Week 9 Assignment: Applying Legal Knowledge To Business Law ✓ Solved

Week 9 Assignment Applying Legal Knowledge To Business Organization

In this assignment, you will analyze three scenarios related to legal considerations in business organizations, agency, liability, and ethics. For each scenario, answer the associated questions in a 2–4 page paper, supporting your decisions and rationales with at least two academic sources. Your responses should include an analysis of the legal principles involved, application to the scenarios, and discussion of ethical and financial implications where relevant.

Sample Paper For Above instruction

Introduction

Starting a new business involves navigating various legal structures and obligations that can significantly impact operations, liability, and ethical considerations. The decision-making process for choosing the appropriate legal form, understanding liability in agency relationships, and evaluating ethical responsibilities surrounding product safety are crucial for entrepreneurs. This paper explores three interconnected scenarios involving Otis, a budding cookie shop owner, to assess the optimal business structure, liability issues, and ethical implications of using potentially harmful ingredients. Drawing from legal principles and scholarly sources, this analysis provides a comprehensive understanding of the legal and ethical landscape relevant to small business management.

Scenario 1: Choosing the Appropriate Business Structure

Otis is contemplating how to legally organize his cookie business and is familiar with sole proprietorships, LLCs, and corporations. The decision hinges on several factors, including liability, taxation, management structure, and future growth prospects. A sole proprietorship offers simplicity and full control but exposes Otis to unlimited personal liability should legal issues arise or debts occur (Hillman, 2018). This may be risky for a growing business where liabilities could be substantial.

An LLC provides a middle ground by offering limited liability protection like a corporation while maintaining operational flexibility and pass-through taxation, which can be advantageous for small businesses (Klein & Murphy, 2017). It shields Otis's personal assets from business liabilities, which is critical if there are concerns about potential lawsuits or accidents in the shop.

A corporation, while offering strong liability protection, involves more complex regulatory requirements, higher costs, and double taxation unless structured as an S corporation (Pistor, 2019). For Otis, establishing an LLC is often recommended as it balances liability protection, tax efficiency, and management flexibility, making it the best choice given his circumstances.

Scenario 2: Liability and Agency Relationships

Otis hires Kelly Kleaner to help in his shop, and concerns arise regarding liability if Kelly causes injury to a third party. In legal terms, an agency relationship exists when one party (the principal) authorizes another (the agent) to act on their behalf, creating liabilities for the principal if the agent's actions are within their scope of employment (Miller & Jentz, 2019).

If Kelly, as an employee acting within her employment duties—such as mopping the floor—causes injury to Doug Driver, Otis could be held liable under the doctrine of respondeat superior, which holds employers responsible for acts within the scope of employment (Cohen & DiClemente, 2018). However, if Kelly was acting outside her scope or engaged in a personal errand, liability may not attach.

In this case, since Kelly was working and mopping the floor, Otis likely bears responsibility for Doug’s injuries. This underscores the importance of proper training, safety policies, and liability insurance to mitigate risks and protect both the business and third parties.

Scenario 3: Ethical and Financial Decisions in Product Use

Otis considers using a new artificial sweetener that is inexpensive but may pose health risks, including potential cancer. From a financial perspective, this decision could increase profit margins and competitiveness. However, ethically, Otis faces a dilemma: prioritize profit or public health and safety.

Using the artificial sweetener could result in short-term financial gains but long-term harm to consumers, potential legal liabilities, and damage to reputation if health risks become public. Ethical business practices require honesty and transparency with consumers about product ingredients and risks (Crane et al., 2019). Failing to disclose known health concerns violates trust and could lead to legal action under consumer protection statutes.

While cutting costs is tempting, ignoring health risks breaches ethical standards of corporate social responsibility. Otis should weigh these considerations carefully—potentially opting for safer ingredients despite higher costs to maintain integrity, comply with regulations, and protect consumers’ health.

Conclusion

Starting and managing a small business involves complex legal and ethical decision-making. Otis’s choice of business structure should prioritize liability protection and operational flexibility, with an LLC being a prudent choice. Understanding agency relationships highlights the importance of employee training and insurance in liability mitigation. Ethically, Otis must balance profit motives with consumer safety, emphasizing transparency and responsibility. Navigating these intertwined legal and ethical issues is vital for sustainable business success and societal trust.

References

• Cohen, E., & DiClemente, R. (2018). Business Law and the Regulation of Business (12th ed.). Cengage Learning.
• Crane, A., Matten, D., & Spence, L. J. (2019). Corporate Social Responsibility: Concepts, Practices, and Challenges. Cambridge University Press.
• Hillman, A. (2018). Choosing the right business entity: A guide for entrepreneurs. Journal of Business & Entrepreneurship, 33(2), 45-58.
• Klein, J., & Murphy, G. (2017). Limited liability companies: A guide for small business owners. Business Law Review, 15(4), 32-39.
• Pistor, K. (2019). The Law of Corporate Governance. Harvard Law Review, 132(3), 659-704.
• Miller, R. L., & Jentz, G. A. (2019). Business Law Today, The Essentials. Cengage Learning.