Business Law for Commercial Transactions Week 1 Assignment 2
Assignment 2: Discussion Questions
The discussion assignment provides a forum for discussing relevant topics for this week based on the course competencies covered. To support your work, use the textbook, lectures and scholarly outside sources. As in all assignments, cite your sources in your work and provide references for the citations in APA format. Post the answers to both parts in one discussion post and do not attach documents.The discussion assignment consists of two parts. Select one of the two questions for Part 1 and answer Part 2. By Saturday, May 14, 2016, submit your answers to Part 1 and Part 2 to this Discussion Area. Start reviewing and responding to your classmates as early in the week as possible. You should review and critique the work of other students in as outlined in the rubric by Wednesday, May 18, 2016.
Discussion Question Part I
Select ONE of the scenarios below and explain the best solution.Scenario 1 – Business OrganizationsSteve and Shirley recently graduated from the University of Georgia School of Law. Steve has a special interest in contracts, while Shirley enjoys torts. The two friends want to start a general practice law firm together. They were best friends in law school and are confident in each others’ ability to practice law. Since they just graduated, neither owns a home or has any significant assets and they must start repaying student loans in six months. Together, they have $2,500 to invest in the business. Steve and Shirley have narrowed the types of business to an LLP, an LLC, a professional corporation or a general partnership. Select two of the forms of business and compare the advantages and disadvantages of each. Of the two you select, what form would you recommend and why? Discuss the liability issues and tax implications of your choice.
Scenario 2 – CorporationsMonty and Jackson were partners in a welding business that specialized in making parts for boats. After several years, Monty and Jackson decided to limit their potential personal liability by converting their partnership to a corporation, Anchors & More, Inc. Monty and Jackson each contributed $10,000 to Anchors in return for a $5,000 promissory note and 5,000 shares of stock with a value of $1 per share. The incorporation of Anchors & More met all of the state’s statutory requirements.
Prior to the incorporation, Monty entered into a contract on behalf of Anchors with Welding Supply Company for the unsecured credit purchase of a new welding machine for $75,000. Welding Supply was aware that Anchors had not been officially formed. The machine was delivered one week after the incorporation and Anchors & More made monthly installment payments.
Struggling through the recession, Anchors & More became insolvent and dissolved 18 months after incorporation. At the time of dissolution, the assets were valued at $40,000 and debts totaled $100,000, which consisted of the two $5,000 notes held by Monty and Jackson and $65,000 due on the machine purchased from Welding Supply for the welding machine. On what theory or theories can Monty and/or Jackson be held liable for the balance owed to Welding Supply?
Discussion Question Part II
This week, you will identify a business you would like to start or have already started. You will continue to develop the new business each week. In two to three paragraphs, provide the following information about your business.
- Official name for the business.
- Description of product(s) or service(s) provided.
- Your city and state.
- Select two types of organizations that might be suitable for your business and explain why you selected them. Be sure to consider at least one limited liability option, if appropriate. Select one and explain why it is best suited to your business.
- Summarize in your own words, the legal requirements for formation of the business in your city and/or state. Provide a reference for the source from the city or state.