Ag Summit 2006 October 19, 2006 3:45 pm – 4:30 pm Institute for Advanced Learning and Research Danville, Virginia

1. Liability and Risk Management By: Jesse J. Richardson, Jr., Associate Professor Urban Affairs and Planning Virginia Tech Blacksburg, Virginia 24061-0113 (540) 231-7508 (540) 231-3367 (fax) Ag Summit 2006 October 19, 2006 3:45 pm – 4:30 pm Institute for Advanced Learning and Research Danville, Virginia

2. Overview • What are the legal risks? • How do we avoid legal risks? • How do we protect ourselves from adverse consequences of accidents?

3. Potential Liability • People on your property • Employees • Neighbors • Customers • Other third parties

4. Anatomy of a Lawsuit • Duty • Breach • Causation • Damages

5. Grounds for Liability • Intentional acts • Negligent acts • Strict liability • Contract

6. Products Liability • Grounds -Strict Liability -Negligence -Implied warranty • 3 worrisome factors -Increasing # of claims -Increasing size of awards -Increasing #s of direct marketing operations

7. The best way to save the farm from a legal perspective: Proactive Safety Management • Develop a proactive liability audit programwatching for possible problems should be part of every employees job • Develop a safety routine for your facility and stick to that routinechecklists for employees to ensure that corridors are clear, hazards are prevented, etc.make safety a key word every day • Use contracts • Use release of liability forms • Use safety latches and locks to secure areas not open to the public, remove keys from tractors and other equipment, keep dangerous items out of reach of the public

8. Keep walkways, aisles, driveways, etc. clean and free clear of obstacles, snow, ice, etc. • Post signs (with pictures) to warn customers of potential risks and hazards • Set up your facility specifically for your activity • Minimize or eliminate contact between animals and customers • Use equipment appropriate to your activity • Use an appropriate business entity • Never say you are sorry, but treat accident victims kindly • Obtain adequate liability insurance

9. Business Organization • Sole Proprietorship • Partnerships • General Partnerships • Limited Partnerships • Limited Liability Partnerships • Corporations • Sub Chapter-C corporation • Sub Chapter-S corporation • Limited Liability Companies • Cooperatives

10. Titling of property • Spouse can hold title and not be involved in the business • Different business entities • Leasing reduces risk as well

11. Liability Insurance • Transfers risk to the insurance company • Essential for all producers, particularly those with limited resources • General Farm Policy- Beware! • Disclose all activities to insurance agent • What the large print giveth, the small print taketh away • Attorneys’ fees! • How much is enough?

12. Conclusions • Be Proactive! • Make safety a part of day-to-day operations • Purchase liability insurance • Plan- business organizations, titling of property, leasing, etc.