Business Law final paper You are the manager of Acme Fireworks, a fireworks retailer who sells fireworks, puts on ground display fireworks, and large aerial display fireworks. The company started in the owner’s garage two years ago and now has 15 employees that you manage. The company started as a sole proprietorship, and the owner has never changed the entity. The owner has informed you that the company has received inquiries from several large businesses wondering if the company could create several fireworks displays on a regular basis.
The owner told the inquirers that the company could fill such display orders, and a price per display was agreed upon. It was discussed that most of the cost for a fireworks display is for skilled labor, insurance, and the actual service of setting off the fireworks. No other details were discussed. The owner is anticipating that new employees will need to be hired, but he is worried that if the large orders for fireworks displays do not continue, the company will not have the funds to pay the new employees. The owner is now considering changing the business entity, but he does not know what entity to form or how to form it.
The owner has asked you to do the following:
Determine if the contracts with the businesses will be governed by common law or the Uniform Commercial Code (UCC), and explain why.Analyze whether the owner formed a contract with the businesses, and apply the five essential elements of an enforceable contract.Explain the potential personal liability to Acme Fireworks if a spectator is injured by a stray firework from a fireworks display.Discuss the different employment types and relationships relevant to agency law, and analyze the advantages and disadvantages of each type specific to Acme Fireworks.Explain why Acme Fireworks should not operate as a sole proprietorship.
Recommend a new business entity, and provide rationale to support your recommendation.
For each task, be sure to analyze the relevant law, apply the facts to the law, and make a conclusion.
The paper
Must be 8 to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Writing Center (Links to an external site.).Must include a separate title page with the following:Title of paperStudent’s nameCourse name and numberInstructor’s nameDate submittedMust begin with an introductory paragraph that has a succinct thesis statement.Must address the topic of the paper with critical thought.
That is, describe what your response is to the content, either positive or negative, and defend your position. If multiple options, alternatives, and/or positions are present and are being rejected, you must also defend the reasons for rejecting an option.Must end with a conclusion that reaffirms your thesis.Must include at least five scholarly sources, two of which must be from the University of Arizona Global Campus Library, in addition to the course text.Must document all sources in APA style as outlined in the Writing Center.Must include a separate references page that is formatted according to APA style as outlined in the Writing Center (Links to an external site.).
Carefully review the Grading Rubric (Links to an external site.) for the criteria that will be used to evaluate your activity.
Outline:
Uniform Commercial Code (Ucc) Or Common Law
FirstName LastName
University title
The first decision I will make as the manager is to determine whether UCC or Common Law will govern Acme Fireworks. To make this decision, I will consider whether Acme Fireworks’ state of contractual transactions. The common law mostly applies for contracts such as real estates’, insurance, and intangible assets/ services. On the other hand, UCC is most appropriate when dealing with goods and tangible properties (“Uniform Commercial Code”, 2021). In this case, Acme fireworks sell fireworks and sometimes put them on display; thus, the sole-proprietorship mainly deals in goods leading to it falling under UCC governing.
I will go on and elaborate further on why I chose UCC over Common law in relation to the expansion of the business and the contracts the business is taking.
Contract formation
I will then analyze the context of Acme and the other large businesses to determine if Acme entered a contractual agreement with them based on the five elements of the enforceable contracts mentioned below. All five aspects have to exist for there to be an enforceable contract between Acme and the inquiring businesses.
5 Elements of an Enforceable Contract
1. Offer: this happens when one party proposes or promises to enter into a business contract or contractual transaction with another business. At Acme, inquiries were made, but it is uncertain if a promise was made.
2. Acceptance: in this element, the party that has been promised responds to the offer in acceptance or declination (Hassall, 2015). An acceptance leads to the subsequent details of an enforceable contract; it is the final relation or process after an offer is made.
3. Consideration: to make a promise during an offer, there has to be something to gain or give in exchange (Hassall, 2015). This can be the value of both parties; in Acme’s case, the Fireworks display in exchange for a paid price (the money received from the payments).
4. Capacity: those entering into a contract have to be of legal age and sound mind; they have to be of stable mental well-being when they enter and sign the contract. Both are of legal age.
5. Legal Intention: for a contract to exist, both parties must be willing to be in a mutually binding agreement of trade. In this element, all the terms and conditions of the contract have to be in line with the state’s legalities; a clear statement has to be made whether it is legally binding or not. Both owners of Acme and the inquiring businesses seem to be willing.
Liability
Suppose a stray firework injured a spectator during a firework display. In that case, Acme has to take personal liability for the injury since it is still a sole-proprietorship, so the entire liability is on the owner. However, it will depend on the occurrences, if the spectator was within a safe distance or too close if there was negligence or simply an accident (Stephens, 2021). All these factors are taken into consideration when determining the owner’s personal liability. In most cases, fireworks insurance may not even be enough to cover the liabilities, especially where there was negligence and massive injury.
Employment types in relation to agency law
I will also elaborate on the different types of employment, their advantages, disadvantages, and their relation to the agency law as outlined below.
1. Agents: Agents can be special ones, general ones and even those coupled with interest depending on the level of authority disbursed by the principal (Lingwall, 2019).
2. Employees: this type of employment comprises part-timers, full-timers, and those who are in temporarily; this depends on the payment (wages) and the laws/ rules between the employer and employee relationship.
3. Independent contractors: this type of employment involves workers working for others and offering services, but they are not controlled by them (Lingwall, 2019). In the case of Acme, an individual who provides services for the business under his or her own want for payment purposes; he or she is not an employee; it’s more of freelance.
Why Acme fireworks should not operate as sole-proprietorship
Sole-proprietorship was perfect for the business during its first two years; however, as the company is expanding, it is no longer the most appropriate entity due to various reasons that I will outline. Firstly considering that the owner of Acme Fireworks is responsible for the businesses’ liabilities and debts, now that it is expanding and taking contracts from other companies, in case of a loss, he will be solely responsible, which could damage the business (Lynott, 2017). Besides, sole-proprietorship has a lot of taxing and limited funding, especially with the increase in the employees.
New Business Entity
The new business entity that I propose with the upcoming expansion of Acme Fireworks is the single-member Limited Liability Company (LLC). This entity will be formed under the state. It will provide the business owner with liability protection and avoidance of the repetitive taxing inherited from the C corporations and ownership restrictions from S corporations (Schwidetzky, 2018). Besides, a single-member LLC has a private structure that is most appropriate for Acme Fireworks. The owner will be protected from creditors; since the owner is separate from the business, they are treated as separate entities the owner is not responsible for the businesses’ liabilities.
References
Lingwall, J. (2019). Agency and Employment. Retrieved 19 May 2021, from https://boisestate.pressbooks.pub/buslaw/chapter/agency-and-employment/
Stephens, M. (2021). Firework Displays – Safety and Insurance. Retrieved 19 May 2021, from https://www.towergateinsurance.co.uk/liability-insurance/firework-liability
Lynott, W. (2017). Sole Proprietorship or Corporation? – Water Well Journal. Retrieved 19 May 2021, from https://waterwelljournal.com/sole-proprietorship-corporation/
Hassall, W. (2015). An enforceable contract: the key elements. Retrieved 19 May 2021, from https://www.wrighthassall.co.uk/knowledge-base/an-enforceable-contract-the-key-elements
Schwidetzky, W. (2018). The pros and cons of LLCs. Retrieved 19 May 2021, from https://www.journalofaccountancy.com/issues/2018/dec/llc-pros-and-cons.html
Uniform Commercial Code. (2021). Retrieved 19 May 2021, from https://www.uniformlaws.org/acts/ucc
