Claire opened Claire's Beauty Parlor in her home. She solicited funds to begin the business from Jack, who believed that the business was incorporated. Claire had, in fact, never filed the papers. One day, Claire fell asleep while giving a customer a perm and the solution caused her customer severe burns. The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets. Under the Revised Model Act, what would be the result?

A) Claire and Jack would not be personally liable.
B) Claire would not be personally liable, but Jack would.
C) Jack would not be personally liable, but Claire would.
D) Both would be personally liable since there was no corporation formed.

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reymund calata · Accepted Answer

Final Answer : C, Explanation :  Under the Revised Model Business Corporation Act, individuals acting on behalf of a corporation that has not yet been formed can be held personally liable for their actions. Since Claire was the one directly involved in the negligent act, she would be personally liable. Jack, who merely provided funds under the belief that the business was incorporated, would not be held personally liable for Claire's actions.

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