Business Law Question

Business Finance

Capella University

Question Description

  • Context
  • Most organizations identify themselves as a specific type of business entity, such as a corporation or a partnership, for legal purposes. The types of legal entities that are available are dictated by public policy.
  • Read the Assessment 4 Context document for important information related to the following topics:
    • Why the Form of Business Entity Is Important.
    • The Notion of Limited Liability.
    • Corporations and Piercing the Corporate Veil.
    • Agency – What It Is and What It Is Not.

  • Questions to Consider

    To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.
    • What are the advantages and disadvantages of forming a limited liability company?
    • Should a member of a limited liability company be liable for obligations that arise after the member has left the company?
    • How can a corporation be properly punished if it commits a tort or a crime?
    • Are the steps required to incorporate an organization too easy or too difficult?
    • Should shareholders be held personally liable for the wrongdoing of the corporations in which they hold shares?
    • Under what circumstances should members of the board of directors be held personally liable for the wrongdoing of the corporations they govern?
    • Is it ever a good idea to do business without creating some form of a limited liability business organization?
    • What are the factors to consider when deciding whether to buy into a franchise such as McDonalds?
    • What are the differences between a partnership and a limited liability business organization? How might different corporate entities impact entrepreneurial interests in relation to the global economy?
    • Are the protections afforded corporate officers warranted in today's business landscape? Given the litigation landscape of the modern United States, how could the protections that the courts provide to companies and partnerships be improved?
    • Are there elements of the different business entities that should be strengthened, weakened, or eliminated altogether?

  • Resources

    Suggested Resources

    • Analyzing a Case Law | Transcript.
      • Throughout this course, you will be required to submit case law analysis papers. This multimedia presentation points out key areas of a case law. Use this presentation to help you complete your case analyses. Refer to this media as often as you need to.
    • Business Law Foundational Concepts | Transcript.
      • This media piece offers interactive flashcards that you can use to learn (or review) foundational terms and concepts in business law. Refer to this study aid often and as needed.
    Library Resources
    Internet Resources
    Access the following resources by clicking the links provided. Please note that URLs change frequently. Permissions for the following links have been either granted or deemed appropriate for educational use at the time of course publication.
    • Nolo. (2013). Nolo law for all. Retrieved from
      • This resource provides helpful background on a range of legal issues. You may find the Free Legal Information section of the site particularly helpful.
    Your assessments throughout this course will be case law analysis papers based on real-world court decisions you will choose and research independently. The following suggested resources provide helpful methods of locating relevant cases:
  • Assessment Instructions

    For this assessment, you will first select an actual business-related U.S. legal case, pertaining to the topic of business entities, based on briefly conducting associated research. Based on that, you will then select an organization that you believe would be impacted by that legal case. Having completed both of these tasks, you should assume you're a senior manager in the organization you selected, and that you were asked to perform an analysis of the legal case and to write an executive briefing for the executive team of that same organization. Your executive briefing should include a summary of the case, as well as an evaluation of how the case impacts the organization.
  • The purpose of this format is two-fold:
    1. To give you the opportunity to research and investigate a real court decision.
    2. To challenge you to think about the business implications of the case, and specifically how the case will impact an actual organization.
    In your case law analysis you must be able to navigate the court's decision, and summarize and evaluate it. You may choose any business-related court case, either state or federal, as the basis for your case law executive briefing, as long as the case is applicable to the assessment topic. You are expected to conduct your own independent research to locate and evaluate the applicability of cases. A few appropriate case law websites are recommended for you in the Resources, but you are not limited to using cases from these sites.
  • For this assessment, use credible legal research databases and online resources, research federal and state court cases, and select any business-related case that has been decided by a state court, a federal court, or the United States Supreme Court. Then select an organization (potentially the organization for which you work) that you believe the selected case might impact. Write an executive briefing that addresses the following:
  • Research federal and state court cases pertaining to the topic of business entities. Select one court case and write an analysis that addresses the following:
    1. Articulate the context and relevance of law in a business environment:
      • Identify the parties who are before the court.
      • Provide a brief background and context associated with the case. Summarize the facts in no more than 2–3 paragraphs.
      • Identify the specific disagreement between the parties.
      • Explain the ruling of the court and its business relevance in no more than 1–2 paragraphs. Was there a dissenting opinion? If so, explain why some of the judges or justices disagreed with the majority in the decision.
    2. Evaluate the business impact of the case:
      • Summarize your analysis of how the case will impact businesses in general, including both positive and negative impacts.
      • Indicate the organization you selected as potentially impacted by the case and why you selected that organization.
      • Explain how the case will impact the specific organization you selected, such that the executive team will understand the implications of the legal decision.
    Based on your executive audience, your executive briefing should be no more than two pages, and should be well organized and written in clear, succinct language. Follow APA rules for attributing sources that support your analysis and conclusions.
  • Case Law Analysis: Business Entities Scoring Guide

    Exhibit information literacy skills as applied to business law.
    Exhibits information literacy skills as applied to business law, and supports statements with legal research from credible legal research databases and online resources.

    Summarize the facts and ruling of a legal case.
    Summarizes the facts and ruling of a legal case, and clearly explains the business context and relevance.

    Analyze how a legal case could impact businesses.
    Analyzes how a legal case could impact businesses, including both positive and negative impacts.

    Explain how a legal case could impact a specific organization.
    Explains how a legal case could impact a specific organization such that an executive team will understand the implications of the legal decision.

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1/31/2021 Assessment 4 Context Print Assessment 4 Context Why the Form of Business Entity Is Important The fundamental question that surrounds the creation of any business is what type of corporate form, or legal entity, the business should construct itself as. This is a question with significant consequence: the business form that an organization assumes can dictate not only how much tax the entity will pay, but also what protections the law will provide the leadership of the business organization. Litigation and the threat of litigation—often seen by business law observers as one of the most detrimental threats in the commercial world—can be mitigated significantly by the form of business entity an organization assumes. No discussion about business entities would be complete—or even informed—without addressing corporate taxation. The choice of business entity form has tremendous implications regarding state and federal taxation upon business earnings, but many types of entities are coupled with onerous tax reporting requirements. There is an ongoing political debate in Washington and in state houses around the country about appropriate corporate taxation levels. An organization's choice of business entity will have long-term ramifications upon the financial stability of the business, and the ability of those organizations to compete in an ultra-competitive global economy. Consider the competing entities that business might embrace, and the implications and rationale for choosing one over another. The Notion of Limited Liability Some small businesses do not incorporate into a formal business entity; for the purposes of taxation, these are considered sole proprietorships. In a sole proprietorship, a business pays taxes as if business income is personal income. Significantly, a sole proprietorship requires no separate tax filing and does not require visiting the Secretary of State's office in any state capital. The entrepreneur or entrepreneurs are relived of the burdensome IRS reporting requirements that those who form partnerships and corporations must adhere to. On the other hand, those who operate as a sole proprietorship assume significant and serious liability, should the business entity be sued. Damages awarded from just a single lawsuit can cripple a once-thriving business. For that reason, many entrepreneurial organizations have chosen limited liability corporations (LLCs) or limited liability partnerships, which—while imposing greater administrative burdens on management—provide a powerful and durable shield for corporate officers from litigation concerning the acts of the partnership or corporation. There is little question that the major attraction for forming a corporation or partnership is to mitigate personal liability for those who lead the entrepreneurial entity. The surging growth of the LLC, for example, is testament to the belief of many businessperson that success in an ultracompetitive business environment is tied closely to addressing the omnipresent risk of litigation and lawsuits. Corporations and Piercing the Corporate Veil Another fundamental issue is how the courts treat decisions made in the corporate boardroom. Unless corporate officers engage in demonstrable malfeasance or gross negligence in the execution of their official duties, state and federal courts have consistently upheld the integrity of the decision-making process among corporate executives. This legal concept, known as the business judgment rule, requires the courts to provide maximum deference to corporate officers in decisions made as part of their official duties, and this deference will not be interfered with unless there is a strong public policy rationale for doing so. The public policy rationale for protecting corporate decision-making is that if every decision reached by a corporate board or executive officer was open to successful challenge by shareholders or other concerned parties, 1/2 1/31/2021 Assessment 4 Context then no corporation will be able to execute business decisions in a way that could mitigate risk and ensure longterm financial stability and growth. For example, when a company's share price nosedives, shareholders usually challenge the integrity of boardroom decision-making, even bringing litigation against the corporate board. While many of these decisions are settled out of court, it does display some of the serious and chronic litigation minefields that threaten the financial integrity of entrepreneurial interests. It is for this strong public policy reason that the courts will only challenge corporate decision-making—or pierce the corporate veil—in extraordinary circumstances when there is a very strong public policy rationale for penalizing the organization. Agency – What It Is and What It Is Not Many businesses rely upon agents who act, operate, and communicate on behalf of the business organization. In a time when independent contractors are relied upon more than ever, and where many businesses have decided to outsource a wide variety of jobs that were once exclusively done in-house, the importance of the agency relationship is perhaps greater today than it has ever been. Given that modern reality, it is important to consider the business context of agency and the risks and challenges involved in that vital and legally significant relationship. Business leaders should know exactly what agents can and cannot do in the context and scope of their relationship with the employer, and what duties and rights agents have towards business organizations. 2/2 1/31/2021 Business Law Foundational Concepts Transcript Pri nt Cr edits BUSINESS LAW FOUNDATIONAL CONCEPTS UNIT 1 TERMS 1. Appellate Court A higher court that reviews the decision of a lower court when a losing party les an appeal. 2. Common Law Developed in the judicial system of England and its colonies before 1776; it consists of quotable statements taken from relevant opinions by prior judges, as well as ancient statutes, and is often summarized in legal treatises. 3. Concurring opinion A written opinion by a judge or justice who agrees with the conclusion reached by the majority of the court but not necessarily with the legal reasoning that led the conclusion. 4. Dissenting opinion A written opinion in which a judge or justice, who does not agree with the conclusion reached by the majority of the court, expounds his or her views on the case. 5. Majority opinion A written opinion outlining the views of the majority of the judges or justices deciding a particular case. 6. Mediation A form of assisted negotiation involving the assistance of a third party as a means of facilitating negotiation. 7. Stare decisis A Latin phrase meaning "to stand on decided cases." 8. Statutory law The body of law that is enacted by state and federal legislatures. 9. Trial Court The court that has original jurisdiction and holds the original trial where all the evidence is rst received and considered. 10. U.S. Constitution The supreme law of the United States. 1/5 1/31/2021 Business Law Foundational Concepts Transcript UNIT 2 TERMS 11. Agreement Occurs when two people reach an understanding about a particular issue, including their obligations, duties, and rights. 12. Consideration A bene t or right for which the parties to a contract must bargain. 13. Capacity The legal ability to enter into a binding contract. 14. Implied contract A contract that is found to exist even when its terms are not explicitly stated because 1) the parties assumed a contract existed (implied-in-fact contract), or 2) denying the contract's existence would result in unjust enrichment to one of the parties (implied-in-law contract). 15. Statute of Frauds A law in every state that requires certain types of documents to be in writing and signed by the party to be charged. 16. Waiver The intentional and voluntary giving up of a right, either by an express statement or by conduct. 17. Substantial performance A good faith performance that does not vary greatly from the contract and confers the same bene ts as promised in the contract. 18. Novation An agreement between the contracting parties to substitute a third party for one of the original parties. 19. Breach A failure or violation of a legal obligation. 20. Risk of Loss The responsibility a carrier, borrower, or user of property or goods assumes, or an insurance company agrees to cover, if there is damage or loss. UNIT 3 TERMS 21. Bankruptcy A federal legal process for debtors seeking to eliminate or repay their debts. 22. Copyright 2/5 1/31/2021 Business Law Foundational Concepts Transcript Exclusive rights granted to the author of a creative work such as book, movie, song, painting, photograph, design, computer software, or architecture. 23. Equal Employment Opportunity Commission (EEOC) The federal agency responsible for interpreting and enforcing laws that prohibit employment discrimination, such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act. 24. Gender bias Prejudice against people of a particular sex, usually women, and may result in discriminatory treatment or unequal opportunity. 25. Infringement Whenever the form or expression of an idea is copied. 26. Patent A grant by the U.S. Patent and Trademark O ce (USPTO) that allows the patent owner to maintain a monopoly for a limited period of time on the use and development of a new innovation. 27. Prima facie case Latin for "at rst look" or "on its face;" a case that at rst glance presents su cient evidence for the plainti to win. 28. Trade secrets Any formula, pattern, device, or compilation of information that is used in business, that is not generally known, and that gives the owner an opportunity to obtain an advantage over competitors who do not know it. 29. Trademark A word, phrase, logo, graphic symbol, or other device that is used to identify the source of a product or service and to distinguish it from competitors. 30. Strike An organized work stoppage by employees, intended to pressure the employer to meet the employees' demands (for example, for higher pay, better bene ts, or safer working conditions. UNIT 4 TERMS 31. Articles of Incorporation A document led with state authorities (usually the Secretary of State or Division of Corporations, depending on the state) to form a corporation. 32. Bylaws The rules that govern the internal a airs or actions of a corporation. Bylaws are adopted by the shareholders or the board of directors of a corporation. 33. Franchise 3/5 1/31/2021 Business Law Foundational Concepts Transcript To grant (for a periodic fee or share of pro ts) the right to operate a business or sell goods or services under a brand or chain name. 34. Limited Partnership A business structure that allows one or more partners (called limited partners) to enjoy limited personal liability for partnership debts while another partner or partners (called general partners) have unlimited personal liability. 35. Limited Liability Company A business ownership structure that shields its owners' personal assets through the doctrine of limited liability (like a corporation) but has pass-through taxation (like a partnership), where pro ts (or losses) are passed through to the owners and taxed on their personal income tax returns. 36. Partnership Refers to a legal structure for a business of two or more individuals; called a general partnership when used without a quali er such as "limited" or "limited liability." 37. Piercing the Corporate Veil A judicial doctrine that allows a plainti to hold otherwise immune corporate shareholders personally liable for the debts of or damages caused by a corporation under their control. 38. S Corporation Business entity where shareholders enjoy limited liability status, as would be true of any corporation, but be taxed as a pass-through tax entity, where income taxes are reported and paid by the owners, like a partnership or sole proprietor. 39. Shareholders An owner of a corporation whose ownership interest is represented by shares of stock in the corporation. 40. Sole Proprietorship A business owned by an individual that has not been registered as a limited liability company, a corporation, or any other type of legal tax entity. UNIT 5 TERMS 41. Assumption of Risk An a rmative defense in a negligence case, in which the defendant claims that the situation (taking a ski-lift, climbing a steep cli ) was so inherently or obviously hazardous that the injured plainti must have known of the risk, but took the chance of being injured. 42. Causation The reason something happens. In order to hold someone responsible for harm to another person, the one must have caused the injury to the other. 43. Consumer credit The borrowing capacity extended to an individual for the purchase of consumer goods or services. 4/5 1/31/2021 Business Law Foundational Concepts Transcript 44. Damages In a lawsuit, the harm caused to a party who is injured. 45. Defamation A false statement that harms a person's reputation. If the statement is published, it is libel; if spoken, it is slander. 46. Gross Negligence A lack of care that demonstrates reckless disregard for the safety or lives of others, which is so great it appears to be a conscious violation of other people's rights to safety. 47. Negligence Failure to exercise the care toward others that a reasonable or prudent person would use in the same circumstances, or taking action that such a reasonable person would not, resulting in unintentional harm to another. 48. Product liability The responsibility of manufacturers, distributors, and sellers of products to the public, to deliver products free of defects that harm someone and to make good on that responsibility if the products are defective. 49. Strict Liability Automatic responsibility for damages due to manufacture or use of equipment or materials that are inherently dangerous, such as explosives, animals, poisonous snakes, or assault weapons. 50. Tort An injury to one person for which the person who caused the injury is legally responsible. REFERENCES Sillick, T. J., & Schutte, N. S. (2006). Emotional intelligence and self-esteem mediate between perceived early parental love and adult happiness. E-Journal of Applied Psychology, 2(2), pp. 38-48. Retrieved from CREDITS Subject Matter Expert: Jason Lum Course Developer: Mo Yang Project Manager: Sue Ann Adams-Bottolfson Interactive Design: Anthony Willow Interactive Development: Peter Hentges Licensed under a Creative Commons Attribution 3.0 License. 5/5 1/31/2021 Analyzing a Case Law Transcript Pri nt Cr edits ANALYZING A CASE LAW Download a PDF of the example Case Law This is a capsule summary of the case that provides basic information about the parties, the controversy, and the disposition of the lower court. The rst paragraph in the Facts section usually explicitly identi es the heart of the controversy. In the rst Fact paragraph, we learn that what is in controversy is the condition of a 1952 Mickey Mantle Topps baseball card worth $17,750. Here we learn of the initial response from Strek, who essentially notes that had earlier notice been given a remedy might have been negotiated to resolve the situation. This is Fitl's follow-up action to the initial response from Strek, seeking a second opinion from a recognized expert in the eld. We learn that Fitl is basing his argument upon the expertise of Strek as a reputable sports card dealer. This will be an essential piece of information as we learn how the case will be analyzed by the Court and what the responsibilities are of a dealer in the eld. It is signi cant that the Court designates this entire paragraph regarding the background expertise of the expert who analyzed the card after Fitl's purchase. Lengthy language is devoted to this expert because it will be relied upon by the Court as expert evidence in analyzing the value of the card and what, if anything, could or could not have been done to remedy the controversy. The last part of any Fact section usually tells you what the lower court ruled if the case at issue is an appeals case. That is the case here. Here we learn that the lower court – the District Court – found in favor of Fitl for the full amount of the baseball card plus any related costs. Strek is appealing the decision hoping that the judgment will be reversed based upon an error of law made by the District Court. The Court begins by stating what is recognized in most states in contract law. This comes out of the Nebraska Uniform Commercial Code. After the law is stated, the Court explains what the public policy purposes are for the notice requirement. The Court takes additional steps here, demarcating which of these considerations is the most important, which in this controversy is how a seller can cure a breach if given su cient time to address a buyer's complaint. This is an essential part of the case; although Fitl did not have the card professionally examined until two years after purchase, the Court explicitly notes that once he learned of that fact he gave immediate notice to Strek. As a matter of general law, the Court makes clear that in most cases a buyer needs to make timely notice of a defect to a seller regarding a defective product in order to maximize the opportunity of a successful remedy. However, as we see here, the Court notes that in this speci c situation it would not have mattered if Fitl had told the seller a day after the purchase or two years after purchase because timely notice would have been immaterial to curing the problem, which was a completely worthless card. 1/2 1/31/2021 Analyzing a Case Law Transcript Pay close attention to the Court's choice of quote here. The key word is "reasonable," and the Court is noting that the buyer would not have had any immediate reason to have a card professionally examined if, as in this case, a buyer could reasonably rely upon the expertise of the seller in making a purchase of this amount. The conclusion in this case states that the District Court judgment is a rmed, which means that it is upheld. It should be noted that Strek can still appeal this further, which in this case would be to the state Supreme Court. CREDITS Subject Matter Expert: Jason Lum Interactive Design: Christina Adams Instructional Design: Mo Yang Project Manager: SueAnn AdamsBottolfson Licensed under a Creative Commons Attribution 3.0 License. 2/2 ...
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