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Current Developments in the Commercial Divisions of the
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Posted: November 11, 2016

Signer of Contract on Behalf of Later-Dissolved Corporation Not Liable on Contract

On October 26, 2016, Justice Kornreich of the New York County Commercial Division issued a decision in 88 Broad St., Inc. v. Stone & Broad Inc., 2016 NY Slip Op. 32156(U), holding that the signer of a contract on behalf of an LLC that later was dissolved was not personally liable under the contract, explaining:

The cases cited by the parties speak to contractual obligations incurred and undertaken by a company afier the corporation was dissolved. Landlord cites no authority for the proposition that a contract entered into by an active corporation that subsequently has its charter voided may give rise to personal liability on the part of the corporation’s shareholders. In other words, there is no authority for the proposition that the owners of a company incur personal liability under contracts previously entered into once the corporation is dissolved. For this reason, the court will not hold that the Individual Defendants defrauded Landlord by committing the myriad alleged breaches of the Lease.

(Internal quotations and citations omitted) (emphasis added).

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