Who of the Franklin owners, Tom Jefferson and Sam Adams, decided to branch off a side-business to create and operate a new restaurant in town. Sam was in charge of the start-up activities. He had not yet created the business entity, but went ahead and hired a contractor, Rhonda, to remodel a building that Tom and Sam thought would be good for the restaurant. After Rhonda began work, Sam subsequently completed the business organization by filing the articles of incorporation. However, the corporation (through the new board of directors), found the building to be unsuitable for purposes of a restaurant because it was too far away from the busy downtown area. Thus, it declined to use the building or to pay Rhonda for the work she had done. Rhonda brought suit against the new corporation and Sam for the amount that Sam agreed would be paid to her. Who is liable to Rhonda for the cost of re modeling the building? Sam? The corporation? Why or why not?

Answer rating: 100% (QA)

In this situation Sam Adams and the new corporation could potentially be held liable for the cost of ... View the full answer