LAW 122 Study Guide - Final Guide: Sole Proprietorship, Insite
2 Apr 2017
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No direct liability for obligations of corporation. Court willing to impose liability on true culprit. The only reason kumar made the hotel a corporation was to get the insurance, and if the insurance company knew kumar was the sole owner than they would have never given the insurance coverage. Another reason for why the insurance won is b/c when a contract is created they need full disclosure (the full truth), which kumar did not give. Rick has an agreement that only after 2 years can he start a separate business. To go around that he created a corporation which he is the sole owner. Jb guitars will win b/c rick is doing wrong doing since he only created the corporation as a front to cover the fact that he needed to go around the agreement (non-competition) Directors manage or supervise the management of the corporation. Only directors can (a) issue shares and (b) declare payment of a dividend.
