When A Limited Liability Company or Corporation Will Not Protect Owners From Personal Liability

If an owner of a corporation or a limited liability company enters into a contract and fails to make it known that he or she was acting on behalf of the entity, that person could be personally bound to the terms of the contract, including all the liabilities thereunder. When entering a contract or an agreement on behalf of an entity, it must be clear to all parties that the entity is the party to the contract, not the person signing the contract or agreement on behalf of the entity. Otherwise, the individual signing the contract will be deemed the party to the contract, not the entity. When entering a contract, the parties should be clear that the entity is named in the contract and the person signing the contracting is doing so on behalf of the entity, in his or her official capacity.

CUTLER & WILENSKY LLP’s Boston lawyers are available for any questions.