Legal Question in Business Law in Illinois

Re: Product liability disclaimer

There are several things you can do. A combination of all of them is best:

1. Use appropriate disclaimers of liability. This may protect you against the buyer but will typically have little or no effect on a third party. A disclaimer is essentially a contract, and the third party is not a party to the contract between the buyer and the seller.

2. Put warnings on the product. This may not be feasible with your products. A warning can put the third party on notice of a condition that a casual user may not understand. I am sure you have seen warnings in many unexpected places ("The liquid in this cup is HOT!") because injured parties have obtained judgments for conditions that many people see as obvious.

3. Keep adequate insurance coverage. Contractual limitations and warning labels cannot eliminate all risk. Insurance fills the gap.

4. Run your business through an entity that provides limited liability, such as a corporation or limited liability company. While the business itself is still at risk, proper planning can limit the possibility that the your personal assets will be subject to the liabilities of the business.

I hope this helps.

David Staub, an Illinois business and tax lawyer