Business Liability and Indemnity

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Questions and Answers

What is indemnity?

  • A type of insurance policy
  • A method of payment for services
  • A legal duty or obligation arising from a contract (correct)
  • A type of business entity

Which of the following is a characteristic of indemnity?

  • It is a type of business entity
  • It is a payment for a service
  • It is a way to defer a right
  • It is a guarantee against losses or damages (correct)

What is the primary concern of an established massage therapy practitioner when choosing a business entity?

  • Tax benefits
  • Liability protection (correct)
  • Scalability
  • Ease of setup

Which business entity is best suited for an established massage therapy practitioner who is primarily concerned about liability?

<p>LLP (D)</p> Signup and view all the answers

What is a major drawback of a sole proprietorship for an established massage therapy practitioner?

<p>Personal liability (B)</p> Signup and view all the answers

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Study Notes

Indemnity Definition

  • Indemnity is a legal duty or obligation arising from a contract
  • It involves one party agreeing to compensate for losses or damages if they occur

Business Entity for Liability Concern

  • For an established massage therapy practitioner concerned about liability, the best business entity is an LLP (Limited Liability Partnership)
  • This is because an LLP provides personal liability protection for the practitioner, limiting their exposure to lawsuits and financial losses

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