Reference no: EM133304667

Question 1

Ms. Grimes sent a letter to Mr. Howard, offering to sell him her collection of Canadian oil paintings. Her letter stated the following:

MEMO FROM: R. Grimes

TO: T. Howard

DATE: January 1, 2016

I hereby agree to sell to T. Howard my entire collection of Canadian oil paintings (6 paintings in total) for the sum of $1 million. This offer is open until Monday, January 4, 2016, at 9:00 a.m.

On Sunday, January 3, 2016, Ms. Grimes decided to sell the paintings to her well-to-do neighbor instead. Mr. Howard heard about the alleged sale later that same day and rushed over to Ms. Grime's house, stating that he wished to accept the offer. Ms. Grimes smiled and said "Sorry, you're too late. I've sold to someone else."

Is Ms. Grimes obligated to keep the offer open until the specified time? What could Mr. Howard have done to better protect his position?

 

Question 2

On May 1, Mr. B. Dunne and a business partner applied for a bank loan to purchase a piece of property as an investment. Unfortunately, they did not have enough collateral to secure the loan without a guarantor. Mr. B. Dunne approached his wife, who was also a successful businessperson, to act as the guarantor and she agreed. Contrary to the bank's usual policy, they did not recommend Mrs. Dunne receive independent legal advice prior to signing the documents. When Mr. B. Dunne and his business partner defaulted on the loan, the bank sued Mrs. Dunne for the outstanding amount. Is the bank able to collect on this loan? What issues may arise?

 

Question 3

Sayid bought a used car from a local used car dealership. While looking at one particular car, he asked the salesperson if it had ever been in an accident. The salesperson responded "No, this car has never even been in a fender bender. It is in amazing condition" even though he knew it had been fixed up after a three-car pile-up. Sayid then decided to buy the car. Unfortunately, after getting the car home, Sayid experienced numerous problems with the vehicle. Upon further investigation, he found out that the car had been in a terrible accident and was almost a "write-off". What issues arise in this situation? Does Sayid have any recourse?

 

Question 4

Claire offered to sell her car to Bella for $10,000. Bella accepted the offer. The car was currently in storage, so the two people agreed to go together later that day to pick up the car from the storage facility. Neither one knew that the storage facility had burned down the night before and all of the property held there had been destroyed. Is there a valid contract?

 

Question 5

Miles witnessed John drive through a red light while on his cell phone and hit another vehicle. John approached Miles and offered him $500 to offer a witness statement saying he hadn't seen John drive through the light. Miles agreed. John gave him $100 but then never gave him the rest of the promised money. Miles would like to sue John for breach of contract. What issues arise in this scenario?

 

CASE: You are an avid amateur inventor and have stumbled across an idea that may revolutionize the renewable resource sector. You think you have discovered a way to build solar panels so that they can attract and retain energy at least 100 times more efficiently than is the current norm. However, as with any business venture, you realize that there is some risk involved. You have $ 50,000 worth of investments and share a mortgaged house with your spouse. You also own a one-quarter share of the family farm.

You have drawn up a business plan and estimate that you will need $1,000,000 in order to finance your business. During a class break, you mentioned your idea to a fellow classmate in BLAW - they love the idea and think you're a genius. Your classmate has some truly excellent ideas on how to market the business and says she has $100,000 that she would like to invest in the business venture. Your family also supports your business idea and has pledged to help you financially.

Questions

Question 1

Define each of the four different business structures that you may use to set up your new business. Identify one advantage and one disadvantage for each structure in the context of the provided facts. Finally, choose a business structure for your new venture and fully explain why you chose the way you did.

Question 2

Based upon the business organization that you chose, explain in detail how you will raise the funds to finance the business. In your explanation, please describe in detail what each party providing funds will receive and the responsibilities that lie with the receiver of the funds.

Question 3

Based upon the business organization that you chose and its particular method of financing, what liability do you face personally? What liability would other investors face? Explain the extent of this liability.

Question 4

Add the following details to the original facts: You have chosen to structure your venture as a corporation and are now deciding on the share structure you will use. You know that it is possible to change it later, but it is much simpler to structure it according to your needs from the beginning. Your dad, mum, and four friends - Chris, Nima, Monica, and Sanjiv - have all asked to buy shares in your corporation. However, they all have different amounts that they can invest and different levels of interest in participating in the corporation. You appreciate their loyalty but want to make sure that you maintain control of the corporation. You also realize that you may need more investors than just your close friends and family.

1. Describe the issues that you will need to consider when formulating your share structure. Consider how the shares will be sold as well as how many classes of shares you will create. What rights will attach to each class of shares?
2. If you only issued one type of shares, identify three rights that each shareholder will have.
3. The shareholders have elected you to be the sole director of the corporation, and you have appointed an officer to help you carry out your obligations. What are the two overriding duties owed by directors and officers of a corporation? Describe each of these duties.
4. Chris, one of your shareholders, has become very dissatisfied with the management of the corporation and its performance. What four options/remedies are available to him? Of these options, which is the most likely method of success for Chris?
5. Describe three ways in which your corporation can be terminated.
6. What are five ways a director can attract personal liability through statute? Describe the nature of the sanctions or penalties that he or she may face in each case.