Full question:
If a wholly owned subsidiary signed an exclusive teaming agreement with another company, does this exclusivity also bind the parent company?
- Category: Corporations
- Date:
- State: National
Answer:
It will be a matter of interpretation for the court, based on all the facts involved, to determine whether the two companies should be treated as a single entity. The separate corporate entity may be disregarded when it is used as a cover for fraud or illegality, when it is used to work an injustice, when it is deemed necessary to achieve equity, or when failure to achieve equity would enable the corporate device to be used to circumvent a statute. When courts have faced the question of whether or not a firm and its subsidiary amount to a single "person", they have answered it by examining the extent of common ownership and the degree of control that the one exercises over the other.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
