Legal Question in Business Law in California

Am I obligated to continue to make payments pursuant to a contract to a suspended California corporation for services rendered before its status became suspended? Any answers that provide statutes or cases will be much appreciated.

(I understand that the corporation will not be able to enforce while it is suspended. However, given the possibility it may revive, am I still under an obligation to pay?)


Asked on 5/23/12, 5:06 pm

2 Answers from Attorneys
Terry A. Nelson Nelson & Lawless

If it is suspended, it is not allowed to do any business, including collect money or sue for debts. Make your decision accordingly. You could put the funds into a savings account, so that if it is revived and sues you, you'll have the money to pay. Doing this will show your good faith.

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Answered on 5/23/12, 5:19 pm

Not only is a suspended corporation reinstated to full rights and powers going forward, once it revives, all legal rights and acts of the corporation while suspended are revived with it. So unless the corporation allows itself to remain suspended until the statute of limitations runs out, they will have the power to sue you for any and all breaches of your obligations as soon as it revives. So if you want to breach your contract on the chance that they will stay suspended long enough, go for it.

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Answered on 5/23/12, 5:50 pm


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