Liability

**AspiringVC** · 01-29-2008 08:02 PM

My question lies within Liability. Let’s say you’re investing into an In Home care company, registered as an LLC. The company has 25 employees who are subcontractors. Your potential partner is seeking 25K in capital. Once you have invested into the company, obtained your percentage, how liable are you ‘personally’ if a client is injured by one of your workers?

Here is another question that arised, if your accountant has bounced checks against the company, again, how liable are you personally? (e.g Does this affect your personal credit?)

Essentially, I would like to know how liable are you if something drastically went wrong with the company, such as lawsuits, accounting issues (bad check written), etc,etc.

**akula** · 01-29-2008 08:16 PM

sure..you're talking about corporate law..(and tort, but I'll leave tort out of the equation)

liability in corporate law is dependent on the corporate veil and whether the respondent/defendant is being sued as a shareholder, a director, an employee or a contractor...so in relation to, "..once you have invested into the company, obtained your percentage, how liable are you ‘personally’"; if a client is injured by one of your workers?"..the answer will depend on a whole bunch of things, including your status in the company, and the status of the person who injured the customer.

for example: if the court deems the subcontractor an "independent contractor", then vicarious liability may not extend to the company you've just invested in. however, if the court upholds vicarious liability, then you may be on the hook..depending on your role in the company. if you're just a shareholder, your liability will typically be limited to your monetary investment in the company - but if you also have other roles in the company (such as a director), then your liability may become unlimited..again, depending on your insurance arrangements and other things.

...this stuff is rather complicated