What is the law regarding business credit cards?

UPDATED: Sep 30, 2022

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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