Doing Business in Atlanta, Georgia: How to Avoid Personal Liability by Always Signing in a Corporate Capacity
Georgia recognizes certain business entities, such as Limited Liability Corporations (“LLC”), S-Corporations, and C-Corporations, as “legal persons” separate from the individuals who form them. People organize these entities for a variety of reasons, one of which may be to stem their personal liability and protect their individual assets. As business attorneys in Atlanta, one of the most frequent mistakes we see in business cases is the failure of a business owner to properly sign agreements in a corporate capacity. Thus, these unsuspecting small business owners make themselves personally liable for whatever agreement they are entering into thereby defeating the very purpose of setting up the corporation in the first place.
In order to lessen the risk of exposing themselves to personal liability, representatives and agents of such entities in Georgia should ALWAYS sign contracts in a format that includes: (1) the person’s name, (2) the entity he represents, and (3) the person’s title with the company (such as owner, vice president, etc)..
Example that may create personal liability: “John Doe” or “John Doe, President.”
Example that doesn’t appear to create personal liability: “Fulton Corp., by John Doe, CEO” or “DeKalb LLC, by John Doe, Managing Member.”
So before you sign that next vendor agreement or sales contract, pause and make sure all of your efforts in setting up and properly maintaining your corporate immunity veil are complete by taking the very basic action of signing your name properly on all contracts and agreements in such a way it is clear that you are acting on behalf of the company, and not yourself.
