The Benefits and Burdens of Limited Liability

Transactions: The Tennessee Journal of Business Law, Vol. 22, pp. 313-24, 2021

12 Pages Posted: 3 Jun 2021

See all articles by Joshua P. Fershee

Joshua P. Fershee

Dean & Professor of Law; Creighton University School of Law

Date Written: June 1, 2021

Abstract

Law students in business associations and people starting businesses often think the only choice for forming a business entity is a limited liability entity like a corporation or a limited liability company (LLC). Although seeking a limited liability entity is usually justifiable, and usually wise, this Article addresses some of the burdens that come from making that decision. We often focus only on the benefits. This Article ponders limited liability as a default rule for contracts with a named business and considers circumstances when choosing a limited liability entity might not communicate what a business owner intends. The Article notes also that when choosing an entity, you get benefits, like limited liability, but burdens (such as need for counsel or tax consequences) also attach. It's not a one-way street. The Article closes by urging courts to consider both the benefits and burdens of an entity choice, especially in considering whether to uphold or disregard an entity, to help parties achieve some measure of certainty and equity.

Keywords: LLCs, Corporations, Society, Business Judgment, PCV, veil piercing, equity, creditors, pro se, jurisdiction

JEL Classification: M1, M10, M13, M14

Suggested Citation

Fershee, Joshua P., The Benefits and Burdens of Limited Liability (June 1, 2021). Transactions: The Tennessee Journal of Business Law, Vol. 22, pp. 313-24, 2021, Available at SSRN: https://ssrn.com/abstract=3858150

Joshua P. Fershee (Contact Author)

Dean & Professor of Law ( email )

2500 California Plaza
Omaha, NE 68178
United States
402-280-2348 (Phone)

HOME PAGE: http://https://www.creighton.edu/faculty-directory-profile/2522/joshua-fershee

Creighton University School of Law ( email )

2500 California Plaza
Omaha, NE 68178
United States
402-280-2348 (Phone)

HOME PAGE: http://https://www.creighton.edu/faculty-directory-profile/2522/joshua-fershee

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