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:
For each task, be sure to analyze the relevant law, apply the facts to the law, and make a conclusion.
The paper
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted
The Outline is attached and you have to use this along with the paper.
BusinessLaw 1
2
Business Law 1
Joyce Crow
Ashford University
Business Law 1
Outline
Introduction
This paper will be based on the scenario provided by Acme Fireworks and its owner. The following information will be provided from the perspective of the manager at the company. It mentions that the business’s nature is a sole proprietorship with a business duration of two years. Acme Fireworks employs a limited number of employees whose character will be discussed in detail later in this document. This paper will also help establish the relationship between the owner and the business entity of Acme Fireworks. It will also provide a legal understanding of the business’s legal jurisdiction and its future employment and business trends.
Scenario
Determine if the contracts with the businesses will be governed by common law or the Uniform Commercial Code (UCC), and explain why.
The Uniform Commercial Code is a set of laws used to supervise commercial transactions in the United States. It is to be remembered here that this is not federal law but a uniform state law collection. Uniformity is essential in this regard to oversee all businesses to remove a bias that may occur. It also brings confidence to the company as they engage with each other on the same legal basis, and they can be supervised under the same uniform law. This law is intended to promote business activity (Uniform Law Commission).
States often collect legislatures from the courts in their jurisdiction to explain a rule or modify it to expand the scope of the common law. Common law is derived based on judicial decisions and not the statutes themselves. American courts created common law based on English common law until the American laws were mature enough to comprehend its legal system and the requirements. Standard rules can be discovered at the state level, but the federal common law consists of a little body (Cornell Law).
From the above observation, Acme Fireworks is a commercial business and will operate under the Uniform Commercial Code.
The owner formed a contract with the businesses and applied the five required elements of a legal agreement.
The first essential requirement of a contract is offered. The offer needs to be stated clearly, so the critical parties to the agreement understand their expectations related to the business. It may also contain the aims of the company. It will include the objective and business purpose of Acme Fireworks.
The second essential is acceptance. The offer mentioned in the last part must be accepted. This acceptance needs to be voluntary. Any contract accepted must not be coerced or made fraudulently.
Consideration is a term of worth or value that may be usually defined by monetary amount. However, it can also be non-monetary, like providing expertise or opinion based on facts.
The agreement made must be legally binding and must hold all parties accountable for their action. The terms of the contract must be by the laws and must not be based on malicious intent or illegal consideration.
In this case, the parties, the owner of Acme Fireworks, involved must of legal age and sound mind and competent enter into any contract (Leonard, 2019).
The owner did construct a contract with the business with the intention of profit-making. The company is a separate legal identity, and the owner is an agent of the business, performing duties on behalf of Acme Fireworks.
Explain the potential personal liability to Acme Fireworks if a stray firework injures a spectator from a fireworks display.
In the case of tort actions regarding fireworks and their mishandling may be filed when it is clear that both parties have failed to provide their claim. It must be filed when the cause of action is based on enough evidence. In Haddon v. Lotito (Lee Law Review), the plaintiff visited a public park to admire the fireworks display and stood a thousand feet away from the other spectators. After the plaintiff went to court, it was revealed that the fireworks had failed to reach their intended height and fell into crows, exploding and causing injuries. Acme Fireworks may be liable in case of the doctrine of absolute liability, which makes the company liable for any harm even though proper care has been taken to manage fireworks. This also applies to blasting.
Acme Fireworks may be held accountable for stray damage if proper diligence is not undertaken before releasing the firework display or the spectator gets hurt in a public spot (Chris, 2017). Warning signs and other guidelines must be displayed, so the company reduces its legal liability to the minimum.
Discuss the different employment types and relationships relevant to agency law, and analyze the advantages and disadvantages of each type specific to Acme Fireworks.
Acme Fireworks mentions the increase in labor demand related to the increase or decrease in the fireworks. This increase is due to the increased order by larger companies to provide daily firework displays. This demand is likely to reduce significantly after a particular amount of time. This term is related to season unemployment (Economics Online), whereby the individuals are let go due to a decrease in the demand for the business’s products or services. Seasonal employment offers extra help during the peak demand season; however, a lack of loyalty to the company may result in inconsistencies. Seasonal employees may also not work as hard as they are only hired part-time until the demand subsides (Kappel, 2019).
Acme Fireworks and the owner is in a relationship of the agency with another. The owners’ actions will reflect on the business and image of Acme Fireworks as the owner is an agent to the company. In case the owner is poor at marketing or progressing with business competency, it can drive the business to a shutdown. In case the owner is occupied with other business matters, more critical business decisions can be delayed, which may harm the company. As an agent, the business owner also needs to maintain proper financial records of Acme Fireworks and hire appropriate employees to protect the interest of the business (Sherman).
Explain why Acme Fireworks should not operate as a sole proprietorship. Recommend a new business entity, and provide a rationale to support your recommendation.
Acme Fireworks has unlimited liability. The owner must compensate for any damage or loss incurred by the business, leading to additional unexpected financial strain on the company. It might take a while to recover from such an event (Kupfer, 2019).
Acme Fireworks may also be financially limited. It cannot raise capital on a public platform, such as other business types. Acme Fireworks must rely on capital assistance only from the owner, limiting future expansionary plans, or hiring experts to operate the business.
A sole proprietorship may also provide limited non-monetary benefits such as no pension or medical services. It is also a considerable time commitment and limits the owner to diversify his business operations (R).
Acme Fireworks is a partnership based on the disadvantages mentioned above. It will be able to raise more capital, depending on the number of partners. When all Acme Fireworks accounts were complete, and the company makes, the profits will be transferred based on the partnership agreement. Any losses or damage will also provide less strain on the business, and it will also provide expert opinion by the partners. It will provide Acme Fireworks with more opportunities to diversify.
References:
Chris. (2017, July 10). FIREWORKS INJURIES AND PERSONAL INJURY CLAIMS. Retrieved from thelaytonlawform.com: https://www.thelaytonlawfirm.com/fireworks-injuries-personal-injury-claims/#:~:text=If%20a%20spectator%20is%20injured,to%20protect%20onlookers%20from%20injuries.
Cornell Law. (n.d.). Common-Law. Retrieved from law.cornell.com: https://www.law.cornell.edu/wex/common_law
Economics Online. (n.d.). Unemployment types. Retrieved from https://www.economicsonline.co.uk/: https://www.economicsonline.co.uk/Managing_the_economy/Unemployment_types_and_causes.html
Kappel, M. (2019, February 11). The Pros and Cons of Hiring Seasonal Employees for Your Small Business. Retrieved from https://www.patriotsoftware.com/: https://www.patriotsoftware.com/blog/payroll/advantages-of-running-payroll-as-a-seasonal-employer/#:~:text=Because%20seasonal%20workers%20are%20only,less%20motivated%2C%20and%20uncommitted%20employees.
Kupfer, M. (2019, September 16). Disadvantages & Hidden Costs of a Sole Proprietorship. Retrieved from delawareinc.com: https://www.delawareinc.com/blog/disadvantages-of-a-sole-proprietorship/
Lee Law Review. (n.d.). Basis Of Liability In Fireworks Accidents. Washington and Lee Law Review, 18(1), 144-149. Retrieved from https://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=3467&context=wlulr
Leonard, K. (2019, February 04). 5 Requirements for a Contract. Retrieved from chron.com: https://smallbusiness.chron.com/5-requirements-contract-15616.html
R, N. (n.d.). Disadvantages of Sole Proprietorship. Retrieved from https://www.businessmanagementideas.com/: https://www.businessmanagementideas.com/sole-proprietorship/disadvantages-of-sole-proprietorship/20248
Sherman, F. (n.d.). The Disadvantages of a Sole Agency Agreement. Retrieved from chron.com: https://smallbusiness.chron.com/disadvantages-sole-agency-agreement-42444.html
Uniform Law Commission. (n.d.). Uniform Commercial Code. Retrieved from Uniformlaws.org: https://www.uniformlaws.org/acts/ucc
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