Question

1. Jerome, Sheila, Gary, and Ella agreed to purchase a tract of land and make it available for use as a free playground for neighborhood children. They called the enterprise Meadowbrook Playground. Jerome and Gary improperly hung one of the playground swings, and a child was injured. The suit was brought against Meadowbrook Playground. Can damages be recovered?

2. A joint venture is a(an):

3. 1. Edwin Edwards and Karen Davis owned EEE, Inc., which owned three convenience stores, all of which sold gasoline. Reid Ellis delivered to the three convenience stores $26,675.02 worth of gasoline for which he was not paid. Ellis proved that Edwards and Davis owned the business, ran it, and in fact personally ordered the gasoline. He claimed that they were personally liable for the debt owed to him by EEE, Inc. Decide.

Answer 1

1 Yes damages will be recovered. Based on Jerome and Gary's negligence by improperly hanging one of the playground swings, they will be liable for the damages and injuries of the child. Even though they offered the playground to be used free of charge, they have the mandate to ensure the safety of the users of that playground is observed. Suppose Meadowbrook playground is insured the insurance company will cover the cost of recovering the damage. But suppose they don't have insurance then they have a serious problem on them. It will be better if they were at least incorporated and hopefully the lawsuit was only filed against the corporation and not against the individuals.

2 A joint venture is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance

3

ase Facts.

Reid Ellis is suing three convenience stores owned by Edwin Edwards and Karen Davis for the unpaid balance of gasoline that he supplied to them. The convenient stores are a corporation owned by the two defendants.

Case Issue.

Whether the owners of the convenient stores are liable for the debt of their corporation.

Explanation:

Relevant terms.

• Corporation- this is an organization that limits liability of its owners such that they can only lose their investment alone as opposed to personal property. A corporation is treated as a separate entity, hence the debts owed by the corporation are not necessary owed by the owners of the corporation.
• Piercing the corporate veil- courts use this tactic to hold owners of a corporation personally liable for the debts of the company. Factors that are considered are fraud, lack of corporate formalities such as meetings and bookkeeping, under-capitalization of business, and mingling assets between different companies.

Decision.

In normal cases, corporation owners are not liable for the debts of their corporation. However, the plaintiff can use piercing the corporate veil so as to hold Edwin Edwards and Karen Davis liable. Unfortunately, the plaintiff failed to show enough evidence to pierce the veil. The court held that:

• Running a corporation such as buying and selling of goods for the corporation does not make the owners personally liable for the debts of the corporation.
• Rein Ellis failed to prove that the corporation was involved in fraudulent activities.

Therefore, there was insufficient information to pierce the corporate veil. The owners are not liable for the corporation's debts.