problem1)

Fred is the electrician. John is a builder; he builds a large number of houses each year. John hires Fred to do wiring of all of his houses. Fred has no time to work for anyone else but John. Is Fred an employee or an independent contractor?

problem2)

If Fred is driving from one of John’s houses to other one to do some wiring and he runs over a small child, will John be responsible for Fred’s actions?

problem3)

Phillip hired Ace to collect the debt from Scott.  He told Ace, "I'll leave the methods to you, but make sure you get the money."  As it turns out, Ace is a violent person with history of serious fights.  Phillip can have discovered this but failed to check on Ace's background.  When trying to collect debt, Ace beat up Scott and injured him.  Scott sued Phillip for damages.  What result is likely and why?

problem4)

Sally is the attorney negotiating to purchase large tract of land for V-Mart. V-Mart is an undisclosed principal in this case. If seller of the land breaches the contract, could Sally sue them?

problem5)

Margaux and Sabrina were best of personal friends and met for drinks at a local pub after work.  Margaux is a CPA and partner in the M and M CPA firm, and Sabrina works there as a receptionist and is not the CPA.  at the same time at the pub, they met Spenser, and Sabrina told Spenser that she could get ready his taxes as a CPA.  Margaux winks in acknowledgement of the conversation.  later, Sabrina poorly prepares Spenser’s taxes.  Spenser now desires to sue M and M CPAs for malpractice.  Who is liable?

Case Problem

Arthur Jensen, Inc. was the corporation engaged in housing construction business. Arthur Jensen owned over half of the corporation’s stock and served as its president. Alaska Valuation Service (AVS) conducted housing appraisals for Jensen on many occasions over the years. When AVS took orders for appraisals, it was not aware that it was dealing with the corporation. It believed that it was dealing directly with Jensen. Jensen never specially informed AVS of his status as the agent for Arthur Jensen, Inc. AVS attempted to hold Jensen personally liable for appraisal services. Is Jensen personally liable as the agent for the undisclosed principal?

Short Answer problems

problem1)

Shelly desires to open restaurant. After studying the different types of business ownership structures, Shelly decides she wants her business to be the sole proprietorship. What are some reasons that Shelly might have picked this type of business?

problem2)

Earl and Pearl are partners in a travel agency. Earl dies. Is the partnership dissolved? Can Pearl still operate the business?

problem3)

Arthur King is the chief executive officer of Camelot, Inc., a close corporation.  He is also the majority shareholder in the corporation.  King knows that two lawsuits are about to be filed against Camelot.  One pertains to an alleged breach of a contract to which Camelot was a party.  King had been actively involved in the negotiation of the terms of the contract.  Other lawsuit which will be filed against Camelot pertains to an automobile accident allegedly caused by the negligence of Lance Allot, a Camelot employee.  Allot was acting within the scope of his employment when the accident occurred.  King is concerned that he could face personal liability for damages that may be awarded in these suits, if Camelot's assets prove insufficient to satisfy the damage awards.  Should he be concerned?  Why or why not?

problem4)

Tinker was a limited partner in Evers & Chance Limited Partnership. Evers and Chance were the firm's general partners. Tinker had invested $50,000 in the limited partnership. Evers and Chance had each invested $10,000.  Originally, Evers and Chance had done all of the managing of the partnership business.  As time went on, Tinker became involved, along with Evers and Chance, in management of the firm's business activities.  After this change in responsibility for management had taken place, Evers (while in the course of partnership business) negligently caused crippling physical injury to Cobb.  Suppose that Cobb's tort claim is a valid one worth at least $500,000, an amount easily in excess of not only the initial contributions to the partnership but also the value of all partnership property and assets.  What is an extent of liability (if any) that Tinker, Evers, and Chance, respectively, may have to Cobb?

problem5)

Legal Eagles law firm was founded as a general partnership. What will be the benefits for Legal Eagles to switch to a limited liability partnership?

Case Problem

When friends come together at the wedding, they reveal their plans for the business ventures. Al and Amy, the unmarried couple, propose opening Thai restaurant. Al is dentist and Amy is director of public relations for a publishing company. Amy will quit her job eventually to run restaurant. They will hire chef whose restaurant is about to close. Carl is a successful real estate agent who desires to open his own real estate firm. Bob has tried many business ventures, but all have failed, including the venture to manufacture ski racks for motorcycles. Dave and Donna, a newly married couple, plan to quit their jobs, move to Wyoming, and open a software development business. They want the business to have few investors. They have lined up potential clients who will finance their initial efforts in return for software customization.

problem1) What business forms must each of these individuals use for their business ventures?

problem2) What extra problems do you want to ask to help you decide the best business forms for their ventures?