First Principles of Business Law
Business organisations in Australia

2. Sole traders

Question 5. Who is liable for debts and other legal obligations incurred by a sole trader in the course of their business?

 

 

 

Read the statements below and select the best one.

(a) Because no distinction is drawn in law between a sole trader and their business, the sole trader is personally liable for business debts. This means that all their individually owned assets are available if necessary to pay business creditors.

(b) Even though no distinction is drawn in law between a sole trader and their business, a sole trader's personal assets are not available to business creditors, even if the income generated by the business is insufficient to pay the creditors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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