What are the elements required for the mere instrumentality test in piercing the corporate veil?

The mere instrumentality test is a legal standard used to determine whether a court should disregard the separate legal entity of a corporation and hold its shareholders personally liable for the corporation's actions or debts. This test generally involves three crucial elements, which align with the chosen answer.

The first element, control, requires showing that one entity has such dominance over the corporation that the corporation is effectively a puppet for the controlling entity. This often involves demonstrating that the corporation is not operating independently but is being manipulated by its shareholders or parent company.

The second element, fraud, pertains to the intent behind the corporate structure. Courts look for evidence that the corporation was formed or used for fraudulent purposes, such as to evade existing obligations or to conceal wrongdoing. Demonstrating that the entity engaged in fraudulent behavior helps establish the need to pierce the corporate veil and protect innocent parties from being harmed by the misuse of corporate form.

The final element, injury causation, requires showing that the actions or fraudulent control exerted over the corporation resulted in harm to a third party. This means there must be a direct link between the control/fraud and the injury suffered by the plaintiff.

Understanding these three elements—control, fraud, and injury causation—provides a solid foundation for analyzing cases