Torts and Contract Liabilities and Ways to Avoid Them

Topics: Corporation, Types of business entity, Business law Pages: 4 (1411 words) Published: October 3, 2012

Potential Torts and Contract Liabilities
And Different Ways to Avoid Them

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, if you personally commit a tort you are still personally held responsible. When dealing with contractual liability and tort liability, one of the preferred ways to minimize these types of liabilities is to contract out to a third party. By using an independent contractor you are reducing your susceptibility to torts and contractual liabilities.

Potential Torts and Contract Liabilities
And Different Ways to Avoid Them
How does tort liability and contract liability affect a business? This essay will explain the effects of tort liability and contract liability to a business and the different ways to avoid it or at least minimize it as much as possible. First, go over briefly to discuss what tort liability and contract liability are. Next, briefly go over the different types of business: sole-proprietor, general partnership, limited partnership, corporation, and limited liability corporation and the effects of liability of each to the owner or owners. Then move right into discussing the liabilities and torts in a business and the different types of clauses that are preferred in a contract and that should be avoided. Last, discuss ways to minimize the risk of liability and torts.

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