Question

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?

Answer 1

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.