Legal Question in Business Law in California

Re: taken to small claims court for breach of contract

You don't say that the company is a corporation, but if it has officers and directors, it probably is incorporated.

There are rare instances in which the officers and directors of a corporation can be sued for breach of a contract to which the corporation, but not the individuals, is/are a party or parties. Such suits are said to try to "pierce the corporate veil" or to apply the "alter ego theory" of liability. What this all means is that the plaintiff alleges that these individual defendants so disregarded the corporate entity in running the business that it would now be unfair to give them the benefit of a corporate firewall against personal liability. It takes rather flagrant disregard of the separateness of the corporation to get a court to disregard the corporation and pin liability directly on the insiders, but courts will sometimes do so "to prevent a fraud" and to recognize the reality that the insiders were treating the corporation as a sham.

The insiders could also be sued directly if they guaranteed the corporation's performance of the contract, but if that were the case here I'm sure you would have mentioned it.

There could be other rare circumstances; for example, it's possible an insider could be liable for contracts made by a corporation while the corporate powers were suspended (as, for example, they will be if its annual franchise tax goes unpaid long enough). (I'd have to research this further to give you a definite answer.)

Re: taken to small claims court for breach of contract

You don't say that the company is a corporation, but if it has officers and directors, it probably is incorporated.

There are rare instances in which the officers and directors of a corporation can be sued for breach of a contract to which the corporation, but not the individuals, is/are a party or parties. Such suits are said to try to "pierce the corporate veil" or to apply the "alter ego theory" of liability. What this all means is that the plaintiff alleges that these individual defendants so disregarded the corporate entity in running the business that it would now be unfair to give them the benefit of a corporate firewall against personal liability. It takes rather flagrant disregard of the separateness of the corporation to get a court to disregard the corporation and pin liability directly on the insiders, but courts will sometimes do so "to prevent a fraud" and to recognize the reality that the insiders were treating the corporation as a sham.

The insiders could also be sued directly if they guaranteed the corporation's performance of the contract, but if that were the case here I'm sure you would have mentioned it.

There could be other rare circumstances; for example, it's possible an insider could be liable for contracts made by a corporation while the corporate powers were suspended (as, for example, they will be if its annual franchise tax goes unpaid long enough). (I'd have to research this further to give you a definite answer.)