What are th potential liabiltiy issues for a consultant with a large company?
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What are th potential liabiltiy issues for a consultant with a large company?
I’m interested in becoming a consultant for a large, international, reputable essential oils company. The company sells essential oils, personal care products, and vitamins. If a customer was to have an adverse reaction to any of the products when used correctly, or if they were to use them incorrectly and have a problem, how liable would a
consultant be in this kind of scenario. In this letigious society, could someone sue a consultant in case of a problem or is it a company problem? I just want to make sure I’m not opening myself up to issues if I pursue this business option.
Asked on December 9, 2016 under Business Law, Pennsylvania
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If you are an actual employee, you would only be personally liable for your own wrongdoing: e.g. if you sold a product you knew was defective, dangerous, or inappropriate for this person (e.g. that this person had risk or warning signs that they are not someone who should use this). Employees are not personally liable for company acts where they personally are not at fault.
But if you are a "consultant" you do not have the protection of being an employee; if someone is injured, they could sue you, as the separate "business" which sold them the thing leading to your injury. That doesn't mean they'd win every lawsuit, since there still needs to be some measure of defect or fault (e.g. if someone had a previously undiagnosed allergy to an ingredient properly listed on the product, clearly, there is no fault in them having a bad reaction and no one is liable for this). In this case, you--the consultant--are the company with customer contact and so could be sued the way any company could be.
If you are not an employee, therefore, you should set up and conduct your business through a limited liability company or LLC; as the term implies, the structure limits, or reduces, your liability. As a member (owner) of an LLC or employee thereof, you are not liable for the company's acts, unless you again were personally at fault (or guaranteed a loan or obligation); it restores to you the protection you'd have as an employee to tort (e.g. injury based) liabilty, and also gives you alot of protection vs. other business debts or obligations.
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