This article explains how preventative law is used in business contracts to mitigate financial risks, establish terms and conditions of business relationships, and set expectations if businesses are sued.
What is Preventative Law?
Preventative law deals with legal items companies put into contracts, agreements, and products or service offerings that protect the business from being sued. Preventative law is a reaction to the highly litigious climate in the United States. People can sue for almost anything and frequently bring lawsuits against companies and businesses. The high volume of legal cases in the United States makes some international companies nervous about entering the US market. Companies and businesses of all sizes use preventative law as protection from potential lawsuits.
Forms of Preventative Law
One common use of preventative law is warning labels on products. These labels outline the intended use of the product. The risk of harm or injury from the product is unlikely if the product is used according to the intended purpose. Warning labels also declare that there is a risk of harm or injury if the product is misused. This is a show of good faith by the company explaining how to use the product and is also a form of preventative protection in court. The company can point to the warning label on the product packaging and show that the public was cautioned against using the product in ways other than the intended purpose. Disclaimers and cautions are given on the packages of many products as a form of preventative legal protection.
Another form of preventative law is the protections outlined in a legal agreement. The terms and conditions of user agreements are an example of this. Consumers see these terms and conditions frequently when using or purchasing products and services online. Another example is the terms and conditions of a legal contract between businesses outlining what happens when things do not go according to plan. Both are used as preventative legal tools for companies.
Simply having preventative protections in place does not guarantee that all lawsuits will be avoided. Large international corporations like Wal-Mart, Target, Amazon, Tesla, Ford, and Chevy all have huge teams of lawyers on staff to make sure the company doesn’t get sued. But all of the lawyers in the world cannot prevent litigation. Even with lawyers on staff, these companies are sued every year anyway.
Lawsuits are not something that can be fully prevented or eliminated. People sue all the time. It’s a constitutional right in America. Using preventative law allows companies to put in the work to get the best return on their investments with a good business lawyer to reduce catastrophic financial losses from litigation if the company is sued now or in the future. Proper planning and contract writing are proactive ways to help companies protect their financial and business interests.
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DISCLAIMER- This website talks about various business topics and various legal situations. The statements given by the host or guests or author do not constitute legal advice given to any individual or business. The host and/or guests are giving their personal opinion based on their personal and professional experience. Examples given are given broadly as examples with names removed for privacy. If you do have questions about your business or legal situation, please reach out and email firstname.lastname@example.org to discus your business or legal situation.