Question

In: Operations Management

Bank of America, N.A. v. Barr, 9 A.3d 816 (2010), Supreme Judicial Court of Maine Constance...

Bank of America, N.A. v. Barr, 9 A.3d 816 (2010), Supreme Judicial Court of Maine

Constance Barr was the sole owner of The Stone Scone, a business operated as a sole proprietorship. Based on documents signed by Barr on behalf of The Stone Scone, Fleet Bank approved a $100,000 unsecured small business line of credit for The Stone Scone. Fleet Bank sent a letter addressed to Barr and The Stone Scone, which stated, “Dear Constance H Barr: Congratulations! Your company has been approved for a $100,000 Small Business Credit Express Line of Credit.” The bank sent account statements addressed to both the Stone Scone and Barr. For four years, Fleet Bank provided funds to The Stone Scone. After that time, however, The Stone Scone did not make any further payments on the loan, leaving $91,444 unpaid principal. Bank of America, N.A., which had acquired Fleet Bank sued The Stone Scone and Barr to recover the unpaid principal and interest. Barr agreed to a judgment against The Stone Scone, which she had converted to a limited liability company (to limit the liability of her business), but denied personal responsibility for the unpaid debt. The trial court found Barr personally liable for the debt. Barr appealed.

Is Barr, the sole owner of The Stone Scone, personally liable for the unpaid debt? Why or why not?

Solutions

Expert Solution

Rule

Cheeseman (2015) states that “ sole proprietorship is a form of business in which the onwer is actully the business’ the business is not a seprate legal entity.” And there is “unlimited personal liabilty of a sole proprietor which is the personal liability of a sole proprietor for all the debts and obligations of a sole proprietorship.”

Application

Barr, the sole owner of The Stone Scone, is personally liable for the unpaid debt because there was sufficient evidence that held him reliable for the debts. Constance Barr, the sole owner of The Stone Scone, was operating as a sole proprietorship and the law states that there is unlimited personal liabilty of a sole proprietor which is the personal liability of a sole proprietor for all the debts and obligations of a sole proprietorship. Sole proprietors are personally liable for the debts of their business because of the advantages of it and the way it works, such as, easy to form, almost no business requirements, doesn’t cost a lot, the owner has the right to make all the management decisions, the owner receives all the profits, easy to transfer or sell the business and paying taxes on a personal level not on a business level, in addition the law states that a sole proprietor for all the debts and obligations of a sole proprietorship. Therefore, everything is done personal, operating, decisions making, earning profits and taxation. Barr did not act ethically in denying responsibility for The Stone Scone’s debts as she’s obligated to pay any debt personally and business wise, especially The Stone Scone is a sole proprietorship which makes the owner personally liable for any debts.

Conclusion

Barr, the sole owner of The Stone Scone, is personally liable for the unpaid debt because The Stone Scone was a sole proprietorship and unlimited personal liabilty of a sole proprietor which is the personal liability of a sole proprietor for all the debts and obligations of a sole proprietorship. Sole proprietors are personally liable for the debts of their business because of its advantages and the way it works, easiness and everyting is doen on a personal level, plus the law holds them personally liable. Barr did not act ethically in denying responsibility for The Stone Scone’s debts because he was ethically and legally responsible.


Related Solutions

Should Supreme Court Justices practice judicial activism or judicial restraint? Explain and support why or why...
Should Supreme Court Justices practice judicial activism or judicial restraint? Explain and support why or why not.
Horton v. JPMorgan Chase Bank, N.A. Court of Appeals of Texas, Dallas, 2018 WL 494776 (2018)....
Horton v. JPMorgan Chase Bank, N.A. Court of Appeals of Texas, Dallas, 2018 WL 494776 (2018). Background and Facts: Robbie Horton, a paralegal for the law firm of Stovall & Associates, P.C., opened an individual checking account with JPMorgan Chase Bank (Chase) with a signature card. The terms of the account required Horton to notify Chase, in writing, of any unauthorized item within thirty days of when a statement showing the item was made available. A failure to provide the...
How did the Supreme Court use judicial review to change American society?
How did the Supreme Court use judicial review to change American society?
what is meant by the term judicial review? address the US supreme Court decision in Marburg...
what is meant by the term judicial review? address the US supreme Court decision in Marburg v. Madison (18030. state whether an action via judicial review would be considered a feomal or informal constitutional change - defend your position.
Under its power of judicial review, the United States Supreme Court may declare which of the...
Under its power of judicial review, the United States Supreme Court may declare which of the following unconstitutional?: A lower court decision. An action by the executive branch of government. A law passed by a legislative body. All of the above.
In the Bank of New England Case, the Supreme Court determined that the Bank violated the...
In the Bank of New England Case, the Supreme Court determined that the Bank violated the currency transaction provisions of the Bank Secrecy Act because the Bank's customer, McDonough: Select one: a. made a single cash deposit of more than $5,000 and less that $10,000 on 31 different business days b. violated the anti-structuring provisions of the Act c. made multiple cash deposits each less than $10,000 but that totaled more than $10,000 on the same business day d. bribed...
In Griswold v. Connecticut, the U.S. Supreme Court stated that “specific guarantees in the Bill of...
In Griswold v. Connecticut, the U.S. Supreme Court stated that “specific guarantees in the Bill of Rights have penumbras, formed by emanations from those guarantees that help give them life and substance.” 1. Discuss the meaning and implications of Griswold’s penumbras and emanations 2. Describe the legal basis for an unenumerated right that might be located within these purported constitutional regions.
14 ) In U.S. Term Limits v Thornton, the Supreme Court ruled that the age, residency,...
14 ) In U.S. Term Limits v Thornton, the Supreme Court ruled that the age, residency, and citizenship requirements set forth in the Constitution were a complete statement of Congressional eligibility standards and that the only way to add any eligibility requirements would be through a constitutional amendment. True or False 15) Each state is given a number of Electoral College votes equal to its combined number of seats in the U.S. House of Representatives and the Senate. True or...
In Brown v. Board of Education (1954), the Supreme Court ruled that racial segregation in public...
In Brown v. Board of Education (1954), the Supreme Court ruled that racial segregation in public schools violated the Equal Protection Clause of the Fourteenth Amendment because "separate is inherently unequal." Does this mean that schools should be legally required to have racially balanced student populations? In other words, should the racial composition of the school be required to match the racial composition of the surrounding area's population (i.e., if the county is 60% white, 30% Hispanic, and 10% black,...
In University of Texas Southwestern Medical Center v. Nassar case, the Supreme Court held that the...
In University of Texas Southwestern Medical Center v. Nassar case, the Supreme Court held that the "___________" standard would apply in retaliation cases.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT