What Is Liability?

What Is Liability?

What this means is that the Management Committee may be held responsible for making good any loss or damage (financial or otherwise) to the organisation or to third parties and may be held personally responsible, where relevant.

However, it’s important to keep this in perspective.

However, it is important for all members to be aware of the extent of their potential legal liabilities and how their personal risks can be minimized.

Where do liabilities arise?

The Management Committee may have legal liabilities arising from :

• Contracts (e.g. with suppliers, funders, staff or landlords)
  
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• Statutory obligations (i.e. as dictated by legislation relating to health & safety, child protection, staff conditions etc)
  
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• Duty of Care (i.e. the responsibility to take reasonable steps to ensure that others do not suffer loss or damage through what you do or fail to do)
  
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Should the organisation, its staff, volunteers or Management Committee members fail to meet their obligations in any of these areas, the Management Committee may be held to account by any external individual or body.

In some cases, the financial implications of this liability will be carried by the organisation, but in others Management Committee members can be held individually responsible and obliged to cover any loss from their own resources. The key factors in this are:

1. The legal structure of the organisation
   
   Management Committee members of incorporated organisations (e.g. a company limited by guarantee) have greater protection against personal financial loss.
   
   
2. Whether the Management Committee members acted reasonably, honestly and with due diligence
   
   If the Management Committee or its members have not acted responsibly, they can potentially be held individually and collectively responsible, regardless of the legal structure or any insurance provisions.