LAW 122 Lecture Notes - Lecture 5: Limited Liability Partnership, Sole Proprietorship, Limited Partnership

• School: Ryerson University
• Department: Law and Business
• Course: LAW 122
• Professor: Daniele Bertolini

Document Summary

Three types of business organizations: sole proprietorships, partnerships. Focus: sources of liability: the proprietor is exclusively responsible for: Performing all contracts entered into in the course of the business; All torts committed personally in connection with the business: the proprietor is also vicariously liable for all torts committed by employees in the course of their employment. As a sole proprietor, you would be personally responsible for all the work and to each employee. Advantages and disadvantages: advantages- simple to start, simple to administer, disadvantages- unlimited personal liability, can only raise money by personal borrowing, and as business grows; these problems continue to grow. You created a partnership even if you never made any profit. A huge risk management issue: a person can become part of a partnership without necessarily realizing it! Profit = [gross revenues] less [costs: the requirement on profit sharing is related to the requirement that partners must carry on business together.