Q:I am in the process of setting up a homebased business selling silk plant arrangements and home accents. The initial marketing strategy is to sell these products at home parties, much like the Pampered Chef and Tupperware. My question is this: If something happens at the home party or someone gets hurt in some way (say, tripping over an arrangement that was on the floor), is the business liable?

Answer:

There are different levels of liability for people who enter your property, depending on their status when they arrive. There are 1) trespassers, or those who come onto the land without permission; 2) licensees, or those who come onto the land with the landowner's permission, for his or her own purposes or business; and 3) invitees, or those who come onto the land with the landowner's permission for the landowner's purposes or business. Your situation would deal with invitees, but I'll go over both licensees and invitees below. These levels of liability also apply to your friends coming over to your house, repair people and so on.

Due to the various liabilities, if you're running a home business, this is a situation where you want to be sure you've formed a business structure that protects your personal assets in the event of a lawsuit, such as an LLC or corporation, so that only the business is liable for any claims. Additionally, your homeowner's and/or business insurance can cover personal injuries if you request coverage. So what are your legal obligations?

In this case, if you mention the item to be given away only as it is titled by the manufacturer and do not use the names or trademarks in any other way, I do not think you would have a problem. If you want to be certain, of course, ask permission or formally consult with an attorney in your state.

Trespassers

Generally, landowners do not owe any legal duties to trespassers, but there are several exceptions to this rule, so if you have a situation with a trespasser, you'll want to consult with an attorney in your area.

Licensees

Friends, people who do minor services, police, firefighters and anyone else you allow onto your property for their own purposes is a licensee. The legal obligation you owe to licensees is to warn them of dangerous conditions you know about that create a danger and that they're unlikely to see on their own. So in general, you want to be sure to point out where the banister is loose or the steps have a nail sticking out and just be conscious of their safety. You'll want to make sure they're aware of the things they might injure themselves on.

Invitees

Invitees are people you invite in for your purposes and business, including mailmen, garbage collectors, census takers and so on. The legal duty or obligation you owe to invitees is to make reasonable inspections of the property and warn them of conditions that create a danger and that they're unlikely to discover on their own. If the condition is obvious, you do not have to warn them, but to err on the side of not being liable, it's best to always warn someone of a potential danger. So again, you want to be sure to point out anything they might injure themselves on and be conscious of their safety.

1 Readers are cautioned not to rely on this article as legal advice as it is
no substitution for a consultation with an attorney and an accountant in your state. Based
on jurisdiction and time, the law varies and changes.