Amy Gargulo and Paula Frisken operated as a partnership Kiddies Korner, an infants' and children's clothing store. They operated the business very successfully for three years, with both Paula and Amy doing the buying and Paula keeping the books and paying the bills. Amy and Paula decided to expand the business when an adjoining store became vacant. At the same time, they incorporated the business. Children's Apparel, Inc., was a major supplier to the business before the expansion. After the expansion, business did not increase as anticipated, and when a nationally known manufacturer of children's apparel opened a factory outlet nearby, the business could no longer pay its bills. Children's Apparel, which had supplied most of the store's stock after expansion, sued Amy and Paula as partners for bills due for expansion stock. Children's Apparel did not know that Amy and Paula had incorporated. Amy and Paula contended that the business was incorporated and that they therefore were not liable for business debts occurring after incorporation. Were Amy and Paula correct?
This question was answered on: Sep 21, 2023
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