Topic:Business Organization and Business Torts


Volume:4 pages

Style: APA

Type: Essay

Make sure you fully understand the main types of legal structures for a business, as well as the main principles of tort law. See the scenarios below. For each scenario, answer the questions and support each answer with at least one reference to one of the readings in the background materials.

SCENARIO 1) Suppose you are driving kind of fast and the car in front of you suddenly stops. You put on the brakes, but your car does not stop immediately and you almost hit the car in front of you. The other driver comes out the car and says “you could have killed me!” and says that he is going to sue you because it is your responsibility to make sure your brakes are working. In this case, did you commit a tort? If so, was it an intentional tort or an unintentional tort? Explain your reasoning.

SCENARIO 2) Suppose you form a corporation with two other investors. Paul is putting up 60% of the initial investment for the new corporation, while you and Susanna are each putting up 20%. When you form the by-laws for the corporate charter, it is agreed that Paul will be able to choose six members of the board of directors and you and Susanna will each be able to choose two members so your influence on the board is directly proportional to each of your investments. The board of directors is then given the authority to hire the CEO of the corporation, and they choose a CEO that all three of you are happy with. But then over the holidays you and Susanna go on vacation and several members of the board of directors are also on vacation. Paul decides to fire the CEO and appoint his brother-in-law as the new CEO. You and Susanna are furious that he fired the CEO without consulting the two of you and also did not consult the board of directors. Paul replies that he can do whatever he wants with the corporation since he owns 60%. Do you think Paul would prevail in court?

SCENARIO 3) You are the sole proprietor of a small physical therapy business that is rapidly growing, but you need to raise additional money to fund your expansion. You talk to several friends and family members about making them partners in your business in exchange for investing in your business. However, they tell you that even though they have confidence in your business, they are too busy to be your business partners. They also do not want to be liable for your debts if you go bankrupt or for any lawsuit that you face. Furthermore, you find out that limited liability companies are not allowed in your state for healthcare practitioners (LLC laws vary state by state). What kind of legal structure do you think you should switch to in order to help persuade your friends and family members to invest in your business?

SCENARIO 4) Suppose you are the CEO of a corporation. After attending a business conference in Hawaii, you and some other CEOs you met at the conference decide to relax and unwind with a few drinks at the hotel bar. The hotel bar closes, so you and the other CEOs decide to go back to your room and continue the party. You proceed to raid the large whiskey collection in your minibar. Your memory becomes hazy at this point, but you wake up the next morning and find the hotel room is completely trashed. The hotel sends you a $50,000 bill for the damages. Are you personally liable for this bill, or is it only the corporation that is liable since you are a CEO and the incident happened during a business trip for the corporation?

SCENARIO 5) Now suppose you are one of the owners of a limited liability corporation that owns some restaurants. One of your waiters takes an order from a customer who says she has a peanut allergy. The waiter makes a note on the order about this allergy before handing it to the chef. However, the waiter’s handwriting is bad and the chef thinks that the order says to include extra peanuts in the dish. The customer eats the food and has to be hospitalized. Would this be a tort? If so, would it be an intentional or an unintentional tort? Finally, would you be personally liable if the customer decided to sue?

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