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Scenario:
Jeb and Josh are lifelong friends. Jeb is a wealthy wind-power tycoon, and Josh is an active outdoor enthusiast. They have decided to open a sporting goods store, Arcadia Sports, using Jeb’s considerable financial resources and Josh’s extensive knowledge of all things outdoors. In addition to selling sporting goods, the store will provide whitewater rafting, rock-climbing, and camping excursions. Jeb will not participate in the day-to-day operations of the store or in the excursions. Both Jeb and Josh have agreed to split the profits down the middle. On the first whitewater rafting excursion, a customer named Jane falls off the raft and suffers a severe concussion and permanent damage to her spine. Meanwhile, Jeb’s wind farms are shut down by government regulators, and he goes bankrupt, leaving extensive personal creditors looking to collect.
A. Recommend a specific business entity for Arcadia Sports and include your reasoning.
B. Based on the characteristics of each type of business entity, determine the type under which Jeb and Josh would be personally liable to Jane for damages.
C. Based on each type of business entity, analyze the ability of Jeb’s personal creditors to seize the assets and/or profits of Arcadia Sports.
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