Starting a Business Project: Lawyer/Researcher RoleJTHS Economic ClassesFall Semester 2019

As the Lawyer/Researcher of your company, you will have three primary responsibilities for the project:

1.) Decide how you will go about protecting your company and its ideas (patents, trademarks, and copyrights).

2.) Determine the taxes and fees your company will have to pay (local, state, and federal taxes, as well as any licensing or application fees).

3.) Research and Analyze any paperwork or documentation you will need to complete and file for your company.

How to File a PatentYou don't have to be Thomas Edison to come up with a valuable invention. But you do have to be savvy enough to protect that invention if you want to make the money you deserve from it. In other words, you need a patent, which is essentially a right granted by a government to sue anyone else (an infringer) who tries to make money from your idea. In the United States, only the inventor of the idea can patent it (though the inventor can transfer those rights to another individual or company).

Filing a U.S. patent application is a fairly complicated ordeal, however, and it can be rejected, which is why most experts recommend inventors hire an attorney to help them draft and file the patent application. As an inventor, you'll want to act fast in order to secure your rights -- in case someone later claims they came up with the idea first. Consider keeping an inventor's notebook and filing a provisional patent application to show you acted diligently in pursuing a patent.

Before you file, use the search function at the U.S. Patent and Trademark Office (USPTO) Web site to see if your idea has already been patented. Next, determine what kind of patent it is so that you file the right application.

The USPTO recognizes three kinds of patents. Utility patents, the most common type, refer to inventions that have a particular function. This is in contrast to design patents, which cover non-functional parts of articles, like the unique, ornamental shape or surface of an item. Lastly, a plant patent protects inventions of asexually reproducible plants. Don't confuse a patent with a trademark, a copyright or a trade secret, which are all different matters, and each is governed by its own laws.

You can file a patent application electronically through the USPTO Web site, by mail, or by fax (but not by e-mail). Don't expect a speedy process, though. Depending on the kind of application and the technology involved in your invention, it could take one to three years to get your patent granted.

A patent could also be rejected for many reasons, like failing the novelty and unobviousness requirements. Novelty means it's different from the prior art (previous patents or something known to the public). Unobviousness means that the invention is different enough from prior art that someone skilled in the area of technology wouldn't consider your idea obvious.

So, what do you need to file a patent? Keep reading to find out.

What is needed to file for a patent?And you thought developing your new invention was hard work. The patent process can get overwhelming, especially considering all the different elements that go into an application. A formal (non-provisional) application has a few required sections. In addition to drawings of the invention, you'll include the specification, which essentially teaches someone how to make or use the invention. The specification contains the following:

Abstract: a short, at-a-glance summary of the rest of the specification Background: describes the need for your invention and problems that your invention

solves

Summary: a short explanation of the invention

Detailed description: includes a description of the ideal embodiment, as well as additional embodiments of the invention and how they work

Conclusion, ramification and scope: briefly states the advantages of the invention and the additional embodiments again, as well as how the legal scope shouldn't be limited to forms shown

The specification should also include such things as the title of the invention, cross references to related applications, and a list of the figures in the drawings.

Most importantly, your application will include claims, which are listed after the specification. Claims actually define the legal scope of your patent and describe the boundaries of your invention (should the patent be granted). In addition to independent claims, which stand alone, you can also list dependent claims, which are narrower and incorporate a previous claim [source: Pressman]. Try to be broad at first, so that you can cover the most legal ground for your invention. But you'll probably have to narrow your claims later if the examiner considers them too vague.

You should include several other things along with your application, such as payment of filing fees, a self-addressed receipt postcard, a Patent Application Declaration (PAD) form and an Information Disclosure Statement (IDS). The PAD states that you are the true inventor; in the IDS, you disclose anything else that you're aware of that's relevant to your application (such as another application that's similar to yours).

Unfortunately, the process is far from over when you file your patent, which is another reason to get professional help. An attorney will help you navigate the prosecution process as you fight to get your patent granted by the USPTO.

What is a trademark or servicemark?A trademark is a word, name, symbol, or device that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. A servicemark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. The terms "trademark" and "mark" are commonly used to refer to both trademarks and servicemarks.

Trademark rights may be used to prevent others from using a confusingly similar mark, but not to prevent others from making the same goods or from selling the same goods or services under a clearly different mark. Trademarks which are used in interstate or foreign commerce may be registered with the USPTO. The registration procedure for trademarks and general information concerning trademarks is described on a separate page entitled "Basic Facts about Trademarks" (http://www.uspto.gov/web/offices/tac/doc/basic/).

How long does a trademark last?Rights in a federally-registered trademark can last indefinitely if the owner continues to use the mark on or in connection with the goods and/or services in the registration and files all necessary documentation in the USPTO at the appropriate times. In general, the owner of a registration must periodically file:

Affidavits of Continued Use or Excusable Nonuse under 15 U.S.C. §1058; and Applications for Renewal under 15 U.S.C. §1059.

Forms for filing these documents are available at http://www.uspto.gov/teas/. For further information on maintaining a federal trademark registration, please contact the Post Registration Division at (571) 272-9500.

How different does one trademark have to be from another?After an application is filed, the assigned examining attorney will search the USPTO records to determine if a conflict, i.e., a likelihood of confusion, exists between the mark in the application and another mark that is registered or pending in the USPTO. The USPTO will not provide any preliminary search for conflicting marks before an applicant files an application. The principal factors considered by the examining attorney in determining whether there would be a likelihood of confusion are:

the similarity of the marks; and the commercial relationship between the goods and/or services listed in the application.

To find a conflict, the marks do not have to be identical, and the goods and/or services do not have to be the same. It may be enough that the marks are similar and the goods and/or services

related.

If a conflict exists between your mark and a registered mark, the examining attorney will refuse registration on the ground of likelihood of confusion. If a conflict exists between your mark and a mark in a pending application that was filed before your application, the examining attorney will notify you of the potential conflict. If the earlier-filed application registers, the Examining Attorney will refuse registration of your mark on the ground of likelihood of confusion.

What is the difference between the notations TM or SM and the ®?Any time you claim rights in a mark, you may use the "TM" (trademark) or "SM" (service mark) designation to alert the public to your claim, regardless of whether you have filed an application with the USPTO. However, you may use the federal registration symbol "®" only after the USPTO actually registers a mark, and not while an application is pending. Also, you may use the registration symbol with the mark only on or in connection with the goods and/or services listed in the federal trademark registration.

Is my trademark registration valid outside the United States?No. However, if you are a qualified owner of a trademark application pending before the USPTO, or of a registration issued by the USPTO, you may seek registration in any of the countries that have joined the Madrid Protocol by filing a single application, called an "international application," with the he International Bureau of the World Property Intellectual Organization, through the USPTO. For more information about the Madrid Protocol, click here.

Also, certain countries recognize a United States registration as a basis for filing an application to register a mark in those countries under international treaties. See TMEP Chapter 1000 for further information. The laws of each country regarding registration must be consulted.

Types of Trademarks

Trademarks protect words, names, symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike patents, can be renewed forever as long as they are being used in commerce. Specific types of trademarks include:

Service marks identify and distinguish the source of a service rather than a product. Certification marks are any word, name, symbol, device, or any combination, used, or

intended to be used, in commerce by someone other than its owner, to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of such person's goods or services, or that the work or labor on the goods or services was performed by members of a union or other organization.

Collective marks are trademarks or service marks used, or intended to be used, in commerce, by the members of a cooperative, an association, or other collective group or organization, including a mark that indicates membership in a union, an association, or other organization.

Registering a Trademark You can establish rights in a mark based on legitimate use of the mark. However, owning a Federal trademark registration on the Principal Register provides several advantages, including

the following: Constructive notice to the public of the registrant's claim of ownership of the mark; A legal presumption of the registrant's ownership of the mark and the registrant's

exclusive right to use the mark nationwide on or in connection with the goods and/or services listed in the registration;

The ability to bring an action concerning the mark in Federal court;

The use of the U.S. registration as a basis to obtain registration in foreign countries; and

The ability to file the U.S. registration with U.S. Customs and Border Protection to prevent importation of infringing foreign goods.

Any time you claim rights in a mark, you may use the "TM" (trademark) or "SM" (service mark) designation to alert the public to your claim, regardless of whether you have filed an application with the USPTO. However, you may use the Federal registration symbol "®" only after the USPTO actually registers a mark, and not while an application is pending. Also, you may use the registration symbol with the mark only on or in connection with the goods and/or services listed in the Federal trademark registration.

Starting the Process

Step 1: Is your product eligible for a trademark?

Most U.S. applicants base their application on their current use of the mark in commerce, or their intent to use their mark in commerce in the future. What is "use in commerce"? For the purpose of obtaining Federal registration, "commerce" means all commerce that the U.S. Congress may lawfully regulate; for example, interstate commerce or commerce between the U.S. and another country. "Use in commerce" must be a bona fide use of the mark in the ordinary course of trade, and not use simply made to reserve rights in the mark. Generally, acceptable use is as follows:

For goods: the mark must appear on the goods, the container for the goods, or displays associated with the goods, and the goods must be sold or transported in commerce.

For services: the mark must be used or displayed in the sale or advertising of the services, and the services must be rendered in commerce.

If you have already started using the mark in commerce, you may file based on that use. A "use" based application must include a sworn statement (usually in the form of a declaration) that the mark is in use in commerce, listing the date of first use of the mark anywhere and the date of first use of the mark in commerce. A properly worded declaration is included in the USPTO standard application form. The applicant or a person authorized to sign on behalf of the applicant must sign the statement. The application should include a specimen showing use of the mark in commerce.

Step 2: Conduct a trademark search

The next step is to search our database, before filing your application, to determine whether

anyone is already claiming trademark rights in a particular mark. You may conduct a search online for free via our TESS (Trademark Electronic Search System) database. If your mark includes a design element, you will need to search it by using a design code. To locate the proper design code(s), please consult the Design Search Code Manual.

Registering a Trademark

You may file your trademark application online using TEAS - the Trademark Electronic Application System. TEAS allows you to fill out an application form and check it for completeness, and then submit the application directly to the USPTO over the Internet. You can pay by credit card, through an existing USPTO deposit account, or via electronic funds transfer. You may also contact the Trademark Assistance Center for a hard copy of the Basic Facts brochure, or a paper form. Paper forms are not processed as quickly as those submitted electronically, however.

Registering a Trademark Overseas

Federal registration is not valid outside the United States. However, if you are a qualified owner of a trademark application pending before the USPTO, or of a registration issued by the USPTO, you may seek registration in any of the countries that have joined the Madrid Protocol by filing a single application, called an "international application," with the International Bureau of the World Property Intellectual Organization, through the USPTO. For more information about the Madrid Protocol, click here.

Also, certain countries recognize a United States registration as a basis for filing an application to register a mark in those countries under international treaties. See TMEP Chapter 1000 for further information. The laws of each country regarding registration must be consulted.

What Taxes Do You Need to Pay When You Start a Small Business?by Louise Balle, Demand Media

When you make money with your own small business you have to pay income taxes just as if you worked for another company. In some cases you may also have to pay additional taxes that are specifically associated with small business operations. Gather as much information as possible about the various small business tax obligations for your type of company before you start the business.

Income TaxWhen operating as a small business you must file a Schedule C form (Profit or Loss from Business Activities) with the IRS to determine your total business profit or loss for the year. The

Schedule C accompanies your standard 1040 form when you file your taxes. Based on the information from Schedule C, you may have to pay federal and state taxes on your business income. If you choose to start a corporate entity, you may also have to pay corporate taxes. Some municipalities also require you to pay local taxes directly to the city or town where you perform your business activities.

Self-Employment TaxIn addition to standard income taxes, small business owners may have to pay self-employment taxes. Self-employment tax covers the Social Security and Medicare costs that you would have to pay out of your regular paycheck if you worked for another company. The total tax is a percentage of your net earnings from your self-employment activities. Determine the tax by filling out IRS form Schedule SE. If you hire people to work at your small businesses, you may also have to pay employment taxes on behalf of your workers. You must also pay a portion of each employee's Federal Insurance Contributions Act (FICA) and Medicare tax expenses.

Sales TaxIf your company is a retail operation, you may have to pay a sales tax to your state and local tax authority. For example, you must pay the New York State Department of Taxation and Finance sales tax for all jurisdictions. You must collect the tax from your customers, which is based on each sale. The tax authority sends you sales tax forms once per year or every three months and you must file a sales tax return and send the money you’ve collected directly to your state or local tax authority. In order to accept and pay sales tax you must first apply for a sales tax permit, sometimes called a certificate of tax authority.

Employment TaxesWhen you have employees, you as the employer have certain employment tax responsibilities that you must pay and forms you must file.  Employment taxes include the following:

Social security and Medicare taxes Federal income tax withholding

Federal unemployment (FUTA) tax

For additional information, refer to Employment Taxes for Small Businesses.

Excise TaxThis section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following.

Manufacture or sell certain products. Operate certain kinds of businesses.

Use various kinds of equipment, facilities, or products.

Receive payment for certain services.

Form 720 - The federal excise taxes reported on Form 720 (PDF), consist of several broad categories of taxes, including the following.

Environmental taxes. Communications and air transportation taxes.

Fuel taxes.

Tax on the first retail sale of heavy trucks, trailers, and tractors.

Manufacturers taxes on the sale or use of a variety of different articles

Small Business Tax Obligations: Payroll Taxes February 03 2012| Filed Under » Entrepreneur, Personal Tax, Small Business, Small Business Tax, Social Security One of the issues small-business owners have to contend with is staying current with the many obligations for local, state and federal taxes. While most business owners hire an accountant or a tax professional to deal with tax-related issues, understanding the tax system is important to those who bear the ultimate responsibility for fulfilling all tax obligations. This article will focus on the business owner's obligations with regard to payroll taxes. (Learn how payroll deductions can lower your personal income tax in Payroll Deductions Pay Off.)

SEE: How To Write A Business Plan

Payroll Tax ObligationsAny business with employees is required to withhold payroll taxes from employees' paychecks and to pay applicable federal, state and local taxes. The taxes usually withheld from employee paychecks include FICA (Medicare and Social Security taxes) and federal, state and local income taxes, if applicable. Other withholding obligations include FUTA (Federal Unemployment Tax Act) and, in states such as California, Hawaii, New Jersey, New York and Rhode Island, disability insurance taxes. Failure to pay taxes or missing a payment may result in heavy fines and penalties, so it is important to calculate the amount of payroll taxes owed and to pay them on time. (Proper bookkeeping is essential for small businesses. Read Six Steps To A Better Business Budget to learn how to manage revenue and expenses.)

If the small-business owner does not have outside employees but is incorporated, the above rules apply for the owner's paychecks as well, because he or she is essentially the sole employee of the corporation. If the business is not incorporated and there are no employees, the owner will need to pay estimated taxes on self-employment income each quarter. (Read Should You Incorporate

Your Business? to find out if this business structure would be advantageous for you.)

Calculating Payroll TaxesThere are three steps to calculating payroll taxes:

1. Determine taxable workers 2. Determine taxable wages

3. Calculate withholding amounts

Taxable WorkersWorkers can be employees or independent contractors. Employees are treated as taxable workers subject to payroll taxes, while independent contractors are responsible for paying their own taxes. Usually, workers are considered employees if you have the right to direct and control the way they do their work, rather than merely the results of the work. However, the lines between independent contractors and employees are not always clear-cut. In order to help business owners determine which workers are taxable employees, the IRS has common law rules, which include behavioral, financial and relationship tests.

Behavioral TestA worker is an employee when the employer has the right to direct and control the worker. The employer does not have to actually direct or control the worker, but has the rightto do so.

Financial TestThis test looks at the degree of control an employer has over financial aspects of the job. In some professions, having significant control over supplies used for work supports a worker's status as an independent contractor.

One definite way to distinguish an independent contractor from an employee is by the availability of services. An independent contractor is not tied to one company and can advertise services; an employee cannot advertise services unless he or she is working outside the company as an independent contractor.

Relationship TestThis test refers to the way the employer and the worker perceive their relationship. If an employer-worker relationship is expected to last until the end of a specific project or for a specified period of time, then the worker is an independent contractor. On the other hand, if the relationship has no or boundaries, the worker is a taxable employee. (For more on relationships essential to a small business, read Small Business: It's All About Relationships.)

Taxable WagesTaxable wages are compensation for services performed and may include salary, bonuses or gifts. Some forms of compensation, such as business-expense reimbursements for travel or meals, do not qualify as taxable wages. For the expenses to be nontaxable, employees must verify them through receipts or expense reports. They must also be necessary, reasonable and business-related. (If you incur business-related expenses, make sure to keep your receipts in

order. Read 10 Steps To Tax Preparation for information on planning before April 15.)

Calculating WithholdingAfter you've figured out which workers qualify as taxable employees and which wages are taxable wages, the next step is figuring out the amount you must withhold for federal, state and local taxes, as well as FICA and FUTA.

Federal TaxesEvery paycheck must withhold federal income taxes for the applicable period. The IRS has two sets of tax tables that employers can use to calculate withholding amounts: the wage bracket tables and the percentage tables.

The wage bracket tablesare segregated for five different payroll periods (daily, weekly, bi-weekly, semi-monthly and monthly). To determine withholding amounts, employers pick the applicable pay period and wage bracket for employees, then read across the table to the column that shows the number of claimed exemptions.

The percentagetables are available for eight payroll periods (daily, weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annually and annually) and segregated by marital status. Employers start by reducing wages by the value of exemptions claimed. Next, they use the table corresponding to the employee's marital status and look for the withholding amount based on the wage bracket.

As a business owner, it is your responsibility to look at the two sets of tables and determine which one is appropriate for your business. The percentage tables are more inclusive, in terms of payroll periods, so if you are in a situation where different employees are paid at different payroll periods, then the percentage table should be the table of choice. For example, if your employees are paid quarterly, the percentage tables will be more appropriate than the wage bracket tables. To get these tables, call the IRS or go to http://www.irs.gov/ and ask for Publications 15 and 15-A.

State TaxesMost states use tables similar to federal tax tables, and you can get them by going to the tax section of your state's website or contacting the Small Business Administration. You do not need to withhold state taxes in jurisdictions that do not impose state taxes on income, such as Alaska, Florida, Texas, Wyoming and Washington. Other exceptions include states whose personal income taxes are a fixed percentage of the federal tax, like Arizona, and where state taxes are a fixed percentage of gross wages, such as Pennsylvania.

FICAThe Federal Insurance Contributions Act (FICA) is a federal law that requires employers to withhold Social Security and Medicare taxes from wages paid to employees. It also requires the employer and employee each to pay half of the FICA tax. Social Security and Medicare taxes are imposed on both the employee at a flat rate of 4.2% for social security and 1.45% for Medicare and the employer 's single flat rate of 6.2% and 1.45%, respectively, creating a combined FICA tax rate of 15.3% (12.4% for Social Security and 2.9% for Medicare). Self-employed individuals

are responsible for paying the entire 13.3% tax themselves. (Read about how the government determines your tax rate in Laffer Curve Key To Ideal Tax Rate.)

Unlike federal and state taxes, FICA taxes are unaffected by the number of withholding exemptions claimed by the employee. You simply multiply an employee's gross wage payment by the applicable tax rate to determine how much you must withhold and how much you must pay as the employer. In 2009 and 2010, the Social Security tax only applies to the first $106,800 of income, also called the Social Security wage base. The wage base is adjusted every year for inflation. The Medicare tax does not have an income limit.

FUTAUnemployment taxes, or FUTA, are taxes paid solely by the employer. You must pay unemployment taxes if either of the following apply:

a) You pay wages totaling at least $1,500 in a quarter b) You have at least one employee on any given day for 20 weeks in a calendar year, regardless of whether the weeks are consecutive

The FUTA tax rate is 6.2% for 2011, and it is imposed on the first $7,000 of wages for each employee. However, you can claim credits against your gross FUTA tax to reflect state unemployment taxes that you pay. If you pay your state unemployment taxes when they are due, you are allowed to claim a 5.4% credit, which effectively reduces your FUTA tax rate to 0.8%.

Bringing It All TogetherCalculating payroll taxes can be very complicated, and it is important to send out payments on time to avoid penalties and late fees. Federal tax payments may be made either online through the Electronic Federal Tax Payment System (EFTPS), or through banks authorized to accept federal payments. If you use the latter method, each payment should be accompanied by Form 8109, which can be obtained by calling the IRS at 1-800-829-4933 or from the IRS website. FUTA taxes are usually paid quarterly and income and FICA taxes are deposited semi-monthly or monthly. The IRS usually sends business owners a notice at the end of each year detailing which method to use for the upcoming year.

Read more: http://www.investopedia.com/articles/taxes/08/business-payroll-tax.asp#ixzz2NFWzoR8k

What Legal Paperwork Is Needed to Start a Business?Despite the fears of many would-be entrepreneurs, starting a small business is a rather straightforward process. Don't shell out hundreds of dollars to pay a lawyer or company to create

your business for you. In most states, a few forms and less than $100 in fees usually is all it takes to hang out your shingle as a small-business owner.

Articles of Incorporation or OrganizationFile articles of incorporation with the state's commercial-services department to start a corporate entity. Corporations are full legal entities in their own right, with their own tax liabilities. However, to start a limited liability company, file articles of organization. An LLC provides some benefits of a corporation, including some protection from personal liability for business obligations, while presenting more favorable tax rates for small businesses. Both documents typically include the company name, its purpose, mailing address and principal officers. Seek the counsel of a qualified business lawyer or tax attorney if you are unsure whether a corporation or LLC is right for you.

Certificate of Assumed NameProprietorships—businesses that have one owner and do not separate personal from professional tax liabilities—are the easiest types of companies to form. In most states, an entrepreneur visits the county clerk's office, fills out a certificate of assumed name and pays a nominal fee. From that point forward, the assumed name (the business name) becomes a legally recognized alias of the business owner. Unincorporated partnerships that choose not to use a limited-liability partnership also file certificates of assumed name, but the partners should have a signed partnership agreement in place beforehand.

Employer Identification NumberThe Internal Revenue Service issues Employer Identification Numbers. An EIN is the basic tax ID of a business or nonprofit entity. Many banks and commercial lenders require an EIN before they will open a business-grade account with a new company. The easiest way to obtain an EIN is online: Visit irs.gov and fill out Form SS-4 for free. The form consists of several simple questions, and when you are finished, the IRS provides an immediate letter with the assigned EIN enclosed.

Profession LicensesMost states require very specific licenses to conduct business in certain trades. Builders, carpenters and plumbers typically are licensed, as are private investigators and child-care providers. A growing number of states are licensing massage therapists, as well. And Louisiana, in early 2010, abolished a long-standing state law requiring florists to be licensed through a governing board of flower-arranging professionals. In Texas, for example, dozens of professions are regulated, from doctors and lawyers to geoscientists and interior designers. Check with your state's business-services office to verify whether a special license or permit to operate is required, or whether individual employees need a professional license or surety bond as a condition of employment in the industry.

Local LicensesCounties and cities sometimes require specific licenses. Many counties control the issuance of liquor licenses, for example, and some cities require a permit to conduct commercial activity within certain zoned communities or within the city limits. Check with the county, township and city clerk in the home jurisdiction of the new business to determine whether any local registration or licensing regulations apply. Pay special attention to sales-tax permits. Most states and many local governments assess a tax on the sale of many different goods and services, so verify whether your business is obligated to collect these taxes, then obtain the necessary permits. For example, Houston has no specific business license, but the city requires licensing for industries such as trash removal and food handlers.

Register With State AgenciesRegister Your Business With State Agencies

Some business types require registration with your state government:

A corporation A nonprofit organization

A limited-liability company or partnership

If you establish your business as a sole proprietorship, you won’t need to register your business at the state level. However, many states require sole proprietors to use their own name for the business name unless they formally file another name. This is known as your “Doing Business As” (DBA) name, trade name or a fictitious name.

What Is a Legal Disclaimer?A legal disclaimer is a disavowal or limitation of responsibility between parties arising from some interaction between them. The use of a disclaimer in situations ranging from contract and patent law to product and personal liability makes standardization elusive. Although the wording of a legal disclaimer might occasionally be specified by statute, there is no required language to apply in all other cases.

Potential responsibility or liability might arise from a variety of relationships. A buyer and seller negotiating a sales contract might wish to precisely define what the product is supposed to do and who pays if it doesn't. A much different type of responsibility could exist between a landowner and someone wishing to cross his or her land. Although disclaimers can be applied to such widely varying situations, their common element is the intent to define and limit a duty that one party might owe to the other.

Although a legal disclaimer might be useful in sorting out duties owed, it don't always accomplish the goal of risk limitation. A bicycle manufacturer, for example, has a duty to build

bikes that can reasonably be considered safe for their intended use. A legal disclaimer of all liability printed on the box might not suffice if, for example, the manufacturer knowingly uses shoddy tubing stock for the bike's frame, resulting in an accident. Even though the cyclist might have seen the disclaimer and agreed to assume responsibility for any accidents, the manufacturing company's intentional breach of duty leaves it as vulnerable to a lawsuit as if there had been no disclaimer at all.

A legal disclaimer that is not properly communicated also might have no effect. If a trespasser fails to see a "No Trespassing" sign, it has little value as a disclaimer. Similarly, printing on a car parking receipt that a garage's liability for damage is limited to $500 US Dollars doesn't make it so. If the car owner never reads the receipt, he or she hasn't necessarily agreed to the limit. The car owner also could reasonably expect that the loss of a car worth $30,000 USD would be compensated for more than $500 USD.

Disclaimers then, are similar to contracts in that they outline a limited aspect of what is often a commercial relationship. Like a contract, a valid legal disclaimer generally has a specific and well-defined objective and is properly communicated and accepted. It also does not permit one of the parties to avoid a duty that the other party should reasonably be able to expect.