A QUESTION OF ETHICS: Limited Liability Companies. Blushing Brides, LLC, a publisher of wedding…

A QUESTION OF ETHICS: Limited Liability Companies. Blushing
Brides, LLC, a publisher of wedding planning magazines in Columbus, Ohio,
opened an account with Gray Printing Co. in July 2000. On behalf of Blushing
Brides, Louis Zacks, the fi rms member-manager, signed a credit agreement that
identifi ed the fi rm as the purchaser and required payment within thirty
days. Despite the agreement, Blushing Brides typically took up to six months to
pay the full amount for itsorders. Gray printed and shipped 10,000 copies of a
fall/winter 2001 issue for Blushing Brides but had not been paid

A QUESTION OF ETHICS: Limited Liability Companies. Blushing
Brides, LLC, a publisher of wedding planning magazines in Columbus, Ohio,
opened an account with Gray Printing Co. in July 2000. On behalf of Blushing
Brides, Louis Zacks, the fi rms member-manager, signed a credit agreement that
identifi ed the fi rm as the purchaser and required payment within thirty
days. Despite the agreement, Blushing Brides typically took up to six months to
pay the full amount for itsorders. Gray printed and shipped 10,000 copies of a
fall/winter 2001 issue for Blushing Brides but had not been paid when the fi rm
ordered 15,000 copies of a spring/summer 2002 issue. Gray refused to print the
new order without an assurance of payment. On May 22, Zacks signed a promissory
note payable to Gray within thirty days for $14,778, plus interest at 6 percent
per year. Gray printed the new order but by October had been paid only $7,500.
Gray fi led a suit in an Ohio state court against Blushing Brides and Zacks to
collect the balance. [Gray Printing Co. v. Blushing Brides, LLC, __ N.E.2d __
(Ohio App. 10 Dist. 2006)]

(a) Under what circumstances is a member of an LLC liable
for the fi rms debts? In this case, is Zacks personally liable under the
credit agreement for the unpaid amount on Blushing Brides account? Did Zackss
promissory note affect the parties liability on the account? Explain. (b)
Should a member of an LLC assume an ethical responsibility to meet the
obligations of the fi rm? Discuss. (c) Gray shipped only 10,000 copies of the
spring/summer 2002 issue of Blushing Brides magazine, waiting for the
publisher to identify a destination for the other 5,000 copies. The magazine had
a retail price of $4.50 per copy. Did Gray have a legal or ethical duty to
mitigate the damages by attempting to sell or otherwise distribute these
copies itself? Why or why not?