Sam opened the restaurant of her dreams two years ago. It is a sole proprietorship. The business lost a lawsuit for $250,000 due to a customer getting sick. This legal liability is not covered by Sam's insurance and the restaurant has to close down. What is Sam's personal liability for this lawsuit?

Question

Quizplus · Accepted Answer

As a sole proprietor, Sam is personally responsible for the debts and liabilities of the business. Therefore, she is personally liable for the lawsuit settlement of $250,000, which is not covered by insurance. This means that her personal assets may be seized to cover the debt.

Sam Opened the Restaurant of Her Dreams Two Years Ago