What is the law regarding business credit cards?
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What is the law regarding business credit cards?
I co-own an S-corp with my business partner. Shortly after starting our business, we signed
up for a corporate credit card and my business partner signed a personal guarantee for the card. They are the majority owner of the company and recently quit, so is now demanding I take on personal liability for the credit card. Is there any legal requirement or lawsuit which would require me to become personally liable for that credit card?
Asked on April 16, 2016 under Business Law, Washington
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
You don't need to take on personal liability for the card, but you can't force him to keep the card open, either: your former partner is free to have this card closed out, since he is no longer working there (because he has personally guaranteed it, he has the right to do so; he can't be made to continue to guaranty a debt after he is longer employed there, though he will remain liable on any unpaid sums incurred up to the point he closes out the card). At that point, you can decide whether to take out a new card or not, which may require you personally guarantying it.
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