Reference no: EM131995816

Introduction to Business Law Assignment -

Background: BCA has explained to the PI owners that it is essential for them to understand the court system and jurisdiction of the courts before beginning the PI business. This is especially important as PI plans to conduct business over the internet and thus, will have potential transactions throughout the U.S.

For an in initial meeting between PI owners and BCA, you presented an overview of law and the legal system. You explained federalism, common law, and the court system.

In addition, your presentation introduced the PI owners to the concept of the rule of law. The rule of law introduction is summarized below.

Introduction to the Rule of Law:

The primary purpose of law is to establish a set of rules and guidelines for Society to promote order and to create parameters for acceptable and prohibited behavior. Also, U.S. law has a very dominant protective purpose - protecting all citizens, as well as providing special protections for certain groups of people, in certain circumstances. In fact, many laws have a primary or secondary purpose of protecting either all citizens or specific groups of citizens.

A primary goal of law is to be fair and just to all, but what is fair to one group may be unfair to another group. What is fair in one situation could be unfair in another situation. Every right granted to an individual or group, to some extent, impinges on the rights of others. Legislatures enacting laws, and courts interpreting laws, must weigh and balance the right(s) granted vs the rights restricted by a specific law to determine if the law is justifiable and fair. Part of the weighing and balancing process involves determining if there a compelling public interest or purpose for the law that justifies granting certain rights while restricting other rights.

Example: Highway speed limit laws protect everyone (drivers, passengers, and pedestrians), but also restrict the freedom of drivers to drive at a speed of their choice. On balance, the restriction is easily justified as there is an important purpose in protecting drivers, passengers, and pedestrians.

Example: Laws that prohibit alcohol consumption/purchase by minors grant rights to those 21 years and older, and restrict rights of those under 21 years. On balance, Society, the legislatures, and courts have determined that this law is justified as Society has a strong public interest in protecting minors who may not have reached a level of maturity and judgment to handle the right to choose to consume/purchase alcohol.

The familiar symbol for law and the legal system is the Scale of Justice showing a blindfolded Lady. This represents the weighing and balancing process necessary to balance rights vs restrictions granted and imposed by laws.

Keep in mind that laws are created, enforced and interpreted by human beings, so the law is not perfect despite its lofty goals and purposes.

The U.S. Constitution provides legal authority for governments to regulate many business activities for both public and private business organizations.

Instructions: Pat and Gale asked you to prepare a summary report for them to present to PI owners regarding the specific courts and jurisdiction issues relevant to PI business transactions.

The summary report should address the following topics. Label all parts.

A. Identify the name of the Maryland state court that has jurisdiction to hear a legal dispute between PI and a customer regarding an in-state transaction.

If either party to the dispute wants to appeal a ruling in a lower Maryland court, identify which appellate court would review the case.

B. What would be important for PI to recognize about jurisdiction and how it might affect their internet sales? Why?

C. Analyze and explain which court most likely would have jurisdiction in a legal dispute between PI and a potential customer in Delaware and why.

Use the following example as a basis for your analysis and discussion for part C.

Hypothetical Facts: PI advertised its painting services over the internet to Mid-Atlantic out-of-state customers. PI completed a residential painting job for Stephenson in Delaware; Stephenson paid for the services. A month later, Stephenson claimed the job was unsatisfactory and the paint was pealing off the walls. Stephenson wants to sue PI to recover the cost of the painting job.

The BMGT 380 course centers on the story of a company, Business Consulting Associates (BCA), a business consulting and research company based in Maryland that advises and conducts research for potential owners considering new business ventures. You and your classmates will be active participants in the story acting as employees of BCA assigned to complete consulting-related and/or research assignments and projects for BCA clients throughout the course.

Your assignments for BCA will concentrate on four categories of business law principles that present significant risks and liabilities for start-up businesses. These legal principles are (1) business structures, sometimes called business forms, (2) tort law, including negligence, premises liability, and product liability, (3) contract law, including Uniform Commercial Code sales and lease contracts and e-contracts, and (4) agency law.

Starting a new business requires extensive preparation, market research, and examination of the legal environment of business. Identifying the nature and scope of legal risks and liabilities that affect business practices and decisions is essential before organizing a business. Exploring ways to prevent, minimize and resolve risks and liabilities is also important in forming a new business.

The primary focus for the 380 course and completing assignments for clients of BCA will center on the question:

How can a business owner identify and minimize legal risks and liabilities associated with operating a business?

Background: Business Consultants Associates (BCA)

After graduating with a B.S. in Management, you have been working for BCA for almost two years as an assistant consultant for Pat Braden and Gale Roth, senior consultants who jointly direct the construction services consulting department for BCA.

Pat and Gale have assigned you to assist them in advising their new client, a start-up residential painting company named Painted Images.

Background: Painted Images (PI)

Jo, Maddy, and Taylor are friends, business acquaintances, and residents of Maryland. Jo has been the project manager for twelve years for a construction company owned by a general contractor and developer. Maddy and Taylor have owned and operated a small, successful home rehab and "flipping" business for ten years.

After considering several business ventures, the group decided that a residential painting business would be a good fit for their professional experiences, skills and interests and agreed to pursue the possibility of launching a Maryland-based painting business named Painted Images.

The three hired a market analyst to research market trends and demands for the painting services industry and confirm whether Painted Images would likely be a viable business in their community. The market analysis showed there is an increased demand for homes services businesses in the region. Consequently, the group decided to move forward with their idea to establish PI.

The group is committed to operating and marketing PI as a green business. Most paint contains high VOC (volatile organic compounds) that pollute the air, particularly indoor air. According to the Environmental Protection Agency, VOCs are considered one of the top five hazards to human health, arising primarily from interior paints and finishes. New environmental regulations and manufacturing techniques have led to the development of low-VOC and zero-VOC paints that are durable, cost-effective and less harmful to human and environmental health.

Jo, Maddy, and Taylor plan to purchase all paint and other supplies from Naturals, Inc. (Naturals), a mid-sized manufacturer of zero-VOC paint and chemical free paint supplies. The potential owners of PI are familiar with Naturals as each has purchased from Nautrals for their respective current businesses. PI plans to resell certain Naturals products to PI clients directly for painting jobs, and via internet sales.

PI will be headquartered in a business space in a local shopping center. The PI headquarters will include private business offices, a reception area, and conference meeting and planning space to which potential and existing customers will be invited to discuss proposals for painting jobs, paint products, and to complete contracts for painting jobs. The business space will be open to the public to collect information and inquire about PI services, examine paint displays, and view photos and exhibits from ongoing and past painting jobs.

The potential PI owners recently attended a start up business seminar sponsored by the local chapter of the Small Business Administration. Following the seminar, the owners held several meetings to define the nature and scope of the work to be done to prepare a clear plan for the start-up business. They realized this process requires time, thoughtful analysis, and clear guidelines as the owners have somewhat different priorities, interests and expectations.

They also recognized that they need for professional business consultants, such as BCA, to guide their start-up for PI. Consequently, the three have hired BCA to advise and guide them through the start-up process for PI.

Painted Images Owners

Jo: Jo wants an initial 30%-40% interest in PI, but wants to limit future capital commitment until the business is operating profitably. Jo wants the option to acquire others' interests if they die or leave the business for any reason. Also, Jo wants to take out money from the business, in the form of salary, benefits, expenses, or dividends, as appropriate, as soon as PI has a healthy net profit margin.

Jo is most concerned about liability and knows the other owners are trustworthy and ethical, but wants to limit personal liability in the business to no more than capital contribution. If possible, Jo wants Key Man Insurance for the owners so all will have protection if one owner can no longer contribute to business for any reason.

Jo prefers a strong managerial position to make decisions for day-to-day operations. Jo is willing to be involved in day-to-day business operations and wants to play a key role, along with the other owners, in establishing the structure, and the business environment and culture for PI.

Maddy: Maddy wants at least a 25% interest, and prefers to minimize additional investments to protect personal cash assets needed for other business investments. Maddy's main goal is to realize a return on investment as quickly as possible.

Maddy wants to minimize personal liability, especially in the event of bankruptcy or death of any of the other owners.

Maddy wants to participate in long-term business decisions, but does not want to be involved in day-to-day business activities. Maddy prefers to hire a general manager to run the business, although is willing to consider having others manage the business.

Taylor: Taylor is enthusiastic about the new business plans and trusts the others and respects their business expertise.

Taylor is willing to commit to an investment of 51% interest in PI, but is agreeable to a lesser interest. With a maximum interest of 51%, Taylor would want complete control over business operations. Even with a lesser investment, Taylor wants a strong managerial position and prefers owners with a minority interest to be silent in day-to-day management of PI.

Taylor wants to minimize personal liability.

Attachment:- Assignment File.rar