Liam and Ava run competing online stores selling construction equipment. Both businesses generate gross revenues of approximately $100,000 per year. Liam is the majority member of "Machine Builders LLC" (the other members are RosieLiams sisterand FrankieLiams cousin). Ava has incorporated her business, Tractor Hut, Inc. She is the majority shareholder, sits on the board of directors, and is the president of Tractor Hut, Inc. Due to the disruption in the supply chain caused by the pandemic, their sales have dropped and both businesses are on the lifeline.

Based solely on the facts given above, if both Machine Builders LLC and Tractor Hut, Inc. are unable to pay creditors when the debts become due and payable , will Liam and/or Ava be personally liable to those creditors?

	A.	Only Liam will be personally liable because, as the majority member of the LLC, he was clearly acting in his own name thus creating personal liability for himself.
	B.	They both will be personally liable because, in substance, the obligations of both Liam and Ava were identical and the liabilities were incurred for personal benefit.
	C.	Neither will be personally liable because the disruption of the supply chain is a force majeure event that limits liability for losses caused by acts of God.
	D.	Neither will be personally liable, as these were obligations incurred in the course of business and the businesses become insolvent.

1. Thinking about Machine Builders LLC, which of the following statements is the most accurate?

   	A.	A member of an LLC is like the general partner of an LP: the member is personally liable if she/he manages the business. Therefore, Liam can be personally liable to Machine Builders LLCs creditors.
   	B.	As members of an LLC, the Liam, Rosie and Frankie can opt for Machine Builders LLC to be taxed as a corporation.
   	C.	Like in an LLP, members can be liable for the torts committed by the members that they are supervising. For instance, Liam can be personally liable for his cousins torts.
   	D.	As members of an LLC, the Liam, Rosie and Frankie enjoy full limited liability without exceptions.

Now assume that Machine Builders is an LLP with three partners: Liam, Rosie and Frankie. Which of the following options better represents the liability of Machine Builders partners?

	A.	A partner in an LLP enjoys full limited liability without exceptions.
	B.	A partner in an LLP is like a general partner in an LP, therefore the partner is personally liable if she/he manages the business.
	C.	A partner in an LLP enjoys the benefit of limited liability other than for his own wrongful acts and for those of the individuals she/he is supervising.
	D.	A partner in an LLP is personally liable to the extent that is stated in the LLP Agreement