Use the following fact pattern and answer the questions:

COFFEE, TEA & MORE - Your new business venture:

You decide to open up a coffee shop at the local mall. You name your business "Coffee, Tea & More" and file the "doing business as" certificate with the State to legally operate under this name. You rent space in the local mall, buy the equipment, furniture, and supplies. You create a marketing plan. You fill out the paper work to get a tax identification number for your business. You obtain liability insurance, Workers Compensation insurance, and make sure your business is compliant with all applicable laws and regulations. You hire 3 full time employees and 4 part time employees. After a few months of hard work getting everything organized and ready to serve customers, you finally open for business. Your first day is a huge success. The local paper comes out and writes a story on you and your business. The review in the paper is great, and during the next week sales increase every day.

At the start of the second week of business, however, a mishap happens. Specifically, one of your employees spills a full pot of coffee. The hot coffee splashes and burns the customer on her face and arms, and the employee who spilled the coffee is also injured because he slipped during the accident and fell to the ground hurting his back and breaking a finger. Both the customer and employee go to the hospital to receive treatment for their injuries. After a few months, both the customer and employee fully recover.

Answer the following questions based on the fact pattern described above. You are NOT required to use the IRAC system - but please make sure you specifically answer the question asked, and explain your answer.

Question

1. What type of business organization/entity is "Coffee, Tea & More"?

2. If the customer that is injured decides to file a lawsuit and sue the business, Coffee, Tea, & More, because of the mishap to recover damages for her injuries, are you as the owner of the business personally liable for damages if the customer wins the lawsuit? Explain your answer.

3. Assume that instead of you owning 100% of the business, Coffee, Tea & More, it is owned by you and your best friend (you own 75% and your friend owns 25%). In this case, what type of business organization/entity is Coffee, Tea & More?

4. Based on your answer in Question C above, does your answer to Question B regarding your potential for personal liability change? Explain your answer.

6. Is there anything you could have done differently to help protect yourself from being sued personally?