BUS670 Legal Environment

Each and every day, businesses are forming and dissolving.  During their lifetime, firms all kinds enter into legally-binding contracts such as leases, service and purchase orders, etc.  Many of those contracts are intentionally or inadvertently broken, and as a result businesses are quite often sued for breach of contract.  Depending on the type of business entity, the owners’ liability exposure can be financially devastating.  Some business entities, such as corporations, limited partnerships, and limited liability companies, limit the owners’ liability while others – sole proprietorships and general partnerships – put the owners’ personal assets in jeopardy.  Although protected business entities are subject to more stringent rules and regulations, perhaps these additional costs are justified in the name of limiting the owners’ personal liability for lawsuits in which the firm may become involved.  Choosing the most advantageous business entity requires carefully weighing the pros and cons of each type of entity.