(a) That's right. One of the major business risks involved in operating as a sole trader arises out of the fact that no legal distinction is drawn between the owner of the business and the business itself. This means that, whatever debts and other legal liabilities are incurred in the course of operating the business are enforceable directly against the sole trader.

Thus, for example, if Edward were to borrow money from a bank, he would be personally liable to repay the loan. It is also likely that the bank would require him to secure any loan by mortgaging his house or other assets.

Similarly, any person who supplies goods or services to Edward for his plumbing business can enforce their right to payment against Edward himself, even if they originally dealt with him under his business name. And, if Edward or his employees acting in the course of the business cause wrongful harm to another person, it is Edward who is liable in tort to pay compensation.

In short, if Edward's plumbing business fails and Edward cannot discharge his liabilities, he runs the risk of being made personally bankrupt.