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MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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I am the sole shareholder officer and director of California

Resolved Question:

I am the sole shareholder officer and director of California C corp. which is active and in good standing. My C Corp signed an Television production services agreement with what i thought was an Arizona LLC. The contract was signed by both parties in thier respective home states and each page was initialed. 99% of the services take place in California. I have since discovered that at the time of execution the Arizona LLC had not been incorporated in fact it was incorporated five days after this contract was signed. The contract is governed by the laws of California with an arbitration clause.

My question is: does the fact the at the arizona LLC was created after the contract was signed expose the LLC's members and the Managing Director (who signed the contract, but is not a member) to be personally liable for the LLC obligations and/or breachs under the contract that was executed?
Submitted: 3 years ago.
Category: Business Law
Expert:  MShore Law replied 3 years ago.
Thank you for the post, I am happy to assist you by answering your questions. The short answer to your question is no, the members of the Arizona LLC are not responsible personally unless the LLC members committed fraud via the LLC, such that the corporate veil can be pierced. Otherwise, the LLC can affirm the responsibility and be bound by the agreement signed by its members.
Customer: replied 3 years ago.
the LLC did not exist when the contract was signed by this non exsistant LLC - is that fraud?. Also the person signing the contract is not a member.
Expert:  MShore Law replied 3 years ago.
No, it would not constitute fraud unless the LLC seeks to deny liability under the contract.
Customer: replied 3 years ago.
what about the person who signed the contract? is he personally liable? the llc is not paying it bills with me and i intend to commence legal action
Expert:  MShore Law replied 3 years ago.
How much time passed between execution and breach?
Customer: replied 3 years ago.
+/- 4 months
Expert:  MShore Law replied 3 years ago.
ok, you could make the technical argument that not enough time passed for the LLC to affirm the debt and the members not be held personally liable.
Customer: replied 3 years ago.

sorry did you the mean the members would be persoanlly liable?

 

Also what about the managing director who signed the contract and repersented to me that an LLC was in place... what's his laibiitly here? if i knew that the LLc did not exist i would have had him sign the contract persoanlly.

Expert:  MShore Law replied 3 years ago.
Yes, that is what I meant.

The managing director could be pursued for personal liability as a guarantor of the LLC's liability.
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience: Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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