In the real world it is not Godfathers who are the problem, it’s brothers-in-law (BIL). When they are not trying to borrow your money, they are involving you in cockamamy business schemes.
For instance, your BIL asks you to take orders in your area for some sort of product. You collect money from various customers and send it to your BIL. However, your BIL has miscalculated, been cheated or in any event has done something stupid, so the product does not arrive.
The customers are angry with you and are owed thousands of dollars. Your BIL’s solution is to ask you for a loan. You refuse, your wife stops talking to you and your BIL goes bust.
With your BIL out of the picture, the customers want you to pay as they made their contract with you. You say that you were only taking orders (a variation on the Nuremberg defence).
Are you liable? Well, it depends whether or not you are a “Disclosed Agent”.
Companies cannot be everywhere, so independent “Agents” are retained by “Principals” and if a customer deals with the Agent it is the same as dealing with the Principal.
The Agent who discloses to the customer that he is an Agent and acts within the authority given by the Principal has no personal liability. Even if the customers do not know the name of the Principal, provided they know you are acting as an agent, you are not liable.
Of course, the customers may deny knowing you are the Agent in order to get their money back, so you will need to prove it.
The best proof is by having a contract/order form which you sign “on account of” “as agent” or “for and on behalf of”.
However, if the product is lousy and breaches regulations you can be prosecuted, Agent or not.
The best way to avoid BILs and many of life’s other challenges is to stay single.
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