Obviously, you want to avoid personal liability when conducting
your business. But in some circumstances, accepting a risk of
personal liability is necessary to operate or grow your business.
For instance, if you want to compete for government contracts or
contract with an owner or general contractor who requires
construction bonds, you may decide the benefits of obtaining such
contracts justifies the risk of personal liability.
Bonding companies invariably will request personal guarantees
from you (and perhaps your spouse) in the general agreement of
indemnity before issuing a bid, performance or payment bond. To
obtain bonding, you may have to agree to sign the general agreement
of indemnity personally and as a company representative. In these
situations, be well aware of the personal liability exposure if
there is a bond claim and the surety makes a payment or a supplier
is not fully paid.
In contrast to a situation where you knowingly accept potential
personal liability, you may unintentionally expose yourself to
personal liability based on how you operate your company and
conduct yourself. To avoid this, be certain to treat your company
as a separate legal entity, satisfy the applicable business law
requirements and conduct yourself in such a manner so there would
be no justification to find you personally negligent in the
operation of your business.
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