LLC and Selling Personal Property

[LdiJ]

Thank you all...
It seems the majority of respondants have a similar question: "What *possible* liability might one have from selling jewelry?" Well, here is a very, very possible scenario:

Buyer purchases diamond studded pendant, leaves it on the table next to kitchen window.

During the early hours of sunrise, the sunlight passes through the window and hits the diamond at a particular angle causing light to reflect/beam through the living room window (the house is a single-level home, with the kitchen right next to the living room.... the living room has what's called a "picture window," i.e. a very large window).

The reflected/directed light beams through the living room window onto the front yard, creating a pattern of light on the ground.

The reflected pattern of light on the ground happens to be a specific pattern that has been searched for (for decades, maybe even centuries) by one of the alien races who have been periodically visiting this planet.

The alien race perceives this pattern, runs it through the alien software aboard their hybrid life-form/machine craft, causing an immediate recognition and a landing *on the property!*

The front lawn now has alien craft landed ('in situ') directly in the middle for all, and I mean ALL neighbors to see.

The property owner happens to be a member of a homeowners association whereby ANY alien craft within 100 feet of property is expressly prohibited (e.g. otherwise there will be a substanital fine, e.g. $500.00 / alien-craft prohibited, even if lawn cut 3" or less, etc.).

The jewelry buyer fights the HA ruling, ends up in court, the judge declares "A contract is a contract," and therefore the buyer/homeowner MUST pay $500.00 to the Homeowners Association for breach of contract (again, absolutely no alien craft within x number of feet of property, no exceptions).

Of course the homeowner may try to fight this (arguing the definition of 'craft' -- e.g. what if the craft is actually a lifeform and not really a machine).

To make a long story/scenario short, the buyer now owes $500.00 because of the diamond jewelry I sold him and now sues me.

I believe having an LLC would help shield me from such a scenario.

Please let me know your thoughts.

Thank you.

That was a pretty ridiculous story.

Anybody can sue anybody for anything. Its not a question of someone being able to sue. Its a question of whether or not they can win. If someone who buys a piece of jewelry is ridiculous enough to sue for something that happens AFTER they purchase the jewelry and is a direct result of their own action (in this instance, leaving the jewelry lying on the table) then you will have to deal with the lawsuit whether its your LLC that gets sued or you personally, therefore you would not be shielded from the inconvenience of such a suit. However there is virtually no chance that the purchaser could win such a suit.

And even if you were to lose such a suit, your LLC would still have to pay the 500.00. So, if you are in the 25% tax bracket between state and federal taxes you would probably have to pay around 500.00 in income tax to shield you from personal liability for 500.00, but your LLC would pay it anyway...so you would still be out 1000.00.

 

[quincy]

Thank you all...
It seems the majority of respondants have a similar question: "What *possible* liability might one have from selling jewelry?" Well, here is a very, very possible scenario:

Buyer purchases diamond studded pendant, leaves it on the table next to kitchen window.

During the early hours of sunrise, the sunlight passes through the window and hits the diamond at a particular angle causing light to reflect/beam through the living room window (the house is a single-level home, with the kitchen right next to the living room.... the living room has what's called a "picture window," i.e. a very large window).

The reflected/directed light beams through the living room window onto the front yard, creating a pattern of light on the ground.

The reflected pattern of light on the ground happens to be a specific pattern that has been searched for (for decades, maybe even centuries) by one of the alien races who have been periodically visiting this planet.

The alien race perceives this pattern, runs it through the alien software aboard their hybrid life-form/machine craft, causing an immediate recognition and a landing *on the property!*

The front lawn now has alien craft landed ('in situ') directly in the middle for all, and I mean ALL neighbors to see.

The property owner happens to be a member of a homeowners association whereby ANY alien craft within 100 feet of property is expressly prohibited (e.g. otherwise there will be a substanital fine, e.g. $500.00 / alien-craft prohibited, even if lawn cut 3" or less, etc.).

The jewelry buyer fights the HA ruling, ends up in court, the judge declares "A contract is a contract," and therefore the buyer/homeowner MUST pay $500.00 to the Homeowners Association for breach of contract (again, absolutely no alien craft within x number of feet of property, no exceptions).

Of course the homeowner may try to fight this (arguing the definition of 'craft' -- e.g. what if the craft is actually a lifeform and not really a machine).

To make a long story/scenario short, the buyer now owes $500.00 because of the diamond jewelry I sold him and now sues me.

I believe having an LLC would help shield me from such a scenario.

Please let me know your thoughts.

Thank you.

This is a common occurrence, for sure, and one most people are not properly prepared for.

Liability insurance should be enough to protect you, though. I see no good reason to sell your wife's jewelry through your LLC.

Good luck.

 

[Taxing Matters]

Thank you all...
It seems the majority of respondants have a similar question: "What *possible* liability might one have from selling jewelry?" Well, here is a very, very possible scenario:

Buyer purchases diamond studded pendant, leaves it on the table next to kitchen window.

During the early hours of sunrise, the sunlight passes through the window and hits the diamond at a particular angle causing light to reflect/beam through the living room window (the house is a single-level home, with the kitchen right next to the living room.... the living room has what's called a "picture window," i.e. a very large window)....

To make a long story/scenario short, the buyer now owes $500.00 because of the diamond jewelry I sold him and now sues me.
I believe having an LLC would help shield me from such a scenario.

The cause of his troubles in this very far-fetched scenario has nothing to do with the sale of the jewelry; it has everything to do with where he placed it. More to the point, there is nothing about this scenario that would give the buyer a claim for breach of contract, unless you happened to put in the contract that you guaranteed that the jewelry would not attract aliens, and you’d be nuts to put guarantees of anything like that in a sale of used goods. Instead, I assume you will simply sell the goods as is with no express warranty or guarantees of any kind. If the buyer in this circumstance were to sue breach of contract you’d still have to pay to defend the claim and file the motion to dismiss. So the LLC limited liability does not save you there.

And to the extent the buyer claims you were negligent (which again would not be successful claim here) remember that LLC limited liability does NOT shield you from liability for damages caused by your own negligence.

The fact that you had to go to this extreme to come up with an example and even then the example is not one that really works pretty much illustrates the point we’ve been making: there is really no upside to incurring the extra taxes by structuring this the way you described in your first post simply to try to get some very remote limited liability protection benefit.
Please let me know your thoughts.

Thank you.[/QUOTE]

 

[quincy]

I suspect any claim arising over the sale of the jewelry is more likely to come from advertising misrepresentations (e.g., saying "diamond" instead of "cubic zirconia") rather than alien aircraft landings, but one can never be too careful.