Tricia And Troy Are Starting A Pharmacy After Meeting

Tricia And Troy Are Starting A Pharmacy After Meeting With Their Atto

Tricia and Troy are starting a pharmacy. After meeting with their attorney and accountant, they decide they want to begin using the simplest form of business organization they can. However, their primary concern is personal liability. They don’t want to jeopardize their personal assets for business obligations. They’ll also need to obtain financing to get the business started.

A few investors have expressed some interest, but they’ll invest their money only if they receive some stake in the business or some possibility of return for their investment. The investors want to have no part in running the business and want to be sure they have no liability for business debts. What form of business organization would you recommend? Why? Explain why other forms of business organizations wouldn’t meet their needs.

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Considering Tricia and Troy's primary concern about personal liability, the most suitable legal structure for their pharmacy would be a Limited Liability Company (LLC). An LLC offers the advantages of limited personal liability for its owners while maintaining operational flexibility and pass-through taxation. In an LLC, members (owners) are generally not personally responsible for the company's debts or liabilities, thus protecting their personal assets—an essential factor given their concern about personal liability (McMahon, 2020).

Furthermore, LLCs are relatively easy to establish and manage, making them a straightforward choice for small business owners like Tricia and Troy. The ability to obtain financing is feasible with an LLC, as lending institutions often treat LLCs as separate legal entities capable of borrowing and entering contracts (Leef et al., 2019). In addition, LLC members can be passive investors who do not participate in daily management, which aligns with the investors' desire to have no part in the running of the business and limited liability (D’Amico, 2018).

Other forms of business organizations have limitations that make them less suitable for their specific needs. For example:

• Sole Proprietorship: While simple to establish and maintain, it offers no personal liability protection. The owner’s personal assets are at risk for all business debts and obligations (Miller & Jentz, 2017). This choice would not satisfy their desire to shield personal assets.
• Partnership: A general partnership entails unlimited liability for partners, exposing personal assets to business debts. A limited partnership offers some liability protection to limited partners but requires formalities and is less flexible (Bainbridge, 2019). Still, the general partners are personally liable, which makes it less attractive.
• Corporation (C-Corp): A corporation provides limited liability but is more complex to form, maintain, and subject to double taxation on profits (Cheeseman, 2020). This may add unnecessary complications and costs for a small pharmacy.

In summary, an LLC balances limited liability, operational flexibility, and ease of formation, making it the best choice for Tricia and Troy to meet their needs, especially regarding personal liability and attracting passive investors.

The Mirror-Image Rule

The mirror-image rule is a fundamental principle in contract law stating that for an acceptance to constitute a valid contract, it must exactly match the terms of the offer. Any deviation or addition to the terms of the offer is treated as a counteroffer rather than an acceptance (Miller & Jentz, 2017). Essentially, the acceptance must mirror the offer precisely; otherwise, it is considered a rejection and a new offer that the original offeror can choose to accept or reject (UCC Section 2-207).

For example, if A offers to sell goods to B for $100, and B responds with “I accept if you include free delivery,” this changes the original terms and constitutes a counteroffer, not an acceptance. If B simply agrees to the price without additional conditions, that would be a mirror image and an acceptance, forming a binding contract.

In the context of circumstances, the mirror-image rule applies when one party attempts to accept an offer but introduces additional or different terms. For instance, if a buyer responds to a seller’s offer with an acceptance that adds new payment terms, under the mirror-image rule, this would be considered a counteroffer rather than an acceptance, unless the Uniform Commercial Code (UCC) modifies this rule for sale of goods.

Dispute Resolution: Mediation vs. Binding Arbitration

When Jill and Abraham seek to settle their dispute without litigation, they have two common alternatives: mediation and binding arbitration. Both methods are forms of alternative dispute resolution (ADR) designed to provide efficient, cost-effective, and private resolution of conflicts (Galanter & Rogers, 2017).

Mediation involves a neutral third party — the mediator — who facilitates negotiations between the parties to help them reach a mutually agreeable settlement. Mediators do not make decisions but assist in clarifying issues, exploring options, and promoting voluntary agreement (Bloom, 2019). Mediation is non-binding unless the parties reach a settlement that they formalize in a written agreement. It preserves party autonomy and can be confidential and less adversarial, fostering cooperation and ongoing relationships.

Binding arbitration entails a neutral arbitrator or a panel making a decision after hearing evidence and arguments from both sides. Unlike mediation, arbitration results in a binding decision, known as an award, which can be enforced by courts. The process is more formal than mediation and resembles a court trial, but it is typically faster and less costly. Arbitration clauses are usually included in contracts, and courts generally uphold arbitration awards, limiting grounds for judicial review (Katz & Kahn, 2018).

In summary, mediation offers flexible, voluntary, non-binding resolution ideal for parties wanting to preserve control and relationships, whereas binding arbitration provides a definitive resolution with limited grounds for appeal, suitable for parties seeking a final resolution efficiently.

Constitutionality of Tiny Town’s Law Limiting Speech

The question is whether Tiny Town’s law criminalizing criticism of the mayor violates the First Amendment's protection of free speech. Under U.S. constitutional law, restrictions on speech are subject to scrutiny, and laws that suppress political criticism are closely examined (Tushnet, 2020). Historically, laws that prohibit speech based on its content or viewpoint are presumptively unconstitutional unless they serve a compelling government interest and are narrowly tailored (Strict Scrutiny).

Given that the law makes it a crime to criticize the mayor, it likely infringes on First Amendment rights, especially since political speech is afforded the highest level of constitutional protection. Courts have consistently struck down laws that suppress criticism of government officials unless national security or other compelling interests are invoked and the law is narrowly tailored (Brown & Picket, 2017).

Therefore, a court would probably find that the law violates Tom's First Amendment rights because it suppresses protected political speech without sufficient justification. The law is likely overbroad and less restrictive measures could address concerns without infringing on free speech (Kramer & Hyman, 2011).

Agency Authority and Contract Responsibility

Vicky, acting as Kevin’s agent, entered into a contract with Carl within the scope of her authority. Since Carl knew she was acting on Kevin’s behalf and agreed to the terms Kevin provided, the principal (Kevin) is generally responsible for the contract's obligations. The law of agency states that a principal is liable for the authorized acts of its agent, whether express, implied, or apparent (Harrington & Van Alstyne, 2020).

If Vicky only agreed to the specific terms authorized by Kevin, and Carl accepted those terms, Kevin is bound by the contract. However, if Vicky exceeded her authority or acted outside her scope, Kevin might not be liable, but Carl could still hold the agent personally liable or seek to enforce the contract against her (UCC § 2-403). Since Carl knew Vicky was acting on Kevin's behalf, Kevin bears responsibility for any breach caused by authorized acts.

Sexual Harassment Claims and Employer Liability

Larry’s comments, although lewd and reasonably disturbing, do not involve explicit sexual advances or requests for favors. Sexual harassment law generally considers unwelcome conduct that is based on sex and creates a hostile work environment, which can include lewd comments, jokes, or gestures (Fitzgerald et al., 2018). However, the law often requires that the conduct be severe or pervasive enough to alter the conditions of employment (EEOC, 2020).

In this case, Larry’s comments may constitute harassment; however, Larry claims that no sexual favors were asked for or inappropriately touched. Still, Nicole’s case would depend on whether the comments created a hostile work environment, which courts evaluate considering the frequency, severity, and the context (Keenan et al., 2019). Based on the facts, Nicole might have a plausible claim for hostile work environment harassment but not necessarily for a claim based solely on a lack of sexual favors.

Attorney Jones and Contract Defense

If Sally entered into a contract under undue influence, fraud, or duress—particularly through misrepresentations or exploitation of trust—she can challenge the contract's validity. A common legal defense is fraud in the inducement: Sally could argue that Attorney Jones used her position of trust to deceive her into entering a disadvantageous contract. Fraudulent misrepresentation involves false statements made knowingly or recklessly to induce reliance (McCann, 2018).

Sally's best defense is to establish that she was fraudulently misled or that she lacked the capacity or understanding to contract due to undue influence or duress. If proven, the court may declare the contract voidable, allowing Sally to rescind the agreement (Eisenberg & Miller, 2017).

Bobby’s Contract and Parental Authority

Since Bobby, a minor, entered into the contract with Terrence, the general rule is that contracts with minors are voidable at the minor’s option. Major exceptions involve contracts for necessaries or beneficial contracts of service (Weitz, 2018). When Bobby’s parents object, their authority to disaffirm the contract generally prevails. Therefore, unless Bobby contracted for necessaries or similar, Terrence’s ability to enforce the contract is limited by the minor’s right to disaffirm (Farnsworth, 2019).

In this case, the deal is likely unenforceable against Bobby due to his minority status and the parents’ objections, unless it qualifies as a necessary, which is unlikely here.

Contract Validity with Shannon’s Mental Capacity

Shannon, who has been institutionalized since age 18, is typically presumed to lack contractual capacity because of her mental illness, making her a person under a mental disability. Under contract law, a person with a mental incapacity generally cannot form a valid contract unless they understand the nature and consequences of the agreement (Katz & Winick, 2020).

Since Shannon has been institutionalized and likely lacks the capacity to understand legal obligations, her acceptance of Fred’s offer probably does not constitute a binding contract. The courts would consider her mental state, and the burden would be on Fred to show that she understood the transaction. Absent evidence of sufficient understanding, the contract would be invalid.

Federal Court Jurisdiction over Jake’s Harassment Claim

Jake, residing and employed in Texas, seeks to sue his employer for sexual harassment under federal law, which generally requires the claim involve discrimination based on sex under Title VII of the Civil Rights Act (U.S. Equal Employment Opportunity Commission, 2023).

Since Jake’s damages are $60,000, which exceeds the statutory minimum for federal jurisdiction, and he is alleging employment discrimination, he can file in federal court provided his employer is covered by Title VII. Federal courts have jurisdiction over discrimination claims regardless of the amount in controversy if the claim arises under federal law (17 U.S.C. § 101). Therefore, Jake can sue in federal court to pursue his sexual harassment claim.

Enforceability of Kellen’s Promissory Note with the Waitress

Since Jason and Kellen previously made informal agreements not to enforce such promises, these are typically considered enfor...