Don't Start a Business Until You Understand Promoter's Liability!

Episode 3 of Learn Laws with James White and attorney Andrew Eastler dives into Promoter’s Liability—the personal risks when you act for a business before it’s legally formed. Learn why forming your company first is key, how to dodge liability with ratification and novation, and protect yourself as an entrepreneur. Perfect for business owners and investors. Subscribe for more legal insights!

Key Moments:

00:00:20 - Intro to Learn Laws and Promoter’s Liability
00:01:27 - What is Promoter’s Liability? Pre-incorporation explained
00:01:59 - Example: Signing a lease before your company exists
00:07:13 - Ratification: Company steps in, but you’re still liable
00:15:01 - Novation: How to escape personal liability
00:14:24 - Personal guarantees vs. promoter risks
00:26:47 - Selling a business? Watch for lingering liability
00:41:01 - Sole proprietorships (DBAs) offer no shield
00:47:17 - Boost business credit with a DUNS number