Unlimited vs Limited Liability? Box it off

Last year I found my students didn’t grasp the concept of unlimited and limited liability as quickly as I felt they should. I always take the view it’s not the students, it’s the teacher so this year I tried something different and it worked really well.

For this activity you need three shoe box sized boxes (one labelled PERSONAL, one BUSINESS, one PERSONAL & BUSINESS in big felt tip) & 2 sets of the following printed large on A4 - Bank Manager owed a certain amount, Supplier 1 earned a certain amount, Supplier 2 a certain amount, Supplier 3 owed a certain amount, plus a range of assets some of which will be business assets and some which will be personal assets. Each asset needs a stated monetary value (e.g. Business Machinery £25k). You’ll also need 1 A4 Sheet which reads Mr/Miss Unlimited and 1 which reads Mr/Miss Limited.

Then you need to ask for 2 teams of 5 volunteers. In each team, assign 1 the role of Miss or Mr Limited or Unlimited, and the others play the bank manager and supplier creditors. For Mr Unlimited you of course give them the box visibly marked BUSINESS & PERSONAL and put the asset sheets in the box. Of course the Mr/Miss Limited person takes the two boxes marked PERSONAL and BUSINESS respectively.

You then explain that these two entrepreneurs run identical struggling businesses in parallel universes that need to wind up and pay back their debts, but that Mr/Miss Limited has a magic spell that protects him or her from loss of personal assets, in comparison to Mr/Miss Unlimited. You shut the lid on the PERSONAL box and tell Mr/Miss Limited that on no account do they need to give away any asset from within that box to pay back debts. You then play out the role play for each entrepreneur, asking them to use their assets starting with their business assets to settle the debts with the various creditors. You’ll need to work out the figures so that there aren’t enough business assets to pay off the last creditor or two.

The very visual nature of this activity worked a treat, and I could see some vivid learning going on - before the role play had even finished the last two creditors of Mr Limited were slapping their foreheads and cursing their luck as they realised that they wouldn’t be getting their money back, at which point I asked them to explain to the class what they were worried about. The students were really engaged and at the end of the role play were asking loads of brilliant questions about what sort of business had limited liability and which has unlimited liability, and why wouldn’t all businesses go for limited liability if it limited their losses. They’d already fired up the department laptops at the very start of the lesson, so after quickly jotting down some formal definitions for their notes, I set them to work on answering these questions for themselves and we recapped it all at the end.

Job done, and certainly an improvement on last year.