My attorney saved my LLC from a $2,000 mistake with one sentence

I was about to sign a service contract last month that had a clause saying I'd be personally liable for any damages. My lawyer read it in 10 seconds and said 'never sign away your corporate veil in the operating agreement.' I didn't even know that was a thing people could sneak in. Has anyone else had a contract try to pierce your LLC protection?

2 comments

2 Comments

the_alex10d ago

...and honestly, that's one of those things that sounds scary but gets misread a lot. Your lawyer was right to flag it, but calling it "piercing the corporate veil" in that context is a bit of a stretch. Piercing the veil is way more serious, it usually happens in court after something goes wrong, like fraud or mixing personal and business money. What you had was a bad contract clause trying to make you personally sign for stuff, which is different from a judge deciding to ignore your LLC. Just be careful throwing that term around, because it means something specific and a lot of people use it wrong.

simonk989d ago

Close but not quite right. Your lawyer was right to catch that clause fast, but "piercing the corporate veil" is a legal term for when a court ignores your LLC because of shady stuff like fraud or not keeping separate accounts. What you dodged was just a personal guarantee buried in the contract terms, which is different legally even if it feels similar. Most service contracts will try to slip that in because they want someone to sue directly instead of going after the company. Always check for any line that says "personally liable" or "jointly and severally" because that's the real trap, not the veil pierce stuff.