Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not personally: The Biscuit Bakery by Daisy Meadows. Unfortunately, she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs. Meadows told him that he could only sue the business because all the contracts were in the business's name. Will Mrs. Meadows lose her dough?

Question

Arjun Crosby

Business

30 March, 14:23

Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not personally: The Biscuit Bakery by Daisy Meadows. Unfortunately, she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs. Meadows told him that he could only sue the business because all the contracts were in the business's name. Will Mrs. Meadows lose her dough?

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Answers (1)

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Susie Q · Answer 1

Yes, because the business is sole proprietorship business

Explanation:

Sole proprietorship business and the business owner are one and the same in law parlance, hence suing the business is automatically suing the owner of the business.

Such businesses do not have a limited liability status where the debt of the business is limited to the amount invested in the assets of the business, any debts owed by Biscuit Bakery is a personal debt of Mrs Meadows and as a result she lose her dough.