BUS: Case Study One
Specifically, the following critical elements must be addressed:
- Describe the main types of business entities and their defining characteristics.
- Apply product liability law and determine what issues are present. How would you advise your client to mitigate those issues?
- Apply the elements and characteristics of an agency relationship to Sam’s actions. Does Sam’s involvement prior to the business formation, as well as his anticipated role once the business is formed, create an agency relationship? Why or why not?
- Identify potential real property issues based on the location of the business on the family farm. Justify each potential issue.
- Does the manufacture of Fred’s Miracle Cough Syrup on the family farm necessitate a formal transfer of ownership or possessory rights? Defend your
response. - Identify potential personal property issues based on the use of Sam’s personal vehicle to deliver the product. Justify each potential issue.
- Does the use of Sam’s personal vehicle in the course of business expose Sam or the business to any liability issues? Defend your response.
- Identify potential estate planning issues with regard to the business and the family farm. Justify each potential issue.
- What estate planning vehicles are available to Fred and Sally should they desire to transfer ownership in the business and family farm, respectively, to Sam and Lilly equally? What are the advantages and disadvantages to each?
- Applying your analysis of the issues above, which type of business entity do you recommend for Fred’s Miracle Cough Syrup and why?
BUS 307 Case Study 1 Guidelines and Rubric
For this case study, craft a professional memo, appropriate in format, tone, and content, to send to your clients Fred and Sally, with your preliminary thoughts on
the issues within. Your memo should illustrate the issues and relevant law, apply the facts, and support your conclusions with regard to each issue. Always
remember to be clear, kind, and professional in your communications.
Case Study 1
Fred is well known in his town for his homeopathic cough syrup. After years of encouragement, he has decided to take his miracle cough remedy to market as
“Fred’s Miracle Cough Syrup.” While his cough syrup is homeopathic, one of the key ingredients causes a severe reaction when taken in conjunction with aspirin.
Fred plans to make and bottle his cough syrup in an outbuilding on the family farm. His son, Sam, has been raving to the locals about his father’s cough syrup for
years, and the local drug store and grocer have contacted Fred to place orders as a result. Sam also intends to approach several national chains in an effort to
secure supply contracts for Fred’s cough syrup. Fred has asked Sam to assist him with deliveries, as Sam has a van. Fred would like Sam to be involved with the
business as an employee initially, with the option of making him a partial owner at a later time. Fred and his wife Sally have two children, Sam and Lilly. Both live
in cabins on the family farm with their spouses and children. Fred and Sally engage you as their attorney to assist with the formation of the new business,
including determining the appropriate business entity type, management issues, product liability issues, and estate planning for both the business and family
property. After your initial meeting, you identify and research the following issues.
Specifically, the following critical elements must be addressed:
I. Describe the main types of business entities and their defining characteristics.
II. Apply product liability law and determine what issues are present. How would you advise your client to mitigate those issues?
III. Apply the elements and characteristics of an agency relationship to Sam’s actions. Does Sam’s involvement prior to the business formation, as well as
his anticipated role once the business is formed, create an agency relationship? Why or why not?
IV. Identify potential real property issues based on the location of the business on the family farm. Justify each potential issue.
V. Does the manufacture of Fred’s Miracle Cough Syrup on the family farm necessitate a formal transfer of ownership or possessory rights? Defend your
response.
VI. Identify potential personal property issues based on the use of Sam’s personal vehicle to deliver the product. Justify each potential issue.
VII. Does the use of Sam’s personal vehicle in the course of business expose Sam or the business to any liability issues? Defend your response.
VIII. Identify potential estate planning issues with regard to the business and the family farm. Justify each potential issue.
IX. What estate planning vehicles are available to Fred and Sally should they desire to transfer ownership in the business and family farm, respectively, to
Sam and Lilly equally? What are the advantages and disadvantages to each?
X. Applying your analysis of the issues above, which type of business entity do you recommend for Fred’s Miracle Cough Syrup and why?
Rubric
Guidelines for Submission: Your submission should be a four to seven page memo, use 12-point Times New Roman font, and follow APA 6th edition format for
layout and citations.
Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value
Case Study 1: Business
Entities
Meets “Proficient” criteria and
offers insight into the nuances of
each type of business entity in
relation to one another
Describes the main types of
business entities and their
defining characteristics
Describes the main types of
business entities, but does not
describe their defining
characteristics
Does not describe the main types
of business entities or their
characteristics
9
Case Study 1: Product
Liability
Meets “Proficient” criteria and
cites specific, applicable rules of
law
Applies product liability law to
determine issues and
recommends mitigating actions
Applies product liability law, but
does not recommend mitigating
actions
Does not apply product liability law
to determine issues
9
Case Study 1: Agency
Relationship
Meets “Proficient” criteria and
provides a thorough, step-by-
step analysis with specific
supporting evidence applied to
each element of the relevant
legal test
Applies elements and
characteristics of an agency
relationship to actions to
determine if an agency
relationship was created and
provides justification
Applies elements and
characteristics of an agency
relationship to actions, but does
not determine if an agency
relationship was created, or
justification is not logical
Does not apply elements and
characteristics of an agency
relationship to actions to
determine if an agency
relationship was created
9
Case Study 1: Real
Property
Meets “Proficient” criteria and
cites specific, applicable rules of
law
Identifies potential real property
issues based on the location of
the business on the family farm
and provides justification for
each
Identifies potential real property
issues based on the location of
the business on the family farm,
but does not provide
justification for each
Does not identify potential real
property issues
9
Case Study 1:
Manufacture
Meets “Proficient” criteria and
offers insight into the nuances of
real property issues as they
pertain to business
Determines if the manufacturing
necessitates a formal transfer of
ownership or possessory rights
and defends response
Determines if the manufacturing
necessitates a formal transfer of
ownership or possessory rights,
but does not defend response
Does not determine if the
manufacturing necessitates a
formal transfer of ownership or
possessory rights
9
Case Study 1: Personal
Property
Meets “Proficient” criteria and
cites specific, applicable rules of
law
Identifies potential personal
property issues based on the use
of Sam’s personal vehicle to
deliver the product and provides
justification for each
Identifies potential personal
property issues based on the use
of Sam’s personal vehicle to
deliver the product, but does not
provide justification for each
Does not identify potential
personal property issues
9
Case Study 1: Liability
Issues
Meets “Proficient” criteria and
offers insight into the nuances of
personal property issues as they
pertain to business
Determines if the use of a
personal vehicle exposes Sam or
the business to any liability
issues and defends response
Determines if the use of a
personal vehicle exposes Sam or
the business to any liability
issues, but does not defend
response
Does not determine if liability
issues are present
Case Study 1: Estate
Planning
Meets “Proficient” criteria and
cites specific, applicable rules of
law
Identifies potential estate
planning issues and provides
justification for each
Identifies potential estate
planning issues, but does not
provide justification for each
Does not identify potential estate
planning issues
9
Case Study 1: Transfer
Ownership
Meets “Proficient” criteria and
offers insight into the
importance of estate planning
issues in business
Determines estate planning
vehicles available to transfer
ownership equally and provides
advantages and disadvantages of
each
Determines estate planning
vehicles available to transfer
ownership equally, but does not
provide advantages and
disadvantages of each
Does not determine estate
planning vehicle available
9
Case Study 1: Business
Entity
Meets “Proficient” criteria and
offers insight, based on research,
as to why the chosen type of
business entity would be an
appropriate choice for Fred’s
Miracle Cough Syrup
Applies legal and factual analysis
to form a recommendation on
an appropriate business entity
and provides rationale
Applies legal and factual analysis
to form a recommendation on
an appropriate business entity,
but does not provide rationale
Does not apply legal and factual
analysis to form a
recommendation
9
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and organization
and is presented in a professional
and easy-to-read format
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization that
prevent understanding of ideas
10
Earned Total 100%
!1Case Study Two
Case Study Two
Business Law One
Megan George
!2Case Study Two
In this case study, we discuss the contract and landlord-tenant laws regarding the
case concerning Sam. In the case study, Sam had told his Landlord Quinn that he was
working on an invention that acted as security to scare away any intruders. Quinn his
landlord acknowledged Sam’s efforts and wished him luck. The machine Sam
invented produced dog barking sounds and this attracted the interest of Chain store
that sold safety products, who wanted 1500 units from him immediately. There was
no contract established or signed by Sam and the Chain store. One day when Sam
came home, he found two letters at his house. One was an eviction letter from his
landlord and the other was a letter from the Chain store concerning the delivery of the
1500 units of his machine. The eviction letter stated that other tenants had complained
about the dog-barking device and that he had to vacate and also he wasn’t allowed to
operate a business at his
apartment
The four elements that make a contract valid in the case between the chain store
and Sam are:(1.) offer (2) acceptance (3) legal object (4) Consideration (Kubasek,
2016). In regards to Sam and the Chain store, there seems to be an existence of an
offer as Sam had verbally implied to the store manager that he would ship 1000 units
of his barking device. Despite this, Sam did not specifically state when he would have
them delivered to a Chain store. The second element is acceptance and in this case, it
is not clear that the store manager accepted Sam’s offer to have the devices delivered.
The lack of acceptance from both parties shows that this element is not present in this
case. The third element is the legal object whereby there is an intention to enter into a
legally binding contract. In the case of Sam and the Chain store, there is no evidence
that there was a legally binding agreement. Lastly, the last element that makes a
contract valid is a consideration ( Kubasek, 2016). In this case, Sam showed
!3Case Study Two
consideration when he promised to deliver the 1000 units but on the other hand, the
store manager did not hence we can conclude that there is no valid contract in the case
for Sam and Chain store.
Assuming that the contract between Sam and chain store is not valid a quasi-
contract or promissory estoppel can be used to accept or refuse both of the parties’
claims. According to Kubasek, a quasi-contract is an agreement legally binding two
parties who have not signed an actual contract (Kubasek, 2016). It imposes fairness
and equity thus there is an imposed contractual obligation. One element of a quasi-
contract is “unjust enrichment” which means that one of the parties is prevented from
being enriched at the expense of the other party. In this case, failure to deliver the
devices by Sam will enrich him at the expense of the store not receiving
them.
The
chain store would have to show how Sam would be unjustly enriched from not
delivering and that Sam was conferred a benefit. This implies that their claim would
fail if they used the quasi-contract.
The other way that the chain store might prevail in their claim to get the 1000
units delivered to them by Sam is through promissory estoppel. This is an enforceable
promise that relies on one of the party’s detriment ((Kubasek, 2016). Based on the
case Sam had told the store manager that he would deliver 1,000 units and this verbal
statement is considered a verbal promise that the store relied on its detriment. The
store can use the promissory estoppel concept to win their claim by stating that Sam
verbally stated that he would deliver 1000 units of the dog barking machine and the
store was relying on him to deliver and if he does not deliver it would be unfair to
them.
!4Case Study Two
Landlords and tenants both have rights and obligations under the terms of the
residential lease agreement. The landlord should provide the tenants with a promise to
maintain the premises, imply a covenant of quiet enjoyment, promise to fully possess
the agreed premises, tenantable property assurance. The covenant of enjoyment is the
right and obligation for both the landlord and tenant to enjoy the rental property and
also take care of it (Kubasek, 2016). In this case, we do not know about Sam’s and
Quinn’s lease agreement specifics or whether they entered into one. The Landlord is
supposed to ensure all his tenants enjoy their property without disturbance and in the
eviction letter, Sam had breached the covenant as other tenants complained of noise
coming from Sam’s barking device. On the other hand, Sam has a right to fully use
the property and possess it so he has a right to do what he feels like about his
apartment
Residential lease agreements mostly prohibit any commercial operations taking
place on the premises unless it is specified otherwise (Kubasek, 2016). If this
prohibition is violated it can be a good reason for a landlord to evict a tenant and
Quinn can use this as a ground for eviction. On the other hand, Sam can state how the
landlord had acknowledged him conducting business in his apartment when first
notified him about his invention and secondly acknowledged it when he wished Sam
good luck.
Quinn can use the neighbor’s complaint to evict Sam since he would have
breached the “covenant of quiet enjoyment” but this would depend on the level of
noise the machine-made and whether it disturbed the neighbors.
!5Case Study Two
Sam can defend himself from being subjected to eviction by proving that the
noise made form the machine did not disturb his neighbor nor breach their right to
enjoy the quietness. He can also sue for damages as a result of the eviction. In regards
to, “conducting a business” Quinn was aware of Sam’s invention thus he voluntarily
waived his position to question Sam’s business operation unless the landlord proves
he did not. Therefore Sam can sue Quinn for evicting him without a reason which is a
contract breach.
Reference
Kubasek, N., Browne, M., Herron, D., Giampetro-Meyer., A., Barkacs, L., & Dhooge,
L.(2016). Dynamic business law ( 3rd ed.). New York: McGraw-Hill Education.