Legal Question in Business Law in California

Re: promissory note

Based upon the information above, and provided you maintain the corporation in such a way that the vendor cannot bypass the liability protection of the corporation ("piercing the corporate veil"), you should be protected from personal liability.

The only other issue would be whether you made any personal guaranty as part of the promissory note.

I would recommend having an attorney review the terms and conditions of the promissory note before signing. This extra effort upfront could protect your individual assets and help prevent problems in the future.

Let me know if I can help you further with this as my firm represents clients in similar situations.

Re: promissory note

Let's take a step back and examine the conditions under which "i have to write" a promissory note. Who says you have to? What I'd guess is that the vendor has threatened either to sue, or to cut you off, or both, unless you give them a promissory note. In such a situation, 9 times out of 10 the vendor/creditor will be wanting (demanding) the note be from the stockholder, director or officer who controls the corporation, not the corporation itself.

So, I guess the answer is, what is the creditor demanding? What do you "have to" do to get him off your back for a while? If you can make him happy with a corporate note, by all means do so......but my guess is that alone won't be enough. The creditor probably wants a personal guarantee, or its equivalent.

IF you can get by with a corporate rather than personal note, by all means be careful how it is worded and signed. NEVER sign your name to anything that you intend to bind only the corporation, and not yourself, without studying the format of how officers sign on behalf of the corporation. It's usually something like this:

XYZ Corporation, by ___________ , its President (with "John Doe" typed under Mr. Doe's handwritten signature on the blank line).