Answers to six legal questions generally pertaining to a variety of business scenarios are given, with some reference to textbook understandings of such cases. There is not a great deal of complexity in the questions or the answers, but a solid foundational knowledge of certain areas of business law is presented.
Owen should open Owen's Pet Store as a sole proprietorship, as this will provide him with the greatest freedom and flexibility during his initial period of slim earnings and his planned but uncertain expansion (Cross & Miller, 2012). This does leave Owen somewhat exposed in terms of risk to his personal finances, but from the brief details provided in the case it appears as though he is in a highly flexible position and is ready to invest himself and his finances in the business, and thus a sole proprietorship would not carry unnecessary risk for him. This would free Owen from any consideration to investment partners and would limit his costs to the government, and though he does not expect to turn a profit for two years as long as he keeps the overall debt level to a minimum he should be able to walk away with relatively little damage if things don't work out. Legally, there is no type of business that is more flexible or more cheap than a sole proprietorship, and Owen can always engage partners or become a more legally substantive type of business/corporation n the future if this would serve his growth purposes (Cross & Miller, 2012).
2)
Though the limited partners in this case might desire a better return on their investment than they are likely to see form the liquidation of the firm, they cannot really compel the firm (or ask the courts to compel the firm) to remain in business if the general partners wish to dissolve it, assuming a standard limited partnership agreement is in place. These agreements give the limited partner an ongoing share in the profits of the business for an initial investment of capital, but explicitly give no control in terms of operation to these partners (Cross & Miller, 2012). Given the (admittedly limited) financial information in the question, however, the limited partners will likely see a fair return on their investment anyway. In the dissolution of a partnership any assets must first go to paying outstanding creditors, such as Friendly Credit Corporation for $5,000 and Gwen for $5,000, which according to the case was made as a loan and not as a capital investment and thus is dealt with separately from his other partnership interests (Karayan & Swenson, 2006). Of the $90,000 in profits remaining (not to mention whatever is raised through the liquidation of assets), the partners will first be returned their capital investments, and the remaining funds would be disbursed as profits according to whatever the existing partnership agreements allocated to each partner (Karayan & Swenson, 2006).
3)
Smith & Jones are not likely to prevail in their case against E-Business, Inc., as the entity they are suing was not a part to the contract that was signed. Corporations are legally separate entities from the individual founders, owners, and agents of that corporation, and though corporations can be held responsible for some of the actions these individuals take they cannot be held responsible for a contract signed before the corporation existed, regardless of who signed it. Dan might have been acting in good faith, but there is simply no way he could be acting with the legal authority to represent the corporation of E-Business at the time he signed the contract with Smith & Jones, as the E-Business corporation was not an entity at that time. Smith & Jones would have been wise to re-sign the contract with an authorized representative of E-Business, Inc. following the incorporation, but they cannot retroactively enforce this contract through the court system now.
Part Two
1)
Commodity Sales Corporation is definitely liable to Eagle under the contract, as Brenda was in possession of a legally and rightfully obtained written authority to purchase that she obtained from a corporate officer that had the authority to grant her authorization, and Eagle acted in complete good faith when it undertook to fulfill the contract Brenda placed with them on behalf of Commodity Sales. Because Brenda had been legally authorized and Eagle was acting in good faith with a demonstrably authorized agent of Commodity Sales, Eagle deserves to have the contract fulfilled by Commodity Sales (Sniffen, 2001). Whether or not Brenda would be civilly liable to Commodity Sales is less clear; while she could certainly be reprimanded and possibly even terminated for contravening the further instruction she was given by the corporate officer, she did not abuse her position for personal gain and was acting on behalf of the company at all times, even if its was against company wishes. As such, her civil liability is nebulous at best, and internally handling this is probably the best method.
2)
If it appears that a simple majority of the workers at Alpha Computers, Inc. decide that they want to unionize, they can demand a vote on union formation through the National Labor Relations Board by submitting signed union cards from a simple majority of workers or in some cases a sizable proportion of the workers (Unions.org, 2009). If the union loses the election individuals workers can picket if they want to, but they will not have the protection of any union-based strike laws and could easily be arrested and/or fined for trespassing (assuming they picket on private property and are asked to leave) or obstructing public walkways, and anyone picketing could be legally fired without any protection in this regard, either. If the union is elected, Bob may or may not have to join the union/be represented by the union depending on state laws and the union's own rules or contract with management at Alpha Computers, Inc. The company would then have to bargain with the union regarding all of the elements of the contract with labor, which would become a collective contract rather than individual contracts with each employee and would thus lead to collective bargaining and standardization of such things as overtime pay and plant hours.
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