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Are You Personally Liable for Your Company’s NY Breach of Contract?


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1/1/2016
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Under New York contract law, it is difficult to hold officers and directors of a company personally liable for breach of an agreement. This may be the case even where the contract specifically states that the corporate officers of the company who are the party to the agreement can be held personally liable. This area of the law is complex and requires the knowledge of an experienced New York breach of contract attorney.

Recently, celebrity Lindsay Lohan was sued in a personal capacity by DNAM Apparel Industries. The company had a contract with Lohan’s LLC, under which the company was to manufacture clothes for her clothing line. DNAM is seeking $5 million in damages from Lohan. The company accuses her of breach of contract and fraud, claiming that her poor reputation has hurt its business. In her own defense, Lohan argues that the agreement between the parties does not have a morals clause. She further argues that the contract was entered into by her LLC and not herself personally.

If this action fell under New York contract law, DNAM could have a difficult time winning its claim. The court would consider the following:

  • Was Lohan specifically a party to the contract?
  • If not, did Lohan clearly intend to bind herself personally under the agreement?
  • Is there explicit evidence that points to her intention to add her own personal liability to that of her LLC?

For help understanding whether a party to your contract can be held personally liable, contact an experienced New York business litigation attorney today. Call our office at (888) 497-3410 for a free consultation.



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