Contract-Sole trader-limited company-Liability

[justNotcricket]

What is the name of your state (only U.S. law)? -

What is the name of your state (only U.S. law)? -

Hi all

Hypothetical:
I am a sole trader. I enter into a contract with a business.
I then set up a limited liability company.
1.Can I simply pass the contract onto the new business?
2.Do I need a new contract?

I have no known liabilities.
In the future, it comes to light, that a liability was incurred during the sole trader period.
3. Can I be sued or will it be my new company?
e.g I infringed on patent/copyright
e.g I ran my coffee shop as a sole trader before I incorporated. Someone comes back, from years ago, saying that my coffee made them hallucinate and they walked into a brick wall, breaking their nose.

Does it revolve around the word 'known'.
i.e you cannot incur massive debts as a sole trader, set up a limited company and then declare the company bankrupt, while you walk away without owing anything.
If it were company to company, would it boil down to due diligence on part of purchasing company unless fraud?

 

[quincy]

What is the name of your state (only U.S. law)? -

What is the name of your state (only U.S. law)? -

Hi all

Hypothetical:
I am a sole trader. I enter into a contract with a business.
I then set up a limited liability company.
1.Can I simply pass the contract onto the new business?
2.Do I need a new contract?

I have no known liabilities.
In the future, it comes to light, that a liability was incurred during the sole trader period.
3. Can I be sued or will it be my new company?
e.g I infringed on patent/copyright
e.g I ran my coffee shop as a sole trader before I incorporated. Someone comes back, from years ago, saying that my coffee made them hallucinate and they walked into a brick wall, breaking their nose.

Does it revolve around the word 'known'.
i.e you cannot incur massive debts as a sole trader, set up a limited company and then declare the company bankrupt, while you walk away without owing anything.
If it were company to company, would it boil down to due diligence on part of purchasing company unless fraud?

You forgot to include the name of your state.

Are you studying for a Bar exam?

 

[justNotcricket]

You forgot to include the name of your state.

Are you studying for a Bar exam?

Hi Quincy.

1. No State. Non US citizen. Europe(up with a migraine and can't get back to sleep)
2. No. God no.

I am working full time at the moment but have always wanted to start my own business.
I believe that a contract would give me the necessary push to leave the job.

This is what I am afraid of. I make a pitch to Company Y, regarding a service, I will provide.
They agree in principle. In the time(and cost) It takes me to form a company (can be up to two weeks) and sign the contract, as my new company, a lot of things can happen. Minds can change etc.
Whereas, If I am in a position to offer them a contract and can sign it, straight away, It would be better. A solicitor would look over it first but the required time for that, is shorter.

I believe, based on nothing more than a guess, that it is a General Law question.
An answer as would apply to America, would be fine.

 

[quincy]

Hi Quincy.

1. No State. Non US citizen. Europe(up with a migraine and can't get back to sleep)
2. No. God no.

I am working full time at the moment but have always wanted to start my own business.
I believe that a contract would give me the necessary push to leave the job.

This is what I am afraid of. I make a pitch to Company Y, regarding a service, I will provide.
They agree in principle. In the time(and cost) It takes me to form a company (can be up to two weeks) and sign the contract, as my new company, a lot of things can happen. Minds can change etc.
Whereas, If I am in a position to offer them a contract and can sign it, straight away, It would be better. A solicitor would look over it first but the required time for that, is shorter.

I believe, based on nothing more than a guess, that it is a General Law question.
An answer as would apply to America, would be fine.

I'm sorry, justNotcricket. What applies to those living in the U.S. will not (necessarily) apply to those living in Europe. Laws are too different between all countries (and they even can vary in substantial ways between the different states in the U.S.) to have any answer provided here worth much to you there. We also do not as a rule answer hypothetical questions or help with Bar exam questions.

You could probably find a legal forum in your area of the world with individuals willing to discuss with you possible answers. And, if the hypothetical mirrors a real life concern, you might want to consider consulting with a solicitor.

I am also sorry you have a migraine.