Business Law Questions - Coursework Example

?First information Business Law Question Eva, the owner of Finest Enterprises, is a sole proprietor. Assuch, she runs and maintains ownership of the business herself. In sole proprietorship, there is no legal distinction between Eva and Finest Enterprises that is, the owner and the business are considered as one under law (Aronoff, Ward and Astrachan 22). The first advantage is that this type of business is easy to form. The business organization is simple with minimal legal formalities that includes the license and permits in special cases. The business is also easy to dissolve if Eva so wishes. The second advantage is that this type of business only needs small startup capital. Apart from this, the amount of money needed for management is small as there is usually no need for specialist in the various functional areas of the company. The third advantage Eva gains from this type of business organization is that it affords a great deal of flexibility in that decision making and changes are easy and fast. The fourth and probably the biggest advantage is that the owner receives all the profits from the business. The final advantage offered is that the company if moderately free from government control. The government regulates this type of business less than other types, thus Eva’s day-to-day operations are smooth as long as she follows the letter of her permit and license. While the business offers many advantages, it also has some challenges. First, these types of companies usually have limited resources. Due to this, banks and other credit facilities are usually reluctant to grant loans due to the high mortality rate of these companies as well few assets owned. The second disadvantage is that the owner assumes unlimited liability. This means that all the debts and loses fall on the head of the owner. The third disadvantage is that in the event the company fails, creditors have the right to force the owner to sell their own property as well as those belonging to the company to offset the debt. Finally, if the owner dies or is incapacitated, the business dies or is incapacitated. In order to raise capital, Eva faces some difficulties as investors unrelated to her will not be comfortable regarding the security and use of their investment. Capital investment for sole proprietorship is also difficult to secure and formalize without risking losing control of the company. The first course of action she may take is to seek financial aid from people related to her such a family and friends. She can also raise loans from financial and banking institutions. In this case, she can secure a loan from the bank for her working capital and seek help from specialized financial institutions in case of long term investment such as buying fixed assets. The third approach is discussing with her suppliers to receive goods on credit, i.e. acquire trade credit. Finally, she can lease her equipment to other firms in order to acquire medium term funds. Question 2 By looking at the second scenario, we find that Don has a basis to set aside the contract. This is because the contract between Don and Evan was entered under coercion. According to Bigwood (369), pure coercion occurs when one party plans to engage in a legal wrong to endorse his demands leaving another party to without any reasonable alternative but to comply. While Evans threat is not a legal wrong it is however exploitative, disagreeable and wrongful in the broader sense hence an improper proposal. Under contract law, Don can prove that he was under duress (duress to the person) thus enabling the contract to be rescinded since it will then be voidable (Stone 337). In order to prove that the contract was under coercion, Don has to prove that no other reasonable option remained but to sign the contract. This can be done by reviewing the relationship between him and his nephew as well as contracts they had entered before. Apart from voiding the contract, Ron can also choose to enforce the contract (Bigwood 370). Cases of contract under duress make the contract voidable but not void thus Ron can choose to enforce the contract becoming Evans legal partner. Ron can also seek the help of the court to get benefits that may have accrued from his investment. And finally, Ron can ask for damages/restitution if he loses money from his initial investment. Lose of money can be because of lost opportunity (previous investment could have brought more money) or it can be because the new investment loses money. Question 3 In the case of Standard Storage Company versus Tri-County Investment Corporation, the furniture so promised form part of the sale. In order to explain why, we have to understand the term contract. A contract can be defined as an exchange agreement initiated either by written form or orally between two or more parties, having a minimum of one promise, and accepted in law as enforceable (DiMatteo 13). Contracts have three elements: offer and acceptance, consideration and legal obligation. In this case, the seller, Standard Storage, tells the buyer that the furniture in the building to be sold is part of the package. Once the buyer accepted this promise, an oral contract was formed. Although the written contract has a provision arguing it supersedes all previous oral promises, it does not negate them. In this case, the oral promise takes second place to the written document. It should be noted that the contract does not mention the furniture. The contract thus leaves the aspect of the furniture to debate, they can either be part of the sale or not. Since they were promised earlier and since the contract did not specify that the furniture were not part of the contract, the buyer thus has a right to the furniture. Another aspect to note that the sellers promise created an implied contract (Hare 64). Standard Storage used the furniture to entice the buyer to enter into the contract. Under law, an implied contract denotes those obligations that arise from intent to promise and a mutual agreement. The law can only enforce an implied contract if the implication can be reasonably deduced from the associations and that surrounded the parties when they entered the contract (in this case buyer and seller) and the circumstances surrounding the contract. The furniture is thus part of the sale as Standard Storage entered into two contracts with the buyer: a true contract (written) and an implied contract (oral). And regardless of the provision, the implied contract still stands as furniture was not mentioned in the contract that is whether or not they form part of the package. Question 4 Specific performance describes a court order that calls for a party to execute a specific act, usually the act specified in a contract that the party had entered into. For the court to decide whether to offer remedy in the form of specific performance, it has to distinguish between contracts to produce and contracts to convey existing goods (Stone 128). In the case of Nancy, she had to produce an item from scratch. She delays and then refuses to complete the contract. In cases involving production contracts, specific performances may bring about four challenges that the court has to consider. First, Anne might be forced to produce the mosaic even though it may be very expensive and dwarfs its value to General. The court thus has to consider if the specific performance will force her to perform even though she may face more costs than if damages was offered. The second consideration is if high production expenses (both time and money), may lead the party (Anne) to engage in careless avoidance steps thus producing subpar outcomes. If the specific performance will force Anne to work while both limited in time and money, she may choose to hurry and leave some things from the mosaic thereby delivering a poor quality output than what was agreed upon in the contract. The third consideration is the likelihood of Anne being forced to pay huge amounts for release, if she deems performance to be too expensive, constitutes an undesirable risk for her. This comes about in that, even if Anne avoids excessive performance through securing a release from the contract, she bears a large risk is specific performance is enforced. The final consideration regards whether the enforcement of Anne’s obligation to perform has the likelihood of involving substantial expenses and yield subpar outcomes (Stone 128). Anne’s outcome is a painting that comes from her talent. It is therefore impossible to enforce the specific performance as no one can force her to paint or create the mosaic. The case of general is however quite straight forward. The uncertainty that faced General in the contract entered with Ideal involves bids for the property that other outside parties like Jewel Funds might make. Production cost uncertainty does not exist as the property already exists and General only has to turn it over. The uncertainties involved in contracts to produce do not affect this type of contract thus the considerations differ. The seller, General, does not have to buy a release when performance would be expensive as they can comply with the specific performance by turning over the property that they have in possession. The second consideration is Jewel Funds could buy from Ideal Inc. as well as General. Finally, enforcing the specific contract in this case is quite straight forward and does not have the difficulties that are inherent in production of a new item. Question 5 In this case, GMI and Channel 4 go against a statute that prohibits advertisement on the claims that it is harmful to minors. The main point of defense is that this statute is unconstitutional as it violates the right of freedom of expression. The government has also engaged in legal coercion as it has imposed its beliefs and not facts on the people through the statute. The government should only prohibit conduct to yield favorable consequences appropriate to prevail over the loss of liberty. Permissible government action should be immediately advantageous for most individuals. The statute so enacted is vague and has no foundation whatsoever. In order for the government to enact such a statute, it should provide sufficient evidence that the games are harmful to children. Using supposition and assumptions to enact a law goes against many rights of the people. A statute should be based on facts, proved by specialist and supported by professionals from the relevant field, in this case medical professionals. This statute is vague and is a form of coercion. An action is only right or wrong depending on its consequences. Human liberty is a good thing and the constitution was developed to protect it. Thus, enacting a statute on the fear that an action might cause a given problem is wrong and against the constitution. The government can discourage advertisement of the games based on this fear but it cannot prohibit advertisement. Works Cited Aronoff, Craig, John, Ward and Joseph, Astrachan. Family Business Sourcebook. New York: Family Enterprise Publishers. Bigwood, Rick. Exploitative Contracts. Oxford: Oxford University Press. DiMatteo, Larry. Contract Theory: The Evolution of Contractual Intent. East Lansing: Michigan State University Press, 1998. Hare, Clark. The Law of Contracts. New Jersey: Lawbook Exchange, 2003. Stone, Richard. The Modern Law of Contract. New York: Routledge, 2013. Read More