In partnership Act, a partnership is the relation that exists between persons carrying out business in common with the aim of making a profit. When each partner agrees to contribute property, capital and labor for his share in the partnership, they form a general partnership. The partnership agreement provides for the way in which profit and losses are to be shared. However, profits should be shared equally amongst the partners if it does not exist. Under general partnership, each partner has an equal right to participate in the management, decision making and control of the business. The majority partners resolve disagreements in the course of business and in the event that there are unusual disagreements and adjustments in the partnership agreement, then this requires approval by all partners.
The liability of a general partner spreads out to the legal actions that the partnership may face. A partner is considered personally liable not only for the business debts and liabilities, but also for business related conduct of other partners. For instance, if a partner binds the partnership into an agreement of some kind, the other partners also become bound and are liable for any consequential damages. As for losses, each partner is jointly and personally liable for the debts and taxes of the partnership. If the partnership assets are not sufficient, the partner’s personal assets are liquidated to settle the debts.
Incorporation is a legal process whereby owners run a business as a legal entity separate from them. It makes businesses look more credible in the eyes of their clients. If Albert and Baker were to take this approach, first they should decide on the incorporation that is best for them based on a number of factors like taxation and corporate ownership. Since they already have a name, the next step would be filing the board of directors and their positions with the Articles of Incorporation and State By-Laws. They should exercise caution in choosing directors who are trustworthy, competent and aligned to the corporation’s mission and vision so as to avoid pitfalls in the future.
At times the availability of the shares is limited to a few individuals in the corporation, mostly the directors. However, this depends on the profits derived by the corporation. It would be wise to seek the opinion of an expert in this area before making conclusive decisions. The state’s corporation’s office issues a certificate of corporation which includes the name of the corporation, nature and purpose of its business and also the location of the offices. The articles of Corporation are then filed with the state along with the required fee which can be done through an attorney or by using a third party like registered agents.
If Albert and Baker decided to corporate, their personal liability would be protected from the corporation’s debt. In the event of any outstanding debt for the corporation, their personal assets would not be used to settle the claims. They would, however, have duties and obligations which if not discharged, could lead to personal liability.
Another choice that Albert and Baker would consider for the structure of their new business would be to form Limited Liability Company. Like a corporation, the LLC also provides protection against personal liability. A limited liability company does not suffer from double taxation where both the company and the stakeholder’s dividends undergo taxation. The limited partnership structure gives owners flexibility in passing through earnings that are included in their personal tax returns. The disadvantage of LLCs is that they restrict transfer of ownership interests in the business. If the business intends raise fund at some time in the future, then the option of raising funds by going public does not arise.
In statute law, federal and state laws exist that protect employees while on the job. Whenever employers violate these rights, employees are entitled to file claims against them. Mrs. Smith has permanent disability and health problems which have led to her dismissal. The American Disability Act provides protection to people with disabilities by prohibiting discrimination against qualified individuals based on their disabilities. Employees with disabilities should be accommodated by including changes in work schedule, duties and environment that enables the employee to remain employed. In the case of Mrs. Smith, this protection has been violated and, therefore, she can pursue legal action for discrimination based on her disability.
As for Albert and Baker, the best defense would be to resolve the claim before it escalates into litigation. However, if employment litigation is unavoidable, Albert and Baker should move proactively to retain an employment attorney and be well prepared with witnesses and documents at an early stage. By so doing, the employer may be able to prevent an employee from filing a lawsuit. Normally, a disgruntled employee produces a demand letter for claims against the employer setting requests for the employer to pay a specified amount to settle the claims without litigation. The employment attorney in turn issues a well drafted response which may lead to both parties amicably resolving the claims or even the employee rescinding the decision to take legal action. If, however, litigation is still inevitable, the lawsuit could be thwarted by exploring potential counterclaims by the employer and this may discourage the employee from pressing forward with the claim.
A union empowers workers to guard their job securities, improve and guarantee their salaries and have better working conditions through a communal negotiation with their employer. For employees in the Lending Store to form a union, they should first get to know their and gather information about their place of work, issues facing coworkers, equity pay, employers’ structure and unionized workers in a similar industry or even co-workers interest to unionize. Doing so helps to identify the best union to join.
The employees should then select an organizing committee to oversee the success of the union formation. The committee educates colleagues about union benefits and strategies on winning. With a strong majority, the union can then be made official through the National Labor Relations Board. Once the union is officially certified, the employer and union obtain a binding contract covering all aspects of employment. The union can then suggest improvements to be effected by the employer.
If a union and the employer are unable to reach an agreement in the bargaining process, several options are available the most common being a strike. However, there are certain conditions under which the union may not legally go on strike. One of the preconditions that must be satisfied is that the union and employer must have first engaged in collective bargaining of which both parties did not come to an agreement. A vote must also have been held to determine if the majority of employees favor the strike. When majority are not willing to take part, the strike is deemed illegal but if they are, they must issues a 72 hour strike notice to the employer. These restrictions aim to enhance a bargaining process before a strike begins.
It is common for businesses to engage contractors for services rather than employees, the main reason being that contractors are highly skilled, but are not needed on a long term basis. Now that The Lending Store Inc. has decided to hire a few independent contractors, the employer needs to look at the differences between the contractors and regular employees of the company. One of the differences is the control behavior. If the employer controls most of the activities like nature of work, number of hours or even tools used, the worker is an employee. On the other hand, if the worker controls most of the work with minimal or no directives from an employer, the there is a contractor relationship. Finance also determines whether a worker is employed or contracted. When a worker is paid a salary and is restricted from working for others, he is a regular employee while, on the other hand, if he can work for other companies at the same time and earn a profit or loss, he is a contractor. A regular employee has a right to end employment relationship without incurring liability whereas an independent contractor is legally obligated to satisfactorily complete a specific job failure to which penalties will be imposed. There are many advantages to hiring independent contractors, as opposed to regular employees, but there also disadvantages too. The Lending Store directors should weigh pros and cons before of Independent Contractors before engaging the services.
Under the theory of vicarious liability, an employer may be held responsible for the acts or omissions of an employee provided that they can be proved to have occurred in the course of employment. In this case, a management employee injured a third party for negative comments about the Lending Store. He had also been drinking during his lunch hour which is against the company policy. In this context, the employer can argue that the employee was acting on a personal capacity and not in the course of employment. If the accident happened after working hours, then this would support Lending Stores’ case, and they may not be liable based on that theory. However, the third party can still sue Lending Store for damages as it’s their car that caused the accident. If there is evidence to suggest the company knew that the employee was not trustful with the vehicle, Lending Store could be liable on the theory of negligent entrustment even if the employee did not act on behalf of the company.
On the third party’s suit, the company could argue that the employee was acting on a personal capacity and not in the interest of the company, and they could easily win on that theory. For the theory of negligent entrust, the company could argue that there was no evidence that the employee could neither be entrusted with the vehicle nor drink during his lunch break. It would however depend on several other factors like the employees driving record or even a history alcohol abuse.
The employee intentionally hit the driver, and that was a deliberate offence. The jury could, therefore, order disciplinary measures according to the law. The employee would also have to cater for the medical bills of the plaintiff and also damages for the time missed from work. The employer may not be liable for any charges under the theory of vicarious unless there is proof to justify liability under the theory of negligent entrustment.
Chapter 7 or liquidation bankruptcy involves the liquidation of a debtor’s assets by a trustee and the proceeds handed over to the creditors. Albert and Baker should gather all their financial records together and file the bankruptcy petition. They must also prove that the information in the bankruptcy documents matches their financial records and then file the documents with the clerk of the bankruptcy. Before filing for bankruptcy Albert and Baker must also pass a means’ test. The court then gives notice for a meeting of directors where the trustee asks questions regarding their financial status. For existing non-exempt property, the trustee seizes and sells the property, and any assets recovered are distributed to creditors. If neither the trustee nor the creditors object to the discharge, the bankruptcy court will give a discharge to Albert and Baker. After filing for bankruptcy and once Albert and Baker receive their bankruptcy discharge, they no longer owe their creditors for any discharged debts, and they can resume their normal activities without court supervision.
Chapter 11 allows business owners to reorganize their obligations and pay their debts over time. If Albert and Baker were to choose this bankruptcy, they could continue to operate while still paying their debts. Since they have overwhelming financial problems, this could be a perfect solution for them. Were they to successfully complete the bankruptcy process, they would only be able to carry out standard operations of the business. They cannot, for example, buy another company, sell a portion of their company or major equipment or even undergo a major expansion. Their credit score would also be affected.
References
Miller, Roger LeRoy, and Frank B. Cross. Business law: Text and summarized cases: Legal, ethical, global, and corporate environment. Alternative ed., 12th ed. Mason, Ohio: South-Western Cengage Learning, 2013. Print.
Bose, D. Chandra. Business law. New Delhi: PHI Learning, 2010. Print.
Corporation, The Company. Incorporating your business for dummies. Unabridged. ed. Hoboken, N.J.: John Wiley & Sons, 2013. Print.
Bennett, James T. What do unions do? A twenty-year perspective. New Brunswick, N.J.: Transaction Publishers, 2007. Print.
Miller, Roger LeRoy. Fundamentals of business law. 3rd ed. Mason, Ohio: South-Western, 2013. Print.
