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The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

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The problems start when your mousetrap business starts earning money | 457 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
The problems start when your mousetrap business starts earning money
Authored by: Anonymous on Saturday, June 08 2013 @ 04:52 AM EDT
Precisely.

Incorporating is a way for me to set up a business to do something useful for
the economy that protects me if it fails.

But when the incorporation is being used in a way to avoid personal liability
(which would normally occur) and is seen as such, then it is considered never to
have happened.

It is a perfect way to stop me [personally] deciding to sue you on flimsy
grounds and getting you to settle as it's cheaper for you than fighting in
court; for if you do fight and I lose, I lose [almost] nothing as I incorporated
a [troll] entity for this purpose: the incorporation acting as a shield to my
actions.

[ Reply to This | Parent | # ]

The problems start when your mousetrap business starts earning money
Authored by: Wol on Saturday, June 08 2013 @ 08:45 AM EDT
And this rarely happens in the UK, precisely because it CAN.

Just like we rarely get nuisance law suits because the aggressor is almost
certain to get landed with the entire defence bill.

Which is better? That a rich aggressor can outspend and bankrupt an innocent
competitor? Or that if a *real* *person* incorporates with the deliberate
intention of launching a malicious lawsuit can have the incorporation declared
invalid, to force them to pay the liability they tried to avoid.

The thing you need to see here, is that this sanction is only used if the
directors actions were LIKELY to trigger the liability, and they KNEW WHAT THEY
WERE DOING.

So if I do something stupid, I'm protected. If I intend to launch a lawsuit with
a low likelihood of success (ie I intend to troll), and I incorporate to shield
my private assets, the Judge will be quite likely to tear the veil. If I start a
genuine business and it goes pear-shaped, there's no way a Judge would be able
to tear the veil.

Cheers,
Wol

[ Reply to This | Parent | # ]

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