Week Two Learning Team Reflection on Personal Liability

Week Two Learning Team reflexion on individual(prenominal) Liability Law/531 October 2, 2012 ? Week Two Learning Team Reflection on Personal Liability Benefits to Commerce Team C colleagues dogged on the following opinions in respect to the advantages of commerce using sh arholders and different entities for defendion against personalised liability losses. Commerce is the buying and selling of goods or services within cities, states, and globally. The legal structure of a patronage allow for establish the liable responsibilities of the work owner.When a business is established as a raft or an LLC this structure separates business owners personal assets from the business debit and liability. The benefits of commerce acquiring shargonholders or former(a) entities to protect and shield their members from personal liabilities are a consideration that each entrepreneur should seek professional advice before starting a business. As a separate legal entities, federations are li able for their own debts and obligations (Cheeseman, p. 558, 2010). By the pile having shareholders it is limiting their loss if a potential suit arises.If they were to be sued they would be limited to the extent of their financial investment in the bow window. The officers of the corporation create a shield that protects them from liability, and from having their personal assets at risk. The benefit of having a corporation is that corporations itself becomes a legal entity therefore the liability is scratchn away(predicate) from an owner. If lawsuits arise the assets of the corporation provide be at risk however, the shareholders will not bear some(prenominal) personal liability. Therefore, potential investors in a corporation seek to have professional executives who use good intellect in running a business.The net worth of the corporation is to a fault determined by the shareholders investment in the business and should there be a suit the corporation stands to be financial ly stronger than a business owned by a sole proprietor. If protecting investors was not in stock(predicate) through legal methods most investors would not take the risk of losing their personal assets along with their investment. Personal Liability of Shareholders Team C colleagues go underd on the following opinions in respect to the advantages of needing personal liability attached to individuals in violation and performing misdeeds.The United States is a country of laws. Believing that individuals and businesses are responsible for the actions and decision they make while in a put down of authority. Personal liability is sometimes imposed the shareholders are normally not liable for the corporate debts incurred. (Cheeseman, 2010) Beginning around 1940, the government started enacting laws that attempted to protect association from unscrupulous businesses. History has shown that these laws alone usher outnot protect society from the misdeeds of individuals. craftes always ha ve relied on the consumer for continued existence. Therefore, a mutual trust essential occur to maintain the balance of commerce. People run businesses therefore it is commonsensical to consider that those that have a fiduciary responsibility should be held responsible for the misdeeds or torts that occur because of their negligence. Current laws consider a corporation as a legal entity accountable for any(prenominal) torts the members of that company may commit. Members of heed under the same laws are afforded shelter against claims on personal assets.If this defense did not exist individuals assets could be attached to any litigation against the company regardless of which members were at fault. One may value attaching personal liability to managing members would be a reasonable solution. After all, they are the individuals who have stewardship over the company. In fact, this action would be counterproductive harming society and commerce alike. Corporate officers and busin ess leaders would not want to take on the risk and would refrain from seeking a managing role within a corporation. The immediate effect on commerce would be devastating.Those with have sex and know-how would simply remove themselves from management responsibilities, creating a vacuum for less certifiable individuals, increasing the potential for torts to occur. Shareholders confidence would wane, stock markets would f switch, and the economy would suffer a financial meltdown. Team C members excessively concur that corporations have protection for their shareholders regarding their personal information, but they do not hold the shareholders responsible if the corporation goes bankrupt or shuts down. Shareholders are only responsible for the amount of currency they have invested in the company.Piercing the corporate veil is the doctrine stating that if the shareholder uses the corporation improperly, the court of equity disregards the corporate entity. The shareholder is personal ly liable for the corporations debts and obligations (Cheeseman, 2010). This is also known as the alter ego doctrine because the corporation becomes the alter ego of the shareholder. Still today sole proprietorships are the most hot form of starting a business and having ownership. The definition is a business owned by one person and not incorporated with any others.In the business world sole ownership is not separate and cannot be split apart from the owners personal assets (Fairfax, 2011). The unincorporated business is exposed to illimitable liabilities and loss of personal asset protection. In todays commerce environment having unlimited liability is the single most substantial oddment between having shareholders and other entities shielding the business and sole ownership. Concluding, it is imperative that individuals enkindle in starting a business take the appropriate measures to decide how they simply will protect the business from potential liability, or loss.Seeking th e advice of professionals can facilitate making the proper decisions. ? Reference Cheeseman, H. (2010). Corporate Formation and Financing, Business Law (7th ed. )(pp. 556- 576). Upper Saddle River, New Jersey Prentice Errors And Omissions insurance policy E. (2012, September 28). Retrieved from (I) INVESTOPEDIA http//www. investopedia. com/terms/e/errors-omissions-insurance. aspaxzz27oyyIDBO Fairfax, L. M. (2011, July). The Model Business Corporation act at Sixty. Law &038 Contemporary Problems, 74(1), 19-30.