Legal Question in Product Liability in Michigan

LLC necessary?

I have recently started on online business. I sell items on ebay and on a webstore. Items include retail novelties including shocking items, etc., that could potentially hurt someone. My questions are these:

1) Regarding terms and conditions: Can I simply copy and paste these from a major competitor and change the company name?

2) Will these terms and conditions make it so noone can sue me or my company if someone gets hurt?

3) I don't make any of the things I sell. If someone gets hurt, would I even be responbsile? Or would just the manufacturer?

4) If someone sues me, and I am an LLC in MI (where I reside), would they have to come to MI for the court case, etc. etc.?

5) Do you think it is a good idea to be an LLC or Incorporated, or neither?

6) If I were to be sued and I'm an LLC or Inc., would my ''excel'' spreadsheet of revenues and expenses and my business checking account be enough so my personal assets are protected?

6) Am I at all currently protected by selling items on ebay? Could I still be sued?

7) If I get an LLC in MI, are my personal assets protected if, let's say, someone in CA sues me?

8) Am I just a worrier and maybe none of this is necessary?

Thank you very much for all of

Asked on 5/08/07, 6:52 pm

1 Answer from Attorneys

Audra Arndt Audra A. Arndt & Associates, PLLC

Re: LLC necessary?

Thanks for contacting us/me with your legal questions. I will try to answer all of them.

Yes, I recommend using terms which another company has set in place, as long as you completely review the terms and make sure they are applicable to your company/product. You should modify them and make any additions as necessary though. There is nothing wrong with using "boilerplate" forms or terms, as long as you thoroughly review them and ensure they are complete. Simply because somebody else is using them doesn't mean they provide adequate protection.

#2-the terms never prevent someone from suing you. You can always be sued - it is just a question of whether another person would be successful in their suit against you. For instance, if your terms said "no returns unless notified within 14 days of a problem with the item" - then if the person waited 60 days to contact you, you could say sorry, you needed to contact me within 14 days. If they then sued you, you would be able to show the court your terms, and explain that your terms were more than reasonable, etc.

#3-If someone is injured, they would most likely sue all parties involved - the manufacturer, any distributor, and any seller. However, again, that doesn't mean they would be successful against you - but if you are sued, you would have to hire a lawyer to defend you or get you dismissed from the case. Michigan law has changed in the past 10 years so that is it much more favorable to manufacturers and sellers. Manuf. are required to place warnings and instructions on products. It is much more difficult for an injured person to file and prevail on a products liability action, unless the manuf and/or seller failed to warn them of certain risks, etc., related to the product. However, the laws in other states may not be as favorable, and if the case were filed in another state, that state's law could apply.

#4-I would definitely recommend putting a "choice of law" provision in your terms which indicates that any disputes regarding the items would have to resolved in an appropriate court in the state of michigan. Most lawsuits have to be filed where the defendant (you) resides.

However, if you have a corporation that is "doing business" in another state, then the person could sue you there. For example, no matter where Macy's is headquartered, they "do business" in Michigan and therefore could be sued in Michigan. Where a lawsuit can be properly filed depends on the kind of lawsuit. For breach of contract, it is where the defendant (you) resides, conducts business (if a corporation), and/or where the contract was entered into.

I have more info for you, but I am limited in my response - so please email me at [email protected].

I hope this is helpful - I tried to be brief and thorough at the same time.

Thanks and good luck with ebay.


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Answered on 5/08/07, 7:15 pm

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