BUS 3055 Business Law for Commercial Transactions
f f f f f f
Week 1 Discussion f f
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Business Organizations
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Before fbeginning f work fon fthis fweek's fdiscussion fforum, fplease freview f thef link f"Doing f
Discussion fQuestions f Right,"fthef expanded f grading frubric ffor fthe f forum, f and fanyf spec
ific finstructions f for f this f week's ftopic.
The fdiscussion fassignment fconsists fofftwo f parts. fSelect f one foff thefquestions f for f Part f1
f and fanswer fPart f2.
By fthe fdue f date fassigned, f submit f your f answers f to f Part f1 fand fPart f2 fto f thisfDiscussio
nf Area. fPost fthe fanswers fto f both fparts fin fonefthread. fLabel f your fanswers f Part f1 fand f Pa
rt f2, fbut fdo fnot frepeat f the f scenario ftext fin fyour fresponses. f Start freviewing fand frespon
ding f to f your fclassmates fasf early fin fthe fweek f asfpossible. f You f should freview fand f critiqu
efthef work foffother f students fas foutlined fin fthef expanded frubric fby fthef end foffthef week.
Discussion f Question f Part fI
Select fonefoffthef scenarios flisted fbelow f and f explain fthe fbest f solution ffor f each. fInclude
f comments frelated fto f any f ethical f issues fthat f arise. fYou fshould f locate fat f least fone fschol
arlyf source f from fthefSUO f Library for fonef case fthat fhas fbeen f decided for fisf currently fpen
ding f to f support f your f answer.
Scenario f1 f– fCorporate fFormation fand f Shareholder fLiability
Ronald f Powers, fa fwell-
known flocal f entrepreneur, fowned fseveral fbusinesses fthat f filed f for fbankruptcy ff from f2
010 fto f2015. ff Last f year, f Powers f established fR. fP. fProperties, fInc. fPowers fis fthe fsolef shar
eholder f and f invested f $2,500 fin f the fcompany fasf a f capital fcontribution. fR.P. fProperties, f
Inc. fpurchased f4 fhouses fusing fa f$600,000 f loan f obtained ffrom fthef bank. fPowers f planne
d fto f fix fup f the fhomes fa f little f and fgivefrenters f a fbreak fon f thef rent fiff they fagreed fto fdo f so
mef repairs. f R.P. f Properties fskipped f several f mortgage f payments fon fthe fhouses feven fth
ough fhisftenantsfpaid f the frent. f R.P. f Properties fisfno flonger f ablef to f payf its fbills. fAsfonefo
ffR.P. fProperties' f creditors, f you f seek fto fhold f Powers fpersonally fliable ffor fthefdebtsfofft
hefcompany.
, • Will f you fbef successful f in fholding fPowers fresponsible f for fthef company's f debts? f
Explain f why for f why fnot.
Scenario f2 f– fForms f offBusiness fOrganizations
Nick fand f Mitch faref partners f in fa f successful flawn fcare fbusiness fand f aref considering fthef
possibilities foff expansion. fMitch fhas fbeen fattending f college fto f studyf accounting. fMitc
h fwould flikefto fcut fback fon fhisf landscaping fresponsibilities f when fhefgraduates fto f take f
on fa ffull ftimef job f in faccounting; fhowever, fhe fcould fmanage fthef financial f affairs fof fthef
partnership.
Nick fsuggests fthat fthey fhire fTracyf to fjoin fthef partnership fbecause fhef is fyounger fand f c
ould fpick fup fthef work f Mitch fwas fdoing. fNick f and fMitch f currently foperate f as fa fgeneral f
partnership. f When fthe fpartners ftalk f with f Tracy, fhe fsuggests f that fhef would flike fto fbeco
mef a f full fpartner.
• Howf would f you f advise fNick fand fMitch fwhen fthey fcome fto f you f for fadvice fabout f t
hefbest ftypefoffbusiness forganization ffor ftheir f landscaping fbusiness? fExplain f y
our freasoning.
Consider fat fleast fonef limited f liability foption f in f your fresponse, f such fas fthe fLLC for fLLP.
Discussion f Question f Part fII
Select f any fform foffbusiness forganization f studied fthis fweek fand fcreate f a fbusiness fthat f
sells fat f least foneftangible fproduct, f such fasfbooks for f food, for fprovides fa fservice, f such fa
sfpet f grooming for fdaycare. fYou fwill f continue fto fbuild fthis fbusiness f each fweek. fIn ftwo f t
o fthree fparagraphs fprovide fthef following f information fabout fyour f business.
• Name fof fbusiness
• Description ftheff product for f service f and f why f it f wasf selected
• Location foffthefprincipal foffice–must f be f inf your fstate
• Type fof forganization f (sole fproprietorship, fpartnership, fLLC, f Sf corp, fetc.) fand f wh
yfthat f form fof forganization f wasf selected
• Advantages fand fdisadvantages fof fthef form fofforganization f selected
, • Legal f requirements f for fformation fof fthe fbusiness f in f your f state. fCite fsources f fro
mfthef state, f as fapplicable.
ff Note: ff To fflearn fhowf to fproperlyf citef a fcourt f case, fclick fHERE
BusinessfOrganizations
Questionf1
IfwouldfadvisefMitchfandfNickftofhavefafLimitedfliabilityfpartnership.fInfthefgeneralfp
artnershipftheyfwerefin,fbothfoffthemfwerefactivelyfinvolvedfinfthefbusiness.fhowever,fMitchf
nowfwantsftofcutfbackfonftheirfbusinessftofstudyfaccountingfwhilefstillfbeingfinvolvedfthoughf
inactively.fInfaflimitedfliabilityfpartnership,fMitchfwillfhaveflimitedfliabilities.fNickfandfTrac
yfwillfcontinuefrunningfthefbusinessfactively.fAnfLLPfallowsfthefadditionfoffanotherfpartner,f
Tracyfuponfthefconsentfofftheftwofexistingfpartners,fMitchfandfNick.fInfaddition,funlikefafgen
eralfpartnership,fthefpartnersfhaveflimitedfliabilityfwhereftheirffinancialfliabilityfisfonlyfbased
onftheirfinvestmentfinfthefbusinessfandfnotfpersonalfones.
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Questionf2
ThefnamefoffthefbusinessfisfMainfStreetfBookfStorefLtd.fProductsfbeingfprovidedfaref
booksfoffallftypesfandfgenres.fTheflocationfoffthefmainfofficefoffthefbookstorefisfinfBeaufortfC
ountyfinfSouthfCarolina.fTheftypefoffbusinessfselectedfinfafLLC.fThefbenefitsfoffanfLLCfareft
hatfitfhasfaflargefcapitalfbasefbecausefitfcanfborrowfmoneyffromfcorporations.fItsfownersfhave
limitedfliabilityfthatfprotectsfthemffromfbeingfpersonallyfliablefforfanyfobligationsfinfthefbusi
f
nessf(FinancefManagement,fn.d).fTheflimitedfliabilityffeaturefprotectsfitsfownersffromfdoubl
eftaxation.fInfaddition,ftheyfarefeasyftofstartfandfmanagefcomparedftofcorporations.fFinally,fth
efownersfhavefcompletefcontrolfoffthefbusiness,funlikefcorporationsfwherefitfisfleftftofCEOs.f
Onefoffthefdisadvantagesfisfthatfitfhasfnofperpetualfexistencefandfthefdeathfandfwithdrawalfoff
afpartnerfcanfleadftofthefclosurefoffthefbusiness.fItfisfalsofcomplexftofdofbusinessfacrossfmanyf
statesfbecausefoffthefdifferentflegalfrequirements.
f f f f f f
Week 1 Discussion f f
ff
Business Organizations
f
Before fbeginning f work fon fthis fweek's fdiscussion fforum, fplease freview f thef link f"Doing f
Discussion fQuestions f Right,"fthef expanded f grading frubric ffor fthe f forum, f and fanyf spec
ific finstructions f for f this f week's ftopic.
The fdiscussion fassignment fconsists fofftwo f parts. fSelect f one foff thefquestions f for f Part f1
f and fanswer fPart f2.
By fthe fdue f date fassigned, f submit f your f answers f to f Part f1 fand fPart f2 fto f thisfDiscussio
nf Area. fPost fthe fanswers fto f both fparts fin fonefthread. fLabel f your fanswers f Part f1 fand f Pa
rt f2, fbut fdo fnot frepeat f the f scenario ftext fin fyour fresponses. f Start freviewing fand frespon
ding f to f your fclassmates fasf early fin fthe fweek f asfpossible. f You f should freview fand f critiqu
efthef work foffother f students fas foutlined fin fthef expanded frubric fby fthef end foffthef week.
Discussion f Question f Part fI
Select fonefoffthef scenarios flisted fbelow f and f explain fthe fbest f solution ffor f each. fInclude
f comments frelated fto f any f ethical f issues fthat f arise. fYou fshould f locate fat f least fone fschol
arlyf source f from fthefSUO f Library for fonef case fthat fhas fbeen f decided for fisf currently fpen
ding f to f support f your f answer.
Scenario f1 f– fCorporate fFormation fand f Shareholder fLiability
Ronald f Powers, fa fwell-
known flocal f entrepreneur, fowned fseveral fbusinesses fthat f filed f for fbankruptcy ff from f2
010 fto f2015. ff Last f year, f Powers f established fR. fP. fProperties, fInc. fPowers fis fthe fsolef shar
eholder f and f invested f $2,500 fin f the fcompany fasf a f capital fcontribution. fR.P. fProperties, f
Inc. fpurchased f4 fhouses fusing fa f$600,000 f loan f obtained ffrom fthef bank. fPowers f planne
d fto f fix fup f the fhomes fa f little f and fgivefrenters f a fbreak fon f thef rent fiff they fagreed fto fdo f so
mef repairs. f R.P. f Properties fskipped f several f mortgage f payments fon fthe fhouses feven fth
ough fhisftenantsfpaid f the frent. f R.P. f Properties fisfno flonger f ablef to f payf its fbills. fAsfonefo
ffR.P. fProperties' f creditors, f you f seek fto fhold f Powers fpersonally fliable ffor fthefdebtsfofft
hefcompany.
, • Will f you fbef successful f in fholding fPowers fresponsible f for fthef company's f debts? f
Explain f why for f why fnot.
Scenario f2 f– fForms f offBusiness fOrganizations
Nick fand f Mitch faref partners f in fa f successful flawn fcare fbusiness fand f aref considering fthef
possibilities foff expansion. fMitch fhas fbeen fattending f college fto f studyf accounting. fMitc
h fwould flikefto fcut fback fon fhisf landscaping fresponsibilities f when fhefgraduates fto f take f
on fa ffull ftimef job f in faccounting; fhowever, fhe fcould fmanage fthef financial f affairs fof fthef
partnership.
Nick fsuggests fthat fthey fhire fTracyf to fjoin fthef partnership fbecause fhef is fyounger fand f c
ould fpick fup fthef work f Mitch fwas fdoing. fNick f and fMitch f currently foperate f as fa fgeneral f
partnership. f When fthe fpartners ftalk f with f Tracy, fhe fsuggests f that fhef would flike fto fbeco
mef a f full fpartner.
• Howf would f you f advise fNick fand fMitch fwhen fthey fcome fto f you f for fadvice fabout f t
hefbest ftypefoffbusiness forganization ffor ftheir f landscaping fbusiness? fExplain f y
our freasoning.
Consider fat fleast fonef limited f liability foption f in f your fresponse, f such fas fthe fLLC for fLLP.
Discussion f Question f Part fII
Select f any fform foffbusiness forganization f studied fthis fweek fand fcreate f a fbusiness fthat f
sells fat f least foneftangible fproduct, f such fasfbooks for f food, for fprovides fa fservice, f such fa
sfpet f grooming for fdaycare. fYou fwill f continue fto fbuild fthis fbusiness f each fweek. fIn ftwo f t
o fthree fparagraphs fprovide fthef following f information fabout fyour f business.
• Name fof fbusiness
• Description ftheff product for f service f and f why f it f wasf selected
• Location foffthefprincipal foffice–must f be f inf your fstate
• Type fof forganization f (sole fproprietorship, fpartnership, fLLC, f Sf corp, fetc.) fand f wh
yfthat f form fof forganization f wasf selected
• Advantages fand fdisadvantages fof fthef form fofforganization f selected
, • Legal f requirements f for fformation fof fthe fbusiness f in f your f state. fCite fsources f fro
mfthef state, f as fapplicable.
ff Note: ff To fflearn fhowf to fproperlyf citef a fcourt f case, fclick fHERE
BusinessfOrganizations
Questionf1
IfwouldfadvisefMitchfandfNickftofhavefafLimitedfliabilityfpartnership.fInfthefgeneralfp
artnershipftheyfwerefin,fbothfoffthemfwerefactivelyfinvolvedfinfthefbusiness.fhowever,fMitchf
nowfwantsftofcutfbackfonftheirfbusinessftofstudyfaccountingfwhilefstillfbeingfinvolvedfthoughf
inactively.fInfaflimitedfliabilityfpartnership,fMitchfwillfhaveflimitedfliabilities.fNickfandfTrac
yfwillfcontinuefrunningfthefbusinessfactively.fAnfLLPfallowsfthefadditionfoffanotherfpartner,f
Tracyfuponfthefconsentfofftheftwofexistingfpartners,fMitchfandfNick.fInfaddition,funlikefafgen
eralfpartnership,fthefpartnersfhaveflimitedfliabilityfwhereftheirffinancialfliabilityfisfonlyfbased
onftheirfinvestmentfinfthefbusinessfandfnotfpersonalfones.
f
Questionf2
ThefnamefoffthefbusinessfisfMainfStreetfBookfStorefLtd.fProductsfbeingfprovidedfaref
booksfoffallftypesfandfgenres.fTheflocationfoffthefmainfofficefoffthefbookstorefisfinfBeaufortfC
ountyfinfSouthfCarolina.fTheftypefoffbusinessfselectedfinfafLLC.fThefbenefitsfoffanfLLCfareft
hatfitfhasfaflargefcapitalfbasefbecausefitfcanfborrowfmoneyffromfcorporations.fItsfownersfhave
limitedfliabilityfthatfprotectsfthemffromfbeingfpersonallyfliablefforfanyfobligationsfinfthefbusi
f
nessf(FinancefManagement,fn.d).fTheflimitedfliabilityffeaturefprotectsfitsfownersffromfdoubl
eftaxation.fInfaddition,ftheyfarefeasyftofstartfandfmanagefcomparedftofcorporations.fFinally,fth
efownersfhavefcompletefcontrolfoffthefbusiness,funlikefcorporationsfwherefitfisfleftftofCEOs.f
Onefoffthefdisadvantagesfisfthatfitfhasfnofperpetualfexistencefandfthefdeathfandfwithdrawalfoff
afpartnerfcanfleadftofthefclosurefoffthefbusiness.fItfisfalsofcomplexftofdofbusinessfacrossfmanyf
statesfbecausefoffthefdifferentflegalfrequirements.
