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Forms of Business Organizations and Int'l Law - Essay Example

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Running head: Law Forms of Business Organizations and Int'l Law Insert Name Insert Grade Course Insert 28 March 2012 Issue 1- Forms of Business Organizations: The case of Raylan’s and Boyd’s “Justified BBQ” partnership (a)Amount of profit entitlement for Boyd Raylan and Boyd are entitled to 50:50 shares of the business profits…
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Forms of Business Organizations and Intl Law
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Download file to see previous pages Further, the death of either of the partners is enough reason to cause dissolution of the partnership regardless of whether the remaining partners resolve to continue or not. The fact that Raylan and Boyd had agreed orally to set up a partnership and share profits and expenses equally does not amount to an agreement in law because in absence of a written document containing provisions and guidelines about the partnership, the courts will apply the state law on partnerships (Bagley and Savage, 2010 chapter 20). (b)Party to be sued by Sassy Sauces if Justified BBQ refuses to pay at the time Raylan and Boyd are winding down the business The partnership will be the one to be sued by Sassy Sauces and bears full liability to pay for the supply of the BBQ sauce. A partnership is created expressly or implied by two or more people with a common understanding about capital input, sharing of profits and losses, efforts and labor as well as skills. Even with the implied agreement, decisions on third party transactions made by some partners without consent from the rest are binding on the partnership and not on the individual partners involved. In this case, Boyd entered into a third party transaction for the supply of BBQ sauce without the knowledge of Raylan. In spite of the contract price being overstated, the transaction was binding to the partnership and is viewed in the eyes of the law as though it was a consequence of a shared decision. Partners owe each other duty of care in regards to entering into irresponsible business transactions as Boyd did in order to get the attention of the receptionist in Sassy Sauces and they should hold in trust the property and profits of the partnership business. These fiduciary duties towards each other continue until the business is wound up completely (Bagley and Savage, 2010 chapter 20). (c)Responsibility for payment for the BBQ sauce if Justified BBQ was a corporation and went bankrupt The corporation would be the one to pay for the BBQ sauce. In law, a corporation is a legal entity different from its owners and the liability of the shareholders is limited to the amount of investment in the corporation therefore the corporation carries the responsibility arising from actions of the shareholders and/or directors although the veil of incorporation may be pierced to determine the real owners and hold them personally liable. In the worst case scenario, Boyd as a shareholder would lose the amount of capital investment equivalent to the payment required by Sassy Sauces. Because ‘Justified BBQ’ has two owners only then it would most probably be a close or closely held corporation. If it as a close corporation in which case shareholders have an option in written agreement to run the day to day operations and not appoint directors, the actions of a shareholder (like Boyd in this case) would translate to personal liability because the veil of incorporation would ordinarily be lifted or pierced to establish who are the real owners of the corporation involved in swindling the corporation of its resources and apportion the loss accordingly. In the case of a closely held corporation which is identifiable with lack of a market for its stock, greater responsibility is placed on the majority shareholders and the directors, in this case Ralyan. Boyd will still be held accountable for his actions because Ralyan did not a ...Download file to see next pagesRead More
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