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

Claire would be personally liable because she was the one operating the business and directly responsible for the incident. Jack, believing the business was incorporated, would not be personally liable as he was an investor under the false impression of a corporate structure, which under the Revised Model Business Corporation Act, shields investors from personal liability for business debts and actions.

Claire Opened Claire's Beauty Parlor in Her Home