Liability or Responsibility? What You Need to Know to Do Good Business

By Renée Grannis, MBC™, ABC Director of Ethics and Compliance, Oklahoma City, Okla.

What is liability vs. responsibility? Oftentimes, business owners interchange these words, but they mean very different things. Just what do you need to know to protect yourself and your business? Read on.

Liability is a legal term

Liability carries risks and repercussions for non-compliance with the terms stated in the contract or anything done in violation of the law. If any aspect of a contract is not completed as stated, the individual or business can be held legally accountable—monetarily or otherwise. Examples include liability for:

• Your company’s debt and financial obligations.

• Any damage (real or imagined) caused by negligence or lack of planning.

• The actions and inactions of those who work under your company’s name, whether you have authorized them to speak for you or not.

• All tasks listed in the contract regardless of circumstances.

• Not performing an action on time.  If you do not perform your duties on time and cause the other party to incur extra charges as a result, you may be held accountable to pay for those charges. Acts of nature may offer some valid reasoning for not performing on time, but will probably not release you from the obligation to perform in a professional and timely manner.

Responsibility Involves Integrity

Who are you when no one is looking? Responsibility and ethics are closely linked. They involve integrity, which is more of a moral obligation that includes being answerable for something that is within your power, control, or management. Responsibility is our duty. It is the care and consideration with which we treat others and deliver on the “promises” we make. Responsibility is the function of social conditioning that enables us to be reliable enough to do what is correct. Although we are answerable for things that are within our power to control, we may not necessarily be liable for them. Ultimately, responsibility means being trustworthy enough to do the right thing.  Responsibility occurs when you:

• Are  properly trained and can perform the best job possible. This includes participating in continuing education and conferences that convey the most current information and trends to benefit your business and your clients.

• Have contracted to set up wedding-day direction and must coordinate and ensure that all vendors do their part. You are not liable for the quality of the other vendors' work, but you are there as the general contractor and must ensure that each vendor delivers what is in their contract.

• Problem-solve solutions to client issues. For example, if the wedding cake is somehow damaged, you are responsible for ensuring there is an appropriate wedding cake at the reception; however, you are not liable for the cake.

Liable or responsible – which one?

When it comes to liability vs. responsibility, it can be difficult to see the difference. An individual who is liable is also responsible, yet the reverse need not be true. And while liability is assigned, responsibility is assumed. Here are a few industry examples to illustrate the difference:

• Regardless of the duties listed in your contract, if an Act of Nature destroys the wedding or reception venue, you are not liable for that venue being unavailable; but as a professional, you are responsible for finding (or assisting the venue in finding) a suitable alternative.

• If you have advised the hostess of an outdoor event to secure a tent or alternate location in the event of bad weather, and she declines, you are not liable for how the event is carried out if the weather turns bad. However, as a professional in the industry, you are responsible for ensuring that you have a back-up plan that is within the client’s budget.

• If you know (and have conveyed) that a specific religious facility has a strict dress code for brides and that the bride is planning to violate it, you are not liable for the anger and frustration that will ensue when the clergy halts the wedding. However, as a professional, you are responsible for having a back-up plan—a cape or coverlet that will allow the bride to walk down the aisle in conformity.

Sometimes, the lines are blurred between being responsible and being liable. If you did not contract it, generally, you are not liable but should be professionally responsible. If, however, you are “tied” to another contractor by taking compensation for that event, you can now be held liable for that person’s actions. Sharing in the profit from an event ties the two companies together and can make your company liable for another company. If you do not want to be held accountable for another company’s actions, do not accept nor pay compensation, commission, or referral fees for the event. Every company should charge what they are worth for the services they provide and not be dependent upon payment from other vendors.

Protect yourself and your business

A solid sense of ethics and responsibility will help keep you and your business out of trouble. A solid contract will carry you the rest of the way. To stay protected, be sure to include the clauses necessary for a comprehensive and complete contract. They are:

• The parties involved.

• Date the contract is signed.

• Date, time, and location of each event (rehearsal, wedding, reception).

• What you will do and what you will not do. For example, your contract may say that you will participate in vendor meetings, but you will not be responsible for the flowers since the bride's aunt will design and decorate as her gift to the couple.

• Compensation— how much do you expect to be compensated for the work on the contract?

• Payment schedule.

• Modifications—how the contract can be modified, if at all.

• Cancellation information.

• Act of nature.

• Substitution. If, through your best efforts, something in your contract could not be provided at the last minute, you have the right to substitute something of equal or greater value (in the same category) in order to fulfill the contract.

• Returned check/payment information.

• Attorney’s fee.

• Signatures of anyone who has authority over the contract.

The majority of wedding professionals know much of this, but sometimes a little reminder is just what we need to keep on track and out of trouble.