Question

Business Law

On November 1, 2001, Gary Fox met in Denver (U.S State of Colorado) with the representative of Coopers & Lybrand(Coopers), an international accounting firm. Fox informed Coopers that the was acting on behalf of a corporation that was in the process of forming, and requested a tax opinion and other accounting services for the corporation. Coopers accepted the engagement with the knowledge that the corporation was not yet in existaence. The corporation was incorporated on December 4, 2001. Coopers completed the work by mid-December and billed the corporation and Fox $10,827 for services rendered. When neither the corporation nor Fox paid the bill, Cooper sued Fox to recover thes debt.

Question:
1. Is there a valid contract between Fox and Cooper?

2. Could the suit against Fox be based upon the doctrine of piercing the corporate veil?

Answer 1

1. Is there a valid contract between Fox and Cooper?

There is no contract as such, in paper between Fox and Cooper. But the allegations made along with the services rendered - which are tangible are proof enough that Fox did intend and did enter into an agreement with Cooper. The absence of the agreement in the face of the services is the proof of the agreement itself.

2. Could the suit against Fox be based upon the doctrine of piercing the corporate veil?

Piercing the corporate veil focuses on ensuring that the rights of the corporate flows down as the rights of the shareholders.
In the case of Fox and Cooper, Fox's rights to take a service means that Cooper has the right to be paid for the services he provided. Any amount liable whether or not they were from before or after the company's existence does not exonerate Fox from paying Cooper. Upholding professional ethics and business ethics is important from a corporate's perspective, therefore Fox is indeed a reflection of the corporate veil.