Question: Java Joint, Inc. is a Delaware corporation owned by four brothers. The corporation owns a coffee shop in West Haven, Connecticut called Java Joint. To
Java Joint, Inc. is a Delaware corporation owned by four brothers. The corporation owns a coffee shop in West Haven, Connecticut called Java Joint. To save money, the brothers handled the incorporation of Java Joint, Inc. by themselves without using a lawyer. They filed the Certificate of Incorporation with the Delaware Secretary of State and paid the necessary filing fees to form Java Joint, Inc. However, they have not adopted any organizational documents for the corporation, they have not elected directors of the corporation and they havent appointed any officers. To save money on bank fees, they use one of the brothers personal bank account for the business. Lois Lender made a $10,000 loan to the corporation which is now in default. (The shareholders did not personally guarantee this loan.) The total balance due on the loan including unpaid interest is $13,500. In addition to suing the corporation, Lois is also suing each of the four brothers individually. Under these circumstances, which of the following is true?
| Lois has a strong legal claim against all four brothers because shareholders of a corporation are always personally liable for the obligations of the corporation. | ||
| A corporation cannot be legally established without using an attorney, so all four brothers are personally liable for the $13,500 due to Lois. | ||
| Lois has a strong legal claim against all four brothers as shareholders of Java Joint, Inc. under the doctrine of piercing the veil. | ||
| All four brothers are liable to Lois under the doctrine of res ipsa loquitor. |
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