Asked by Bailey Glover on May 14, 2024
Verified
When a member of a limited liability company guarantees payment of a loan to the firm, the member is personally liable for the obligation.
Guarantees Payment
Refers to the assurance provided by one party to another that payment will be made according to the agreed terms and conditions.
Personally Liable
Being directly responsible for the fulfillment of an obligation or the compensation of a loss, often in a personal capacity rather than corporate.
- Separate the functions and accountabilities of members and managers in LLCs.
Verified Answer
PM
Paula McGovernMay 15, 2024
Final Answer :
True
Explanation :
When a member of a limited liability company (LLC) personally guarantees a loan for the firm, they are agreeing to be personally responsible for the debt if the LLC fails to pay. This means the member's personal assets could be at risk to satisfy the loan obligation.
Learning Objectives
- Separate the functions and accountabilities of members and managers in LLCs.