Legal Question in Business Law in New Jersey

Re: Does an LLC protect more than just personal assets?

The limitation of liability that the law affords in the case of LLCs and corporations does not insulate anyone against personal wrongdoing including criminal offenses or fraud that they commit themselves. What it does is provide that the members and managers of an LLC will not be held liable for the debts or the acts of the LLC or its agents where there is no personal involvement of their own. It is a subtle but important distinction.

Liability arising when goods "fall off a truck" is ultimately one of evidence and burden of proof. Dealing in goods that you know to be stolen is a crime. Dealing in counterfeit copyrighted works is a violation of copyright law that can carry serious economic penalties. If you only suspect the source, it then becomes a matter of evidence and proof as to whether what you knew or should have known and how much investigation you should have undertaken. One thing is certain, however, in a single-member LLC, the company cannot "know" anything that the managing member does not.

Online auctions are subject to abuse and, from what you tell me, you should assume at least a duty of making reasonable inquiry as to the goods. A place to start might be to contact the security and abuse people at eBay etc to determine if they have had any complaints about those goods. If, for example, a copyright owner has complained about counterfeits, they would probably know about it. If you still have further concerns, you may want to sit down with a business lawyer to discuss particular ways to protect you and your business.

See also: http://info.corbettlaw.net/lawguru.htm

Re: Does an LLC protect more than just personal assets?

I have read the response that you got from Attorney John Corbett.

I agree with much of what he says.

The bottom line is that it would be smart to have a lawyer do a little research and give you some advice as to how to reduce your exposure to someone claiming that you are doing something bad or illegal. A little legal advice could protect you a lot.

Please call me if you would like me to assist you. I am in Hackensack, right across from the Bergen County Courthouse.

My contact information can be obtained from the links below, just click on the Attorney Profile link. Let my secretary know you found me through LawGuru. This website, LawGuru, will NOT let me list my phone number in this response.

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