Claire opened Claire's Beauty Parlor in her home. She solicited funds to begin the business from Jack, who believed that the business was incorporated. Claire had, in fact, never filed the papers. One day, Claire fell asleep while giving a customer a perm and the solution caused her customer severe burns. The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets. Under the Revised Model Act, what would be the result?

Question

Quizplus · Accepted Answer

Under the Revised Model Business Corporation Act, individuals acting on behalf of a corporation that has not yet been formed can be held personally liable for their actions. Since Claire was the one directly involved in the negligent act, she would be personally liable. Jack, who merely provided funds under the belief that the business was incorporated, would not be held personally liable for Claire's actions.

Claire Opened Claire's Beauty Parlor in Her Home