While acting in the capacity of an officer of a corporation or manager or member of a limited liability company, it is important for one to hold himself or herself out as the officer or manager or member of the corporation or limited liability company, as applicable. There have been many recent court cases involving creditors attempting to have the Court hold the officers or shareholders of a corporation personally responsible for the corporation’s debts to that creditor. In addition to attempting to pierce the corporate veil of a corporation, a creditor may argue that the officer personally contracted for the services with the creditor. Officers of a corporation and managers and members of a limited liability company may unduly subject themselves to personal liability in a contract intended to be between their corporation or limited liability company and a third party if the officer, manager, or member fails to sign the contract in his or her capacity as an officer, manager, or member of the corporation or limited liability company, as applicable.
For example, a creditor may argue that John Doe, President of ABC Corp. is personally obligated under a contract where John Doe signs the contract as simply John Doe. He should sign the contract in his capacity as an officer as follows:
ABC Corp.
By: John Doe
John Doe, President
OR
John Doe
John Doe, President of ABC Corp.
For more information on corporations or limited liability companies, please contact Theodore F. Claypoole at 610-692-1371 or tclaypoole@utbf.com.
