Contract Mistakes You’re Making: Personal Guarantees

Of all the things I see in my practice, a client’s personal guarantee of a corporate obligation is among the few things that keep me from sleeping at night, really. I loathe personal guarantees, and for good reason.

1. Corporations are (quasi) people. In every American state, corporations are legal entities or “beings” in the same way that you and I are beings. As such, corporations are afforded certain privileges and responsibilities. The most common form of responsibility is the obligation to file and pay income, sales and other taxes. Privileges