Business Law for Accountants Essay

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Business Law and Christian Ethics

The terms limited liability and liability protection are often used interchangeably to describe business arrangements that limit the amount of a firm's liability, generally to the amount of assets held by the firm. In other words, those types of business arrangements protect an individual's personal assets from judgment should the person be sued in a professional capacity. One frequent example of a limited liability business arrangement is the limited liability partnership, which essentially "protects each partner from debts against the partnership arising from professional malpractice lawsuits against another partner" (Pakroo, 2013). In those instances, the liability limitation is not limited the individual assets of the partners, but also extends to property owned by the partnership.

Whether or not limited liability or liability protection aligns with a Christian worldview is a tricky moral question because it presupposes that all people who enter into those types of business arrangments do so for the same motives. For example, in a limited liability partnership arrangement, ideally each partner would have sufficient malpractice or other insurance coverage to provide adequate relief to a claimant in a lawsuit.

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Therefore, entering into a limited liability partnership arrangement would not be a means of hiding assets from wronged victims, but simply a way of protecting assets in the case of a lawsuit. However, if a business owner is aware that a partner has a propensity for committing wrongs and is not adequately insured to cover those wrongs, then entering into a partnership agreement with that person that protects partnership assets from judgment would be immoral. In other words, it is not the arrangement, itself, that is immoral, but the intent of the arrangement. Therefore, Fred needs to consider whether limiting liability for his business would be likely to result in harm to his customers, and, if so, if he could remedy that potential for harm without exposing his personal assets to danger. For example, Fred could double his planned insurance coverage, which would ensure that any injured parties had adequate compensation, while still protecting his family's personal assets.….....

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