Liability and Commerce





Learning Team C Reflection

Casey Beighley, Deelip B. Joshi, Jose Carmelle Dieudonne, and Ian Hosein


March 25th, 2013

Ivy Voss

Week Two Learning Team C Reflection

            This team paper will introduce the reader to the benefits to commerce of having shareholders and other entities shield members to protect them from personal liability, and the effect on commerce if personal liability is attached to individuals for misdeeds of their entity (UOPX, 2013). Our team will cite examples of basic tort laws enacted as such, the basics of liability insurance as discussed this week, and ultimately the basic risk management principles in place to make sure people are protected.

Limited Liability Benefits to Commerce

Corporations generate 85% of United States gross business receipts. It is an independent legal entity separate from the people who own, control, and manage it, and is governed by the corporation codes (rules and regulations) of the state in which it is incorporated.  Shareholders are owners of the corporation, and have limited liability up to the amount of their capital contribution, and are not responsible for the corporation’s debts and obligation. This means that if the corporation incurs loss or goes bankrupt, the shareholder’s personal assets are protected from the creditors up to the amount of their stake in the company. This is important for commerce, as it gives the corporation flexibility to borrow funds or sell shares to raise large sums of money without the hindrance from creditors to do so. The limited liability of shareholders attracts potential investors to invest in the company. The growth of assets of the corporation beyond the lifetime of the investors and shareholders bring stability to the corporation. In rare case, personal liability may be imposed upon shareholders when the corporate veil is pierced.  What this states is that if the shareholders misuse the corporation, the corporate entity can be disregarded by the court, and the shareholder’s are held liable for the corporation debts and obligations (Cheeseman, 2010).

Personal Liability and Commerce

The question that needs to be discussed is whether Commerce will be served better or not if personal liability would attach to those individuals for the misdeeds of their entity (UOPX, 2013). Team C’s position is that commerce would be served better by doing this. Commerce could be beneficial if there is set standards for conduct (John, n.d).  Retaliatory justice can come very handy in commerce. Individuals should be liable for those misdeeds for which they were personally responsible (MacCormick, 2005). If individuals of business entities were not held responsible for their misdeeds; everyone would be immune from blame, which would not be good for business. Individuals would do only irresponsible activities, and no one would be punished. This retaliatory justice, holding individuals responsible for misdeeds, would lead each individual to be more cautious, and methodical in his or her conduct, would keep the workplace safer, and commerce better served.


            Shareholders are only liable for the amount of capital they have put into the company, but they are not personally liable for any debts or expenses the company may have. Commerce would be better served if the members are not shielded for their misdeeds, and everyone takes responsibility for his or her actions, and are punished accordingly. Shielding members from personal liability only allows them to act irresponsibly and get away unscathed.



Cheeseman, H.R. (2010). Business law: Legal environment, online commerce, business ethics, and international issues (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

John, F. (n.d). Holding individuals liable for corporate misdeeds. Daily Reporter, The             (Milwaukee, WI),

MacCormick, N. (2005). Taking Responsibility Seriously. Edinburgh Law Review9(1), 168-     175.

UOPX (2013) University of Phoenix LAW/531 classroom: Course Materials. Retrieved from




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