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Jenny
Jenny, Solicitor
Category: Law
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Experience:  Qualified Solicitor specialising in Employment Law and general legal matters. Please start your question For Jenny Only
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Company law

Resolved Question:

company law
Submitted: 2 years ago.
Category: Law
Expert:  Jenny replied 2 years ago.
Hello name is ***** ***** I am happy to help you. Do you have a specific question?
Customer: replied 2 years ago.

Hello Jenny,

My wife is starting an online business selling household goods .She intends to do this via a limited company in which she is the sole director.She has no assets in her name apart from what is in her bank account. All assets including the house that we live in are held in my name .I am also a sole trader and the business is in my name.

The question is one of possible litigation if in the unlikely event, a customer sues my wife after buying a product .Lets assume that product catches fire and burns the customer or damages property etc

I would like to know if my wife would be PERSONALLY liable in such an event or would liability rest with the company .

Since my wife has no other assets in her name , would asssets owned by me as her husband ever be at risk ?

Expert:  Jenny replied 2 years ago.
Hi if it is a limited company then the risk is with the company and your wife does not have personal responsibility.
There are limited exceptions to this, such as if she as director is involved in fraudulent trading, she is also personally liable for contracts entered into prior to the company being incorporated. There may also be some personal liability if she is deemed to be negligent or criminally responsible for something.
If there is a risk of injury to customers she would be well advised to take out an insurance policy, such as public liability insurance to cover the risk of a claim. These policies are often relatively inexpensive and will give you and her peace of mind. You can contact the Association of Insurance Brokers at www.biba.org.uk as a first port of call.
She would also be well advised to have professionally drafted agreements with her customers.
If you have any further questions please do ask. if I have answered your question I would be grateful if you would take the time to rate my answer. Thank you and all the best.
Expert:  Jenny replied 2 years ago.
Hello is there anything further you would like to know about this as I can see you have not yet rated my answer?
If I have fully answered your question please do take the time to rate my answer as I am not otherwise credited for my time.
Many thanks and all the best.
Customer: replied 2 years ago.

Hi Jenny, I have just started back at work and have a further question which I will ask this evening when I get back home

Expert:  Jenny replied 2 years ago.
Ok no problem, I'll wait to hear from you. Please do take the time to rate my answer, I will still answer your follow on question later with no further charge.
Customer: replied 2 years ago.

Hi Jenny, My original question also asked if I as my wife's husband or my personal assets could be at risk in the event of litigation. I have made clear that my wife will be operating her company independent of me and has no assets in her own personal / joint name with me.

I also wanted to know, within the context of product litigation/liability , whether potential liability can extend to the assets of the spouse. I would hope that all liability rests with the company itself period ?

Expert:  Jenny replied 2 years ago.
Hi any assets in your sole name would not ever be affected.
In the limited circumstances that directors can have personal liability personal assets in your joint name could be affected.
It is highly unlikely but this is why it is a very sensible idea to invest in some public liability insurance. Especially if there is a risk that the product could potentially harm health.
If you have any further questions please do ask.
Customer: replied 2 years ago.

Hi Jenny , many thanks . But am I right in assuming that a company is a legal entity in itself independent of the director and as such carries any liability ?

My wife is also thinking of selling in the USA . Do you know if the same legal parameters as the UK are valid there too ?

Expert:  Jenny replied 2 years ago.
Hi yes that is absolutely right BUT there are limited circumstances in which directors can be PERSONALLY liable, I did set these out above. They can include wrongful trading or where she has been negligent.
Insurance policies are available to remove the risk of personal liability and I would urge you to explore this option to cover this risk. They are not terribly expensive.
It would be usual for Directors to be liable but it is not unheard which is why these insurance policies are useful to have.
I have suggested you contact BIBA the british association of insurance brokers to discuss this. You will probably be surprised that the premiums are inexpensive.
The same laws apply if you sell the goods in the UK to the USA again I would ensure you look at insurance to cover the 'small' risk of personal liability.
Please do take the time to rate my answer. I will be happy to answer your follow on questions.
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