Business Law - The Ethical, Global, and E-Commerce Environment - Assignment Example

Issue The issue to be determined is liability of a corporation’s owner or shareholder to a corporation’s debts. Rules Limited liability clause of an incorporated entity protects shareholders from all sorts of personal liability of the corporation beyond the shareholder’s investment in the entity. In addition, a corporation’s director is only liable for negligence that occurs within the formal scope of duty, torts that the director’s corporation or employees commit under the director’s powers, and conflict of interest (Mallor, et al., 2013). Analysis Facts of the case identify Ecco’s failure to pay for a shipment.

This is a breach of contract by the corporation and does not identify liability of an executive of a corporation because it cannot be attributed to negligence, tort, or conflict of interest of Sally as an executive. Sally also has no direct contact with African and the plaintiff can only claim her investments in the company and not a direct suit. Conclusion Sally is therefore correct in her legal argument that only the corporation was liable and failure to identify the nature of the entity was African’s fault and not a legal issue.