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Potential Torts And Contract Legalities And Ways To Avoid Them

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Running Head: TORTS AND CONTRACT LIABILITIES AND WAYS TO AVOID THEM

Potential Torts and Contract Liabilities
And Different Ways to Avoid Them

Abstract
People who do business as a sole proprietor or in a partnership are liable for the torts committed by them and for torts committed by the business and its agents. The best way to avoid tort liability is to set establish their business as a corporation or a limited liability company. A corporation or limited liability company will act as its own entity for all intent and purposes. When it becomes it own entity you will have to separate your finances from that of the business. Remember that it does not matter what type of business organization you select, …show more content…

Remember that it does not matter what type of business organization is selected, if a person commits a tort they are still personally held responsible. For example, if a shareholder in a corporation runs over an employee while driving a company truck, he or she is still held liable for negligently operating the vehicle. There are certain clauses that can be beneficial in a contract as well as clauses that one should be wary of. Some clauses that can be beneficial include hold harmless clauses, which are used to shift liability from person to another; and indemnification clauses, which are designed primarily to transfer the liability and expense of claims brought against the business away from the entity (Rapp). While some clauses are beneficial, one should be wary of others. For example, one should avoid clauses pertaining to his or her rights and duties in the event that a claim or suit arises, which can create a contractual duty on their part (Rapp). Entering into a provider agreement that forfeits a person 's ability to seek compensation for services they are entitled to should also be avoided. One should always be cautious of forfeiting their right to compensations (Rapp).

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