Comment: Response

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Response

All parties which contract with a limited liability corporation agree to limit the liability of the shareholders to the assets of the corporation - by definition. That's what it means to be a limited liability corporation! As in my example, anyone or any kind of business association can contract ad hoc with other people on the condition of limited liability. What defines limited liability corporation is that everyone who contracts with it always does so on the condition of limited liability. The corporation is set up so that it is not allowed (by its own internal rules established by its owners) to contract with anyone except on the condition of limited liability.

What special rights are you claiming for you libertarian utopian corporation that differentiates it?

None! That's my point! Everyone, and every business association of whatever kind, has the right to contract with people on whatever terms it likes, including on the condition of limited liability - right? If other people don't want to contract with it on those terms, they're free not to. The LLC is merely a business association which always contracts on the condition of limited liability - by definition, that's what makes it an LLC.

As I said before, limited liability applies only to contractual obligations. That is, the only parties who are prevented from going after the personal assets of the shareholders are those who have contractually agreed to be restricted in that way. Limited liability does not apply to torts. That is, if an LLC harms someone or their property, as by (for example) dumping toxic waste into a stream, there is no limited liability, precisely because the victims of this tort did not contractually agree to limited liability.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."