Disregarding the Corporate Entity. Steven and Janis Gimbert ...

[Mr.Thesaxman]

Disregarding the Corporate Entity. Steven and Janis Gimbert leased a warehouse to a manufacturing business owned by Manzar Zuberi. Zuberi signed the lease as the purported representative of ATM Manufacturing, Inc, which was a nonexistent corporation. Zuberi was actually the president of two existing corporations, ATM Enterprises, Inc, and Ameri-Pak International. Under the Ameri-Pak name, Zuberi manufactured a household cleaning product in the Gimberts' warehouse. The hydrochloric acid used in the operations severely damaged the premises, and the Gimberts filed a suit in a Georgia state court against Zuberi personally to collect for the damage. On what basis might Zuberi be held personally liable? Discuss fully.

Question 2

The death of a principal would affect the validity of contracts then made by the agent for the principal.
 a. True
  b. False
  Indicate whether the statement is true or false

[ecox1012]

Answer to Question 1

Disregarding the corporate entity
The court found Ameri Pak International responsible for the damage and held Zuberi per-sonally liable. The court reasoned that Zuberi knowingly signed the lease with the Gimberts as the representative of a nonexistent corporation. Zuberi appealed, and the state intermediate appellate court affirmed the lower court's holding. The appellate court emphasized that Zuberi signed the lease under the name of a nonexistent corporation. Under state statutes, this made him personally liable for all liabilities created while he purported to act as, or for, the corporation. Because Zuberi entered the lease on behalf of a company that did not exist, the trial court could find he was personally bound by the lease, and by any extensions of that lease beyond the original one year period, so long as a business he operated occupied the premises.

Answer to Question 2

TRUE

[Mr.Thesaxman]

Excellent

[amcvicar]

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