Introduction As the manager of Acme Fireworks, it is my responsibility to use the best business practices going forward. With business beginning to grow, the need to address certain issues is now incumbent and some decisions need to be made quickly before any further steps in the business are taken. Specifically, the company now employees 15 workers but with so many larger orders coming in currently from big firms, there is a need to hire and train more workers: however, if the orders begin to dwindle in the future, there could be a problem with funds to pay for these new hired hands. Thus, the questions that need to be answered first and foremost are whether the current contracts with the big businesses regarding the putting on of a fireworks display will be governed by common law or by the Uniform Commercial Code (UCC). It is also important to know whether I have formed an actual contract with the businesses and what the five essential elements of an enforceable contract are. Plus, the potential personal liability to Acme Fireworks should a spectator be injured from a stray firework needs to be discussed. I also need to know the different employment types and relationships relevant to agency law and what the advantages and disadvantages of each type are with relation to Acme Fireworks. Finally, I need to know why a sole proprietorship is a bad idea for this business. This paper will show, therefore, why our contracts should be governed by the UCC, what the five essential elements are, and why this business should be switched to a limited liability corporation (LLC).

UCC

Common law applies mainly to real estate transactions, services, insurance, employment issues, etc. UCC governs a contractual transaction where good and objects are transferred. In this case, a service is being provided—a fireworks display—but there are also goods involved—i.e., the fireworks themselves. Since this is not a real estate transaction or a service regarding insurance or employment, the UCC should govern these contracts. Rogers (2012) points out that “common law is primarily used in real estate and the law is made by the decisions of judges in individual cases” (p. 132). For this reason, the UCC contract basis is the best for this particular scenario, as it is more suited to the commercial needs of Acme Fireworks. With this in mind, the issue of whether the business actually entered into a contract with the businesses can be addressed.

Five Elements

A contract is made whenever two entities voluntary give their assent to an agreement about an exchange. The contract is based on the mutual and voluntary agreement made between the two parties and this contract is legally binding. As Rogers (2012) notes,...

These are:
1) Offer

2) Acceptance

3) Consideration

4) Legality

5) Capacity

First, an offer has to be made; second, the offer has to be accepted. In this case, Acme has made an offer to provide fireworks services to the businesses and the businesses have accepted the offer. Consideration refers to the thing of value that is exchanged and in this case, the businesses are paying money to Acme and Acme is providing the fireworks display, so—there is an offer, acceptance and consideration. Is there legality? If the agreement and specifics have been settled upon, and there is some evidence of the agreement, such as a bill of goods or an intent to pay, then there is a legal basis for the exchange having taken place and the contract is binding. There also has to be capacity, as in both parties must have the actual capacity to follow through on their part of the agreement. In each case, these points are evident and thus for Acme, these contracts have been entered into.

Personal Liability

If negligence is involved in the fireworks display, there is liability for Acme particularly because it is set up as a sole proprietorship and the manager is the owner and therefore the one to be held accountable (Smail, 1961). Ang, Lin and Tyler (1995) have also shown that personal liability is particularly an issue when a business is set up as a sole proprietorship—and so in the cases where even an accident can happen that is not the fault of negligence, it is important for an owner to protect himself. Even accidents can lead to lawsuits and the owner should not make himself vulnerable to prosecution. Coleman (2000) points this out as well, noting that “sole proprietorships and partnerships, on the other hand [from limited liability corporations], have unlimited liability, and their owners and partners are personally liable” (p. 40). As the owner of Acme Fireworks, I am currently personally liable to any unfortunate circumstances, and to protect myself I should look into changing the way this business is set up. I also need to examine the employment types and whether or not there is a type of employment I should use that is more beneficial than another.

Employment Types

The various types of employment and relationships relevant to agency law are: full-time and part-time work, casual employees, fixed term or contract employees, apprenticeship work, and commission or piece rate employees. Each bears a different relationship in terms of agency law. Full-time employees are hired for specific average number of hours, approximately 38 per week. Part-time employees work…