Reference no: EM133267225
Business Structures and Obligations, only refer to week 3 course content
Read the following case scenario and answer the questions
Deb has a booming business selling cleaning products via the internet. Over the last few years business has been increasing. Deb's husband, Tom, is helping more and Deb has brought in her close friend Kym to work in the business along with the other employees. Deb is hoping to make a long-term business for her kids and perhaps 'go big' by getting others to invest in the business. Kym has offered to buy into the business by investing $25,000 for a 30% share in the profits. Kym also has a lot of ideas and is keen to make some other arrangements for the business. As her best friend Deb is also aware that Kym visits the 'Pokies' often and may have an 'unhealthy' approach to gambling and money management.
The business needs to move out of Deb's garage and into new premises. Deb is also considering purchasing new packaging equipment so expenditure for the coming year is likely to exceed $45,000.00.
There are issues of liability to consider too. For example, recently a batch of the cleaning products was not properly diluted meaning that some customers sustained burns to their hands.
Deb has been considering a few options to increase the businesses profits. She could start purchasing her soaps from Indonesia where they use palm oil. The palm oil plantations are known to threaten wild orangutan habitat. Deb also needs more people to do the packing. She is appalled at having to pay the minimum wage ($21.38). She has approached some young international students who are looking for work and agree to work for her for a bargain $15.00 an hour. And, if she uses cheaper materials she can make more profit, although they are potentially more harmful to the environment, her workers and customers.
Deb must make a formal decision about the business structure. She does not want to operate as a sole trader and has asked you to write to her and explain:
- What is a partnership?
- What is a company?
- Given her businesses' situation what are the relative advantages and disadvantages of each of these business structures?
Your explanation should use case law and legislation. For example, you can refer to cases to highlight key points where relevant.
a) Respond to Deb, explain to her the business structure of a partnership and a company and the advantages and disadvantages of each based on the facts of the scenario. Use case law and legislation to illustrate your recommendations. (7 marks) 700 400 words
Min 6 Case Law references,
Min 2 Legislation References
b) Identify ethical considerations in Deb's decision making for the business. Explain the relationship between law and ethics. (3 marks) 200 @ 150 words
Suitable reference is your textbook (*1 reference only is required)
TEXTBOOK: Business law / Nickolas James