Legal Question in Business Law in New York

Legally held payment?

If a business owes my company money and they have a separate business owned by the same persons, can a payment we owe to the first entity be legally held or short paid due to the debt owed from the second company?


Asked on 4/08/08, 1:41 pm

3 Answers from Attorneys
Carlos Gonzalez Gonzalez Legal Associates PLLC

Re: Legally held payment?

Overall each company, especially if in 'corporate' format is its own seperate individual and can not take on the rights owed to any other individual or company... this is a general rule and is valid except for very few exceptions.

Ideally you would want to have your contracts reviewed and see what they say regarding such situattions, particularly the company the debt was originally owed to.

That being said, you must keep in mind the amount of the debt and weigh the pros and cons as to whether it is worth continuing or not.

if you have any further questions you may contact us at 212.709.8303

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Answered on 4/09/08, 4:17 pm
Michael Markowitz Michael A. Markowitz, PC

Re: Legally held payment?

No, each corporation is a separate entity unless it is established that the second entity is an "alter ego" of the first entity.

Mike.

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Answered on 4/08/08, 1:56 pm
John Friedman Law Office of John K. Friedman

Re: Legally held payment?

Mr. Markowitz is essentially correct UNLESS your company has a right of set-off in its contract(s) w/ the companies at issue. You'll have to review those documents to determine if such a right has been granted your company.

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Answered on 4/08/08, 2:22 pm


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