Legal Definitions - proprietary drug

A proprietary function refers to an activity undertaken by a local government (like a city or county) that is performed primarily for its own financial gain or benefit, much like a private business would operate. This is distinct from a governmental function, which is an activity performed for the general welfare and benefit of the public, such as providing police protection or maintaining public roads.

The distinction between proprietary and governmental functions is significant because, historically, municipalities often enjoyed immunity from lawsuits (tort liability) when performing governmental functions. However, they generally did not have such immunity when performing proprietary functions. This meant that if a city caused harm while acting in a proprietary capacity, it could be sued just like a private company.

It's important to note that many states have passed laws that have changed or eliminated this distinction, so the specific rules regarding municipal liability can vary significantly by jurisdiction.

Here are some examples to illustrate a proprietary function:

• Operating a Municipal Utility:

  Imagine a city that owns and operates its own water and sewer utility. It charges residents monthly fees for water consumption and wastewater treatment, generating revenue for the city. If a city-owned water main bursts due due to negligence during maintenance, flooding a nearby business and causing significant damage, the city's operation of the water utility would likely be considered a proprietary function.

  Explanation: The city is charging for a service and generating revenue, acting much like a private utility company. Because this is a proprietary function, the city might not be immune from a lawsuit seeking compensation for the damage caused by the burst pipe.

• Managing a City-Owned Convention Center:

  A county government owns and operates a large convention center, renting out its facilities to various organizations for conferences, trade shows, and events. The county charges rental fees, sells advertising space, and profits from concessions sold within the venue. If a visitor slips and falls on a wet floor that was negligently left unmarked by convention center staff, resulting in an injury, the county's operation of the center would be a proprietary function.

  Explanation: The county is engaging in a commercial enterprise, generating income by renting out space and services. This activity is for the county's financial benefit, making it proprietary. Consequently, the county might be held liable for negligence, similar to how a private business owner would be.

• Running a Municipal Marina:

  A town operates a marina on a local lake, offering boat slips for rent to private boat owners, selling fuel, and providing repair services. The town collects fees for these services, which contribute to its general fund. If a boat docked at the marina is damaged due to the town's negligent maintenance of the dock infrastructure (e.g., a faulty mooring cleat), the town's operation of the marina would be a proprietary function.

  Explanation: The town is providing services and facilities for a fee, directly benefiting financially from these commercial activities. This revenue-generating operation is considered proprietary, meaning the town could potentially be sued for damages resulting from its negligence in maintaining the marina.