Answer the below case problem, giving the legal issue, the governing law and the rationale in support of your conclusion.
Arthur Jensen, Inc., was a corporation engaged in the housing construction business.
Arthur Jensen set up and was the sole owner and president of the corporation. Alaska Valuation Service [AVS] conducted housing appraisals for Jensen on numerous occasions over the years. When AVS took the orders for appraisals, it was not aware that it was dealing with a corporation. It believed that it was dealing directly with Jensen [i.e., as a sole proprietor]. Jensen never specifically informed AVS of his status as the president of Arthur Jensen, Inc. When AVS was not paid for appraisal services that it had performed, AVS sued Arthur Jensen, attempting to hold him personally liable for the unpaid appraisals.
Arthur Jensen argued that he could not be personally liable because he had acted on behalf of his corporation.
1. Decide the case based on the above stated facts.
2. Assuming Arthur Jensen could be held personally liable, how could Arthur
Jensen have better protected himself? [we discussed this in class]

Respuesta :

Answer:

1. Decide the case based on the above stated facts.

Corporations provide limited liability to their owners, and one person corporations are legal in all states. Depending on how Arthur handled his business, the corporate veil might or not be lifted. If he separated the corporate account and managed the corporation separately for his other assets, then he is not liable.

On the other hand, if he paid the bills using his personal account, or used the corporation's assets as his own, then the outcome might change. We are not given enough details.

2. Assuming Arthur Jensen could be held personally liable, how could Arthur Jensen have better protected himself?

Simple, he should sign as the president of the corporation and pay using the corporation's account.