RISK TRANSFER / RISK MANAGEMENT

Most economic activity takes place by virtue of a contract or agreement between two parties. Far too often the parties to the contract do not use that agreement to their advantage to protect themselves from liability exposures. However, owners, contractors and providers of professional services, among others, are able to use contractual provisions to diminish their exposure to liability. In fact, a carefully worded contract could potentially transfer the risks a party may incur as a result of running a business and serve to protect the insurance loss history and financial assets of that business.

Stone & Johnson has been a leader in helping various national industry groups develop contracts that provide for risk transfer. Further, many other Stone & Johnson clients have benefitted from having their agreements redrafted to include risk transfer language. Stone & Johnson recommends the use of several state of the art risk transfer provisions. These provisions include:

1. (1) contractual indemnity provisions,
2. (2) the procurement of insurance by one party for the benefit of another,
3. (3) transfer of safety obligations, and
4. (4) the use of language establishing liability defenses, such as the borrowed servant doctrine.

Because the proper risk transfer provisions often vary state to state, Stone & Johnson maintains a 50 state compendium of case law on risk transfer issues. This database allows for prompt and efficient review and redrafting of contracts to improve the risk transfer provisions. Every business should have their contracts reviewed to allow for improved risk transfer, thereby protecting that business and its financial performance from liability exposures.