Reference no: EM133875153

Assignment: Project Guidelines

Business law plays an integral part in both our personal and professional lives. A solid grasp of essential business law concepts is critical to successfully navigating complex and diverse business environments. You will assess relevant legal issues and apply the discipline-specific knowledge necessary to successfully address real-world business situations such as business formation and management, liability issues, and compliance with government and industry regulations. You will also effectively communicate issues and facts to peers and professionals.

The project represents an authentic competency. You will have the opportunity to present your analysis of the legal and ethical issues involved in three hypothetical business scenarios as well as to evaluate and make recommendations to avoid such issues in the future.

This assessment addresses the following course outcomes:

A. Apply the law regarding business relationships, such as agency law, partnership, and corporate law as strategies for appropriate and effective business management

B. Analyze issues of real and personal property as they pertain to business formation and management

C. Determine the legal rights and duties of the parties to commercial paper for their impact on fundamental business operations

D. Analyze the rights and duties of the parties in credit transactions, including secured transactions and bankruptcy law, as they apply to fundamental business operations

E. Evaluate the impact of government regulation on business practices for strategic and compliance purposes

Prompt

The project for this course consists of two milestones and the project submission. Milestones One and Two are short answers crafted in memo format from the perspective of a business consultant who is making recommendations to a client. For Milestones One and Two, use the case study to craft a professional memo that is appropriate in format, tone, and content to send to your clients Javier and Elena with your preliminary thoughts on their case. Your memos should illustrate the issues and relevant law, apply the facts, and support your conclusions with regard to each issue. Your communications should always be clear, kind, and professional. The third element, the case study in the Project submission, will be a short, 2 to 3 pages memo in APA format that will require you to independently issue-spot as well as provide a factual analysis of relevant law and recommendations. You will receive feedback on both milestones. Make any necessary revisions and then include them all in the submission, where you will label them as Case Study I, II and III.

Case Study I

Javier is well-known in his town for his homemade salsa picante, also known as hot sauce. After years of encouragement, he has decided to take his product to market as "Javier's Very Hot Sauce!" The label includes the subheading "It just might kill you!" The sauce is made with an extremely spicy hot pepper that can cause eyes to water and, in rare instances, abdominal pain and cramping.

Javier plans to make and bottle his hot sauce in a large outbuilding on his 50-acre property. Javier and his wife, Elena, have two children: a son, Antonio, and a daughter, Maria. Maria does not work for the business. Javier expects Antonio to be involved with the business now, though. He even presented Antonio with an option to make him a partial owner at a later date.

Antonio has been promoting the product for commercial sale. As a result, several local restaurants and grocers have placed orders with Javier. Antonio also intends to approach several national chains to secure supply contracts for Javier's hot sauce. Javier has asked Antonio to assist him with sales and deliveries by using Antonio's van.

Both Antonio and Maria live with their spouses and children in homes built on their father's property. Javier has told them they both will inherit the property in equal shares.

Javier and Elena engage you as their business consultant to assist with the formation of their new business. This includes determining the appropriate business entity type, management issues, product liability issues, and estate planning for both the business and family property. While you are not an attorney, you are very familiar with the many legal details and nuances that need to be addressed before Javier goes further with his plan. After your initial meeting, you identify and research the following issues.

Specifically, address the following rubric criteria in your memo to Javier and Elena:

A. Describe the main types of business entities and their defining characteristics.

B. Apply product liability law to determine issues and recommend mitigating actions.

a. How would you advise your client to mitigate those issues?

C. Apply the elements and characteristics of an agency relationship to actions. Determine if an agency relationship was created and if it provides justification.

a. Does Antonio's involvement prior to the business formation, and his anticipated role once the business is formed, create an agency relationship?

b. Why, or why not?

D. Identify potential real property issues based on the location of the business on the family property and provide justification for each.

E. Determine if the manufacture process of Javier's Very Hot Sauce! on the family property necessitates a formal transfer of ownership or possessory rights, and defend your response.

F. Identify potential personal property issues based on the use of Antonio's personal vehicle to deliver the product, and justify each potential issue.

G. Determine if the use of a personal vehicle exposes Antonio or the business to any liability issues.

a. Does the use of his personal vehicle in the course of business expose Antonio or the business to any liability issues?

b. Defend your response.

H. Identify potential estate planning issues.

a. Identify potential estate planning issues regarding the business and the family property.

b. Justify each potential issue.

I. Determine what estate planning vehicles are available to transfer ownership between two parties and provide advantages and disadvantages to each.

a. What estate planning vehicles are available to Javier and Elena if they want to transfer ownership of the business and family property to Antonio and Maria?

b. What are the advantages and disadvantages of each?

J. Apply legal and factual analysis to form a recommendation on an appropriate business entity and provide rationale.

a. Applying your analysis of the issues above, which type of business entity do you recommend for Javier's Very Hot Sauce!, and why?

Case Study II

Javier's Very Hot Sauce! has hit the market. It has become a huge success locally, and they are looking to grow nationally. Javier has patented his famous concoction and trademarked the hot sauce's name and logo. Demand is so high that Javier and Elena are working full-time on the business. Their children, Antonio and Maria, have now joined the company full-time as well. In fact, Javier has made Antonio and Maria partial owners of the business. Javier and Antonio handle the production, sales, and delivery. Elena and Maria handle most of the administrative and business management tasks. They hired a longtime friend, Tiffany, as the bookkeeper. While there are more employees now, Javier and Elena are the only authorized signatories on the corporate account.

At this point, the business has only one business credit card that they use to buy Javier's Very Hot Sauce! production supplies. There is also a small mortgage outstanding on the family property. The business owes vendors money for supplies, but it is consistently in the red. Individual family members carry high personal credit card balances. Antonio has a loan on the delivery van, too.

Elena and Maria are working on securing a new production facility and distribution chain. They need this to accommodate an upcoming contract with a national chain. After locating a large warehouse on several acres, Elena and Maria approach their local credit union for a loan.

An issue arises during the commercial loan accounting review process. The bank discovers that Tiffany has been siphoning off large amounts of corporate money and "cooking the books" to hide her actions. She has written several checks from the corporate account and forged both Javier and Elena's signatures on several checks from the business's account. Tiffany also wrote several of the forged checks to Don, a local loan shark, to repay her gambling debts. After feeling some guilt about her actions, Tiffany wrote one very large check out to "Cash" and slipped it into the collection box at church. The embezzlement is so severe that the family fears Javier's Very Hot Sauce! business is on the brink of bankruptcy.

Meanwhile, Antonio has refused to enter into an exclusive distribution deal with the local grocery store. This upsets Tyrone, the owner of the local grocery store. Tyrone has exclusively promoted Javier's product and believes he is the one who made it a success. As a result of this dispute, Tyrone has discontinued buying the product. Tyrone has also reverse-engineered the recipe for Javier's Very Hot Sauce! and has posted it online in an act of vengeance.

Specifically, address the following rubric criteria in your memo to Javier and Elena:

A. Determine the legal defenses Javier and Elena might raise about the checks written by Tiffany to Don, and explain why defenses will be successful or unsuccessful.

B. Determine the legal defenses Javier and Elena might raise about the check written by Tiffany and delivered to the church, and explain why defenses will be successful or unsuccessful.

C. Determine civil claims available to Javier and Elena against Tiffany based on her actions, and evaluate the potential for success.

D. Analyze the forms of bankruptcy available to the business in this instance based on the chosen type of business entity, and determine which form is most appropriate and why.

a. Assume the business entity is the same form as you chose in Case Study I.

E. Analyze the implications of a potential bankruptcy action on the business assets, and explain which are subject to forced sales, liens, or forfeiture.

a. Assume the business entity is the same form as you chose in Case Study I.

F. Analyze the implications of a potential bankruptcy action by the business on the personal assets of the individual family members, and explain if the assets of business owners are subject to forced sale, liens, or forfeiture.

a. Assume the business entity is the same form as you chose in Case Study I.

G. Determine the legal recourse Javier has against Tyrone for infringement of intellectual property rights, and explain why Javier will be successful or unsuccessful.

Case Study III

Both Javier's family and the business have rebounded from their prior issues. Tiffany sought counseling for her gambling issues. She has worked hard to mend her relationships with the family. Before cashing the forged checks from Tiffany, Don was struck by lightning and experienced a spiritual enlightenment. He willingly returned the checks to Javier and Elena and promptly joined the Peace Corps. Likewise, when the church found out the donated check was a forgery, they immediately returned it. Tyrone's wife (also Elena's best friend) found out about Tyrone's online sabotage. She promptly remedied the situation.

Once Javier's Very Hot Sauce! was back on track, the company's growth was exponential. They were featured on a popular talk show starring a prominent chef. After this, online orders and demands from big-box chains nationwide skyrocketed. Javier and Elena have been told that now would be an ideal time to take Javier's Very Hot Sauce! public. The only concerning issue at hand involves Manya, a local woman with an accounting degree. She applied for the open bookkeeper position. Javier told her that he needed a man and hired Marcos, a man without a degree and no experience instead. Manya has filed a claim of sex discrimination against the company and Javier personally.

Javier and Elena are seeking your advice about Manya and the possibility of taking the company public.

Complete a legal analysis of the given facts, including the following elements.

Specifically, address the following criteria:

A. Evaluate three existing or potential legal or regulatory issues apparent in this fact pattern that might impact a public offering.

B. Determine whether Javier's Very Hot Sauce! is in compliance with government regulations involving public offering by analyzing relevant laws and using the appropriate legal test and facts given.

C. Support your conclusions of law and provide recommendations to improve compliance and strategies for corporate growth.