Question 19 2 pts Casey decided to incorporate her business under the name Casey

Question

Question 19 2 pts Casey decided to incorporate her business under the name Casey's Toy Company. Before Casey's Toy was incorporated, Casey signed a contract in the name of Casey's Toy Company to have some office space remodeled. Which statement is correct? Casey's Toy is liable on the contract because the contract was signed in its name. Casey's Toys becomes liable on the contract as soon as it is incorporated. Casey's Toys is liable on the contract if the contractor knows that the corporation does not yet exist. Casey's Toys will be liable on the contract only if the corporation adopts the contract.

Explanation / Answer

Casey’s Toys will be liable to the contract only if the Corporation adopts the contract.

A Corporation has a legal identity of an Artificial person that is separate from its members. In this regard, when Casey contracted in the name of Casey’s Toy Company, she is personally liable for the Contract and cannot hold the Corporation liable for the same because the Corporation did not even come into existence by then. As a matter of fact, the Corporation can only be held liable if it adopts to the contract formally and not otherwise.

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