Sarah owns half of Smith Realty, Inc., and her brother, Bill, owns the other half. Sarah routinely uses the company car, which is supposed to be used only for taking clients to view property, to run her personal errands. She also routinely uses company funds for personal uses, but always pays the money back in to the corporation. When Smith Realty failed to pay its lawyer for work completed on its behalf, the lawyer sued both Smith Realty as well as Sarah and Bill personally. In this situation the court likely will:

Question

Rhett Ross

Social Studies

14 January, 18:25

Sarah owns half of Smith Realty, Inc., and her brother, Bill, owns the other half. Sarah routinely uses the company car, which is supposed to be used only for taking clients to view property, to run her personal errands. She also routinely uses company funds for personal uses, but always pays the money back in to the corporation. When Smith Realty failed to pay its lawyer for work completed on its behalf, the lawyer sued both Smith Realty as well as Sarah and Bill personally. In this situation the court likely will:

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Answers (1)

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Rodolfo Rocha · Answer 1

Pierce the corporate veil due to Sarah's commingling of interest

Explanation:

Piercing if corporate veil refers to a situation which courts out aside limited liability and hold a corporation shareholder or directors personally liable for the corporation's action of debts. Since Sarah has been mixinp up the company find with her personal fund most times, the best way to go about this is not make them liable personally for the debt the corporation owes.