GO KOSOVO CO.: THE BIRTH OF A BUSINESS

 

Introduction

 

            Go Kosovo Co. was created as a logical expansion of the tourism project of Operation Kosovo at Chicago-Kent College of Law.  Students worked on the project over the last couple of years, but none of them chose to incorporate.  The students created a rough business plan highlighting their research, a brochure with colorful photographs, an information packet with a detailed itinerary and a website to promote a tour to Kosovo.  The previous students also met with a couple of travel agencies, but each agency said it would not conduct business with an unincorporated tour company.  Therefore, in order to move the tourism project along, incorporation of a business entity seemed like the next obvious step to create an organized tour of Kosovo.  Go Kosovo Co. was incorporated in the state of Illinois on July 6, 2005.[1] 

            Go Kosovo Co. was incorporated in order to provide organized tours of Kosovo.  All of Go Kosovo Co.’s three founders traveled in Kosovo, and they realize it has the potential to be a great tourism destination.  Kosovo offers a market for tourism that is essentially overlooked by the travel industry.  Therefore, Go Kosovo Co. has virtually no competition at this time.  Its potential customers have the opportunity to experience nation building first hand as they tour a Muslim region that is very pro-American.  Since Kosovo is undiscovered by most American tourists, Go Kosovo Co. offers a unique chance to visit this exotic locale.  Go Kosovo Co. desires to provide an educational tour of Kosovo.  It wishes to focus on Kosovo’s unique position at the crossroads of Christianity and Islam, Communism and Capitalism, and Eastern and Western culture.  It also wishes to focus on nation building, Albanian nationalism, and the plight of refugees as well as Kosovo’s potential as an independent country in the Balkans. 

            Helping bring money into the Kosovo economy is a benefit as well.  The Travel Industry Association of America has a wonderful diagram that illustrates how tourism dollars are spent.[2]  It shows how money spent by travelers on things such as transportation, lodging, recreation, entertainment and food trickles down as wages, salaries, profits and taxes of the local population.  In turn, outside and local goods and services increase, and the local economy is boosted by the local population spending more money on things such as school, entertainment, recreation, food and shopping.  Tourism is especially good for developing countries that may not have much else to offer.  In the year 2000, tourism ranked number three among the top four export sectors of developing and least developed countries (the others being manufacture, fuel and food).[3]  In countries that are the most dependent on tourism, it can “account for 30-90% GDP, 50-90% of exports, and can employ 20-50% of the population.”[4]  The World Travel & Tourism Council (“WTTC”) developed a blueprint for tourism, which highlights the value of “working with governments to raise awareness of the importance of [tourism,] one of the world’s largest generators of wealth and jobs.”[5]  The WTTC states that travel and tourism gives vitality to economies, stimulates development and offers people jobs and career prospects.[6]  According to the United Nations Environment Programme, the economic impacts of tourism relate to foreign exchange earnings, contribution to government revenues, employment generation, stimulation of infrastructure investment and contributions to local economies.[7]  With all of Kosovo’s natural beauty and charm, tourism is a sector of its economy that Kosovars should focus more on.  Kosovo has the attractions to draw travelers, and by doing so, the Kosovo economy can benefit greatly.

            The first section of this paper presents a discussion on forming a corporation in Illinois.[8]  The second section of this paper examines the liability issues that can arise with the individuals involved with a corporation, namely piercing the corporate veil.  The third and final section of this paper presents the author’s reflections about the incorporation of Go Kosovo Co.

Section I: Forming a Corporation in Illinois

Articles of Incorporation

            All Illinois corporations are formed under the Illinois Business Corporation Act of 1983 (the “BCA”).[9]  A corporation does not exist until there are Articles of Incorporation (“Articles”) and those Articles are filed with the Illinois Secretary of State Department of Business Services (“Secretary of State”).[10]  The Articles are the foundational document of a corporation “which establishes the framework of a corporation’s authorized business activities”.[11]  The Articles must include: the corporation’s name, the name and address of the initial registered agent and office, the corporation’s purpose, the number and class of shares the corporation is authorized to issue, the number of initially issued shares, the consideration paid for the issued shares and the name and address of each incorporator.[12]  The Secretary of State has a specific Articles of Incorporation form that is available online or at any Department of Business Services office.[13]

            A corporation’s name must contain the word corporation, incorporated, company or limited, or an abbreviation of one of those words, in order to disclose its corporate status.[14]  A corporation’s name may not imply “that the corporation is organized for the purposes of insurance, assurance, banking or a fiduciary.”[15]  Incorporators may pick any name they want as long as that name is distinguishable from any other name or assumed name used by an Illinois corporation, foreign corporation or limited liability company (“LLC”) authorized to do business in Illinois.  The name also must be distinguishable from any reserved name.[16]  The Secretary of State approves all names before the Articles are filed.[17]  A corporation may operate under an assumed name; the assumed name does not need a corporate ending such as those listed above, but it must be renewed in years ending in zero or five and be approved by the Secretary of State.[18]  Nevertheless, the name chosen by the incorporators may be used by an out of state company, so the incorporators should perform a trademark search.  The Secretary of State only searches corporate names within its own Illinois database.[19]

            The Articles must state the initial registered agent and office. The registered agent must be a person who resides in Illinois or “a corporation specifically authorized by its Articles of Incorporation to act as a registered agent and which has an office in Illinois.”[20]  The registered office must meet three requirements.  It must be located in Illinois, have a street address (or rural route and box number) and “be identical with the business office of the registered agent.”[21]  The registered agent should be available during regular business hours at the registered office in order to receive legal process, official correspondences and the state annual report.[22] 

            The BCA states that a corporation may be formed for any lawful purpose (except banking or insurance).[23]  The purpose clause “is the statement of the character of the business objectives of [the] corporation.”[24]  The Articles may list a general corporate purpose or specific corporate purpose(s).  The general purpose clause suggested by the Secretary of State is: “The transaction of any or all lawful purposes for which corporations may be incorporated under the Illinois Business Corporation Act of 1983.”[25]  The general purpose clause is recommended because it is flexible.  If the corporation changes its business focus or plan, the corporation will not need to amend its Articles with the Secretary of State, and it will avoid paying an amendment fee.[26]

            A corporation is required to “disclose how many shares of stock are authorized (even if not issued), how many will be initially issued, and what consideration will be received in exchange for the issued shares.”[27]  Margaret Cook does an excellent job clearly defining these stock terms in her article “Blocking and Tackling Articles of Incorporation: The Building Blocks of Business.”[28]  She writes:

Shares:  This refers to shares of stock.  Stock is simply ownership in a corporation.  Every corporation has stock, even if there is only a single owner.  This does not mean the corporation is selling or trading its shares publicly.

 

Authorized Shares:  This number indicates the total amount of shares of stock, or pieces of ownership, the company can give to its owners.  It does not have to use all authorized shares[,] but it cannot issue more shares than it is authorized to do so by its Articles.  Authorized shares do not mean anything until they are actually issued.

 

Issued Shares:  These are the actual shares that have been issued to owners.  In other words, it is the number of outstanding shares of stock.  A company can issue more shares to new or current owners. . . .  Ownership is determined by the number of shares outstanding or issued.[29]

 

There is no minimum or maximum amount of shares that must be authorized.  The incorporators need to keep in mind, however, the number of shares they believe the corporation would like to issue in the future as well as the amount of shares it would like to issue immediately.[30]  Otherwise, in order to authorize more shares, the Articles have to be amended.  Since authorized shares do not mean anything until they are issued, there is no harm in authorizing more shares than are believed to be necessary; after all, the corporation does not need to issue all of its authorized shares.[31]

            The consideration paid for the initially issued shares also must be disclosed in the Articles.  Consideration is “what is paid into the corporation in exchange for the issued shares.  Each holder of shares must exchange either cash, property, promissory notes, or a combination of these items for the shares the corporation issues to them.”[32]  This consideration is considered the paid-in capital of the corporation.  Although there is no minimum amount of consideration that must be paid, the amount cannot be zero.[33]  The paid-in capital is very important because it determines the amount of franchise tax that must be paid to the Secretary of State when filing the Articles and future annual reports.[34]  Consideration may also be paid “in labor or services actually performed for the corporation.”[35]  The judgment of the board of directors or shareholders usually shall determine the value of the consideration received.[36]

            The incorporators must decide if they want different classes of shares.  Shares that have the same basic characteristics are considered a class of shares.  Classes are generally divided into common shares or preferred shares.[37]  Common shares are “shares that have no preference over any other shares with respect to the payment of dividends or the distribution of assets on liquidation.”[38]  Preferred shares are “those that are entitled to priority in payment of dividends or the distribution of assets on liquidation of a corporation.”[39]  There may be more than one class of common shares or preferred shares.[40]  If there are two or more classes of common shares, the differences must be described.  Classes may differ “with respect to voting rights (e.g., one class may be voting shares and another may be non-voting); management terms (e.g., each class may elect only specific directors); transferability rights (e.g., one class may have no restrictions while another is subject to a right of first refusal); or preemptive rights.”[41]  If there are one or more classes of preferred shares, “all preferences, qualifications, limitations, restrictions and special or relative rights with respect to each preferred class must be described.”[42]  Although the right to receive dividends before the common stock shareholders is the most usual preference, there are many other rights that would qualify.[43]  Small corporations typically have only one class of shares (common voting shares) because it is simpler.  Multiple classes are generally unnecessary.[44] 

            Under the BCA, one or more incorporators may form a corporation.  An incorporator must be a natural person (eighteen (18) years old or older) or a domestic or foreign corporation.[45]  The incorporator(s) must type or print their name(s), provide their address(es) and sign the Articles, thereby declaring that all the statements made in the Articles are true.  The incorporator does not have to be the business owner.  The incorporator could be an attorney or a professional incorporation company.[46] 

           The Articles also have optional sections that are not essential to satisfy the statutory requirements.  The initial number, names and addresses of the board of directors may be stated in the Articles or decided at an organizational meeting of the incorporators.[47]  The corporation may choose to list the value of any property it owns both inside and outside of Illinois in the Articles.[48]  Many other provisions may be placed in either the Articles or the by-laws.  Some of these provisions deal with managing the business, defining and regulating the affairs of the corporation, defining qualifications for the directors and provisions authorizing indemnification among many others.[49]  Given the choice, it is probably best to keep the Articles simple and leave these sections blank.  The Articles are available to the public, so the corporation may prefer to keep certain information out of them in order to maintain privacy and nondisclosure.  Also, any time the corporation wants to change one of these provisions in the Articles, it must file Articles of Amendment with the Secretary of State and pay the applicable fees.[50] 

            The corporate existence technically begins once the Articles are filed with the Secretary of State.  That filing “shall be conclusive evidence, except as against the State, that all conditions precedent required to be performed by the incorporators have been complied with and that the corporation has been incorporated under the appropriate statutory provisions.”[51]  Therefore, if something is wrong with the Articles filed, but the Secretary of State accepts them, the only thing that can happen if a problem is discovered later is that the state can revoke the corporate charter.  The corporation will not become a partnership with full liability.  An organization

that is not technically a corporation because of its failure to meet some statutory requirement will be recognized as a “de facto corporation” if there is a valid law under which it may be organized, a good faith effort to organize under the law, a colorable or apparent compliance with the law, and if the organization is a user of corporate powers.[52]

 

            The only things that need to be delivered to the Secretary of State are the Articles and a check for payment of the initial fees.[53]  The Secretary of State reviews the Articles, and when “final approval has been given, the Articles of Incorporation [are] stamped ‘filed’ with the date thereof (i.e., the date of incorporation) and [are] assigned an 8-digit ‘file number’ by the Secretary of State’s office.”[54]  At the time of filing, two fees are required.  The filing fee is currently one hundred fifty dollars ($150.00), and it is a fixed amount.[55]  The second fee required is a franchise tax.  The initial franchise tax “is based upon the ‘Consideration To Be Received’ for the shares to be issued. . . .  The rate of the franchise tax is 15/100 of 1 percent of the Consideration To Be Received, with a minimum of $25.”[56]  In other words, the consideration should be multiplied by .0015 in order to figure out the initial franchise tax (that is $1.50 per every $1,000.00).[57]  Therefore, the minimum total due for the filing fee and franchise tax is one hundred seventy-five dollars ($175.00).

            After the Articles are mailed back to the incorporators (or their representative), the Articles must be recorded with the Office of the Recorder of Deeds (“Recorder”) within fifteen (15) days.  The incorporators must record them with the Recorder in the county where the registered office of their corporation is located.[58]  The fee for recording any standard document in Cook County is twenty six dollars ($26.00) for the first two pages, and each additional page costs two dollars ($2.00).[59]

Organizing the Corporation

            Although filing the Articles with the Secretary of State and the Recorder technically creates a corporation, there is a lot more that must be accomplished before the corporation is considered a distinct legal entity separate from its shareholders.[60]  Certain corporate formalities need to be followed to help keep the individuals behind the corporation protected.  There should be ample evidence that the corporation is a distinct and separate entity and not just a sham corporation that the shareholders are using to conduct personal business.  Some of the most important corporate formalities include adopting by-laws, properly issuing stock, electing directors and officers, holding annual meetings and recording the minutes of meetings.[61] 

            By-laws govern the business and affairs of a corporation’s management such as annual meeting dates, voting rules and director and officer duties and requirements.[62]  By-laws are not mandatory in Illinois,[63] but without them, the corporation would adopt the same resolutions repeatedly.  By-laws are typically adopted right after the corporation is formed or at the first board of directors’ meeting.[64]  By-laws tend to be mostly boilerplate, and they generally are drafted to give flexibility.  By-laws are an internal document of the corporation, so there is no filing requirement with the Secretary of State.[65]  Therefore, given the choice to put something in the Articles or the by-laws, it would be better to put it in the by-laws.  The by-laws can easily be amended, and the document is private.  Articles are more difficult to amend since there is a filing requirement and a fee to be paid, along with the fact that the document becomes a public record.

            Properly issuing stock is also important for a corporation to do.  Even though shares can be owned without the corporation issuing actual certificates, the corporation should have a stock registration book that is evidence of stock ownership.[66]  If certificates are issued, it is best to leave them in the corporation’s minute book or stock registration book so they do not get lost.  Courts look for more than just a stock certificate to determine if shares were properly issued however.  They also look at “records of payment, meeting minutes and voting records, tax returns and investment records, as well as other evidence that a transaction in stock in fact took place.”[67]

            Directors and officers must be elected to run the corporation.  If the initial directors were not named in the Articles, an organizational meeting of the incorporators must be held to decide the number of the initial directors.  If the initial board of directors was named in the Articles, then the board may proceed with business without there being an organizational meeting of the incorporators.[68]  The shareholders are responsible for electing and removing the directors, and the directors manage the affairs of the corporation.[69]  The shareholders usually cannot order the board of directors to take any particular action.[70]  The directors are responsible for appointing and removing the officers.  Officers carry out the day-to-day affairs of the corporation.[71]  In smaller corporations, generally the same individuals perform all the roles of managing and controlling the corporation.[72]

            At the very least, a corporation must have one annual meeting each year,[73] and it is required to keep accurate records and minutes of any meetings that are held.[74]  The corporation also must file an annual report each year.[75]  The corporation must make sure to pay its yearly franchise taxes as well; if it does not, the Secretary of State will dissolve the corporation.[76]  Although the other corporate formalities described previously in this section are important, the formalities listed in this paragraph are essential to keep in goodstanding with the Secretary of State.

Business Licensing and Other Filings

            Although filing the Articles and following through with corporate formalities are usually enough to create a corporation that is a definite separate legal entity apart from its shareholders, there is still more that must be accomplished before a corporation can legally conduct business.  The corporation and those running it “are responsible for and obligated to contacting the various federal, state and local governmental agencies with which corporations must file.”[77]  The various agencies are not required to contact the corporation first.  It is important to “[a]ct promptly after incorporating because failure to file, register or report may subject you and/or your corporation to fines or other penalties.”[78]  The corporate entity itself is probably not threatened by noncompliance.  Some of the agencies that are contacted most frequently are the Internal Revenue Service (IRS), the Secretary of State’s Security Department, the Trademark Section of the Secretary of State’s Department of Business Services, the Income Tax Division of the Illinois Department of Revenue and the City of Chicago’s City Clerk’s Business License Section.[79]  This list is not exhaustive of all the possible agencies that may need to be contacted however.  It is important to remember that “[s]ome businesses are more regulated than others, and some local governments are more restrictive than others.  [A person] may have to analyze statutes and ordinances, call or write many agencies, or consult professionals such as [his or her] lawyer or accountant.”[80]  Unfortunately, a more in depth look at the requirements of these various agencies, and the penalties for not meeting the requirements, is outside the scope of this paper.

Go Kosovo Co.’s Incorporation and Organization

            At this time, Go Kosovo Co. is technically a corporation, and it is in goodstanding.  Its full legal name is Go Kosovo Company.  No other corporation or LLC in Illinois is currently using a name with the word Kosovo in it, so Go Kosovo Co. is clearly distinguishable from any corporation or LLC doing business in Illinois.  The name was chosen to match the website domain name that the previous Operation Kosovo students had created (www.gokosovo.com).  No trademark search has been performed yet, so it is unknown whether a business organization in another state may be using this or a similar name.

            The initial registered agent is one of the founders of Go Kosovo Co., and the initial registered office is the apartment of that founder.  In hindsight, this was probably a bad choice.  First, the founder has been out of the country for several months, so he is not at his apartment to receive mail.  The author does not know where any correspondence from the Secretary of State is going.  Second, even if the founder was here, he would not be available at his apartment during regular business hours because he is a student.  This should be changed, which means a special form must be filed with the Secretary of State and a fee must be paid.[81]

            The author believes that the general purpose clause was used to state the purpose of Go Kosovo Co.  Thirty thousand (30,000) shares were authorized, and three (3) shares were issued (one to each founder).  The author did not pay any cash for her share, but she did perform services for Go Kosovo Co., which under the statute can be consideration.  The author is not sure what consideration was listed in the Articles, however, because she has not been able to get a copy of the Articles by the time of writing.  Go Kosovo Co. has just one class of shares (common stock) since it is such a small corporation and only has a few shareholders.

            The three founders and shareholders of Go Kosovo Co. were the incorporators.  The author believes that they were also named as the initial directors in the Articles as well.  The author does not know at this time if the Articles were recorded with the Cook County Recorder of Deeds.  No corporate formalities have been followed yet.  By-laws have not been adopted.  Stock has not been issued.  Officers have not been appointed.  None of this has happened because there has not been an official meeting of the shareholders/directors.  It has been difficult to have a meeting when one of the shareholders is out of the country.  No records or minutes have been kept because there has been no meetings.  Clearly, Go Kosovo Co. has a lot to accomplish before it can be considered a legal entity separate and distinct from its shareholders.  No annual report has been filed, but Go Kosovo Co. has only been organized for approximately six months, so this is not a concern at this time.  Go Kosovo Co. has not contacted any of the required agencies yet, which is needed to get a business license and tax identification number among other things.  Needless to say, there is a lot of work that must be done in order for Go Kosovo Co. to legally conduct business.

Section II: Piercing the Corporate Veil

            A corporation is “a legal entity which exists separate and distinct from its shareholders, directors and officers.”[82]  It has the ability to sue, and it can be sued.[83]  The obligations and liabilities of a corporation usually do not fall on the shareholders, directors and officers of that corporation because the corporation itself is responsible for those items.[84]  Nevertheless, an Illinois court may find the officers,[85] directors[86] and/or shareholders[87] of a corporation personally liable for its obligations through the common law doctrine of piercing the corporate veil.[88]  Piercing the corporate veil results in a corporation not being considered a separate, legal entity.

            Piercing the corporate veil in Illinois is difficult.  Courts are reluctant to do this,[89] and it only happens in exceptional situations.[90]  The party attempting to pierce the corporate veil has a substantial burden.[91]  This doctrine is available whether it is a tort or contract cause of action.[92]  It is generally allowed only to protect a third party.[93]  In other words, the corporate veil cannot be pierced for the benefit of the corporation or its shareholders.[94]

            The test to pierce the corporate veil consists of two requirements.  Both requirements must be met before liability shifts from the corporation to the officers, directors and/or shareholders of the corporation.  The first requirement is “a unity of interest and ownership that causes the separate personalities of the corporation and the individual to no longer exist”[95], and the second requirement is “the presence of circumstances under which adherence to the fiction of a separate corporate existence would sanction a fraud, promote injustice or promote inequitable consequences.”[96] 

Unity of Interest Requirement

            The first requirement of the test to pierce the corporate veil is the unity of interest requirement.  The separate corporate identity only is disregarded if there is an “abuse or disregard of the corporate form.  It must be shown that the corporation is so controlled and manipulated, its affairs so conducted, that it has become a mere instrumentality of another.”[97]  In this situation, the corporation often is viewed as a dummy, sham or alter ego of the individual involved.[98]  The resulting determination is that there is no distinction between the individual and the corporate entity because the corporation is being used as an instrument to conduct that person’s personal business.[99]  Factual considerations are determined by the circumstances of each case.  Illinois law looks at a variety of factors including inadequate capitalization, failure to observe corporate formalities, nonfunctioning of officers and directors[100] and insolvency of the debtor corporation.[101]  No single factor is determinative however.[102] 

            Inadequate capitalization is an important factor in piercing the corporate veil and denying the defense of limited liability.[103]  A corporation’s capitalization is significant “in determining whether a legitimate separate corporate entity was maintained.”[104]  In order to figure out if a corporation is adequately (or inadequately) capitalized, a balancing test of sorts must be used.  The amount of capital in the corporation should be compared to “the amount of business to be conducted and obligations to be fulfilled.”[105]  This is relevant because “if a corporation is organized and carries on business without substantial capital in such a way that the corporation is likely to have no sufficient assets available to meet its debts, it is inequitable that shareholders should set up such a flimsy organization to escape personal liability.”[106]  Individuals dealing with a corporation expect that corporation to have sufficient assets to satisfy its obligations. 

            Many Illinois cases discuss inadequate capitalization in regards to piercing the corporate veil.[107]  In Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328 (3rd Dist. 1996),[108] the court concluded that the corporation was adequately capitalized.  The corporation had enough assets, including equipment and inventory, and significant income from sales to pay its debts and retain earnings.[109]  On the other hand, the corporations in Fiumetto v. Garrett Enterprises, Inc., 749 N.E.2d 992 (2nd Dist. 2001)[110] and People v. V & M Industries, Inc., 700 N.E.2d 746 (5th Dist. 1998)[111] were found to be undercapitalized.  In Fiumetto, the court determined that the one thousand dollar ($1,000.00) capital contribution was entirely inadequate to support the business because the corporation had five employees on the payroll at the time.[112]  In V & M Industries, Inc., the dominant shareholder argued that no assets were needed since the purpose of the corporation was to lease property.  The court concluded, however, that the corporation had to purchase property in order to lease property.  The corporation relied on a different business entity to buy its leasing property and pay its debts, so the court decided that the corporation was undercapitalized because it had no assets to pay for the basic items and services that it needed.[113]  The court in Fiumetto may have stated the policy consideration best: “Absent adequate capitalization, a corporation becomes a mere liability shield, rather than an independent entity capable of carrying on its own business.”[114]

            Another factor considered when attempting to pierce the corporate veil is the failure of the directors, officers and/or shareholders to observe corporate formalities.  This factor is divided into various sub-factors including failure to hold annual meetings, failure to keep minutes and records at meetings, absence of corporate records, commingling of personal and corporate funds or assets, failure to issue stock and nonpayment of dividends.[115]  The result is not determined by a single factor.[116]  Many Illinois cases discuss a number of these factors.[117]  In Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328 (3rd Dist. 1996),[118] even though the corporation did not pay dividends, failed to hold an annual meeting and failed to have workers’ compensation insurance, the corporation did issue shares of stock, filed tax returns and did not divert or commingle funds, so the court decided not to pierce the corporate veil.[119]  The corporate veils in People v. V & M Industries, Inc., 700 N.E.2d 746 (5th Dist. 1998)[120] and Falcon Associates, Inc. v. Cox, 699 N.E.2d 203 (5th Dist. 1998)[121] were pierced however.  In V & M Industries, Inc., there was a failure to issue stock, no dividends paid, no minutes recorded, absence of corporate records and the dominant shareholder was found to exercise ownership, direction and control over the corporation.[122]  In Falcon Associates, Inc., no stocks were issued, no dividends were paid and there was a de facto merger of two corporations which made one corporation nothing more than the alter ego of the other.[123]

            Yet another consideration when piercing the corporate veil is the nonfuctioning of officers and directors.  This factor indicates that the corporation is essentially a façade for the operations of a dominant individual.[124]  In V & M Industries, Inc., the court found that the officers that were elected clearly held no authority.  The dominant shareholder exercised all the ownership, direction and control over the corporation.[125]  A final factor courts may consider when deciding to pierce the corporate veil is insolvency of the corporation.[126]

Sanctioning of Fraud or Promotion of Injustice Requirement

            The second requirement of the test to pierce the corporate veil is the sanctioning of fraud or promotion of injustice requirement.  The separate corporate identity is disregarded if either of those instances exists.  In other words, piercing the corporate veil “will be resorted to only when something unlawful, or at least against public policy, is being done by means of an alter ego.”[127]  In order to show common law fraud, the following elements must be met: “(1) a false representation of a material fact; (2) by a party who know or believes it to be false; (3) with the intent to induce a plaintiff to act; (4) action by a plaintiff in reliance on the statement; and (5) injury to the plaintiff as a consequence of that reliance.”[128]  An intentional wrongdoing is not required, however, to pierce the corporate veil.  It is enough to show a promotion of an injustice.  The injustice element is met by “a showing of fundamental unfairness or bad faith in one form or another, or a demonstration of something akin to fraud or deception, or the existence of a compelling public interest.”[129]

Application to Go Kosovo Co.

            As stated previously, all corporate officers, directors and shareholders can be held individually liable for a corporation’s debts and obligations under the doctrine of piercing the corporate veil.  Go Kosovo Co.’s three shareholders and founders clearly would be liable if the corporate veil was pierced.  It does not seem possible that Go Kosovo Co.’s veil could be pierced at this time because Go Kosovo Co. has done absolutely nothing at all besides technically incorporate.  There has been no attempt to conduct business, so it does not seem like there would be anything to sue Go Kosovo Co. about or anyone who could bring a lawsuit.  Nevertheless, it is worth looking at what could happen to Go Kosovo Co.’s shareholders if the corporation was attempting to conduct business at this time.

            The first requirement of piercing the corporate veil (unity of interest) would probably go against the shareholders if Go Kosovo Co. actively was conducting business at this time.  Go Kosovo Co. currently has no capital besides the small amount of initial paid-in capital, which almost certainly would be considered inadequate.  All corporate formalities have been neglected thus far.  There has been no meeting and, therefore, no minutes or records of meetings.  There are no records besides the Articles (and the author is not sure where the corporation’s copy of the Articles are at).  No funds have been commingled, but that is because Go Kosovo Co. has no real assets at this time and there has been no attempt to conduct business that would require funding.  No stock certificates have been issued.  No dividends have been paid, but Go Kosovo Co. is still young, and that does not seem to be as serious of a violation as the lack of the other corporate formalities.  Since Go Kosovo Co. seems to be nonfunctioning in general, there does not seem to be any significant nonfunctioning of directors that could be used to pierce the corporate veil.  Go Kosovo Co. has not been found insolvent.

            All of these corporate formalities can be followed if the shareholders of Go Kosovo Co. make the effort to follow them.  None of the formalities are hard; they just take some work, dedication and a little organization.  Getting adequate capitalization is probably the hardest thing to achieve.  All of Go Kosovo Co.’s shareholders are students with little money, so bank loans or credit cards may be the best way to finance the immediate needs of Go Kosovo Co.  Once the shareholder who is currently out of the country gets back, it will not be difficult to hold a meeting in order to adopt by-laws, elect officers and issue stock.  A corporate minute book can be purchased to keep track of the records and minutes of Go Kosovo Co.  A corporate checking account can be opened in order to keep corporate funds separate from personal funds.  All of the shareholders still want to be a part of Go Kosovo Co., so there should not be any nonfunctioning officers or directors once the business gets going. 

            It is hard to determine whether the second requirement of piercing the corporate veil (sanctioning of fraud or promotion of injustice) would be met.  Go Kosovo Co. has not attempted to conduct any business, so there has been no action taken whatsoever that could be considered fraudulent or unjust.  Nevertheless, the directors of Go Kosovo Co. will want to keep this requirement in mind once they start running the business.

Section III: Reflections on the Incorporation of Go Kosovo Co.

            Even though Go Kosovo Co. seems to be a mess right now, at least the author is aware of what action must be taken to legally run a business that is separate and distinct from its shareholders, directors and officers.  The author went into this process very naïve.  She performed no research before signing the Go Kosovo Co. Articles of Incorporation, and she certainly did not realize how much work would have to be done after the paperwork was filed with the Secretary of State.  It seems like the requirements to operate a legal business just keep multiplying.  The corporation is accountable to so many different government agencies at every level (federal, state and local), and they all want a fee paid to them.  It is very intimidating.  The author fears that a significant agency will be overlooked and that there will be severe legal implications.  She definitely understands why almost all the sources that discuss incorporation recommend having a lawyer help them with the process.  It is much more difficult than she anticipated to satisfy all the required legal obligations.

            The author wonders if it would have been better and/or easier if the founders of Go Kosovo Co. had not actually incorporated the business.  In that scenario, the founders would have been a general partnership with full liability.  There would not have been many requirements to start the business.  The founders could have proceeded with just planning a trip and trying to get customers over to Kosovo.  That was the original intention.  The business may not have been taking seriously however.  At least the act of incorporation gives Go Kosovo Co. a little more credibility (as long as the corporate formalities start to be met), and it is less risky to the individuals involved.  As frustrating and overwhelming as it has been, the author is glad Go Kosovo Co. was incorporated, and she hopes more can be accomplished in the new year to help get Go Kosovo Co. off the ground.



[1] A real time Illinois corporation and LLC information search is available online at http://cdsprod.ilsos.net/corp.html.

[2] Travel Indus. Assoc. of Am., How Tourism Dollars Are Spent (2001), http://www.tia.org/marketing/tourism_resources_dollars.html.

[3] See Caroline Ashley et al., Pro-Poor Tourism P’ship, Sheet No. 6: Economic Data on International Tourism’s Contribution to Developing Country Economies 2 (2004), http://www.propoortourism.org.uk/ppt_pubs_infosheets.htm.

[4] Id. at 4.

[5] World Travel & Tourism Council, Blueprint for New Tourism 2 (2003), http://www.wttc.org/frameset1.htm.

[6] Id. at 4.

[7] Production and Consumption Branch, United Nations Environment Programme, Economic Impacts of Tourism, at http://www.uneptie.org/pc/tourism/sust-tourism/economic.htm (last updated Oct. 9, 2001).

[8] In light of the fact that Go Kosovo Co. is organized as a for profit corporation, that is the only type of business entity that will be discussed in this paper.  Other types of business entities include sole proprietorships, general partnerships, limited partnerships, limited liability companies, limited liability partnerships and not-for-profit organizations.  See generally David G. Epstein et al., Business Structures (2002); Carolyn Amadon et al., Take 5: A “Take Five” from the Take Fives, CBA Record, Apr. 2004, at 52; Craig J. Langstraat & K. Dianne Jackson, Choice of Business Tax Entity After the 1993 Tax Act, 11 Akron Tax J. 1 (1995).

[9] 805 Ill. Comp. Stat.  5 (1983); see also Sally J.T. Necheles & Theresa E. Whiteley, 2005 Ill. Jurisprudence: Bus. Relationships § 1:1 (“A corporation is a creature of statute.  The legislature has the inherent plenary power to create corporations and to confer the corporate powers and impose the conditions under which those powers may be exercised.”).  Since corporations are created by state statute, the “status of a corporation, its nature and functions, and the purposes for which it is incorporated, are generally determined by the statute under which it is formed.”  Necheles & Whiteley, supra, § 1:6.

[10] See 5/2.10–2.15; Dep’t of Bus. Servs., Ill. Sec’y of State, A Guide for Organizing Domestic Corporations 1 (2005) [hereinafter Guide].

[11] Margaret Cook, Blocking and Tackling Articles of Incorporation: The Building Blocks of Business, CBA Record Feb.–Mar. 2004 at 37.

[12] See 5/2.10; see also Guide, supra note 10, at 1; Thomas Nusbaum & Theresa E. Whiteley, in 2005 Ill. Jurisprudence: Bus. Relationships, supra note 9, § 3:32.

[13] Cook, supra note 11, at 37.  All Illinois BCA forms are available online in PDF format at http://www.cyberdriveillinois.com/departments/business_services/publications_and_forms/bca.html.

[14] See 5/4.05; see also Sara B. Baughan & Theresa E. Whiteley, in 2005 Ill. Jurisprudence: Bus. Relationships, supra note 9, § 4:1.

[15] Guide, supra note 10, at 2.

[16] See 5/4.05–4.10; see also Guide, supra note 10, at 2.  The name is limited to using letters of the English alphabet, Arabic numbers, Roman numerals and/or symbols that the Secretary of State is capable of reproducing.  See 5/4.05; see also Guide, supra note 10, at 2.  The name may be reserved for ninety (90) days by filing Form BCA 4.10 and paying a twenty five dollar ($25.00) fee.  See 5/4.10; see also Guide, supra note 10, at 3.

[17] See Cook, supra note 11, at 37.

[18] See 5/4.15; see also Cook, supra note 11, at 38.  The form used to adopt an assumed name is Form BCA 4.15/4.20, Application to Adopt an Assumed Name.  An assumed name may be adopted in a year that does not end in zero or five for a lower fee, but it must be renewed in a year ending in zero or five nevertheless.  See Guide, supra note 10, at 19 (“The filing fee to adopt an assumed name is $150 if the current year ends with either 0 or 5, $120 if the current year ends with either 1 or 6, $90 if the current year ends with either 2 or 7, $60 if the current year ends with either 3 or 8, $30 if the current year ends with either 4 or 9.”); Cook, supra note 11, at 38.

[19] See Cook, supra note 11, at 38.

[20] Guide, supra note 10, at 3 (emphasis in original).

[21] Id.

[22] See Cook, supra note 11, at 39.  For a description of how to change the registered agent and/or office, see Baughan & Whiteley, supra note 14, §§ 4:14–15 or Form BCA 5.10/5.20.  The fee is twenty five dollars ($25.00).  See 5/15.10.

[23] See 5/2.10(a)(2); 5/3.05.

[24] Guide, supra note 10, at 3.

[25] Id.

[26] See Cook, supra note 11, at 39.  If a corporation lists a specific purpose, and that purpose changes, the corporation is required to file Articles of Amendment (Form BCA 10.30).  See id.  Articles of Amendment cost fifty dollars ($50.00) to file plus all applicable franchise taxes, penalties and interest.  See Guide, supra note 10, at 19.

[27] Cook, supra note 11, at 39.

[28] Cook, supra note 11.

[29] Cook, supra note 11, at 39 (emphasis in original).  If a corporation desires to increase or decrease the number of authorized shares, it must file Articles of Amendment (Form BCA 10.30).  If a corporation desires to issue more shares or cancel outstanding shares, it must file a Cumulative Report of Changes in Issued Shares and Paid-In Capital (Form BCA 14.30).  The fee is five dollars ($5.00) plus applicable franchise taxes, penalties and interest.  See 805 Ill. Comp. Stat.  5/15.10 (1983).  Articles of Amendment are not required for changing the number of issued shares.  See Cook, supra note 11, at 39.

[30] See Guide, supra note 10, at 5.

[31] See Cook, supra note 11, at 40.

[32] Guide, supra note 10, at 7; see also 5/6.25–6.30.

[33] See Guide, supra note 10, at 7.

[34] See Cook, supra note 11, at 40.  The paid-in capital of a corporation “must be at least the amount of issued stock multiplied by the par value.  It represents the amount of capital contributed for the initial shares.  This being said, it is common practice to list paid-in capital as $1,000, regardless of the real circumstances.”  Id.  Par value represents the “least amount of money for which a share may be sold, if shares are for sale.”  Id. at 39.  It is usually listed as zero (no par value), one cent or one dollar.  Par value does not represent the value of the stock or the corporation, and it is not nearly as important as it once was (except for publicly traded companies).  See id. at 39–40.  The Secretary of State has deleted par value from its Articles of Incorporation form (Form BCA 2.10), and par value is not discussed in its Guide.

[35] 5/6.30.

[36] See id.

[37] See Guide, supra note 10, at 4.

[38] Id.

[39] Id.

[40] See id.

[41] Id. at 5 (emphasis in original).

[42] Id.

[43] See id.; see also 805 Ill. Comp. Stat.  5/6.05 (1983).

[44] See Cook, supra note 11, at 40.

[45] See 5/2.05; see also Nusbaum & Whiteley, supra note 12, § 3:10.

[46] See Cook, supra note 11, at 40.  If a corporation “acts as an incorporator, the Articles must show its exact name and state of incorporation.  The Articles of Incorporation must be signed by a duly authorized officer of the corporation acting as the incorporator.  Print or type the officer’s name and title under his or her signature.”  Guide, supra note 10, at 9.

[47] See Guide, supra note 10, at 7.

[48] See Cook, supra note 11, at 40.

[49] See Guide, supra note 10, at 8­–9; see also Nusbaum & Whiteley, supra note 12, § 3:32.  By-laws are discussed in greater detail in the next sub-section.

[50] See Cook, supra note 11, at 40; see also supra note 26.

[51] Nusbaum & Whiteley, supra note 12, § 3:31.

[52] Id., § 3:51.

[53] See Guide, supra note 10, at 9.  The only forms of payment accepted are certified checks, cashier’s checks, money orders, Illinois attorney’s checks or certified public accountant’s check.  See id.

[54] Id. at 10.

[55] See 805 Ill. Comp. Stat.  5/15.10 (1983); see also Guide, supra note 10, at 10.

[56] Guide, supra note 10, at 10.

[57] The Secretary of State provides an example fee schedule in its Guide.  If the amount of consideration to be received is not listed, the fees can be computed by the Secretary of State by calling one of the phone numbers listed above the fee schedule.  Id.

[58] See 5/1.10(e)(3)(iv); Guide, supra note 10, at 10.

[59] See Fee Schedule, Cook County Recorder of Deeds, http://www.ccrd.info (last visited Dec. 20, 2005).

[60] See Guide, supra note 10, at 11.

[61] See Basic Structures, Business.gov, http://www.business.gov/phases/launching/choose_structure/basic_structures.html (last visited Dec. 21, 2005); see also 5/2.20.  Professor Gerald Brown of Chicago-Kent College of Law emphasized a few additional considerations that should be addressed early in the life of a corporation in his Business Entity Formation class.  The shareholders should adopt a fiscal year, approve any bank resolutions, leases, employment agreements and loan agreements, and they should draft a shareholders buy-sell agreement.  A shareholders buy-sell agreement governs the relationship between the shareholders and each other as well as the relationship between the shareholders and the corporation.  Unfortunately, the corporate formalities “are usually quite cumbersome for the small business with few owners.”  Langstraat, supra note 8, at 12.

[62] See Bylaws, Smart Agreements.com, http://www.smartagreements.com/cor/lp46.htm (last visited Dec. 21, 2005); see also 5/2.25.

[63] See 5/2.20.

[64] See Bylaws, Smart Agreements.com, http://www.smartagreements.com/cor/lp46.htm (last visited Dec. 21, 2005).

[65] Professor Gerald Brown of Chicago-Kent College of Law emphasized these points in his Business Entity Formation class during his by-laws discussion.

[66] See Jeanne Philbin & Theresa E. Whiteley, in 2005 Ill. Jurisprudence: Bus. Relationships, supra note 9, § 6:4.

[67] Id.  Nevertheless, the court in People v. V & M Industries, Inc. seemed mostly concerned with the lack of stock certificates on file.  It did not discuss any other factor in its paragraph about failure to issue stock.  People v. V & M Indus., Inc., 700 N.E.2d 746, 751 (5th Dist. 1998).

[68] See Guide, supra note 10, at 7.

[69] See Langstraat, supra note 8, at 12.

[70] See Epstein, supra note 8, at 203.

[71] See 805 Ill. Comp. Stat.  5/8.50 (1983); Epstein, supra note 8, at 182.

[72] See Epstein, supra note 8, at 199; Langstraat, supra note 8, at 12.

[73] See 5/7.05.

[74] See 5/7.75; Baughan & Whiteley, supra note 14, § 4:24; Langstraat, supra note 8, at 12.

[75] See Baughan & Whiteley, supra note 14, § 4:44.  The form for filing an annual report is located on the Illinois Secretary of State’s website.  All officers and directors must be named, and the fee for filing an annual report is seventy five dollars ($75.00) plus applicable franchise taxes, penalties and interest.  See State of Illinois Domestic Corporation Annual Report, http://www.cyberdriveillinois.com/departments/business_services/publications_and_forms/bca.html.

[76] See Baughan & Whiteley, supra note 14, § 4:47.

[77] Guide, supra note 10, at 16.

[78] Id.

[79] See id. at 16–18; Business License Section, City Clerk of Chicago, http://chicityclerk.com/licenses/business.html.  Any business owned in Chicago must be licensed.  There are over one hundred ninety five (195) different types of licenses available, and fees range from two dollars ($2.00) to four thousand dollars ($4,000.00).  See Business License Section, City Clerk of Chicago, http://chicityclerk.com/licenses/business.html.  The City of Chicago’s Small Business Assistance Center has an online component called the Small Business Wizard that is designed to help small businesses in Chicago.  See Small Business Assistance Center, City of Chicago, http://egov.cityofchicago.org/city/csbac/home.do.

[80] Guide, supra note 10, at 16.

[81] See supra note 22.

[82] Davis v. Haas & Haas Inc., 694 N.E.2d 588, 590 (3rd Dist. 1998).

[83] See Sinquefield v. Sears Roebuck & Co., 568 N.E.2d 325, 326 (1st Dist. 1991).

[84] See Davis, 694 N.E.2d at 590; Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328, 331 (3rd Dist. 1996); Sinquefield, 568 N.E.2d at 326.

[85] See People v. V & M Indus., Inc., 700 N.E.2d 746, 750 (5th Dist. 1998) (discussing liability in terms of corporate officers); Falcon Assocs., Inc. v. Cox, 699 N.E.2d 203, 211 (5th Dist. 1998) (discussing liability in terms of corporate officers); Washington Courte Condo., Ass’n-Four v. Washington-Golf Corp., 643 N.E.2d 199, 217 (1st Dist. 1994) (discussing liability in terms of corporate officers).

[86] See Fentress v. Triple Mining, Inc., 635 N.E.2d 102, 107 (4th Dist. 1994) (quoting People ex rel. Scott v. Pintozzi, 277 N.E.2d 844, 851–52 (1971)) (discussing liability in terms of directors and officers).

[87] See Jacobson, 664 N.E.2d at 331 (discussing liability in terms of shareholders); see also Necheles & Whiteley, supra note 9, § 1:25 (discussing liability in terms of officers, directors and shareholders).

[88] See V & M Indus., Inc., 700 N.E.2d at 750; Falcon Assocs., Inc., 699 N.E.2d at 211; Washington-Golf Corp., 643 N.E.2d at 217.

[89] See Jacobson, 664 N.E.2d at 331.

[90] See Necheles & Whiteley, supra note 9, § 1:21.

[91] See Jacobson, 664 N.E.2d at 331.

[92] See Necheles & Whiteley, supra note 9, § 1:22.

[93] See Sinquefield v. Sears Roebuck & Co., 568 N.E.2d 325, 327 (1st Dist. 1991) (“The accepted rule is that the corporate entity will only be pierced to protect the interests of third parties; the separate corporate entity will not be disregarded to allow the corporation to escape its obligations.”).

[94] See Necheles & Whiteley, supra note 9, § 1:23.IL Juris.

[95] Jacobson, 664 N.E.2d at 331; see also People v. V & M Indus., Inc., 700 N.E.2d 746, 750 (5th Dist. 1998); Falcon Assocs., Inc. v. Cox, 699 N.E.2d 203, 211 (5th Dist. 1998); Washington Courte Condo., Ass’n-Four v. Washington-Golf Corp., 643 N.E.2d 199, 217 (1st Dist. 1994).

[96] Jacobson, 664 N.E.2d at 331; see also V & M Indus., Inc., 700 N.E.2d at 750; Falcon Assocs., Inc., 699 N.E.2d at 211; Washington-Golf Corp., 643 N.E.2d at 217.

[97] Necheles & Whiteley, supra note 9, § 1:28.  For example, a corporate entity “will be disregarded where it would otherwise present an obstacle to the protection of private rights or where the corporation is merely the alter ego or business conduit of the governing or dominant personality.”  Washington-Golf Corp., 643 N.E.2d at 217.

[98] See Necheles & Whiteley, supra note 9, § 1:28.

[99] See E. Seafood Co. v. Barone, 625 N.E.2d 664, 670 (1st Dist. 1993) (quoting In re Rehab. of Centaur Ins. Co., 606 N.E.2d 291, 296 (1992)).

[100] See Fentress v. Triple Mining, Inc., 635 N.E.2d 102, 107 (4th Dist. 1994).

[101] See V & M Indus., Inc., 700 N.E.2d at 751; Falcon Assocs., Inc., 699 N.E.2d at 211; Jacobson, 664 N.E.2d at 331.

[102] See V & M Indus., Inc., 700 N.E.2d at 751; Falcon Assocs., Inc., 699 N.E.2d at 211.

[103] See Jacobson, 664 N.E.2d at 332.

[104] Necheles & Whiteley, supra note 9, § 1:30; see also Fiumetto v. Garrett Enters., Inc., 749 N.E.2d 992, 1005 (2nd Dist. 2001).

[105] Fiumetto, 749 N.E.2d at 1005.

[106] Necheles & Whiteley, supra note 9, § 1:30.

[107] See, e.g., V & M Indus., Inc., 700 N.E.2d at 751; Jacobson, 664 N.E.2d at 332.

[108] Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328 (3rd Dist. 1996).

[109] Id. at 332.

[110] Fiumetto v. Garrett Enters., Inc., 749 N.E.2d 992 (2nd Dist. 2001).

[111] People v. V & M Indus., Inc., 700 N.E.2d 746, 750 (5th Dist. 1998).

[112] Fiumetto, 749 N.E.2d at 1006.  The plaintiff, who was fired from the corporation, was making over eighteen dollars ($18.00) at the time of her discharge.  The court inferred that the corporation’s payroll was a significant expense, especially since there were five employees.  Id.  Since the defendant shareholder bought the corporation with five employees working there, the court determined that a reasonable trier of fact could conclude that “the initial $1,000 capital contribution was wholly insufficient for the corporation to do business.”  Id.

[113] V & M Indus., Inc., 700 N.E.2d at 751.

[114] Fiumetto, 749 N.E.2d at 1005.  The policy for this determination is also stated in Gallagher v. Reconco Builders, Inc., 415 NE2d 560 (1st Dist. 1980): “If a corporation is organized and carries on business without substantial capital in such a way that the corporation is likely to have no sufficient assets available to meet its debts, it is inequitable that shareholders should set up such a flimsy organization to escape personal liability. *** It is coming to be recognized as the policy of the law that shareholders should in good faith put at the risk of the business unencumbered capital reasonably adequate for its prospective liabilities. . . .”  Gallagher, 415 N.E.2d at 564.

[115] See Fentress v. Triple Mining, Inc., 635 N.E.2d 102, 107 (4th Dist. 1994).  Many cases list the sub-factors above as factors distinct from and equal to the failure to observe corporate formalities.  See, e.g., V & M Indus., Inc., 700 N.E.2d at 751–52; Falcon Assocs., Inc. v. Cox, 699 N.E.2d 203, 211 (5th Dist. 1998); Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328, 331–32 (3rd Dist. 1996); see also Necheles & Whiteley, supra note 9, § 1:29.  Nevertheless, they seem to be examples of when corporate formalities are not observed, as stated in Fentress v. Triple Mining, Inc., 635 N.E.2d 102 (4th Dist. 1994), so that is how they are being presented.

[116] See Necheles & Whiteley, supra note 9, § 1:29.

[117] See supra note 115 and accompanying text.

[118] Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328 (3rd Dist. 1996).

[119] Id. at 331–32.

[120] People v. V & M Indus., Inc., 700 N.E.2d 746 (5th Dist. 1998).

[121] Falcon Assocs., Inc. v. Cox, 699 N.E.2d 203, 211 (5th Dist. 1998).

[122] V & M Indus., Inc., 700 N.E.2d at 751–52.

[123] Falcon Assocs., Inc., 699 N.E.2d at 211.

[124] See Fentress v. Triple Mining, Inc., 635 N.E.2d 102, 107 (4th Dist. 1994).

[125] V & M Indus., Inc., 700 N.E.2d at 752.

[126] See id.; see also Falcon Assocs., Inc., 699 N.E.2d at 211; Jacobson v. Buffalo Rock Shooters Supply, Inc., 664 N.E.2d 328, 331 (3rd Dist. 1996).

[127] Necheles & Whiteley, supra note 9, § 1:27.

[128] Washington Courte Condo., Ass’n-Four v. Washington-Golf Corp., 643 N.E.2d 199, 216 (1st Dist. 1994).

[129] Necheles & Whiteley, supra note 9, § 1:34.