LAW 122 Lecture Notes - Lecture 1: Sole Proprietorship, Limited Liability, General Partnership

• School: Ryerson University
• Department: Law and Business
• Course: LAW 122
• Professor: Nick Iannazzo

Document Summary

Basic forms of business organizations: sole proprietorship, general partnership. In each type of organization, the law strikes a different balance between the interests of the categories of people who have a stake in the operation of the business. Business organizations law addresses the risks that business owners face as a result of actions by managers. The sole proprietorship comes into existence when a persons starts to carry on business on their own, without adopting any other form of business organization, such as corporation. You remain sole owner (can employ people), but you are responsible for its obligations. The main disadvantage of a sole proprietorship is unlimited personal liability. Unlimited person liability: means that third parties (cid:373)a(cid:455) take all the sole proprietor"s perso(cid:374)al assets (cid:374)ot just the (cid:271)usi(cid:374)ess"s to satisf(cid:455) the (cid:271)usi(cid:374)ess o(cid:271)ligatio(cid:374)s. Incorporation is often a less expensive and more effective strategy.