Week 4 — Who Is on the Hook? Two Siblings Choose a Legal Form

Assignment 4 of the term — compare two legal forms for a small business, compute what each owner could lose, and explain the choice to someone new to business.

This adaptive assignment uses a coaching dialogue to help you turn a first attempt into a clear, checkable analysis. You remain the author. The coach asks questions, checks the work you show, and waits for you to revise before it produces the required report. This week's lecture tutorial, quiz, discussion, and Business Case Workshop practise the same ideas from other angles; this assignment is where you put unlimited liability, limited liability, and the forms of ownership together on one small case.

The task

The case is illustrative, built for this course and not real data. Two siblings plan a home-cleaning service that sends a two-person crew to apartments and small offices in a van. Like the coffee cart this course follows, the service is a business: it aims to take in more money than it spends.

The siblings' money and debt, line by line:

• Sibling A's savings put into the business: 6,000 dollars.
• Sibling B's savings put into the business: 4,000 dollars.
• A loan for the van and cleaning equipment: 14,000 dollars.

They are choosing between two forms: a general partnership, which needs no filing, and a two-member LLC, created under state law. For both problems, assume the worst case: the business fails and nothing from it goes toward repaying the loan.

Work these two problems, showing every addition:

1. As a general partnership, the lender collects the whole loan from Sibling B. How many dollars is Sibling B's worst-case personal exposure?
2. As a general partnership, how many dollars could the two siblings together lose personally in the worst case?

Beside each answer, add a brief interpretation:

• Problem 1: explain, using the term unlimited liability, why Sibling B answers personally for the whole loan and not only half of it, and name two things the siblings' partnership agreement should settle, including how they would settle up with each other after the lender collects.
• Problem 2: compute what the two siblings together could lose as a two-member LLC and say why the loan drops out, explain why limited liability does not mean the siblings cannot lose money, and say whether buying a cleaning franchise instead would make the siblings owners of the brand, with a reason.

Explain it to a non-expert

The siblings' parent asks you, "If they form an LLC, does that mean they can't lose anything?" Write a 3–5 sentence message that explains what each form puts at risk, what an LLC protects and what it does not, and one limit, including that this case is illustrative and that a real family would take the question to a lawyer or the state's business office. Explain any technical term in everyday words. More than one good answer is possible, and the message gives no legal, tax, or financial advice.

For a different, ungraded example, imagine a one-person tutoring service that borrowed for a laptop. Model answer: "Right now the tutor runs the business alone without filing anything, so if it failed, the lender could ask the tutor to repay the laptop loan from personal savings. Forming an LLC would make the business its own legal person, so that loan would belong to the business. The tutor could still lose the money already put in; the LLC caps the loss, it doesn't erase it. This is a made-up example, and a real tutor would check the details with a lawyer or the state."

Use that pattern for the cleaning service, with your own wording and evidence.

Part 1 — Student instructions

1. Draft both answers, both interpretations, and your message to the parent before opening a chatbot.
2. Open any course-approved chatbot. Copy the entire Coach Prompt box, including its first and last marker lines, and paste it as one message. The coach will ask for your draft and then work one question at a time.
3. Answer in your own words. Show each addition when asked. Use the coach's feedback to revise at least one number or explanation, even if your first attempt was correct.
4. Continue until the prompt's exit condition is met.
5. Save the chat's share link and copy the final report exactly as the coach gives it.

The chatbot is a coach, not a ghostwriter. It must draw out your reasoning rather than write the work for you.

Coach Prompt

COPY EVERYTHING BELOW THIS LINE
ROLE: You are a careful learning coach for an introduction-to-business course. Draw out and challenge MY thinking about the forms of business ownership, unlimited and limited liability, and an owner's worst-case personal exposure. Do not write my assignment for me, do not invent work I did not show, never invent a statistic, a market size, a study, a quotation, or a fact about a real company, and never give me legal, tax, or investment advice or tell me which form to file.

ASSIGNMENT: Work through these two problems in order, one at a time. Do not invent, replace, or reorder a problem. The case: an illustrative home-cleaning service run by two siblings, built for my course and not real data. Assume the worst case: the business fails and nothing from it goes toward repaying the loan. In this course, a general partnership is a business owned by two or more general partners who share its management, its profits, and unlimited personal liability for its debts; unlimited liability is an owner's duty to pay the business's debts out of personal assets, with no cap; a limited liability company is a business structure created under state law that gives its owners limited liability without being a corporation; limited liability caps an owner's loss at what the owner put into the business; and personal exposure is the most an owner could lose personally if a business fails.
PROBLEM P1: In the illustrative home-cleaning service, Sibling B put 4,000 dollars of savings into the business and the business took a 14,000-dollar loan for a van and equipment; as a general partnership that fails, the lender collects the whole loan from Sibling B. How many dollars is Sibling B's worst-case personal exposure?
PROBLEM P2: In the illustrative home-cleaning service, Sibling A put in 6,000 dollars of savings, Sibling B put in 4,000 dollars of savings, and the business took a 14,000-dollar loan for a van and equipment. As a general partnership that fails, how many dollars could the two siblings together lose personally in the worst case?
After the two answers, I must interpret each one: for P1, explain, using the term unlimited liability, why Sibling B answers personally for the whole loan and not only half of it, and name two things the partnership agreement should settle, including how the siblings settle up with each other; for P2, compute what the two siblings together could lose as a two-member LLC and say why the loan drops out, explain why limited liability does not mean the siblings cannot lose money, and say whether buying a cleaning franchise would make them owners of the brand, with a reason. I must then write a 3-5 sentence message to the siblings' parent explaining what each form puts at risk, what an LLC protects and what it does not, and one limit, including that the case is illustrative and that a real family would ask a lawyer or the state's business office. I must explain technical terms in everyday words.

SCORING CRITERIA: Score only evidence I supply: correct numbers (20 points), business reasoning (48 points), clarity for a non-expert reader (20 points), and showing the work so it can be checked (12 points). For each of P1 and P2, give 2, 1, or 0 evidence units per criterion; one unit is worth 5 number points, 12 reasoning points, 5 clarity points, or 3 showing-the-work points. Sum both problems within each criterion. Count my final message only with P2, not again with P1.
NUMBER UNITS: A correct amount = 2; an amount that is off because of one arithmetic slip or one missed line, with the work shown = 1; a missing amount or an amount with no work behind it = 0.
REASONING UNITS: For P1, BOTH an explanation of unlimited liability showing why the loan is not capped at half AND two partnership-agreement topics including how the siblings settle up = 2; exactly one of those parts = 1; neither = 0. For P2, BOTH the two-member LLC amount with the loan explained as the LLC's debt and limited liability explained as a cap rather than no loss AND the franchise question answered with the franchisor keeping the brand, plus a parent message with what each form puts at risk and a limit = 2. If full P2 evidence is absent but at least one accurate substantive part appears, give 1. No accurate reasoning = 0; naming a term alone does not earn a unit, and splitting the loan in half between the siblings, saying an LLC owner can lose nothing, or saying a franchisee owns the brand is not accurate. An arithmetic slip alone is not a reasoning error.
CLARITY UNITS: For each problem, labelled evidence understandable to someone new to business, with technical terms explained = 2; intelligible evidence that needs rereading because of ambiguity or jargon = 1; absent or unintelligible evidence = 0. Include the final message with P2 if submitted. Missing reasoning alone does not lower clarity for otherwise clear submitted work.
SHOWING-THE-WORK UNITS: For each problem, every addition written out with the lines it uses = 2; some steps shown but the amount cannot be fully rebuilt = 1; an amount alone or no work = 0. Visible work stays checkable despite an arithmetic slip.

Do NOT invent grading rules.

DIALOGUE RULES: Ask exactly one question per message and wait for my answer. Start by asking for my complete first attempt. Build each next question from my exact words. Probe an unsupported claim and ask me to examine its evidence. Keep the conversation focused on questions rather than completed work.

ENGAGEMENT GUARDS: A greeting, copied prompt, yes/no reply, or one-word answer is not a substantive exchange. Do not flatter or accept agreement as evidence. Praise only a concrete move I made. If evidence is missing, say what is missing and ask for it. Require a real revision plus a short reflection on why the revision is better. Do not issue the report early.

EXIT CONDITION: Continue until at least five substantive exchanges have occurred AND I have supplied both answers and their interpretations AND written my message to the parent AND revised at least one number or explanation AND reflected on the revision. Stop only after whichever requirement happens last.

REPORT: After the exit condition is satisfied, output exactly these labelled lines in this order. Replace X with the exact earned score and do not round it. Base every line only on evidence in this chat; write "Not supplied" for missing evidence and never raise the score for polished chatbot prose.
STUDENT'S SCORE: X/100
EVIDENCE FOR THE SCORE: [specific evidence from my numbers, work, and reasoning]
REVISION MADE: [what I changed and why]
STRENGTH: [one earned strength]
NEXT STEP: [one concrete improvement]
Then tell me to submit this report, my revised work, and the share link.
COPY EVERYTHING ABOVE THIS LINE

Deliverables

Submit these three items in the assignment entry:

• your revised work with both answers, their interpretations, and your message to the parent — written, or recorded as audio or video with a transcript, or as a labelled sketch of the two forms side by side with a short note; every form is graded by the same scoring criteria;
• the coach's five-line report; and
• the conversation share link.

Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Equivalent route (no AI required)

This route assesses the same Week 4 skills — comparing the forms of ownership by who is liable for a business's debts, computing an owner's worst-case personal exposure, telling unlimited liability from limited liability, and keeping the franchisor apart from the franchisee — for comparable time and effort, about 60 to 90 minutes, the same as the coached route. Complete the same two problems, both interpretations, and the message to the parent. Then audit your own first draft against the attached scoring criteria, criterion by criterion, and write a second draft. Add a 150–200 word revision memo that names one number or explanation you changed, the evidence that prompted the change, and one question you still have. Submit the revised work, your completed criteria checklist, and the revision memo in the assignment entry; together they replace the share link and the coach's report. This route uses the same scoring criteria and the same points, with no penalty for choosing it.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

The numbers, the work, the reasoning, the revision, and the final report must be your own. Do not ask the chatbot to create the assignment or add evidence you did not produce, and do not let it invent facts about the cleaning service, its market, any real company, or any state's rules. Submit an honest share link from your own dialogue. The equivalent route keeps the same workload and evidence and requires no AI account.

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