Application in Managers Employee Motivation - Assignment Example

Law of Business Association: Application in Managers’ Employee Motivation By Name Presented to Instructor Course Institution Due Date Question 1: The most Appropriate Business Structure Choosing the right structure for a business is a critical step in establishing a business. According to the Australian Securities and Investments Commission (ASIC), the first step of establishing a business in Australia is deciding the right structure for your company. Considering their intention to start small, but with the hope of transforming the business into a larger provider of classroom seating, a Limited Liability Company (LLC) would be the most appropriate structure for their business. As a start-up business, an LLC will offer their business more advantages compared to other business structures. An LLC blends the certain strengths and positive attributes of other business entities, including sole proprietorship, partnership, and corporations without necessarily inheriting some of the limitations of these entities. However, it is imperative to note that Laws governing the establishment and operations of LLCs may vary from state to state. For instance, some state may put a threshold to the minimum number of members required to form an LLC, while some state will differ in terms of personal liability, taxation, and limitations to the forms or types of businesses the entity can engage. Nonetheless, typically an LLC is appropriate to Jack, Marry and Will because of a number of the following considerations. First, and from an ownership perspective, an LLC puts no limit to the number of members required to form them because it can comprise one or more members. This condition justifies the appropriateness of an LLC for their business because they are already three members and have freedom to add more members, for example, their neigbour, Ken who a potential asset to their business as he is willing to bring forth the capital they need to get the business started. Equally, their business will not suffer in the case one or two members decide to exit because of the absence of the minimum number of members to form LLCs. Furthermore, an LLC will guarantee all members a high degree of personal liability. According to AISC, an LLC is a legal entity that operates independent or separate from its individual members or owners. Just like shareholders in a corporation, individual members of an LLC are not individually liable for several issues arising from the business’ operations, such as debts or legal liabilities. Despite that Jack, Mary and Will may lose their individual contribution to the entity in the case of such uncertainties, like the case of shareholders, an LLC’s legal obligations would not implicate their personal assets, including home and bank account, at risk like a sole proprietor. However, an LLC does not offer absolute personal liability to the members, rather just like other business structures, when any of the members defaults paying a business debt or exhibit negligence causing injury or damage to a third party, or abscond individual responsibilities to the business, may be liable. Moreover, this structure is suitable for their business because choosing an LLC will shield them from double taxation. Typical corporations are subject to the additional cost of double income taxation as their profits are subject to taxation as income while shareholders still are taxed on dividends. On the contrary, an LLC enjoys the “pass through” procedure in which allocated profits are subject to single taxation on the tax return of each member. This exemption from double taxation would be particularly important to their business because being a start up entity, avoiding double taxation would save it extra capital to invest in and grow their business. Additionally, an LLC guarantees flexibility in sharing profits. Some business structures may allocate profits equally or based on individual capital contribution or volume of ownership. However, an LLC will enable Jack, Mary, and Will retain the flexibility to decide the manner in which they will share profit resulting from the business based on the business operating agreement. They will not be limited to their percentage of capital contribution or ownership interest. For example, if they bring Will on board and Will invest the largest share of capital in the business, he will not be subject to the largest share of profit, rather all will agree on a more equitable way of dividing up their business returns. With an LLC, the members can enter into an agreement to stipulate their respective duties, tasks and activities and structure the business in a manner that suits their particular needs. Also, they will make informed decision as all members will have to proactively participate in the decision-making processes. Question 2 (a) Jack not only breached their partnership agreement or contract, but also put the whole business as well as Will, Mary and Ken at risk. First, the cheap sensor may cause malfunction in the business products that may cause harm to the users. This may jeopardise the integrity and responsibility of the business as both the consumers and the legal system expect the business to comply with existing health and safety standards, among other requirement. Section 4 of the Partnership Act 1963 states that each member in the partnership business is subject to joint liability with the other members in the entity for any uncertainty for which the business becomes liable. Considering this provision, the partnership should be prepared to face any uncertainties that may arise from using the cheap sensors. Second, Section 34 of the Partnership Act 1963 states that each member in a partnership business is bound to be accountable to other partners for any benefits that accrue on all transactions concerning the business conducted without other members’ consent. In light of the regulation, it is clear that Jack engaged in theft of embezzlement of the partnership’s money. However, misappropriation of partnership money is a sensitive issue it can compromise the mutual trust among the members and creates unnecessary bad blood within the partnership, hence adversely impacting the good working relationship. Also, all partners are liable to the incidence. Therefore, the firm should find a better through which Jack may compensate for the stolen money and establish an excellent management system to regulate all transactions and detect and mitigate fraudulent activities. Question 2 (b) Attento–Chair Industries is subject to the law of Strict Liability. Strict liability involves an individual or company engaging actions that are extremely dangerous that the resultant harm or injury to either another person or property must be compensated. In 1996 Mr. MacPherson suffered serious injuries resulting from a brand Buick he had purchased from a local Buick dealer, whose wheel shattered into pieces during its first week of use. In MacPherson v. Buick Motor Co., the complainant sued Buick Motor for the injuries he had suffered as well as the damage to the Buick he had bought from the defendant. The court ruled that Buick Motor was the actual assembler of the complete Buick, hence had the legal duty to detect such defects, and was consequently held liable for the plaintiff’s injuries. Since it may be difficult to show how and when the firm was negligent in making the chairs, strict liability” holds that since the students suffered harm due to a defective or unexpectedly dangerous commodity MUST recover compensation from its producer or seller, without proving that the producer or seller was indeed negligent. As the manufacture, Attento–Chair Industries had a duty to ensure all the seats were safe and zero-defective. However, to successful prosecution of the negligence, the plaintiff in collaboration of the police investigation has to show that the defendant indulged in negligence. If the business is convicted of the harm to the students, they will have to compensate them. Nonetheless, the roots of this issue can be traced to find the primary orchestra to assume personal liability for the negligence. Question 2(c) As mentioned earlier, both partners are liable for some consequences of the company’s defective chairs because of their business structure. The members are bound by a business contract that calls for integrity and accountability in all operations. This implies that an issue to be undertaken by the business must be decided by the majority of the members in the entity. In light of this provision, Ken is justified because, as a primary partner, he is liable to the consequences of the malfunctioned chairs in the event the students sue Attento–Chair Industries and the police establish breach of health and safety regulations. Moreover, section 30 of the Partnership Act 1963 directs that books of a partnership entity ought to be at the disposal of the entity and each member has a right, when he thinks necessary, to access, peruse, or copy the financial documents. Also, an LLC necessitate all partners to proactively participate in the decision-making processes and activities, which include purchases concerning the partnership business. Considering these grounds, Ken has a right to access the firm’s financial records and make a significant contribution to the way in which the business is being run. Read More