When You Can Incur Personal Liability For a Corporate Debt In New York
In the last year, I've been asked a few times whether you can incur personal liability merely by virtue of signing an agreement on Â behalf of a corporation. Well, you need wonder no more, as a Suffolk County trial court in Cutler v. Collura-Repp has laid out the law on this issue in no uncertain terms: "When an agent acts on behalf of a [corporation], the agent will not be personally liable for a breach of contract unless there is clear and explicit evidence of the agent's intention to be personally liable .... even though he signed a contract without any language limiting his signature."Weinreb v. Stinchfield, 19 A.D.3d 482, 797 N.Y.S.2d 521 (2d Dep't 2005). In order to assess whether the agent should be personally liable, the Court will engage in a two-part inquiry: (1) whether the agent signed the agreement in her individual capacity, or merely on behalf of the corporation; and, (2) whether the agent made a special promise to answer for the debt or default of the corporation (as called for by New York's Statute of Frauds).
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