P is a residential development company with a single member. The member's responsibilities were to locate and

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P is a residential development company with a single member. The member's responsibilities "were to locate and purchase property, and then work with engineering companies and municipalities to have the property zoned and fully developed for residential living." P entered into a contract with D to excavate a property purchased by P. The member signed on behalf of P, and D signed on behalf of himself (Perrin) and Perrin Excavating. Shortly thereafter, Duray Development and Perrin entered into a new contract, which was supposed to supersede the former contract. This contract was between Duray Development and Outlaw-which is an excavation company that Perrin and Vining owned. Perrin and Vining signed the new contract on behalf of Outlaw. They both also held themselves as owners of Duray Development as well. D then began excavation, but did not perform as expected on time. Duray Development then sued D for breach of contract. D later learned that Outlaw did not obtain an adequate filing status as an LLC in time, thus Outlaw was not a valid LLC at the time of the second contract. D argues he isn't personally liable because he signed on behalf of Outlaw, which was treated by all parties as a properly formed LLC. In so doing he cites the de facto corporation doctrine. Limited Liability Act - "the existence of the limited liability company begins on the effective date of the articles of organization . . . the document is effective at the time it is endorsed." However, the Michigan Supreme Court stated that once the articles of operation are executed and acknowledged, they are a de facto corporation. The idea is to prevent a poorly formed corporation from not being recognized as a corporation because of the defect when the parties acknowledged and believed it to be one. What ambiguity in this Michigan Supreme Court decision is likely to lead to further litigation to sharpen the boundaries of this decision? [Court of Appeals of Michigan, 792 N.W.2d 749 (2010).]

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Dynamic Business Law The Essentials

ISBN: 978-1259917103

4th edition

Authors: Nancy Kubasek, Neil Browne, Daniel Herron

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