Indeed creditors of a corporate cannot claim the assets of a company’s shareholders should the company become insolvent. This is contrasted to the situation regarding a sole proprietorship in which the creditors are allowed by the law to put claim on the property of the sole proprietor in case the assets of the business are not sufficient to cater of all of the creditor’s claims. Indeed, it is fair for the shareholders of a company to have a limited liability and for the owner of a sole proprietorship to have an unlimited liability. A shareholder with unlimited liability is one whose personal property can be used to pay creditors when the company is liquidated while for a shareholder with limited liability, his or her personal property cannot be used to pay business debts in case the business is wound up. This separate treatment of corporations and sole proprietorship is fair because a corporation is a separate legal entity from its shareholders whereas sole proprietorship and the sole trader stand for the same entity. Since a corporation is separate legal entity, the actions regarding what investments to take and how to handle creditors are under the control of managers who are actually agents of the corporation and therefore it is only fair that the debts incurred by the company are paid by the same company not shareholders are less involved in the running of this company. Contrary to this, a sole proprietorship is owned and controlled by a sole proprietor. This therefore means that the person debts incurred by the company are actually the proprietor’s debts and therefore he should pay for them even if it demands selling his personal property.
Liabilities of directors
Indeed the directors of a company are subject to more and more liabilities because they are directly involved in the running of the business. These people have a greater influence on the company’s decision making process than any other stakeholder. They therefore must be subjected to more liabilities in order to make sure that the decisions they make are beneficial to the company and not for their own selfish gains. It is important to note that some directors who may be unscrupulous can easily decide to have the company enter into a transaction which would result into massive losses for the company but financial gains for them. If this is allowed to continue, the company’s continued survival would be undermined. It is therefore necessary for directors to be subjected to more liabilities in order to make sure that all the decisions they make and actions they take result into financial gains for the company and not the other way round. Directors can protect themselves by making sure that they only engage in activities which are within their mandate as company’s directors.
Classification of employees
Distinguishing between an employees and an independent contractor can be quite challenging for an employer. The classification of a worker either as an independent contractor or as an employee can be done using three criteria. These include the level of financial control that the employer has over this worker, the level of control that the employer have over the work performed and the nature of their relationship. If the employer has a high control over the income that the worker receives, then he is an employee and not an independent contractor. Furthermore, if the employer has control over the work performed and how it is performed, then he is an employee. However, if the relationship between the two is an agent-principle one, then there are high chances that the person in question is an independent contractor and not an employee.
An employer who wishes his workers to be classified as independent contractors must first reduce the level of control he has over them. The contract between the employer the work should be reviewed such that the terms implicit in the contract dictate that the employee is at will to perform the tasks they wish at their own discretion bearing in mind the fact that their level of income would be based on the level and quality of output delivered. This is important because workers would then be considered to be independent and at will decide the work to do and how to do it. Consequently, an employer’s behavioral control of the worker would have been eliminated. Secondly, the employer should let go of his or her control over the amount of income that the worker gets from job performed. This should be replaced with a negotiation or even a bid such that one who is able to perform a high quality work and at the most affordable price is contracted. This will also eliminate the employer’s financial control over the workers. Lastly, the employer could also make sure that he relates with the worker the way a person would relate with a business partner and not his or her employee. The worker should not be entitled to any benefits because this would mean that he is an employee and not a contractor. If these steps are accurately observed, the assessment of such worker would show that he is an independent contractor and not an employee.
Classifying independent contractor as workers is quite risky to the company. Firstly, the company risks being penalized for making such an erroneous classification. The fines that are imposed are likely to have a negative effect on the company’s financial wellbeing. This is the reason why it is advisable for the concerned parties to make sure that the classification if an employee is accurate. Employees as opposed to independent contractors are entitled to particular benefits from the company like pension, health cover among others. A company would therefore be compelled to offer such benefits to independent contractors if they are classified as employees. This would cause a financial strain on the company. Finally, classifying an independent contractor as an employee subjects the company to more liabilities because legal suits arising from negligent actions by the independent contractor would be directed at the company.
Prospective Employees
A company hires people on the basis of their ability to perform the duties at hand. Quite a good number of prospective employees overstate their qualifications in order to get the appointment. The fact that the employee had overstated their qualification should not be used as justification for their dismissal. Instead, the employee could be given time to prove that indeed they can work to meet the expectations of their employer. The employee can then be dismissed if he or she fails to meet the expectations of his or her employer.
Property Insurance
It is important for the directors of the manufacturing business to disclose all material facts that could have an impact on the insurer’s decision to provide the cover. This is the information concerning the state of the property and any developments that are likely to increase probability of occurrence of the risk being covered. For instance is the factory premises has a crack, it would be important for the directors to inform the underwriter about this risk for the director to know whether to cover the risk or not and if so, how much premiums to be paid by the insured. Insurance is a contract governed by the principle of utmost good faith. If the insured misrepresents some information or fails to disclose some material information, the insurer would be at liberty to avoid the contract and return the premiums to the insured.
A franchise contract contains the identities of the parties as defined by the law. These are the franchisor and the franchisee. Each of these parties has its roles to play in ensuring that the success of the franchise. These are outlined in the contract. The franchise contract also contains disclosures which are required by the state laws as well as the objectives of each of the parties. The contract also contains licensed rights, franchisor services, payments and obligations.
Avoiding the services of a real estate agent can have detrimental effects on the purchaser if the transaction ends up being unsatisfactory. It may take longer for the purchaser to have their funds back or worse still; the purchaser may be compelled to possess the property even though it is not satisfactory to them. This is because there would be no agent to bring forth an arbitration between the seller and the purchaser of the property.
