may present hazards for all individuals who use them, including customers;
- If there are any potential dangers present, the business should place a warning sign that puts visitors on notice of the danger; and
- Structures that have not been properly repaired: If a structure is kept in disrepair and results in injuries to an individual, the injured individual may be able to take legal action against the owner of the property;
- Disrepair is defined, in general, as a condition which presents a threat of harm or danger to individuals who enter the property;
- Disrepair may occur because of:
- neglect;
- failure to repair;
- faulty construction; or
- decay or dilapidation of the structure.
What are Contingent Liabilities?
A contingent liability is a loss or cost that a business anticipates but that cannot be accurately predicted because it is dependent on the outcome of a future event. For example, a business may be involved in a lawsuit where they are being sued as the defendant.
The business may then anticipate that they will be required to pay a damages award to the plaintiff. In this situation, the lawsuit may be included in the accounting books of the company as a contingent liability.
In this scenario, the liabilities are contingent upon the outcome of the legal dispute.
What can I Do to Prevent Contingent Liabilities?
A contingent liability is not something that can be completely avoided. Any business entity will involve factors which cannot be completely determined or predicted.
Something as small as a slight shift in the usual weather patterns may create unforeseen losses for a business. For example, if the delivery of a product depends on good weather.
Contingent liabilities, however, may be properly be dealt with by taking steps, which may include:
- Avoid taking payment for goods or services on credit or on the word of a client;
- an individual should ask for payment up front as much as possible, especially if they have performed their part of the bargain;
- It is important to include records of any contingent liabilities in the accounting books of a business. Although the amount might not be completely determined, a business can still avoid errors by at least making note that the company might have a pending debt; and
- If payment must be made, try to make payments in full rather than installments, if possible. While this is not always feasible in every case, avoiding future installment payments can eliminate more issues associated with the payments.
For some businesses, contingent liability insurance may be obtained to protect the company from losses associated with such issues. These may vary depending on the type of business as well as the laws of the state in which the business operates.
What are Some Disputes Involving Contingent Liabilities?
One of the most common disputes related to contingent liability involves company records. It is common for companies to make oversights by failing to include a contingent liability in their expense sheets.
The balance sheet of a business should reflect contingent liabilities by making footnotes which describe the source as well as the extent of any potential liabilities. Failure to take these steps may lead to more issues for the business at a future date.
In some cases, a company may intentionally avoid mentioning the contingent liability in its records. This may be done to avoid tax liability on that debt.
Altering business records, also called cooking the books, is against the law and may lead to various criminal penalties. It is much better for a business to include a contingent liability in their company records, even if the amount is not fully known.
As with any insurance arrangement, a dispute with an insurance company may arise in connection with a contingent liability insurance package. This may include a refusal by an insurance company to back the company, resulting in a breach of the insurance contract terms.
Do I Need a Lawyer for Help with Contingent Liability Issues?
Contingent liabilities will often create a complicated situation for any type of business. If you have any issues, questions, or concerns related to contingent liabilities, it may be helpful to consult with a business attorney.
Your attorney can advise you regarding the laws governing contingent liabilities in the jurisdiction. In addition, your attorney can assist you with managing your budget by advising you how the lawsuit may affect your business.
If you have to file a lawsuit related to a contingent liability issue, your lawyer will represent you in court. In addition, if your business is a defendant in a lawsuit, your lawyer can represent you in court and help protect the interests of the business.
If your business has a dispute with your insurance company, your attorney can work to resolve the issue or file a lawsuit on behalf of the business, if necessary. Insurance companies often have lawyers on staff to handle legal issues, so it is important to have an attorney representing your business as well.
