Even if your business has been closed for five or even 10 years, there are probably still products it made floating around somewhere. In some cases, it is possible your product might cause injury, which is why claims settling is the reason that quite a few businesses exist even after they are technically closed. What happens then, especially if you live in a jurisdiction where someone can bring suit against you? In most cases, the answer centers on proactive planning, attorney actions and insurance policies.
Contact an Attorney ASAP
It really is important to get in touch with an attorney as soon as possible if someone contacts you about product injury after your business closes. Avoid admitting fault, and avoid making promises. Take any contact information and any information you have about the product injury, and relay it to the attorney you enlist.
If you correctly followed state notification practices governing the closure of your business, the window of time in which someone can bring suit is limited; specific time periods vary by state. Your attorney will work to get any lawsuits dismissed if they exceed the window of time. In other cases, some states allow you to reject a claim, which means the claimant must take further steps. If he or she does not take further steps, your attorney will work to get the lawsuit dismissed. Your attorney can also determine if liability should be transferred to another party if you sold your operating assets to that party before your business closed.
There are times where the claimant does everything right and has a genuine case. If this happens, talk with your attorney about whether it is best to pursue the matter in court or to settle out of court. It is usually best time-wise and money-wise to settle out of court.
Buy and Maintain Insurance
As long as your products remain in circulation, they could potentially cause issues such as physical injury and property damage. This is especially true if your products are durable and long lasting, such as machinery products (elevators, for example). One way to act proactively is to continue buying insurance to protect you against such claims even after you close or sell a business. For instance, you could buy discontinued products liability insurance.
Brush up on the Law and Industry Standards
The law requires you to take certain steps when you close a business. For example, you may be required to notify creditors, who may include product liability claimants. Try not to be shady even if something is technically legal, and treat others as you would like to be treated. Take the perspective of your creditors, partners or other involved parties, and try to behave as you would like them to if the situations were reversed.
In many cases, the law requires you to create a run-off infrastructure. One purpose of such a step is to prepare for the possibility of future lawsuits arising from business products. Under the law, you must leave enough resources for the run-off infrastructure, but even if the law does not require you to do so, you should try to leave adequate resources. In fact, not doing this could be viewed by the courts as an attempt to dodge responsibility for your business and as bad conduct. You could end up in even worse straits. When you set up this infrastructure, make it clear how people can find you, explain the rationale behind you closing the business, and detail how you are closing it. Explain any rights consumers have regarding your business, and how they can follow through on those rights if necessary.
Communication Is Important
One way to show you are acting in good faith even as your business has closed is to maintain a consumer hotline or a phone number for consumers to contact. Doing this also serves as a system of early warning so you get an idea early on if certain products are causing many injuries. You can then act to send out safety notices or recalls.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.