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sole proprietorship and liability

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halsal

Junior Member
What is the name of your state (only U.S. law)? US

Assume there's a hypothetical situation where Company B is a "sole proprietorship" under the same name as Company A. Company B declares bankruptcy. Creditors are aware of Company A, and Company A claims the proprietor of Company B is not "employed" by Company A.

Can Company A be held liable for the debts of Company B if any of the following are true, individually or collectively:

I. Company A publicly advertised Company B's existence.
II. Company A publicly advertised Company B's owner as its own employee. (e.g., "Welcome XX to Company A!")
III. Company A seeded/seeds money to Company B.
IV. Owner(s) of Company A are related to the owner of Company B.

The reason I ask is, hypothetically, an owner-owner relationship funding and advertising a company of a same name (i.e., boosting established brand awareness) while claiming "they're not ours!" seems sketchy.

Case law or citations would be much appreciated! (This is not a homework question.)
 
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Mass_Shyster

Senior Member
Your post is confusing.

A sole proprietorship cannot have multiple proprietors. That's why it's called "sole".

You stated that Company B is "under" Company A. What does that mean? "Under" is not a legal relationship. Also, "Company A" is clearly not the name name as "Company B".

Business association laws vary by state. "US" is too broad.
 

halsal

Junior Member
You stated that Company B is "under" Company A. What does that mean?

I proposed no declaration of corporate hierarchy; I merely stated that this hypothetical Company B is under the same name as Company A. Example:

Company A: Unicorn Taxidermy
Company B: Unicorn Taxidermy

For simplification, let's also assume that "Unicorn Taxidermy" is clearly not, nor could be, mistaken for anyone's name.

A sole proprietorship cannot have multiple proprietors. That's why it's called "sole".
I need to up my morning coffee. :o I'll edit the erroneous pluralities out of the OP.
 

halsal

Junior Member
There is no legal relationship because two different businesses have the same name.

Even if any, or all, of these are fact:

I. Company A publicly advertised Company B's existence.
II. Company A publicly advertised Company B's owner as its own employee. (e.g., "Welcome XX to Company A!")
III. Company A seeded/seeds money to Company B.
IV. Owner(s) of Company A are related to the owner of Company B.
 

tranquility

Senior Member
THERE IS NO LEGAL RELATIONSHIP BETWEEN BUSINESSES WITH THE SAME NAME.

The rest of what you allege has to do with different and separate torts.
 

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