3
QuizMultiple Choice

Business Structures

Question 3 • 2414VA Career Explorations Sem A

If the owner of a sole proprietorship is sued by a customer who slipped and fell in her store, _____.

Answer
A
the sole proprietor is liable only for a small fraction of any damages
B
the sole proprietor is not liable under any circumstance
C
the sole proprietor is personally liable for damages the injured woman is awarded by the courts
D
the sole proprietor is covered by a Small Business Administration insurance policy

Explanation

A sole proprietorship is not legally separate from its owner, so the owner has unlimited personal liability for the business’s obligations. If the customer wins damages in court, the owner is personally liable for paying them. Therefore, the correct choice is “the sole proprietor is personally liable for damages the injured woman is awarded by the courts.”

AI-written and checked against the verified answer.

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