Views expressed in this blog are mine alone and are not intended to represent Williamson County policy nor intended as legal advice.

6/6/2019

The legal fiction of corporate personhood

Generally, corporate personhood allows companies to hold property, enter contracts, and to sue and be sued just like a human being. In fact, many times a small business owner will incorporate to protect themselves from personal liability. In other words, if you want to sue your auto repair person for faulty workmanship but the company he works for, even if he is the owner, is a corporation or LLC, you can’t sue him directly. You must sue the corporation or business.

In fact, suing the owner of a business for breach of contract can result in your case being dismissed as improperly filed. The owner or agent cannot be sued unless they are a sole proprietor or in a partnership. The owner is an officer of the corporation and can be served notice of the suit but cannot be named in the suit.

Confusing, yes? It adds a wrinkle to things when a pro se, or self-represented, plaintiff tries to sue in small claims court. It seems obvious that one should sue the owner or president of the company, especially if that is the person you worked with, who signed your contract and who did the work. However, if their business is incorporated, then you cannot sue them directly, only the business. The business is liable for any judgments, not the owner. It’s a separation of personal finances and business finances.

Make sure you know who you should be named in your suit to avoid having your case dismissed or a ruling for the defendant. There are many places on the internet you can look for legal information. Some are on our website at http://www.wilco.org/Elected-Officials/Justice-Courts/Precinct-Four/Self-Represented-Litigants.

You can also find information here:

https://www.nolo.com/legal-encyclopedia/free-books/small-claims-book/chapter11-5.html

https://www.alllaw.com/articles/nolo/personal-injury/business-owner-employee-liability.html

https://www.nolo.com/legal-encyclopedia/free-books/small-claims-book/chapter8-1.html

Share it:    

Get Updates



Categories