A Wedding Party and Sole Proprietorship Catering: Liability Explained

Who would be liable if a sole proprietorship, mistaken as a corporation, poisons a cake at a wedding party?

a) The board of directors of the corporation

b) The employee who handled the job

c) The partner of the corporation

d) The sole proprietorship itself

Answer:

The employee who handled the job

The statement is false. Sole proprietorships and corporations are different types of businesses. In a sole proprietorship, an individual accepts all business liabilities.

Explanation:

That statement is false. First, a sole proprietorship isn't a corporation, but rather a business owned and operated by a single individual, the sole proprietor. Meanwhile, in a corporation, a group of individuals (a board of directors) makes decisions and shares liability. The person who performed the work (such as the catering job mentioned), is an employee, not a partner, and the responsibility would fall on them or the owner, not any 'board of directors' because a sole proprietorship does not have one.