Liability on contract for LLC owners

A personal liability LLC owners should avoid is voluntary assumption of liability on contract, which a personal guarantee. Small business sometime do not have great credit history and sometimes find it very difficult qualifying for loans for the business without a personal guarantee. Since Granite Cleaning Business is growing business this should not be a problem for the LLC switch. However, when creditors are seeking personal guarantee, member must be careful not to accidentally become a party to the contract by failing to clearly note their role in the LLC. If they sign their and does not informed the creditor that they are signing on behalf of the LLC they could become liable for the contract of breached. When negotiating contracts make sure that the contract is in Granite Cleaning Business LLC and state the role of the person signing the contract.
There are several things that a LLC has great protection against many types of liabilities. For example if the LLC hire and train someone and they in turn commit an act of negligence or fraud, the LLC shield the owners and members from personal liability. If a defective product was sold and the LLC owners or members was unaware of the product they cannot be personal held responsible. However, if they are aware of the defective product they could be held liable. Carry adequate business insurance will not change the fact that an LLC owner or members will not personally be liable for negligence but it will help with making any payments. Remember to keep LLC separate from personal business. the LLC should have their own bank account. Never pay personal expenses from the LLC account. Never use personal checks to pay the LLC expenses. If the entity needs funds, make a capital contribution or a loan. Always keep track of every transaction.
There is a mandatory performance for the parties under a sales or lease contract which consists of the duties and responsibilities each party has under the terms of the contract. As discussed by Miller (2015), the primary obligation of the supplier is to transfer and deliver the goods as stated in the contract, and the primary obligation of the customer to accept and pay for the goods. The duties and obligation are agreed upon at the initiation of the contract which have been custom by the Uniform Commercial Code. The UCC’s good faith provision states that “Every Contract or duty within this Act imposes an obligation of good faith in its performance or enforcement” [UCC 1-304].
Under the perfect tender rule the seller has an obligation to ship or tender conforming goods the buying has to accept and pay according to the terms of the contract. The goods have to meet the description of the goods specified in the contract. The UCC preserves the perfect tender doctrine which states that if goods or tender of delivery fails in respect to conform to the contract, the buyer or lessee may accept the goods, or reject the entire shipment, or accept part and reject part.
When a contract is confirmed as being breached by a nonconforming tender Priest (1978), discuss that the law gives the buyer two possible remedies. The buy could call off the sale and send the goods back to the seller, or the buy could the goods and pursue damages for the nonconformity. The cost of exercising these remedies can be placed into two groups. First, there are allocative costs the transfer of real resources from one or both of the parties to a disposable place. Insurance and freight to have the goods reshipped, administrative costs to resale the goods, and fees attorneys which are involved in the dispute of the resolution. Second are distributive costs, when the resources are transferred between the seller and the buyers usually when one party recuperates damages from the other party. Usually when the allocative cost is minimized both parties benefit regardless of the cost of distribution cost they had to pay. Nevertheless, the cost of distribution will still affect the allocative cost because each party is trying to reduce their share of the joint cost. Whenever there is a dispute over the clarification of a contract both parties spend more money than anticipated fighting in litigation which reduces the joint value of the transaction. However, if the buyer did not notify the seller in a reasonable time to inform them of the complaint that existed with the product the buyer could be denied damages. (960. 1001).
As a seller is legally obligated to produce safe products as well as an ethical one. Under no circumstance should seller jeopardize the safety of the consumer to save on the cost of producing a better product. The warranty laws serve to protect the consumer from unethical seller who to dismiss the concern of safety to save a dollar. The UCC require that any disclaimer be visible to the buyer and allow them to decide if they would accept the risk of buying an unsafe or unhealthy product. If for any reason the disclaimer fail to meet the standards of the UCC it will not be considered an effective disclaimer.
The UCC acknowledges the express warranty and the implied warranties. Under UCC 2-314 and 2 A-212, goods sold by a business or leased by a lessor must be suitable for the normal purposes for which such goods are used, it must met the expected quality, and be accurately labeled and packaged. The UCC insert more fairness into contracts by identifying the descriptions as express warranties, so, a seller or lessor of goods may be held to have breached the contract if the goods fails to conform to the description. In this way, the UCC acknowledges that a buyer or lessee believes that a seller or lessor is warranting their product, even though the word warrant or guarantee was not used. Therefore, the law executes an ethical obligation on the sellers and lessors in a statutory form ( (2015, p. 329).

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