Is a Business that Signs a Promissory Note Liable if They Go Out of Business?
Full Question:
Answer:
The asnwer will depend on how the note was signed. If signed as an agent of the company, without a personal guarantee, typically the agent isn't personally laible for corporate debts. If signed as an individual without an indication of corporate capacity, then the person's individual assets could be attached to pay the debt.
When a corporation dissolves, a process is undertaken by which any creditors are notified. These creditors may then make claims. Of course, if the corporation has no assets, there will be no money to pay any claimed debts. If the shareholders have maintained adequate corporate procedures, they cannot be held personally liable for the debts of the corporation - provided they did not personally guarantee any debts.
We are unsure of the type of form you are looking to purchase. Generally, a legal form should comply with the laws of the state where it will be enforced. If you are looking for a complaint form to collect on the promissory note, it should comply with the laws of the state where the lawsuit is filed. Where to file will depend on where defendant resides or conducts business, and the dollar limit of the local small claims court. Venue is typically proper where the defendant resides, conducts business, where a contract is formed, where an accident occurs, or where the contract provides for the case to be brought. Typically, a defendant needs to have minimum contacts with the forum to pass due process requirements for being served with a complaint. Due process requires it to be reasonably foreseeable that a person would be called to defend in that court.
In personam jurisdiction is obtained when the respondent/ defendant is properly served with a summons and complaint either by certified mail, by personal service, or by publication (only rarely used and only when the address of the respondent/defendant is unknown). An out-of-state defendant may be served with the complaint under a state's long-arm statute if the requirements for exercising long arm jurisdiction and due process requirements are met. If the defendant is out of state, due process requires that they must be shown to have contacts in the forum state of such a nature that they could reasonably foresee being sued in that state. Whether minimum contacts exist so that the court has personal jurisdiction over an out-of-state defendant is a determination made based upon the facts and circumstances in each case. Minimum contacts can be established by consent where a party signs a contract with a forum selection clause, agreeing to litigate in a specified forum. If minimum contacts don't exist, the defendant must be sued in the state where they reside or regularly conduct business.
In order to serve a defendant with the state's long arm statute, the defendant must have minimum contacts with the state. Minimum contacts can consist of either some type of systematic and continuous contact with the forum ("general jurisdiction"), or isolated or occasional contacts purposefully directed toward the forum ("specific jurisdiction"). A single contact can suffice to establish personal jurisdiction, but where jurisdiction is based on a single contact, the nature and quality of the contact is determinative. The principal test of foreseeability in a due process analysis "is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate the possibility of defending a suit in the forum. Ownership of property in the state may satisfy this requirement.
We can assist you with searching to locate forms or we can draft or add forms you may need to our database. However, we cannot advise you to use one particular form over another. We can show you what is available. Please see the forms at the link below to see if the forms meet your needs. You may order the form online or by phone by calling Toll Free: 1-(877) 389-0141 between 8:30am and 5:00pm Central Time Zone Monday – Friday.
Our forms may be modified in Word to fit your needs. If you like, you may also submit a drafting request at the following link:
https://secure.uslegalforms.com/cgi-bin/survey/questionaire?US-DRAFTREQUEST|formsuslegal
