Chapter 5
Partnerships
252
Critical Thinking
CT-1 (
1
2
)
Sometimes a person simply wants to invest in a business as an owner, rather than actively
participate in the business. This is simple when the business is organized as a corporation. By
definition, a proprietorship has only one owner. If the investor participates in a partnership,
the investor assumes unlimited liability for the partnership.
Required
a) Is it wise to invest in a partnership if one does not want to actively participate in the
partnership?
b) Are there any steps an investor could take to limit his liability? Discuss.
