A question on liability

Rennie Heuer

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I have always shied away from building anything meant to be used by a child primarily for liability reasons. I remember looking into making wooden toys about 15 or 20 years ago and at that time there were a slew of new regulations coming out that just seemed a hill too high to climb. Even so, I see a lot of fellow woodworkers on various sites like Etsy doing quite well selling items intended primarily for kids, specifically doll furniture.

I did not realize it, but there seems to be a huge following, and therefore a huge market, for large doll furniture sized for 18" dolls like the American Girl brand. This fascinates me. These are expensive dolls (selling for over $100) and there seems to be a few dollars to be made making furniture for them. I've never been in a position to buy a $100 doll for my daughters, but it seems many others have no qualms about it. I am happy for them! These dolls seem to be both playthings and intended heirlooms.

There are some makers that go the 'child safe' route on finishes using only BLO and such, while others use varnish, lacquer, or paint. None of these pieces, or atleast very few, have parts that could be considered choking hazards. Some of the furniture is banged together pine glued and held together with help from a brad nailer. Other pieces, and those I am most interested in, are assembled just like 'real' furniture with real joinery.

I am seriously thinking of wading into this area and turning out a few pieces to see how well they are received. Having a LOML that likes to sew is a huge plus because we can also offer little mattresses, quilts, pillows, and the like. Much easier to sell a bed that is nicely adorned I would guess.

So, getting back to my initial question - Liability. What need I be aware of? Nothing that can break off and become a choke hazard. Child safe finishes. Age appropriate notations in the advertisements and perhaps reinforced with a note included in the shipping container. Maybe even a liability notice of some sort?

Some of you must make things for kids. How do you address these concerns?
 

Carol Reed

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I used to make rocking horses and had to quit. The reason was liability. Parents are quite unreasonable when it comes to their kids and when their kids use their things in an inappropriate way and get injured, guess who gets taken to court? I looked into product liability insurance and found it absolutely prohibitive. In terms of premiums, they were number 2 behind seating, another item people tend to use inappropriately. As I recall, premiums were based on number produced and the lowest number (lowest premium) was in six figures. The annual premium was in healthy 4 figures. YMMV.

That said, the government has both guidelines and requirements with regard to toys you might want to check out. Tread carefully here. I was unwilling to bet the whole farm against one unreasonable person unwilling to admit their darling could do anything wrong. And it isn't just the client. Its also any friends of the client who allowed their child to abuse the crap out of what you made. Call me chicken.

I also love the big doll furniture and have a rocking chair that once belonged to one of my aunts from her childhood. Its just the right size for a toddler to attempt to use. Scary in this day and age of suing everybody and their cousin.

If you continue, I suggest you burn the caveat "For doll use only." or some such disclaimer. Burn it right into the wood. Hard to lose those instructions. See you lawyer before proceeding.
 

Darren Wright

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Our guild quit making toys for the same reason, liability is way too high. What is worse is that though they make a claim when the child is young, when they turn 18, they can claim additional losses against insurance, so many insurance companies won't even give you coverage.

One thing you could consider and many parents will probably still ignore and still buy the products, is to label them for adult use only. Adults do collect doll furniture as well, even the type you are talking about.

I assume that you've also already setup your company under an LLC, S, or C Corp? If not, it would be another layer of liability protection.
 

Rennie Heuer

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Good advice from all - thank you.

Ryan, I followed both of those links and used the 'robot' to go through what I wanted to manufacture and sell and, quite frankly, doll beds, so long as they are labeled and intended for children over 12 and meant to be 'collectables' don't pigeon hole easily. The impression is that the rules don't apply, but Carol's words ring out here reminding me that people can sometimes :D be less than intelligent when using any product.

I've contacted a number of other sellers on Etsy to ask them how they deal with the regulatory Jungle. Should be interesting, if they reply.
 
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Leo Voisine

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This is what a corporation is for.

A corp is to "separate" Rennie the person away from the business that Rennie operates. It's possible that there are some tax advantages but that is NOT the primary reason to incorporate, the separation IS the reason. Being incorporated comes with a price. Is the business generated worth the price? There are fees and matters of ownership. I dunno.

Personally, I would like to stay corp free, and not do it. Maybe some day I will need to but I don't want to be in a position where I need to.

IF - you ARE - incorporated and concerned about liability - then you NEED liability insurance - also comes with a price tag. Particularly if you are talking personal injury, and even more so, - children.

Seems innocent enough - "others on ETSY are doing it". BUT - are they taking chances that they can loose their house, retirement savings? Are they legit, liability insurance, incorporated? Who knows? Are you willing to take a chance on some disgruntled daddy wanting to take care of the problem?

Sounds like something to stay away from.

BUT - on the bright side

There certainly IS a way to do it and do it safely - for everyone. I am SURE that government regulations ARE readily available for the asking. www - . - (something) - . - gov, I am sure will have all the information you need. After all daycare centers, children's schools, baby sitting services, toys, foods and so many other things ARE out there for KIDS. Somebody provides the stuff, and there are safe ways to do so. I would not shy away just because a bunch of friends said - no - it's not a good idea. If this is something you are truly interested in, then you should do your due diligence and find out about it. It "could" be well worth while.

That's my 2 cents - add another $4.00 and you get a cup of coffee. Come over to visit me and the coffee is free.
 

Rennie Heuer

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This is what a corporation is for.

A corp is to "separate" Rennie the person away from the business that Rennie operates. It's possible that there are some tax advantages but that is NOT the primary reason to incorporate, the separation IS the reason. Being incorporated comes with a price. Is the business generated worth the price? There are fees and matters of ownership. I dunno.

Currently I am a DBA. However, I do carry $1 million in personal liability insurance. When I was in Idaho I was an LLC. Have not explored that possibility here in Michigan. I will.
 

Ryan Mooney

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In order for incorporation to provide protection you have to do all the little stand on one leg and touch your nose with your off hand dances while crossing the i's and dotting the t's in the right order to make sure that you haven't opened up a chance for a litigious individual to pierce the corporate veil.

https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html
The really important there is the "There is no real separation between the company and its owners." which means careful handling of finances, legal affairs, corporate meeting minutes carefully recorded, etc.. Mostly its pro-forma stuff but you have to watch for small slip ups that someone could later use against you. There is also the somewhat worrisome "The company's creditors suffered an unjust cost", but that is generally contingent upon one of the other criteria being met (fraud, not following the blah blah blah formalities).

This isn't saying that incorporating is a bad idea, just that you have to do all the steps in order for it to actually be useful in this regard.

There's one other bit of CPSC ruling that _might_ give you a bit of an out (at least on the extremely onerous testing requirements which would normally require re-certification if even seemingly trivial things like paint color changed) is the small batch exception (which was added later):
https://www.cpsc.gov/Business--Manu...es/Small-Batch-Manufacturers-and-Third-Party-
I'm pretty sure (ask your lawyer) that you'd fall into class B.

Having said that if you can clearly define them as not for children (and I think you'd have a decent case because of the construction methods and cost point - but again.. not a lawyer) I think you'd still be generally better off. Of course that also means that if someone says "Oooh I'd love one of XX for my <small child>" you would be obligated to refuse to sell it to them (some states have a similar issue with raw milk - yeah I'm buying this $8/gallon raw milk for my pets.. totally not planning to drink it.. and if I said I did you couldn't sell it to me).
 

Darren Wright

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Ryan is correct, you do have to separate out business from personal and be diligent about keeping them separated. As I suggested, it's just another layer to help protect you.

The other thing courts will look at is neglect and intent on your part. Obviously anyone can sue anyone for anything, point is keeping the ducks in a row and having the documentation for intent. If someone buys a gun from a gun shop and shoots themselves in the foot, as long as you didn't sell/advertise the gun as a certified foot shooter, then things should be pretty straight forward with the courts.

Of course we can't let the "What if?" monsters destroy all our fun, so I think just being clear on who and what the toys are intended for, by having it in your advertising and perhaps printed on the toys, makes it clear to buyers/would be ambulance chasers that they have no case to stand upon.
 

Ted Calver

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A few years ago, the missus had an Etsy store selling crocheted items she custom designed to fit the American Girl Doll (AGD). Sales were modest as the outfits were pricey, but she had a steady clientele that loved her things. Probably sold one outfit a month on average and had done so for several years. One day she got, via Etsy, a cease and desist notification from a lawyer representing the company that owned the rights to the doll. The lawyer's sole job was to search out the use of the name American girl doll in connection with any unauthorized product and put a stop to it. After a couple of phone calls with the lawyer the missus changed the wording in her product listings to say the products would fit "popular 18 inch dolls" and that satisfied the lawyer, and Etsy. Didn't seem to hurt sales.

She put that store on vacation in March of '17, so I don't know what the current climate is regarding use of the AGD name, but along with liability keep in mind that lawyer is probably still on the look out.
 

Dave Hoskins

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This liability issue is the reason several years ago, when I had a furniture building operation, I did not have the shop open to the public. The insurance was sky high. I did manage to have the office area insured but that was it. Letting someone into the shop area was unreal. Though honestly not safe anyway. Personally, I think it might be wise to just leave well enough alone.
 

Rob Keeble

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I have a very different view to any of you.

First go ahead sue me. If you think a lawyer is going to take a case on contingency where there is nothing to be had of meaningful value i think you wrong.

I think most have reached an age where fear is governing life far too much.

As they say in the classics you have nothing to fear except fear itself.

So when you load up on liability insurance and have something worth suing you for sure the other party looks to have a go at you.

My approach is make sure there is nothing to be had.

I give you as an example the reverse situation.

I spent fortunes on trademark and patents at one time.
Then comes the day i want to exercise my rights.
Well well well i needed to put 60 000 pounds sterling up before a lawyer would touch my "waterproof open and shut case of infringement"

Sorry but i think we need to be practical here.

Sure large corporations that have oodles of money are a great target but a contingency lawyer is not going to take on a case where there is no money for settlement.

This whole debate is like the cold war, when i got to see inside Eastern Europe at the end of the cold war there was no chance that Soviets posed a threat to Europe.

But that fear was amplified by every constituency that had something to gain from enormous waste of tax payers and planet earths resources on all sides. Have you ever thought what we as humanity could have done with those resources instead. But thats what happens when fear takes over.

I am done with living in fear. Had a lifetime of it.

So provided one is sensible takes the necessary precautions and puts warnings out on product why shy away from making a few toys.

Based on this discussion we need warning labels printed on M&Ms not just the packaging but the sweet itself and what about skittles oh and what about a lollypop the doctor or dentist gives a kid.

The list of things is endless.

Gosh left to where our risk averse generation has got to we would have no progress and never have reached the moon, built an electric car heck even made a cell phone. Any idea how dangerous that lithium ion battery in your phone is? Ask Samsung about it!

And if we say well they have protection circuits then tell me do you know the guaranteed failure mode for the components in those circuits?

Because a huge reason i. some industries certain old school electromechanical devices are still used is because of known reliable failure modes that can be predicted and mitigated.

Humanity is obsessed with risk averseness or safety. Stupid is stupid and always will be.
We cant save everyone from themselves.

Time for common sense to return its been in hiding for way too long.
 
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I would suggest you put all your major personal assets in a Trust's name (house, vehicles, bank accounts, etc.). If you don't own it anymore, they can't touch it. We set up a trust a few years ago and the first thing they did was put our two houses in the trust. We are working through the rest of the bank assets. At that point we can drastically reduce the dollar amount we need in an umbrella policy. Can't get blood from a turnip if you no longer "technically" own the asset.

A lot of folks tell me they don't do it because they have a beneficiary on their bank/401(k) accounts listed so would not have to go through probate. However those accounts would be subject to a suit (hence needing an umbrella policy). I'm no lawyer, so hopefully not steering you wrong. But something to consider.

And good luck to you, Rennie, no matter what route you go.
 

Leo Voisine

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To some degree I do agree with you Rob - BUT -

It is not so much about common sense. The "suer" is where the common sense needs to be placed. The lawyers ARE not out there to make sure common sense is used, they are out there to find the ways to make a buck even at the expense of the innocent - like Rennie. Yes of course there are honest lawyers, but can you find 5. How many personal injury ads are out there, designed for this very reason?

Liability is a real threat - not a lack of common sense. This is not about the issue of suing McDonalds over a spilt cup of hot coffee. This is some sue happy parents of a child that miss handled toy. There really are people out there that look for reasons to sue. There IS money to be made. It IS a lack of common sense for sure - but that does not help protect Rennie. As long as Rennie is DBA he has all his personal possessions at risk.

Go ahead sue me. Rennie has his entire existence on the line - savings account, cars, house - everything - it is all liable, and there is little to protect it.

I would also gander to say that a disclaimer - not signed by the consumer - does not hold much weight in court.

The only way to separate it is to incorporate and remove ownership of the business from his personal life. Like I said - this comes with a price.
 

Dave Hoskins

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A doctor friend of mine asked me once this: "What do you get when you get rid of 50% of the lawyers?" I asked what. He said, "A Good Start!". Lawyers need to go find honest work. Though I doubt many honest employers would hire them.
 

Rennie Heuer

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So much good and useful information - thanks everyone.

I went through the information in all the links and it seems that I squarely fall into the "small batch" category - and - doll furniture, especially that intended to be 'collectables', and 'not intended for use by children under 12' is exempt from third party testing and nearly every other specific regulation. That is a light at the end of the tunnel.

When you come right down to it, there is a liability issue in EVERYTHING we make and sell. One of my mantle clocks could fall off a mantle and cause injury. One of Dan's gumball machines could dispense gumballs without limit and cause someone to have rotted teeth or a child to choke. One of Larry's beautiful cabinets or Hoosier's could fall on a child looking to scale up the front in search of contraband if it were not secured to the wall, something he has no control over. As recently noted in Allen's post about his Adirondack chairs a design flaw on the rear leg could cause it to break off, possibly while someone was seated. Lawsuits are rarely likened to rifles, nearly always likened to shotguns. Sue happy people will sue anyone and everyone associated with a product, suppliers, advertisers, and sales venues. None of us are exempt. None of us are safe.

I'm going to move ahead with a couple of trial pieces. Larger pieces with no small parts, nothing that can break off. I'll market them as 'heirloom' or 'collectable' and clearly state in the description, and in literature included in the packaging, that they are intended for use by children 13 years old and above. If they are well received I will then look to both expand the line and to change my DBA to an LLC. Brent's trust idea may also be worth investigating.

Thanks again to all of you who offered information, insight, or opinion. I found all to be very valuable.
 

Jim DeLaney

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...I will then look to both expand the line and to change my DBA to an LLC...

Is your Idaho LLC still active? If not, can you renew it? Corporations are often registered in states other than the one where the business is located.

My last one (since dissolved) was registered in Delaware for a business in California. The lawyers insisted on doing it that way.
 

Frank Fusco

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When I owned my childrens clothing and furniture store I was constantly bombarded with notices from the Feds. about issues with the furniture and their (perceived) safety issues. Cribs were the worst. They spent more time in storage waiting new parts from the manufacturer than on the showroom floor. It was a non-stop, constant hassle. Personally, I would shy away from selling items like riding toys for children. Not worth the risk, IMHO. Pity things are this way. How did we survive?
 
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