Free «Business Law» Essay Sample
a). Whether Lindsay Lohan, Angelina Jolie, and Sherry Mussels should form a partnership or register their training academy as a company.
Whether the three friends should form a partnership or an incorporated company will depend on how each intends to contribute to the business and liability sharing. In the case of a partnership, partners are mandated offset debts that their business may incur. This means that where the Partnership's liability exceeds each partner's share, their personal properties can be attached to offset the debt. Partnership formation and dissolution are faster compared to a company. The other challenge with Partnership is that the parties may start fighting on profit sharing, especially when one or some of the partners are also employees. In the case at hand, Sherry Mussels will likely be most active in the business given that it falls under her profession.
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The formation of a limited company is best appropriate for this business. In a limited company, each shareholder's liability is limited to their shares. Creditors cannot attach the shareholder's personal property where the company is unable to pay its debts. Profit-sharing in a limited company is well defined. The value of their paid-up shares determines shareholders' profit. If the three friends have equal shares, then the profit shall be divided equally among them. The other advantage of a limited company is that it is perceived as a legal entity with the capacity to sue and be sued. This means that people dealing with the business cannot sue the shareholders but the company. Company management is also much efficient compared to Partnership as each director's role is well elaborated in the company's memorandum of articles.
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Agents are essential as, in most cases, they are persons with experience and knowledge in their field of operation. In an agency relationship, the agent performs the assigned responsibilities on behalf of the principal (the three of you). Since the agent acts on behalf of the principle, their liabilities when executing the assigned roles are transferred to the principal. As a general principle, the law presumes an agent's conduct as though done by the principal. Therefore, an agency may lead to liabilities on third parties on agreements they entered with the agents.
They are more like agents only that their liabilities are not transferable to the employer. Independent contractors are persons or companies that specialize in a given field where they offer their services to other businesses. Independent contractors, unlike employees, do not work under the employer's direct supervision but work towards meeting their contractor's directives or objectives.
Employees work under the instructions and direct supervision of their employers. An employer is held liable for employees' liabilities on conducts done in the course of their duty (vicarious liability).
Between agency, independent contractor, and employees, hiring an independent contractor is much better, putting their efficiency and liability issues into consideration. The company can sue an independent contractor if they fail to deliver or on other liabilities caused by them. The same cannot be done on an employee or an agent as they are presumed to be working under the employers/principal's instructions and supervision.
c). Hiring Employees
Before hiring employees, the Partnership or the company's leadership must first familiarize themselves with the Employment Standards Act (ESA). ESA stipulates the least employment standards required for ensuring workplace rights and obligations by both employers and employees. Employers are allowed to make employment contracts, but the employment terms must go below the lowest-set employment standards such as wages, hours of work, equal pay for similar work, among others as stipulated by ESA.