Assignment 2: Legal Problems Managing a Small Business Part I

Read  the scenario and the questions that follow.   Identify the legal issue(s) and apply legal concepts and possible  arguments for each question.  Prepare a  solution for each question using laws, cases, examples and/or other relevant  materials.  Identify potential ethical issues  and propose a solution for each issue.   Support your answers with information from the textbook and at least two  outside scholarly sources.  By Week 3, Day 6, prepare a 5 to 8 page  paper that identifies the legal issues and potential solutions and answers all  questions presented, supported by relevant legal authority.  Properly cite all sources using APA format.

This  assignment requires application of the concepts learned in Weeks 1 – 3 and is  worth significantly more than previous assignments.

Scenario

After being  laid off from the construction firm where he has worked for 20 years, Dad  started his little handyman business.   With a downturn in the economy, Dad found that people repaired things  instead of replacing them, so his services were always in demand. Chad worked  with his father (Dad) in the afternoons and on the days he didn’t have classes  in construction management at the university, since his father needed some help  with the growing business. Chad enjoyed  the work and it paid well, so he suggested they form a partnership and call it  Dad and Chad Expert Handyman Service.

Although Dad prefers cash, a new  customer paid for some plumbing work with a check for $330, made payable to Dad  and signed by the customer.  Dad takes  the check to the bank after he completes the services and finds that the bank  had issued a stop payment on the check.  

Chad orders 15  windows from a wholesale dealer. The  dealer comes out to measure for the windows and they agree on white vinyl insulated low-E with half screens for all windows.  Since the windows were special ordered, Chad  paid for the entire shipment.  The windows arrived two weeks later; however, one window was shattered, two windows  were missing and two windows did not fit.

Dad looks for deals on materials.   A plumbing supply company offered to sell Dad 15 hot water heaters, 15  toilets and 5 Jacuzzi tubs for $5500 cash.   Since Dad receives a lot of bathroom remodeling jobs and hot water  heaters always need replacing, he thought this was a great deal.   Dad and the seller entered into an oral  contract whereby Dad would pay the seller $5,500 cash on delivery.  In the meantime, Dad lined up two bathroom  remodeling jobs and both wanted Jacuzzi tubs.    When time came for delivery of the goods, the seller said that they had  already sold the hot water heaters to another handyman and they were not able  to get the Jacuzzis.  

Dad and Chad installed a new hot  water heater manufactured by American Water Products for JoAnn, a single mother  with two children. Extensive warnings  were provided on the water heater itself and in the manual Dad provided to  JoAnn at the time of installation. The warning on the water heater read  "CAUTION: Hot water increases the risk of scald injury." The heater  itself contained a picture of hot water coming from a faucet with the words  "DANGER" printed above it. In addition, the water heater had a  statement on it:

Warning! Water  temperature over 110°F can cause severe burns instantly or death from scalds.  Children, disabled, and elderly are at highest risk of being scalded. Feel  water temperature before bathing or showering. Temperature limiting valves are  available, see manual.

Dad set the temperature to 105°F.   The next day, 3 year old Benji was being bathed by his 12-year brother,  Lou. When his cell phone rang, Lou left Benji alone in the bathtub with the  water running. Benji was scalded by the water from the tap. Benji’s mother,  JoAnn, brought suit against Dad and American Water Products alleging defects in  the design of the water heater and Dad’s failure to warn her about the heater’s dangers.

Assignment

Based on the  different situations described in the scenario, create a 5 to 8-page Microsoft  Word document that includes the answers to the following:

Identify the types of business organizations for operating the handyman business and explain the advantages and  disadvantages of each one.  Select a type  of business for the father/son team and provide support for your choice.

What are Dad’s  options related to the stop payment on the customer’s check?

What are Chad’s options related to the damaged, undelivered and  incorrect-sized windows?

What rights does Dad have related to the oral contract for  plumbing supplies? Is the seller in breach of contract? Discuss why or why not.

Can  JoAnn prevail in a product liability lawsuit against Dad or American Water  Products? Explain why or why not for each party.

Consider any  ethical concerns Dad and Chad may face related to the topics covered.

Conclude your  paper by providing suggestions for Dad and Chad to help prevent future  occurrences of these types of legal and ethical problems.

Support your answers  with appropriate research, reasoning, cases, laws, and other relevant examples.