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Alan Freeman Is in the Process of Forming a Corporation

question 81

Essay

Alan Freeman is in the process of forming a corporation in order to protect himself from liability in the operation of his construction/development business. The business is incorporated on November 1, 2011. However, Alan was anxious to get started on a townhouse development. He signed contracts with subcontractors for the project during September and October. Discuss Alan's liability before and after incorporation.


Definitions:

Deposit Account

A bank account that holds deposited funds, such as a savings or checking account, allowing for the deposit and withdrawal of money.

Perfection

In law, especially regarding secured transactions, refers to the act of making a security interest enforceable against third parties by fulfilling legal requirements.

Financing Statement

A document filed by a creditor to announce a security interest in a debtor's assets, used in securing loans.

Security Agreement

A legal contract that grants a lender a security interest in a specific asset or property pledged as collateral by the borrower.

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