Jim forms a corporation, called Not-So-Bright Colors, Inc., to paint houses. Jim is the sole officer...

Jim forms a corporation, called Not-So-Bright Colors, Inc., to paint houses. Jim is the sole officer and director. Jim hires through his corporation his long-time friend, Brian, to paint houses. Jim also buys a truck through his corporation to drive to the work sites and carry painting supplies. Brian, with Jim's consent, also uses this truck during the evening hours to pinstripe automobiles. Jim and Brian agree that Brian's unincorporated auto detailing business, Sort-of-Straight Lines, is Brian's business alone, and that Jim is not entitled to any of the profits. However, Brian agrees to pay for the gas and any upkeep or repairs to the truck related to his auto detailing business. Brian's wife leaves him. Brian, a non-drinker, "ties one on." That evening, Brian attempts to drive the truck to one of his customer's garages to detail a vehicle and, on the way, rear-ends Victim at a stop sign. Victim's injuries are substantial and exceed the value of the corporate assets and any available insurance.

Set forth your best argument that Not-So-Bright Colors, Inc., is liable to Victim.

Set forth your best argument that Jim is personally liable to Victim.

Set forth your best argument that Not-So-Bright Colors, Inc., is not liable to Victim.

Set forth your best argument that Jim is not personally liable to Victim.

Solutions

Expert Solution

	Situation	Best Argument
1.	Not-So-Bright Colors Inc. is liable to Victim	As Brian is an employee of Not-So-Bright Colors Inc,, the principle of vicarious liability would apply, following the deep pockets theory. And the employer ( Not-So-Bright Colors) will be liable to a third person for losses caused by employee.
2.	Jim is personally liable to the Victim	Jim's business is organized as a corporation. On paper, it is formed as a corporation, but in effect, Jim is the proprietor of the business, and the sole director. In effect, Jim and his business are one and the same entity. Therefore, Jim's liabilities are unlimited, and Jim himself would be liable for losses caused to third parties. Hence, Jim is personally liable to the Victim.
3.	Not-So-Bright Colors Inc. is not liable to the Victim	The employer would be liable for losses caused to third parties by employees only if the damages are caused while the employee was acting within the scope of his employment. Brian was driving the truck to one of his own customers when the accident happened. So he was not acting within the scope of employment of No-So-Bright Colors Inc. Hence the principle of vicarious liability would not apply, and the corporation would not be liable to the Victim
4.	Jim is not personally liable to the Victim	Jim's business is organized as a corporation. Therefore, Jim's liability is limited. Also, the truck is registered in the name of Not So Bright Colors Inc.The corporation might be liable to the Victim.

jeff jeffy answered 1 year ago

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