Perspectives of American Business Law - Assignment Example

Name Professor Course Date Perspectives of American Business Law Question One: Using your “own eyes” as a lawyer from your own country, what have you learned from his course about being a good business lawyer in the United States that could be helpful to you when your return to your home country. Human beings come across varied encounters in their day to day life. Attorneys come in handy when it comes to resolving disputes. They research laws prepare drafts for legal documents and help their clients to argue out their cases before the court. Business or Corporate Lawyers usually ensure that commercial transactions occur according to the laid down rules and procedures. These lawyers must have a firm grip of several statutory laws and all the regulations drawn by the government. Corporate attorneys may be required to conduct some research about contract laws, licensing, taxation, zone laws and any other regulations relating to the business field. They must also ensure that transactions do not against federal laws. Business law will never run out of demand, since there. Becoming a business lawyer require spending several years in school, and gaining enough experience from court cases. During this course, I have learnt many things about being a good lawyer in the United States, which will be helpful to me even after I return to my country. I have been able to gather the following from my observations and studies: a.) Building Trust Being a successful business lawyer in the US requires one to gather trust. Trust is an issue that is not only beneficial in this field, but even in other careers. Many clients usually fear approaching just anyone to help them handle their problems since there are also many quacks in the market, even though they pose like genuine and highly experienced professionals. It may be difficult to win the trust of people who have never worked with you, or heard about you. Winning trust hence starts from the first case that an attorney handles. Representing a client professionally and helping them to solve their legal issues successfully will undoubtedly make them to invest their trust in you. The advantage of creating this trust is that it will be a future avenue for your clients. Research shows that more than 54% of business clients in the US are usually as a result of referrals from past clients. Returning clients also occupy a larger percentage, of about 14%. Nobody wants to lose a case; clients want to work with lawyers they can trust with their case, as well as their secrets. b.) Work in a Team Business law is team oriented; unlike adversary law, it requires a lot of research and understanding of very many and minute corporate laws, which may easily land anyone into a problem. Since the US has a dedicated team of business lawyers, it is advisable to identify a group of lawyers, whom one can work with, in order to develop a strong defense team for their client. Teams may also help win a case since business law, unlike adversary law, does not involve a lot rivalry, since both sides usually have a common goal. They can hence negotiate and find a way around their cases, in a bid to mutually help their clients. c.) Client Relation While working as a business lawyer in US, it is very essential to learn professional client relationship skills. Many lawyers, in the US and outside the US, have found themselves in problems due to these issues of Client relationship. It is good for a lawyer to develop a friendly relationship with a client. This important as it will help the lawyer to retain clients, and get many referrals. However, the mistake that many lawyers do is to develop a very personal relationship with their clients so that instead of telling the truth to their clients, they tell them what they know the clients would want to hear. Good client relation should be friendly, yet professional. It is much better to tell a client the truth about his actions, than tell him what he wants to hear since this may cost you your license. A good corporate lawyer should also avoid greed, and hence exercise good sense of judgment before accepting to represent a client. d.) Paying your Dues Pressure in law starts early, in the US; admission into a law school is very competitive, although there are a good number of institutions that offer a degree course in law. However, the school you attend will play a great role in determining your future as a business lawyer in the US. You will be enrolled for a summer job basing on the type of school that you attend for a law degree, which will definitely determine your permanent job. A student who targets to be a good and successful lawyer should hence start by choosing the right school since varied colleges offer different contents of study. An advantage of being a big corporate lawyer is that you may take months negotiating an expensive commercial deal, which will definitely come with a huge pay, unlike a small lawyer who may handle small cases like divorce. e.) Specialization I also learnt that specialization is very useful if one has to be a good lawyer. Specialization gives one enough time to concentrate on one thing, and hence develop a high level of competency. In the US, many clients prefer special attorneys to general practitioners. Clients believe that general practitioners may only stand useful in small legal issues and that they may not be competent enough to handle complicated cases and expensive commercial deals. Specialization will hence help you attract clients while at the same time, giving you an opportunity to become a master in your field of business law. Question Two: “Basic agency law principle can be used by a good plaintiff’s lawyer to achieve comparable results to ‘alter ego’ judicial theories in most ‘pcv’ situations.” Critically discuss and evaluate this statement. Sternberg (5) asserts that an agency relationship exists where one person, the agents represents another person, who needs such kind of representation. This means that an agent acts on behalf of another person and does not deal in his own goods. He must hence act in the best interest of the principle, and perform what would have been done by the principle, in his right state of mind (6). Alter ego occurs where there is a strong unity between an individual and a corporation, such that it is difficult to put a mark between the company and that specific individual, which results in holding both the corporation and the individual liable for any injustice. Incorporation is usually used by many business owners as a way of limiting their liability for their business obligations and debts. When a corporate entity is, however, dominated by an individual person, and that the company is so misused that the individual starts to transact individual business with it, it will result to the individual’s alter ego. The corporate form of the organization will hence be overlooked. In a partnership, the agent is entitled to represent the principle, and act in the same capacity as that of the principle (Steinberg, 8). This is just the same case within corporations since the directors and the employees act as agents to the company. The agent hence has the ability to bind the principle. The Liability of Agent law stipulates that an agent cannot personally enforce contracts, entered into by him on behalf of his principal, and he cannot be personally bound by them. This relationship is called the agency immunity. However, there are some situations under which agency immunity may be found null and void. The following are some of the principle that can be used by a good attorney to create a situation equivalent to alter ego, in an agency case. a.) When an agent makes a contract for a merchant residing abroad, there is a general pre-assumption that the agent undertakes personal liability. b.) The agent shall also be personally liable where he does not disclose the name of his principle. c.) If the agent ha personal interest or special interest in the subject matter of the contract, or has a beneficial relationship with the subject matter, he is liable to the extent of his interest. d.) Where an agent exceeds his authority or professes to act as an agent, but has no authority from the real principal, he shall be personally liable for breach of warranty of authority. e.) Where an agent receives a bribe, or pays money to a third party by mistake or fraud with regards to matters which do not fall within his authority, or the ordinary course of business for his principal, he shall be personally liable. Question Three: Hypothetically, starting from a blank state legislative slate, the only form of business organization that would be needed today would be the Limited Liability Company form. Analyze and critique this statement. Whilst a number of business entities prefer to operate as sole proprietorships or partnerships, it is undisputable that almost all large and significant businesses operate as incorporated companies. This is the best form of operation that a business can adopt. Incorporated companies have very many advantages, rising from all facets, in the course of their operation. Below are the advantages of operating a limited liability company. Separate Legal Identity Limited liability companies are treated as separate entities from their owners. They have legal existence, which is independent of their owners, the management and the shareholders. This means that unless there is a situation of “alter ego,” business obligations will only affect the owners to a limited amount, equivalent to their share of ownership. Members' liability is limited ("limited liability") One of the best advantages of a limited liability company is the level of protection that is given to the owners. The members are only liable up to the amount of their unpaid shares. Many private companies usually issue out their shares in term of “fully paid” mechanisms, so that in case of a company loss, the members will only lose an equivalent of their shares and any other loans that they may have advanced to the company. Because of this, no personal assets are usually exposed to the risk of loss in the process of recovering the company’s obligations. However, this protection enjoyed by a member of a limited company does not stand in the case of fraudulent transactions. Directors will face liability without limit if they involve themselves in any fraudulent activities. Protection of Company Name Choice of company names is restricted by the registrar of companies. There are set rules to guide the choice of company names, and once set-up, no one else can use that name. Sole proprietorships and other sole traders only enjoy the protection for their trademarks. Continuity Unlike other forms of businesses, Limited Liability companies have a perpetual continuity. A partnership can be dissolved when one of the partners withdraws his support, either by death or voluntarily. On the other hand, a limited liability company, once formed enjoys an everlasting life. The directors and other employees of a company only act as agents to the company. The company will still be inexistence even if the owners and founders die or leave the business. A limited liability company, as a result, can only be terminated by winding up, liquidation and a court order. New Shareholders and Investors can be easily introduced Unlike partnership businesses, shareholders and investors can be introduced to Limited Liability Companies easily. This makes it easy for the company to obtain capital, in terms of both finances and labor. The processing of lending to a limited liability company is easier than in other types of businesses, like sole proprietorships and partnerships. This is because the lending bank can secure its money or loan via the company’s fixed assets. For a partnership or sole proprietor to obtain a loan, the private property of the owners is usually used as collateral. Better Pension Schemes Pension schemes of limited liability companies, once approved, usually provide better returns, in terms of benefits, than sole businesses. Taxation Sole proprietorships and partnership businesses usually pay income tax. On the other hand, companies usually pay corporation tax, which is deducted from their taxable profits. This gives limited liability companies an advantage over sole business, who receive less money compared to the directors of limited liability companies, because of tax rates. As much as limited liability companies may have many advantages, there are a few reasons that may discourage people from forming them. These are: Costs First, the formation of limited liability companies involves a lot of costs. Before a limited liability company starts to run, the relevant documents should be submitted to the registrar of companies, and the relevant fees paid. Limited companies also have a lot of running costs and expenditures which one must have to run a successful Limited Liability Company (Lynch, 27). Such fees as franchise fees must be paid perpetually, as long as the company lives. Some states like Arizona and New York have made it mandatory for limited liability companies to publish their formation in local news papers, which can be an extra cost for the company. Transferable ownership It is usually hard to transfer ownership of Limited Liability Companies as compared to corporations, whose stock can be sold to increase ownership. Limited liability owners, on the other hand, must approve the addition of new members, and changing the percentages of ownership of the company. From the argument presented above, it is undisputable that there are more advantages of running a limited liability company than the disadvantages. The few disadvantages like costs are very minor issues that cannot be treated with much strength since finances can always be sought. It is hence true to say that the best business that the only businesses that should operate in the modern world are Limited Liability Companies. Question Four: “The franchise arrangement is a unique invention of American legal ingenuity that can offer much to non-U.S. legal systems that do not yet have this way of doing business.” Discuss critically, using your own eyes as a lawyer from your own country, the pros and cons of this statement. What Is a Franchise? The Federal Trade Commission is the governing body that regulates how franchise businesses work. It classifies franchise businesses into two, depending on the arrangement (Lynch, 32). a.) One situation is where a franchisee gives a license to another person, the franchisee, to operate the business under the set-up format. A good example is where a franchiser sets up a fats food restaurant or coffee shop, and licenses other people to operate the same business, without altering anything in the original set-up. This is also called a business format or package franchise business. b.) Another situation is where a franchisee agrees to sell products that have been made by the franchiser, who also controls and manages them. This is called product franchising. Common examples of product franchise are gas stations and auto dealers. According to the rights of the Federal Trade Commission, a franchise will exist if: One owns the distribution rights of products that bear the trade mark of the franchiser. The franchiser assists you in conducting a business, and You give to the franchiser a minimum fee of $500 during the first six months of business. The franchise arrangement is a unique invention of the American Legal ingenuity, and can be of great help to non-US legal systems that have not discovered this method f business. In this section, I will discuss critically what I have seen as a lawyer in my own country. Pro's and Cons of Franchising Advantages a.) Experience of the franchisor In my own country, there are many people who have not been able to succeed in business due to poor business skills and low levels of experience. However, franchising may provide a lasting solution to this problem. A strong reason for encouraging the development of more franchise business is that a franchisor is usually experienced in his field of work (Steinberg, 203). Franchises like MacDonald and Kentucky Fried Chicken have operated their businesses for a long time. They have gathered enough experience and successful business formulas, compounded by wide customer recognition. They can provide a good base for a starter in their filed of business. b.) Training Franchisers usually provide training to their franchisee. A good franchiser, who has a good business experience, will provide ample training, with excellent resources in your own place of business operation, in order to help you get started at a high note. c.) Buying and advertising There are many people usually drain a lot of cash on buying and marketing their products. In a franchise business, you can benefit from the franchisers already sold out the name, and public awareness. Franchisers also do advertising to continue popularizing their brands. This saves the franchisee a good deal of money, which would have been directed towards advertising. The franchisor may also buy products cheaply he buys in bulk; hence benefiting from the large number of purchases. This is unlike the franchisee, who may not be in a position to buy in bulk, and will be forced to buy at the market rate. The market rate may be expensive to the franchisee. d.) Research and development Before the franchisor decides to get into business, he does all the necessary research about his products. By the time he invests into a business, he is usually armed with a lot of knowledge about his product and the general market. He also generates development strategies, which will definitely benefit the franchisee. The franchisor, in the course of business, usually does further research, and continues to advice the franchisee on how important issue such as how to launch new products in the market. e.) Business Synergy Franchisees have the same goal. When you acquire a franchise, you are joining a family of other similar businesses, which share the same goals and objectives. All of you adopt a similar mission and you start working towards the same goal, on behalf of the franchisor. You hold regular meetings to share challenges, and since you are in the same field, the challenges are almost the same, and you can solve them together. Disadvantages a.) Added expenses Franchisees must pay some fee to the franchiser, before being allowed to use the franchisor’s name to conduct business. The main problem here is that fee can be very high, especially if the franchisor expects that his brand name will be a hot in future. There is also an ongoing fee, which eats in to the profits of the franchisee. b.) Uniformity People who are used to doing things in their own unique ways may not like the idea of franchising. It may also be difficult for people who do not like routine. In my country, people believe that they must differentiate their businesses form other so that they can appear unique. Franchises may hence get a low support. c.) False expectations It is easy for some people in my country to fall into the trap of feeling that, they will experience immediate success by buying franchise. There are people who have money to invest, but they do not have right investment ideas. Such people are the ones who are likely to follow the wind and buy franchise, hoping g to succeed instantly. Work Cited Lynch, T. Fundamentals of Business Law in the United States. Cengage Publishers, 2009. Print. Steinberg, M. Developments In Business Law And Policy. Cognella Academic Pub, 2012. Print. Read More