Question

Sometimes the owners of a corporation use the corporate entity to perpetrate fraud, circumvent the law, or in some other way accomplish an illegitimate objective. In these situations, the court will ignore the formation and structure of the corporation and hold the shareholders personally liable for a corporate obligation. This is called piercing the corporate veil. After reading the case, you will respond with answers to the following questions using your critical thinking and moral reasoning skills:

What are some of the factors that cause the courts to pierce the corporate veil? What was the contract between Dog House Investments, Inc. and Teal Properties, Inc.? How was it breached? When Dog House Investments, Inc. was not reimbursed it caused severe financial duress. Does this consequence make the landlord’s conduct unethical? Explain. What is the standard for an award of punitive damages for a contract breach? Was the standard met in this case? How might this suit have been avoided altogether? Was Jerry Teal’s disregard for the corporate form unethical? Why or why not?

Answer 1

For this situation, the litigant (Teal Properties Ltd.) rented out its property to the offended party ( Dog House Investments) for the running of a Dog Camp. The respondent guaranteed the offended party to fix the land in the event of harm by fire and different causes. The land got harmed because of the flood however the respondent didn't embrace the fix work. He contracted with the offended party to attempt the fix work and alter the expense later on. The offended party fixed the land which caused serious money related hardship bringing about liquidation. Along these lines, the offended party documented a claim for a break of agreement against the respondents. The Court ruled for the offended party and held the respondent at risk for a break of agreement and granted customary just as corrective harms to the offended party.

Clarification:

Components that reason the court to puncture the corporate shroud are:

1. At the point when an individual is going about as an organization to fulfill his own advantages.

2. At the point when the partnership fused with such low speculation, that it can't make a benefit or pay its obligations and liabilities.

3. At the point when the organization isn't following statutory and required corporate customs.

4. At the point when corporate and individual interests are blended to such a degree that the company loses its character.

5. At the point when the company is joined with an aim to sidestep charge or different liabilities.

The Contract between Dog House and Teal Properties Ltd. was

The Contract between the Dog House and Teal Properties Ltd. was that the Teal house ltd will rent out its property to the Dog House for the activity of their Dog Camp and if there should arise an occurrence of any harm to the property because of fire or whatever other reason which renders the property unusable the proprietor of the property will bear the expenses of fix.

The agreement was broken when the proprietor of the Teal Properties in spite of the notice given by the Dog House Inc of the unusable state of land didn't make any move to reestablish it. The proprietor of the Teal Properties made the Dog House Inc. attempt the fix work and guaranteed that they will be repaid which brought about the liquidation of Dog House Inc.

Truly, the lead of the landowner was exploitative in light of the fact that he guaranteed the Dog House Investments to fix the land if there should be an occurrence of harm by fire and different causes. Be that as it may, the litigant didn't stay faithful to his obligation, because of which the organization confronted serious money related pain bringing about its chapter 11.

Reformatory grants are praiseworthy harms given to an offended party by the court. These harms are given to set a model in the public arena and to hinder the individuals from embracing such sort of direct. Reformatory grants are by and large not given in the agreement cases except if it has been demonstrated that the leader of the respondent was so extreme and appalling that the entire issue took the state of tort as opposed to a legally binding one. The Punitive Damages Standards Act oversee the cases wherein a request for granting correctional harms has been made. It accommodates a different preliminary on the subject of corrective harms, builds the measure of payable harms and raises the weight of verification required for demonstrating the case.

Indeed, the standard for granting reformatory harms was met for this situation on the grounds that the proprietor of the Teal properties Ltd willfully occupied with false acts knowing the desperate money related circumstance of the offended party organization. He got the protection cash from the insurance agency yet abused it for his utilization to do his business movement.

This suit could have been maintained a strategic distance from if the litigant would have stayed faithful to his obligation of fixing the land if there should be an occurrence of harm in any case. The litigant misused the protection guarantee which was intended for fix work to his own utilization and advised the offended party to complete the fix work which caused serious money related hardship to the offended party.

Truly, Jerry Teal's negligence for the corporate structure was dishonest on the grounds that he framed the organization with a deceitful reason. He was the main proprietor of the organization and the organization possessed no properties, money, and resources in its name. The organization had no different legitimate character and was framed to fulfill his own advantage. Any lease got from the property of the litigant was quickly redirected to take care of Mr. Greenish blue's money related commitments.