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Full-Text Articles in Business Organizations Law
Fraud Is Now Legal In Texas (For Some People), Val D. Ricks
Fraud Is Now Legal In Texas (For Some People), Val D. Ricks
Texas A&M Law Review
Three intermediate appellate courts in Texas have held that corporate actors— directors, officers, managers, shareholders, and probably common employees and agents—are immune from personal liability for fraud that they themselves commit as long as their deceit relates to or arises from a contractual obligation of the corporation. Similar actors in limited liability companies also enjoy immunity. These courts do not require that the business entities themselves be liable for the fraud. When the entities are not liable, these new holdings leave fraud victims no remedy at all, even if a jury would find fraud. One (or maybe two) Texas appellate …