Introduction
Business ownership and management play a vital role in the progress and development of a company. Certainly, there are different types of entities that follow particular policies of formulation and establishment. The Acme Fireworks is a special type of company considering changing its entity from the sole proprietorship. There are special laws that govern business contracts. Primarily, Acme will have to choose whether to go for those contracts governed by the Uniform Commercial Code (UCC) or the Common Law. The new business relationship that the company will enter requires a change in its entity formation, particularly because of the consideration of the laws. An analysis into whether the owner formed a contract with the new business partners would provide vital insight into the direction Acme Fireworks will take in its dealings. Importantly, the five essential elements of an enforceable contract help to shed more light as to the state of the contract the Acme Fireworks enters. Worthy of consideration in this change is the personal liability that Acme will have to take in the event of an injury to a spectator during their display works. Certainly, this is a vital area of thought concerning the new business deals. As well, the question of the type pf employment is of vital consideration. Given the unique nature of Acme Fireworks activities, an analysis of these aspects will help to guide in the new type of entity the owner seeks.
Determination of whether the contracts with the businesses will be subject to common law or the Uniform Commercial Code (UCC)
Contracts help to bring a binding agreement in the transactions that people enter. Indeed, they can be made in writing or verbally, as long as the terms are understandable and agreeable to both parties. However, as opposed to the verbal agreement, the written contract proves much stronger as it provides a point of reference. As well, the written contract provides room for legal intervention. Accordingly, the process of writing the written contract enables the parties to think more precisely about the transaction. As such, this may minimize the chance for misunderstanding (Rogers and Kauffman, 2012). Predominantly, the Acme contract is subject to the UCC and not the common law. Fundamentally, this is because the contract that Acme Fireworks entered with the large corporations only spelled three areas, making it binding. In so doing, the contract only approximated the acceptable conditions. Thus, this satisfies UCC concept that acceptance is valid as long as it closely approximates to the terms of the contract (Johnson and Powell, 2015).
Analysis into whether Acme owner formed a contract with the corporations, using the five essential elements of an enforceable contract
Contract analysis is vital in determining the legitimacy and power of the contract. Fundamentally, it involves a scrutiny of a contract based on the five essentials of the valid contract. Namely, the offer, the acceptance, support of consideration, parties that are eligible to contract, and the legitimacy of the contract. The absence of any of the elements would render a contract invalid. According to the agreement entered by the owner, only some of the elements were met. Offer and acceptance refer to the mutual assent. Accordingly, the common laws application and interpretation of the two differs from that of the UCC. The common law interprets mutual assent to be the mirror image of the contract. Therefore, the offer is the mirror image of the contract. As such, the contract should spell out exactly what will be done. On the other hand, the UCC considers mutual assent as any action that closely approximates to the contract legitimizes the contract. Thus, according to the UCC, the acceptance needs not to be the mirror image of the offer. Accordingly, the offered does not necessarily have to spell the all the terms of precision. Technically, the only essential element in the UCC contract is quantity. Primarily, this is due to the argument that, the ‘gap fillers' in the UCC are the key determinant of the other terms. Precisely, these types include price and the time of delivery (Johnson and Powell, 2015).
Consideration means an exchange that the parties agree upon based on the bargain entered. Primarily, it is something that reinforces the legal detriment of the parties involved in the contract. Fundamentally, the consideration is an item of legal value that the parties are required to give to each other in exchange for a promise or action. For example, the parties can agree to give each other money in exchange for some products or services rendered. Given this, Acme Fireworks contract the large corporations factored the element of consideration. Notably, the element of consideration is the same in both UCC and common law (Johnson and Powell, 2015).
Capacity is the concept that the parties entering the contract have adequate capacity to understand the nature of the contract. Primarily, it is the idea that all the parties involved in the contract have a complete understanding of all the aspects of the contract. Accordingly, this means that the terms of the contract must be not only agreeable to the parties, but also known. Specifically, it means that the parties to the contract have the ability to comprehend whatever they are agreeing to or doing. In line with this, it seems that the owner of Acme Fireworks lacked the capacity of complete understanding (Johnson and Powell, 2015). Capacity is subject to compromise by factors such as language barrier, the level of education, mental infirmity, age, intoxication and other factors. Thus, these factors can significantly diminish and interfere with the parties' ability to understand the contract accordingly. Importantly, a factor such as age is a general legal limitation on the capacity, rather than a party-specific factor (Johnson and Powell, 2015). Apparently, the details discussed by the owner and the large corporations covered only three areas. Primarily, the owner settled on the cost because it covered the insurance, skilled labor, and the actual service of setting the fireworks.
Additionally, an enforceable contract is the contract whose business and activities are legal. Therefore, any contract entered by any person for the fulfillment of an illegal activity renders it invalid. Naturally, the court cannot step in to uphold an activity that is not valid. In so doing, it will be breaching its primary mandate of protecting and preserving the rule of law. Thus, any contract that contains something that violates the public law renders it invalid (Johnson and Powell, 2015)
Thus, the agreement between Acme owner and the large corporations fulfilled the four of the conditions but lacked one that is capacity. Thus, legally speaking, the owner did not enter into a valid contract with the corporations.
Potential personal liability to Acme Fireworks in the case of a spectator who gets injured by a stray firework from a fireworks display
Part of Acme Fireworks involves the display of its diverse fireworks models. Both the common law and the statutory laws oblige the company to cover for any damage to an individual or his property, in the event of their displays. Accordingly, the liability risks require the company to compensate injured persons commensurately. The liability risks are those risks that arise out of human mistakes. Customarily, these mistakes are termed as civil wrongs that a person may commit, leading to the loss of property, physical injury or death of the victim (Gulati, 2009). As such, Acme faces the challenge of having to spend extra money for compensating injured people in their displays.
Employment types and relationships relevant to agency law
There are diverse employment types, relevant to the agency law, which Acme can offer its new staff. These employments include the full time, casual labor, part-time, fixed-term employment, apprenticeships and traineeships (Types of Employment, 2015). Primarily, the agency law refers to the relationship existing between an individual (agent), who acts on behalf of another person, government, or company. The person who is being represented in the actions is called the ‘principal' or the ‘master.' Accordingly, the agency emerges when the master asks an individual to make a delivery. As well, it can spring when the principal formally names someone to be his agent. Notably, in both cases, the principal seals the agreement using a contract (Agency Law, 1995-2015). The common-law-based, law of agency, the employment relationships is governed by statutes. Certainly, each state has its particular employment law (Rogers and Kauffman, 2012).
An analysis of the advantages and disadvantages of each type specific to Acme Fireworks
The full-time employment involves the workers who regularly work in the company. Precisely they work on a daily basis. One advantage of the full-time employment is that it guarantees the continuity of work. As well, it helps in planning and allocating the responsibilities. However, if not well monitored, the company may end up spending a lot for work that was not done (Types of Employment, 2015).
On the other hand, Acme may have to hire some people on the part-time basis. Precisely, this involves the workers working for the company during specific times of the day and specific days of the week. Accordingly, their pay depends on the numbers of hours worked. As Acme enters into the regular production of fireworks, it will need additional employees on a part-time basis. Part-time enables the company to reduce expenditure connected with the full-time employment of professionals. Acme should ensure that they familiarize themselves with the legal provisions for the part-timers covered by an award (Types of Employment, 2015).
Casual employment is another option for the Acme Fireworks. Precisely, it involves the employment of workers on an irregular basis as needed. As such, the company hires them only when there is a need. Casual employees can work do for as many hours as agreed upon between them and the employer. For instance, Acme may need casual laborers for the setting of the display fireworks and carry of relevant equipment to the display site. Practically, they can be assigned a skilled person to guide their activities. One advantage of this employment is that it enables the company to sub-contract particular activities, while focusing on its core areas. One disadvantage is that the casuals may refuse to work, thus, stalling important activities. As well, in the case of bereavement or absence, they can disrupt the daily flow of fieldwork in Acme (Types of Employment, 2015).
Fixed term employment is the employment involving a contract for a specified period. For instance, Acme may need some workers for a specific project or to relieve someone who is going for leave. Accordingly, this employment ensures the continued flow of work despite the absence of full-time worker. Accordingly, Acme must provide the fixed term worker with a formal written contract. Like the full-time employees, contract employees are entitled to personal, annual, and other leave entitlements. However, these entitlements are on the proportional basis based on the period of the contract (Types of Employment, 2015).
Apprenticeships and traineeships are employees who are mainly learners. The apprenticeships are learners of a trade, while the trainees are learners engaged in the learning of the non-trade occupations. Notably, both cases involve registered agreement, learning of skills both at work and off work, as well as practical work. This employment facilitates ongoing learning within Acme. As well, it provides a good opportunity for Acme to identify potential employees. One disadvantage is that the company does have a guarantee obtaining the formal consent of contract from the productive apprentices (Types of Employment, 2015).
Importantly, the law requires that every employee under the agency law be given a hearing before the enactment of any new employment regulation. Predominantly, this process helps to ensure that the agencies do not operate in a vacuum but remains responsive to the needs of those it serves (Weiss, 2012).
Why Acme Fireworks should stop operating as a sole proprietorship. Recommendations for the new business entity, based on relevant rationale to support
Acme Fireworks should not operate as a sole proprietorship because of the magnitude of the work it will be handling with the new customers. Fundamentally, the nature of production and the production costs will soar immensely, leading to the need for a larger pool of resources. As well, Acme requires a restructuring of the management to adopt more complex work types under the new business deals. As the company grows, risk levels also increase. Acme faces the danger of personal risks within both the management and the employees. As well, it faces the risks that may arise from the technical failures, on the part of other people, to meet a specified obligation. Additionally, Acme may face the risks of fidelity as it expands. Predominantly, fidelity risks are the risks that arise as a result of the dishonesty of the employees and other people during their work. Consequently, the fidelity risks can cause significant loss of stocks and money to the proprietor. Another risk that Acme Fireworks faces is the risk arising from the ownership and use of the company vehicles. Accordingly, the usage of the company vehicles can lead to two main risks. Firstly, it may lead to the risk of loss and damage to the vehicle due to pure risks such as negligence. Secondly, it may result in the death and loss of property for the third parties (Gulati, 2009).
Technically, the sole proprietorship entity lays the liability entirely on the owner of the entity. Given the various considerations, Acme should change and take the form of a corporation. Precisely, this is a business entity established through an application to the state. Accordingly, it allows its shareholders limited liability. Suzy Rogers notes that corporations hold legal status as persons (Rogers and Kauffman, 2012). Indeed, the corporation will help in meeting the large demand for fireworks, as it will attract a wider pool of outsider investments into the company. Predominantly, such contributions will help to cover the running costs of the business.
Conclusion
In conclusion, the contract that the owner entered lacked an important aspect of an enforceable contract, that is, capacity. The owner lacked the relevant knowledge in getting the contract. Thus, the new contract entered requires special review to ensure that the relevant clauses are involved and made known to the parties. Certainly, Acme needs to move into the Corporation model. Inevitably, Acme will have to consider new options for employment as it expands and restructures itself. Policy issues are also critical as the company expands its production and market. Of particular concern is that Acme should seek to familiarize itself with the UCC, common law, and other legislations governing employment. Accordingly, it is critical for the owner of the company to understand the pros and cons of the various employment types.
References
Agency Law. (1995-2015). Retrieved Jul 14 from http://www.hg.org/agency-law.html
Gulati, N.C. (2009). Principles of Insurance Management: A Special Focus on Developments in Indian Insurance Sector Pre and Post Liberalization. Mumbai. Excel Books India.
Johnson, L & Powell F. (2015). Environmental Law. New York. Cengage Learning.
Elements of a Contract. (2015). Retrieved Jul 14 from The Law Handbook website: http://www.lawhandbook.org.au/handbook/ch12s01s02.php
Rogers, S., & Kauffman, K. D. (2012). Essentials of Business Law. Bridgepoint Education.
Types of Employment. Retrieved Jul 14 from the Small Business Development Corporation website: https://www.smallbusiness.wa.gov.au/business-topics/employing-people/types-of-employment/
Weiss, J.W. (2012). Organizational Change. San Diego, CA. Bridgepoint Education, Inc.
