BUS 311

ACME FIREWORKS, FROM A SOLE PROPRIETORSHIP 7

Enrique Luna

BUS 311

Business Law I

Instructor: Professor Peter McCann

Acme Fireworks, From a Sole Proprietorship to an LLC (Outline)

I. Introduction

Entrepreneurs need to conduct thorough research in preparation for what could be a potentially successful business adventure for them. One such organization that has been successful and is on the verge of becoming even more successful is Acme Fireworks. This is a business that sells fireworks, is involved in putting on ground firework shows as well as large aerial firework shows. Acme evolved from the proprietor’s garage and has been in business for two years and currently employs 15 employees. Recently, there have been potential opportunities for the business to grow.

a. Thesis Statement

Acme Fireworks will continue to grow and in order to do so the business will need to research the best options that are available and should be considered, such as, what laws regulate contracts, how are contracts formed, what are the potential personal liabilities, how to employ personnel and their relationship to the principal, and finally what will the new business entity be.

II. Body paragraph #1 – Topic Sentence #1

While common law stresses the creation of rules based on court rulings, the Uniform Commercial Code (UCC) are exceptions to the common law.

a. Supporting Evidence

According to Judge Aldisert (as cited by Kozel, 2014), “common-law tradition requires starting with a narrow holding and, then…either applying it or not applying it to subsequent facts” (p. 190).

“The adoption of the U.C.C. provided a major leap forward for good faith in American contract law. The U.C.C. itself provides that “every contract or duty within the code, imposes an obligation of good faith in its performance or enforcement” (MacMahon, 2015, p. 2060).

b. Explanation

Courts have the ability to determine their rulings based on common law that can be adjusted to recent times, the current environment, and advancements in technology. Should the courts deem it necessary, the UCC is more specific to contract law?

c. So What?

While the courts may find it too easy to make judgement solely on common law, the court must take into consideration the guidance set by the UCC in reference to contracts.

III. Body paragraph #2 – Topic Sentence #2

A contract is composed of five essential elements.

a. Supporting Evidence

The offer is “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it” (Ricks, 2013, p. 625),

b. Explanation

The five essential elements of a contract include the offer, acceptance, consideration, legality and capacity.

c. So What?

Although contracts are what keep businesses going and goods flowing, it is important to understand then the contract is agreed on.

IV. Body paragraph #3 – Topic Sentence #3

Businesses run the risk of encountering potential personal liability through negligence or strict liability.

a. Supporting Evidence

“Recently, a fireworks malfunction injured two spectators at the home stadium of the Hudson Valley Renegades, a minor league baseball team in New York” (Epstein, 2011, p. 122)

b. Explanation

According to Rogers (2012), “the law states that everyone has the duty to act with reasonable care to avoid creating undue risk of harm to others” (section 2.4).

c. So What?

Fireworks present an ultrahazardous activity and involve a great deal of risk that may not be preventable by being reasonably carful. Because they are not a common thing, it is necessary to take extra precautionary measures to insure the safety of the public.

V. Body paragraph #4 – Topic Sentence #4

Acme fireworks is composed of legal relationships between its employees and independent contractors.

a. Supporting Evidence

“The rules of agency law come from the common law, and potentially apply to any situation where one person is acting for another” (Rogers, 2012, p. 244).

b. Explanation

The agent is the employee who represents the principal or the employer. Each has the duty to be loyal to one another in order and trust each other.

c. So What?

Principals are pretty much liable for the torts of its agents when these torts are committed while carrying out his or her assigned duties.

VI. Body paragraph #5 – Topic Sentence #5

Acme Fireworks came into business as a “sole proprietorship” and because of the possible future growth and expansion, it is in its best interest to become an LLC.

a. Supporting Evidence

According to Rogers (2012), having LLC status permits a simple formation that is accompanied with lower filling dues, members of this organization are taxed on their earnings, the firmness of a corporation and liability is limited to the business and not the owners.

b. Explanation

The owners of Acme Fireworks must be wise in choosing the organizational form in which they want to pursue. The owners should really consider an LLC as it brings limited liability.

c. So What?

Being a sole proprietorship can have its advantages in the early stages of a business. As the firm grows and expands it will also grow in agents, torts, liability claims, and much more. Choosing the correct organizational structure can help alleviate the stress associated with the growing pains.

VII. Conclusion

a. Rephrased thesis statement

Acme Fireworks is growing and the owners need to determine the best course of action to take while considering the regulating laws, contracts, the potential personal liabilities, its relations with its agents, and what its new organizational structure will be in the future. A proper analysis of where the business is today and where it wants to be tomorrow will most likely guarantee a successful journey for years to come.

References

Epstein, A. (2011). Teaching torts with sports. Journal of Legal Studies Education, 28(1), 117. doi:10.1111/j.1744-1722.2010.01086.x

Kozel, R. J. (2014). The scope of precedent. Michigan Law Review, 113(2), 179-230.

MacMahon, P. (2015). Good faith and fair dealing as an underenforced legal norm. Minnesota Law Review, 99(6), 2051-2112.

Neild, D. (2013). Vicarious liability and the employment rationale. Victoria University of Wellington Law Review, (3-4), 707.

Ricks, V. (2013). Assent is not an element of contract formation. Kansas Law Review, 61(3), 591-556.

Rogers, S. (2012). Essentials of Business Law. San Diego, CA: Bridgepoint Education, Inc.