Reference no: EM132489051

Max, Hillary and Judy decide to start a business making parachutes. Max and Hillary will each invest $10,000 in the business. While they don't want to participate in the day-to-day running of the business they still want to have an active role in management. Judy has no money to invest, but she has years of experience making parachutes.

i. What legal structure would you advise for their project: a partnership, an incorporated association, a company (if a company, provide details on the type of company) or some other structure?  Why would you recommend this structure - provide details?

For the remaining questions, assume that a proprietary company is selected as the most appropriate entity for the business.

ii. If the company did not have a constitution when it was formed, can it adopt a constitution later?  If so, how?

iii. One of the company's employees, while making a parachute, left a needle on the table in the foyer at the company's office. Karl, a customer, entered the office and cut his hand when he touched the needle on the table. Max was standing nearby and when Karl screamed after being cut, Max said, "Chill out, it can't hurt that much."  Karl was so irate that  that he picked up the needle up and stabbed Max with it and said, "see how you like it." 

Have any torts been committed based on these facts?