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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
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Experience:  Attorney
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My wife and I signed a five year contract with ADT for security

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My wife and I signed a five year contract with ADT for security services when we opened our business. We were assured by their sales rep that if our business should go under before the contract was finished that we would not be held responsible. I indicated to him that I had a concern that in the present economy that might happen. We did go under after two years. During the two years our business became an LLC.
Of course our business bank account is closed.

We asked ADT to stop service which they did when we went out of business.

Now they are demanding just over $1700 for the remainder of the contract even though
we are out of business and they sent it to a collection attorney. We offered to allow them to set up the system in our home to fulfill the contract but advised them that we feel we are not under any obligation to do so. It was their idea.

What are our legal responsibilities?
Submitted: 4 years ago.
Category: Business Law
Expert:  Lucy, Esq. replied 4 years ago.

My name is XXXXX XXXXX I'd be happy to answer your questions today.

The general rule is that the owners of an LLC are not liable for the debts of the company. The exception is that, if you signed the contract as individuals, or at a time when the business was not an LLC, it's not considered a debt of the LLC. Look at the contract to see if there is language on there that suggests that you and/or your husband personally guaranteed and promised to pay. If there is, unfortunately, you are legally responsible even though the business has gone under. If the business was an LLC at the time, and you entered the contract on behalf of the LLC, you're not liable.

Good luck.
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