LAW 122 Study Guide - Midterm Guide: Legal Personality
12 May 2016
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Big steel corp has a contract to provide steel to little builders inc. big steel corp supplies steel to little builders inc, but little builders inc fails to pay for the steel. Little builders inc does not have the money or the assets to satisfy big steel corp"s claim against it for the outstanding payments. Big steel corp learns that the majority shareholder of little builders inc, a fellow named ricky rainbow, is very wealthy and could easily satisfy the debt owed by little builders inc to big steel corp. Explain why or why not, taking care to state the law and then apply the law to the facts. (2) Corporations are separate legal persons from their shareholders. Shareholders" liability for the corporation"s actions/debts are limited to the amount they have invested in the corporation. /shareholders enjoy limited liability in terms of the corporation"s actions/debts/liabilities. /shareholders are not personally liable for the debts of the corporation.
