Final answer:
The legal doctrine that might shield Alice, Betty, and Charles from personal liability is 'corporation by estoppel,' which applies when a business has been treated as a corporation by others despite not being legally incorporated. Option c is the correct answer.
Step-by-step explanation:
In this scenario, Alan discovers that ABC Co., to whom he sold merchandise on credit, is not a corporation but a partnership consisting of Alice, Betty, and Charles. If Alan were to seek personal liability from the partners, they might invoke the legal doctrine of corporation by estoppel.
This doctrine can sometimes shield individuals when a party has dealt with an entity as if it were a corporation, only to later discover that it has not been properly incorporated. Since the entity was treated as a corporation, the individual members may be estopped (prevented) from denying their corporate status to avoid liability. However, this principle is not universally applied and would depend on the specific facts of the case and the jurisdiction.
It's important to note that while a corporation generally protects its owners from personal liability, partnerships do not afford the same level of protection. In a partnership, the partners are usually personally liable for the debts and obligations of the business.
The available options reflect different concepts related to business structures and liability:
- De facto corporation pertains to a business operating as if it were a corporation without having completed the formal requirements.
- De jure corporation is a business that has fulfilled all legal requirements to be recognized as a corporation.
- Corporation by estoppel is a principle that may protect individuals from personal liability if a business has been treated as a corporation by others.
- To pierce the corporate veil means to hold the individual shareholders personally liable for the corporation's actions, which is the opposite of what Alice, Betty, and Charles would seek.
In this case, the most appropriate legal doctrine that might shield Alice, Betty, and Charles from personal liability would be corporation by estoppel (option c). It's important to consult with a lawyer to understand the applicability of these doctrines to a specific case.