Limiting Your Business's Liability
Limiting Your Business's Liability
All businesses should have a plan to manage their business risks. Whether your business is to provide a service or to sell products, you will likely encounter a situation where a valid claim is asserted against your company. There are multiple ways to manage such risks, and a combination of several methods should be utilized.
The most obvious way to manage risk is to maintain liability insurance. However, this is not cost- effective if used as the sole method. Multiple claims generally lead to increased premiums, cutting into profits. Too many claims may limit your company's insurance options as well.
A frequently underutilized tool is a strong limitation of liability and/or damages provision. It allows the business to manage risk by having customers agree in advance (and before there is a problem) to limit recovery.
In Georgia, certain contracts relieving a party of liability may be unenforceable as being against public policy. For instance, contracts related to construction or maintenance of buildings or design of buildings which purport to insulate the indemnified party from claims due to that party's sole negligence have been held to be unenforceable as violating public policy under O.C.G.A. 13-8-2. However, unless a statute specifically enumerates certain contracts as against public policy, courts will generally uphold limitation of liability and/or damages provisions.
Courts have upheld various limitation clauses, including limitation on the type of damages, the amount of damages, and time limits on when claims can be brought (even for building construction and design contracts). An experienced business attorney can provide guidance and prepare narrowly-tailored contract changes to protect your business, so your business can thrive.
At Brim Law, LLC, we are committed to the success of your business and look forward to helping you navigate today's challenging business environment. We are here to assist with your legal needs.