Question

Soheili is the director of Dynasty Kitchen Cabinets, a company that makes and installs kitchen cabinets in personal residences and professional spaces. Soheili and his wife decided to change their personal kitchen and install new kitchen cabinets provided by the company where he was working as a director. The cost of the kitchen was $250,000 but Soheili didn't pay the company and didn't provide them with a personal guarantee either. Now, the company, Dynasty Kitchen Cabinets, is suing Soheili and asking from the court to hold him personally liable. Question: Do you think that this is a case in which the court would “lift the corporate veil” or not? Explain why. Try to incorporate in your answers the points that we discussed in class.

Answer 1

Yes, I think that in this case the law would order the corporate to lift up the corporate veil. The principle of the corporate veil is the legal concept which separates the personality of the corporation from the shareholders and so, it helps to protect the company and the shareholders as well from being perosnally liable for company's debts and other obligations. Thus, in this case, Soheili purchased the kitchen from his own company and didn't pay the price of $250,000 for the kitchen. As it is an economic offence because the company's finances are being disturbed in this case, the court is then entitled to lift the veil for the corporate entity and pay important and regard to the economic realities that are held behind the legal facade.