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 permanent 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 Act, in the absence of incorporation, the individual or individuals who own and operate the business will be personally liable for any damages. In this case, Claire is the owner and operator of the Beauty Parlor, so she would be personally liable for the customer's injuries. Since Jack only provided funds and did not participate in the operation of the business, he would not be personally liable.

Claire Opened Claire's Beauty Parlor in Her Home