Next Generation Bar Exam Quiz
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BUSINESS ASSOCIATIONS AND RELATIONSHIPS
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State X's LLC Act, Section 108, provides: (a) A person that enters into a transaction on behalf of a limited liability company before the company is formed is personally liable on the transaction unless the person and the other party expressly agree otherwise. (b) If the company is formed and adopts the transaction, the company is liable on the transaction, but the adoption does not release the person from personal liability unless the other party expressly releases the person. (c) A person is not liable under subsection (a) if the other party knew when entering the transaction that the company had not been formed and expressly agreed that the person would not be personally liable. Facts: Before filing articles of organization, Renata signed a three-year lease as 'Managing Member, Juniper Creek LLC, a limited liability company in formation.' Renata told the landlord that Juniper Creek had not yet been formed. The lease did not state that Renata would not be personally liable and did not release her. Juniper Creek was formed ten days later and adopted the lease. Juniper Creek then defaulted, and the landlord sued Renata for unpaid rent.
Under Section 108, is Renata personally liable for the unpaid rent?
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