Mia K. Thompson LS311- Business Law I Kaplan University Professor James Starcher November 13, 2012 Introduction The purpose of this assignment is to discuss the renovation of Danile and Sondra Estelle home. To finance the cost they obtained a line of credit from Banc One, Indiana, which periodic does inspections to disburse funds. When the bank did the inspection they found the work to be of poor quality. When Allen failed to act on the Estelle’s complaints, they filed a suit in an Indiana State court against Allen Construction and Allen personally. The analysis will: 1. Can both Allen and his corporation be held liable for this tort?
There are certain types of cases that a director/officer can be liable. In this case, Greg Allen was found liable for damages just as his corporation was, however it was later vacated because the court determined that corporate officers are not generally liable for contractual obligations. Later, the court reversed the judgment that Greg Allen was not individually responsible. Liability of shareholders is determined by common law and generally, officers are not liable for torts committed by its agents. Agents that commit a tortious act (criminal, punishable, etc. ), however, can be personally liable along with the principle.
For this case, the agent, Greg Allen, was accused of negligence and the Estelle’s’ filed a suit against him as well as the corporation. According to Miller & Jentz, the corporation is liable for torts committed by its agents or officers within the scope of their employment. The liability would fall on the corporation because the agent, Greg, was directly working within the scope of his employment at the Estelle’s. The court ruled that the breach of contract fell on Greg Allen Construction and eventually retracted stating Greg Allen himself should have also been liable due to Greg participating in the negligent conduct.
Since the duty of the agent was to work in an appropriate manner and failed to do so, the obligation falls on the corporation. It would seem the Greg Allen could be liable for certain aspects of the companies’ negligence because in essence he directed or authorized the conduct. References Miller, R. L. , & Jentz, G. A. (2010, 2007). Fundamentals of Business Law (8th ed. ). Mason, Ohio, United States of America: South-Western Cengage Learning.