Legal Question in Business Law in California

Re: I own a business Auto body

Almost forgot...

Find out if his state requires two safety chains and what their ratings must be. Then think about how you can find out whether he was using the proper safety chains without tipping him off.

Re: I own a business Auto body

If the hitch broke then the problem has nothing to do with the truck's towing capacity. Whether the hitch should have withstood the type of use it was being put to will depend upon the facts, but if the hitch was not as sturdy as you led the driver to believe you may indeed be liable. You should notify your liability insurer immediately.

Re: I own a business Auto body

Because you custom made it for him, there probably is an implied warranty. But that only really speaks to the replacement of the hitch. The insurance company probably is concerned with damage to property other than the hitch, and they'll want to pin that on you a products liability theory. Still, there are many unanswered questions here.

Did you have any contract or other written material related to this transaction? Will the insurance company tell you what he was pulling and under what circumstances it broke? What are the load ratings for similar hitches? Did you get the hitch back for inspection? How much are they asking for, and does it exceed your CGL policy? Have they threatened a lawsuit?

Re: I own a business Auto body

The range of problems for which a manufacturer can be liable is very broad, including misuse if the misuse was forseeable. The plaintiff's lawyer will argue that overloading the hitch, or towing up a 12% grade, was forseeable. You should indeed be concerned about a suit for not just the value of the broken hitch, but all the harm caused when it broke, including possibly personal injuries or worse.