Legal Updates

A person is personally liable for transactions made through its business if not a corporate

August 4, 2020
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An Australian company purchased goods from an Israeli supplier, who issued receipts under its private tax file, but the goods were never supplied. The supplier contended that she is not personally liable the failure in the supply because she managed the transaction through a company incorporated a few days after ordering the goods.
The Court held that the person behind the supplier is personally liable for failing to supply the goods as she acted through her personal tax file and not through a company. Israeli Companies Law stipulates that a company has a separate legal personality from its shareholders but a personal tax file is not considered as such. For hiding behind the corporate vail, one must demonstrate a legal separation between the business and the person. Here, the supplier operated under her own tax file and the company was incorporated only a few days after the order of the goods. Thus, she is personally liable to the customer.

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