Table of Contents
This assignment involves Chapters 20 (Starting a Business) and 21 (Corporations) of the textbook and my accompanying slides.
Question 1. (12 points):
Heather and Manny have decided to open a bakery together. They are experienced bakers who specialize in scones, and they feel the world is in need of moist and delicious scones. They are concerned about protecting their assets in case the business fails, but also about being able to pay the taxes for a business that is just starting out and about the difficulty of setting up the business. What are the pros and cons of the different business entities they could form? (Go through the different types of business entities we have learned about this week). Which type of business entity do you think would be their best option and why?
Question 2. (7 points):
Heather and Manny open their business and find a sugar supplier, Sweet Myron, Inc. Their relationship with Sweet Myron, Inc. is great at first; the sugar is of good quality and is delivered according to their contract. However, after a few months, Sweet Myron, Inc. starts providing deliveries later and later and is eventually unable to deliver any sugar at all. Unfortunately, Heather and Manny have already paid Sweet Myron, Inc. for the sugar that has not been delivered.
Sweet Myron, Inc. is incorporated with Byron Myron and his wife are the sole shareholders and the directors and officers of the corporation. Byron and his wife have held two annual meetings over the last eight years and do not keep current minutes for the corporation. Sweet Myron, Inc.s bank account rarely has a positive balance and most of the corporations expenses are paid from Byron and his wifes personal account.
Heather and Manny file a lawsuit for breach of contract against Sweet Myron, Inc., and against Byron Myron and his wife as individuals. Do you think Heather and Manny will be successful holding Byron Myron and his wife personally liable? Why or why not?
Question 3. (6 points):
Heather and Manny seem to have no end of back luck. Ezra’s Shriveled Grapes is Heather and Manny’s raisin supplier. Heather and Manny have a contract with Ezra’s Shriveled Grapes to provide a weekly delivery of plump, juicy raisins. Ezra is the only owner of Ezra’s Shriveled Grapes and Ezra has not filed any business formation paperwork with the Secretary of State.
Unfortunately, its been six months, and Ezra’s Shriveled Grapes has not been able to consistently deliver raisins as contracted. Some weeks the raisins are delivered as scheduled, and some weeks they are nowhere to be found. Heather and Manny sue Ezra, but Ezra claims he is not personally liable and they can only sue the business because the contract is with Ezra’s Shriveled Grapes. Is Ezra correct? Why or why not?
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