Some businesses pay to put their obsolete equipment in mothballs. Others use it to generate income either by sale or as a tax-deductible donation to charity. If you choose this option, beware: you could be exposing yourself to a nasty liability claim by the new owner.

Before you decide to sell or donate used equipment ask yourself: 1) was it too old to operate, not operating properly, or were replacement parts unavailable? and 2) has the original manufacturer or seller gone out of business, leaving you liable as the seller or donor?

To help reduce your product liability for outdated equipment that’s sold or donated, follow these guidelines:

Make it clear in in a sales agreement that the equipment is being sold or donated “as is," with no inspections, testing, reconditioning, or repairs.

Recommend that the buyer or recipient have the equipment inspected and tested before using it and repaired or upgraded to make sure that it’s safe to operate it.

Identify any safety hazards or deficiencies, and either repair them or recommend that the buyer or recipient do so; if this isn’t possible, scrap the equipment.

Include a clause stating that the buyer or recipient holds you as the seller or donor harmless for all liability, legal fees, expenses, etc., arising from use of the equipment.

Get legal advice to be sure that you’ve taken all appropriate measures to reduce the risk.

For more information, please get in touch with our agency.

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