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Just wanted to correct this understanding. Just because I sell something doesn't make me exempt from the legal consequences of my actions prior. If I negligent

Just wanted to correct this understanding. Just because I sell something doesn't make me exempt from the legal consequences of my actions prior. If I negligently claim that a product will make you healthier and it cripples you, then you can sue me regardless of whether I still own the product. Similarly, I could be prosecuted for dishonest advertising type offences (which aren't wiped clean simply by selling a business!). You might be talking about a products liability type claim. Only an incompetent acquirer would take liability for any latent claims in a target acquiree. Most likely they will get strong warranties from the seller about the existence of claims and rely on their own due diligence to ensure they aren't buying a product which is likely to cripple people in the future. In 90% of cases the seller will retain liability for incidents which pre-date the sale of their business.

pydave 13y ago
So the founders are personally responsible for the actions of their corporation?
- westicle 13y ago
  No, the founders are personally responsible for their own actions. The corporate veil may protect them from liabilities of the company (barring fraud/breach of directors' duties), however in this particular instance we have a founder, Rob Rhinehart, who seems to have done most of his marketing and made most of his claims personally. That is, Rob, not Soylent Nominees Ltd, made the statements. Therefore, if he has breached laws, civil penalty provisions or acted negligently in doing so, he is personally liable. Source: I recently acted for a home owner who sued her (incorporated) builder in negligence (for building a house which fell down). The company was unfortunately insolvent. Luckily, the founder/director of the company made a number of claims about the expertise and abilities of the building company on the company website (which he hosted personally). We sued the director personally.
dragonwriter 13y ago
> Just because I sell something doesn't make me exempt from the legal consequences of my actions prior. Actually, yes, selling your stake in the corporation that was the legally-responsible actor does mean that you are no longer at any financial risk for the actions of the corporation prior to you selling it, at least not in the main way that you were prior to selling it (that the consequences imposed on the corporation would reduce the value of your equity stake.)
- westicle 13y ago
  This is partially correct. If you manage to sell the corporate entity to a third party without making any warranties about latent claims, you will not be concerned about the corporation's liability. And the purchaser of that corporation is pretty foolish. However you are still responsible for your own personal liability when you operated the company. Did you breach your directors' duties? Did you commit fraud? Did you sign a guarantee for the obligations of the corporation? There are three ways to become personally liable off the top of my head. I'm sure there are several more.
  - dragonwriter 13y ago
    I think its completely correct, as I think the issues you enumerate are encompassed within the portion starting "at least...". However, the enumeration of those other avenues to liability is valuable.

pydave 13y ago

So the founders are personally responsible for the actions of their corporation?

westicle 13y ago
No, the founders are personally responsible for their own actions. The corporate veil may protect them from liabilities of the company (barring fraud/breach of directors' duties), however in this particular instance we have a founder, Rob Rhinehart, who seems to have done most of his marketing and made most of his claims personally. That is, Rob, not Soylent Nominees Ltd, made the statements. Therefore, if he has breached laws, civil penalty provisions or acted negligently in doing so, he is personally liable. Source: I recently acted for a home owner who sued her (incorporated) builder in negligence (for building a house which fell down). The company was unfortunately insolvent. Luckily, the founder/director of the company made a number of claims about the expertise and abilities of the building company on the company website (which he hosted personally). We sued the director personally.

dragonwriter 13y ago

> Just because I sell something doesn't make me exempt from the legal consequences of my actions prior. Actually, yes, selling your stake in the corporation that was the legally-responsible actor does mean that you are no longer at any financial risk for the actions of the corporation prior to you selling it, at least not in the main way that you were prior to selling it (that the consequences imposed on the corporation would reduce the value of your equity stake.)

westicle 13y ago
This is partially correct. If you manage to sell the corporate entity to a third party without making any warranties about latent claims, you will not be concerned about the corporation's liability. And the purchaser of that corporation is pretty foolish. However you are still responsible for your own personal liability when you operated the company. Did you breach your directors' duties? Did you commit fraud? Did you sign a guarantee for the obligations of the corporation? There are three ways to become personally liable off the top of my head. I'm sure there are several more.
- dragonwriter 13y ago
  I think its completely correct, as I think the issues you enumerate are encompassed within the portion starting "at least...". However, the enumeration of those other avenues to liability is valuable.