Corporate Officers Making Personal Promises

It is a well settled rule of law that a corporation generally shields the actions of officers, directors and employees from personal liability when they engage in company business.  In fact, the main purpose of corporate formation is to shield an individual or individuals from liability for corporation actions.  Nonetheless, there are circumstances when a corporation’s principals may be personally liable in the furtherance of corporate business. 

In the recent case of Bennett v. A.T. Masterpiece Homes, a certain Grant Colledge, owner and sole manager of A.T. Masterpiece Homes at Broadsprings, LLC, a limited liability company, made promises during a construction project concerning residential properties.  As the construction proceeded, Mr. Colledge specifically promised that he would “make things right” and that he would “satisfy” the needs of the buyers. 

Following a lawsuit, a jury found Colledge personally liable in April of 2011 for $26,000 to one homeowner and $85,000 to another because of the specific personal promises made to correct defects.  The Court doubled damages pursuant to the Consumer Protection Law and added attorney’s fees so that the total amount of the judgment against Mr. Colledge totaled $228,500, a princely sum for a few casual off hand remarks.  The Court first recited the standard basic tentative agency law that an individual acting as an agent for a disclosed principal is not personally liable on a contract unless the agent specifically agrees to assume liability.  Nonetheless, the Court noted that a person acting as an agent may assume personal liability by making specific personal promises. 

The Court found that Colledge’s statements were an assumption of liability because “he made the statement with the goal of securing the buyers continuing performance on the contract.” 

The lesson here is that individual owners of corporate entities must not make personal promises if they wish to avoid personal liability. 

Bill Brennan


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