In a message dated 12/17/02 8:59:02 PM, [EMAIL PROTECTED] writes: << --- Michael Giesbrecht <[EMAIL PROTECTED]> wrote: > In a pure market, shouldn't the directors be personally liable, or not, > for a corporations debts, based on whatever terms they reach with the > lenders involved?
Yes, but there are also liabilities that can be incurred without contracts, such as if the corporation is sued for damages. > Without a personal guarrantee, from a primary > stakeholder, that serves to turn a limited liability into a full > liability, lenders are not very willing to make loans. True, especially if there is not adequate collateral, implying that expected future earnings are not sufficient additional collateral. Fred Foldvary >> In practice, small corporations usually cannot get loans without the major stockholder personally guaranteeing the loans, so in those cases limited liability serves mostly to protect the owner(s) from liability to tort victims. Why that should be so I'm not sure. David
