Business Law 12 - Joyce Crowashford University

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This paper will be based on the scenario provided by Acme Fireworks and its owner. The following information will be provided from the perspective of the manager at the company. It mentions that the business's nature is a sole proprietorship with a business duration of two years. Acme Fireworks employs a limited number of employees whose character will be discussed in detail later in this document. This paper will also help establish the relationship between the owner and the business entity of Acme Fireworks.

It will also provide a legal understanding of the business's legal jurisdiction and its future employment and business trends. The scenario involves determining whether contracts with other businesses are governed by common law or the Uniform Commercial Code (UCC), and explaining the reasons. The UCC is a set of laws used to supervise commercial transactions in the United States, primarily at the state level, to promote uniformity and confidence in commercial dealings (Uniform Law Commission).

Since Acme Fireworks operates as a commercial business, it will generally operate under the UCC. The owner has formed contracts that include the five essential elements of a legal agreement: offer, acceptance, consideration, legality, and capacity. These elements ensure the contract is binding and enforceable, provided all parties involved are of legal age and sound mind (Leonard, 2019). The owner, acting as an agent of the sole proprietorship, enters into contractual relationships to facilitate business operations and profit-making.

Legal Liability from Firework Injuries

Regarding potential liabilities, if a stray firework injures a spectator, Acme Fireworks could face liability under the doctrine of absolute liability which holds the company responsible for damages caused by dangerous or hazardous activities, such as fireworks displays, regardless of negligence (Chris, 2017). For instance, in the case of Haddon v. Lotito, injuries from fireworks that failed to reach their intended height resulted in liability for the fireworks company. Adequate safety measures, warning signs, and proper handling are essential to minimize legal risks and demonstrate due diligence.

Employment Types and Agency Law Implications

Acme Fireworks's employee structure includes seasonal employees due to fluctuating demand, especially during peak seasons. Seasonal employment provides flexibility but also presents disadvantages such as reduced loyalty, inconsistent effort, and potential training costs. These workers are typically employed part-time, which aligns with the seasonal needs of the business (Kappel, 2019). The relationship between the owner and employees also creates agency law considerations; as the owner acts as an agent whose actions directly impact the company's reputation and legal standing.

Proper management of this relationship involves maintaining accurate financial records, ensuring employment law compliance, and hiring appropriately skilled staff. Poor management or negligence could result in legal liabilities, affecting the company's operational stability (Sherman).

Reasons Against Operating as a Sole Proprietorship

Operating as a sole proprietorship exposes the owner to unlimited personal liability for all business debts and damages, which could significantly jeopardize personal assets. Additionally, a sole proprietorship limits access to capital, hindering growth and expansion opportunities since it cannot issue shares or easily attract investors. The owner also bears the entire burden of financial risk and decision-making, which could become overwhelming or inefficient, especially in complex or large-scale operations (Kupfer, 2019).

Proposal for a Partnership Entity

Given these limitations, a partnership could be a more suitable business structure for Acme Fireworks. A partnership allows pooling of resources and capital from multiple owners, sharing both profits and liabilities based on the partnership agreement. This structure offers multiple benefits: increased capital, shared responsibility, access to diverse expertise, and flexibility in management. Profits and losses are distributed among partners, reducing individual financial strain and promoting business growth (R).

Furthermore, partnerships facilitate easier capital accumulation and can provide credibility in the eyes of clients and suppliers. However, partnerships also require clear legal agreements to delineate responsibilities and profit sharing. It is essential to establish terms that promote accountability and conflict resolution to maximize the benefits of this structure.

Conclusion

In conclusion, Acme Fireworks should operate under a business structure that mitigates personal liability and enhances growth potential. Moving from a sole proprietorship to a partnership can provide the necessary resources, shared liabilities, and operational flexibility to support future expansion. Additionally, adherence to legal frameworks such as the UCC and proper management of employment relationships are critical for ensuring legal compliance, operational efficiency, and business sustainability.

References

• Chris. (2017, July 10). FIREWORKS INJURIES AND PERSONAL INJURY CLAIMS. Retrieved from thelaytonlawform.com
• Cornell Law. (n.d.). Common-Law. Retrieved from law.cornell.edu
• Economics Online. (n.d.). Unemployment types. Retrieved from
• Kappel, M. (2019, February 11). The Pros and Cons of Hiring Seasonal Employees for Your Small Business. Retrieved from
• Kupfer, M. (2019, September 16). Disadvantages & Hidden Costs of a Sole Proprietorship. Retrieved from delawareinc.com
• Lee Law Review. (n.d.). Basis Of Liability In Fireworks Accidents. Washington and Lee Law Review, 18(1),
• Leonard, K. (2019, February 04). 5 Requirements for a Contract. Retrieved from chron.com
• Sherman, F. (n.d.). The Disadvantages of a Sole Agency Agreement. Retrieved from chron.com
• Uniform Law Commission. (n.d.). Uniform Commercial Code. Retrieved from uniformlaws.org
• R. N. (n.d.). Disadvantages of Sole Proprietorship.