Running Head: MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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5-1 Final Project Milestone Two
BUS 307
SNHU
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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From – Jane Doe
To – Fred and Sally
Date – April 01, 2022
Subject – Probable legal issues relating to Miracle Cough Syrup
I am sincerely sorry to hear all the issues that you have encountered during the past few
months relating to the Miracle Cough Syrup business. I will use my knowledge and skills to
help you arrive at the most suitable solutions to address your concerns. I have incorporated a
broad range of details in the memo relating to legal defenses, civil claims, implications of
bankruptcy on business assets and assets of individual family members and intellectual property
rights.
Legal Defenses
While performing the commercial loan accounting review process, it was determined
that Jane, Sam’s wife, had been siphoning off a large sum of corporate money and manipulating
the books of accounts so that her actions would not be revealed. She had also forged your
signatures a number of times while giving checks to Don, a local loan shark, so that she could
clear her gambling debts. According to the general rule, when an unauthorized individual does a
signature on a negotiable instrument, the legitimate party will not be held liable or accountable.
So, in the specific scenario, Jane would be personally held liable for her actions relating to
forging the signature unless you make the decision to ratify the signature and become liable for
the specific transactions.
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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The Universal Commercial Code (UCC) is responsible for governing the determination
of liabilities pertaining to customers and banks for the losses that have been incurred as a result
of fraudulent transactions. Generally, UCC places the loss on the party that it deems ideal so
that the situation can be avoided, so it is typically a business entity (Uniform commercial code.
Uniform Law Commission, 2021). However, in the situation, the check has not been authorized
by the business, and so it cannot be charged to the corporate account. Additionally, UCC also
has the ‘Read your statement’ provision, which enables account holders to review their regular
account statements to identify unauthorized charges. In case an account holder fails to identify
any fraudulent transactions within 30 days of the statement mail date, he may be liable for the
unauthorized checks. You must note that you have limited rights to recover the funds, and you
must identify and report the unauthorized signature by Jane to the bank within one year. There
is a chance that your business will be held liable for the transactions and not Jane. The bank can
determine whether the business must incur the losses for the fraudulent transactions, and it
could force Miracle Cough Syrup to accept the financial liability. The signature by Jane must be
compared with your actual signatures so that differences can be identified and Jane can be held
accountable for her actions.
Legal Defenses in relation to the church
It has been ascertained that Jane had converted a check into equivalent cash and slipped
it into the collection box at a church so that she could feel less guilty about her actions.
Regarding this matter, the same legal defense can be applied, and the onus of the actions can
fall on Jane. Even though the act of giving money to the church can be considered to be a good
action but the money that she was using did not belong to her. On the contrary, it was the
money of the Miracle Cough Syrup business that she had acquired due to forgery of signatures.
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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The handwriting comparison can also be done in the context of the church to ensure that the
financial obligation can be successfully transferred to Jane and not the syrup business. e
Civil Claims
In the specific situation, you have the option to bring civil charges against Jane so that it
would be possible to recoup the costs relating to the fraudulent checks. You must prove that
there were no red flags, that the business entity exercised ordinary care, and it had no role to lay
in the entire forgery episode. By proving integrity on the part of the business, it is possible to
make sure that the liability successfully falls on Jane, who was actually responsible for the
fraudulent activities. Thus, you have the option to use civil charges to ensure that Jane will be
subjected to punishment and prosecutions for the fraudulent actions that she has committed
while acting as the bookkeeper of the Miracle Cough Syrup business. It can help the business to
get reimbursement for the fraudulent checks that have been drawn in its names.
Available forms of bankruptcy
Different forms of bankruptcy can be applied to a business in such a situation, depending
on the specific type of business. The diverse forms of bankruptcy are different for sole
proprietorships, partnerships and corporations. Since Miracle Cough Syrup is a Limited
Liability Corporation (LLC), the ideal form of bankruptcy will belong to the corporation
category. The two main forms of bankruptcy that can be considered by the LLC business
include Chapter 7 (liquidation) and Chapter 11 (reorganization). Chapter 7 will lead to
liquidation, and the business will cease to exist and carry out the usual business transactions. On
the other hand, Chapter 11 can lead to restructuring. Chapter 7 option can be chosen when a
business is not worth saving, whereas Chapter 11 can be adopted if a business has the potential
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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to survive, sustain and effectively carry out the business operations. I believe that Miracle
Cough Syrup has the potential to recover since it has been performing exceptionally well in the
market setting, and the customers have responded positively to the offerings of the business.
Thus, the business reorganization (Chapter 11) bankruptcy is ideal for the scenario since it
would enable the business to carry on with its operational activities. This form of bankruptcy
will aid in the continuation of the Miracle Cough Syrup business in spite of facing legal
complexities. e e e
Implications of bankruptcy on the business assets
When a case is filed under the business reorganization bankruptcy category (Chapter 11)
of the United States Bankruptcy Code, the owners (or debtors) will have to be the trustees of the
company. So, this bankruptcy option will make sure that you still have possession of the
business assets and you have the duties as well as the power of the trustee. You can operate the
business even in such a difficult situation, and if the court gives the necessary approval, you can
borrow new money to carry on with the business operations of Miracle Cough Syrup (Chapter
11 - Bankruptcy Basics. United States Courts, 2021). By filing Chapter 11 bankruptcy, you
would act as the ‘debtor in possession,’ and hence you can have access to business assets even
when the reorganization is taking place. By choosing the bankruptcy option, you will be able to
pay the creditors a section of debt that is owed to them over a period of time. The business
assets may serve as security that would help to pay off the debt of the business. One of the main
advantages of the business reorganization bankruptcy is that your personal assets would not be
at risk.
Implications of bankruptcy on the assets of individual family members
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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The selection of the business reorganization bankruptcy can give rise to implications
relating to the assets that are owned by the individual family members of the household. While
the assets of the business would be used as security, the assets of the individual family members
would be free from any kind of risk. Thus, even if the reorganization bankruptcy may lead to
the forfeiture of certain business assets, the family assets cannot be used to meet the liability
and financial obligations of the Miracle Cough Syrup business.
Legal Resources for the infringement of intellectual property rights by Bob
Bob has reverse engineered the recipe of the Miracle Cough Syrup and posted it online
since Sam was not willing to enter into an exclusive distribution deal. In the specific situation,
you have the option to take relevant legal recourse since Fred’s Miracle Cough Syrup had been
patented. As you have already been issued a patent for your syrup, you have the option to file a
case against Bob relating to patent infringement. You are in a position to take legal action
against him based on your intellectual property rights relating to your cough syrup. Since Bob
has been involved in using, selling or manufacturing the cough syrup without your necessary
permission and approval, you are protected by common law. After the filing of an infringement
suit for the unauthorized use of the syrup recipe by Bob, you may have to prove that he
unlawfully got hold of the recipe, which acts as your trade secret. I believe you have a good
chance of recovering damages and losses because of the vengeful actions of Bob.
I hope the diverse legal aspects that have been covered in the memo can help you in
making informed decisions relating to the Miracle Cough Syrup business. In case you have any
further queries or concerns, you can contact me by giving me a call.
Sincerely
MEMO e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e
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Jane Doe
References
Chapter 11 - Bankruptcy Basics. United States Courts. (2021). Retrieved April 1, 2022, from
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-
bankruptcy-
basics#:~:text=A%20case%20filed%20under%20chapter,court%20approval%2C%20borro
w%20new%20money.
Uniform commercial code. Uniform Law Commission. (2021). Retrieved April 1, 2022, from
https://www.uniformlaws.org/acts/ucc
