Case Study Analysis: Business Law, Ethics, and Contractual Obligations

This document presents a comprehensive analysis of three business law case studies. The first case examines jurisdiction, ADR, corporate liability, and ethical decision-making in the context of product liability, specifically focusing on the consequences of a company's negligence in introducing a harmful chemical into a product. The second case delves into contract law, exploring the elements of a valid contract, promissory estoppel, quasi-contracts, and the rights and obligations of tenants and landlords, including issues of breach of contract and potential defenses. The third case study provides an overview of different business entities, including sole proprietorships, partnerships, and corporations, outlining their advantages and disadvantages and how they are established, managed, and taxed. The analysis covers legal aspects of business operations, ethical considerations, and various dispute resolution methods.

Running head: MILESTONE 1-3 1
Milestone 1-3
Name
Institution
Case Study 1

MILESTONE 1-3 2
A: The most appropriate jurisdiction, in this case, is general jurisdiction. This is because Novelty
has substantial systematic contacts that relate to the forum. Therefore, the court can apply the
jurisdiction to the two parties. The state court has judicial power over a person who is affected by
the state. The ‘long arm’ set rules and guideline to state on how they can exercise their
constitutional power to oversee the conduct of non- citizens (Bachar & Hensler, 2017).
B: ADR is the process of settling disputes by other means other than the use of the court.
Advantages:
I. Expert Arbitrators- in regard to the proceedings of the court cases the judge acted as an expert
specialized in a particular area of law. The judge depends on the facts presented to her or him
and the entire process is quite expensive (Kubasek, 2011). The court process may seek the
witness of the experts who may extend the length of the trial and the entire cost may be
expensive to both of the parties involved. ADR does not depend on the evidence of the experts
and the general proceedings are cheaper and quicker (Resolution, 2013).
II. Adversarial- court proceedings are about winning the case not losing and they are mostly
adversarial, while ADR intention is to find an amicable solution to disputes (Blake, Browne &
Sime, 2016). The use of ADR mostly allows the participation of the two parties and the solution
may bind the two parties (Fiadjoe & Okyir, 2016).
Disadvantages:
I. Willingness to compromise – the application of ADR relies upon the willingness of the two
parties involved. One party like in this case Novelty may not accept that there exists a problem.
The company may fail to accept that it has actually caused damage to Donald Margolin.
II. Uncertainty – Although, ADR is mostly cheaper and quicker. This case may take a long time
depending on the method of dispute resolution that the two parties may apply. There is certainty
in court cases (Lee, Yiu & Cheung, 2016).
C: It will be in the best interest of Funny Face to negotiate terms straight with Mr. Margolin.
This negotiation will subsequently assist keep this incident away from media. It would then
permit Funny Face to correct action of placing the PYR chemical in product that FDA never
approved.
D: The corporate officer is reliable for the criminal acts. This is because of the apparent
negligence on the part of the management.

MILESTONE 1-3 3
E: The classification of the criminal act committed by Funny Face / Novelty is called Infractions.
This kind of crime causes less harm and includes minor offenses and they are mostly punishable
by a fine. Donald Margolin only seeks for the compensation because of the negligence of the
Novelty which only causes damage to his business reputation and face (face damage). This is a
minor case. Funny Face advice products to the internet that causes harm to its customers
(Mikula, 2017). The company should first confirm the quality of the products so as to ensure that
all the products produced are safe for use by the general public. The error was due to negligence
F: As stated above both parties knowingly and willingly arrived at the decision of putting the
PYR chemical inside the aftershave and then production process was to follow. Chris, Funny
Face, Novelty, matt, and Ian should all be accountable to cover any of the Donald Margolin
depend in this case. This is because they all come into agreement of making the products.
G: The ethical decision-making process under WPH (Whom, Purpose, How) guidelines consist
of three major elements. An important set of ethical rules needs recognition that the top
managerial decision must satisfy the following key criteria: The decisions affect specific groups
of stakeholder in the processes of the firm (Meyerson, 2015). The appropriate question is,
therefore, whom this would touch directly. The decisions are established in order to achieve a
particular purpose. Business decisions are directed toward achieving an ethical end. The
decisions should satisfy the standards of action which focused on business behavior (Ware,
2016).
Managers must put in place set guideline and rules for how to come up with ethical decisions.
The WPH method of decision-making process had made me come up with the conclusion of
many ethical issues in this case study. Whom; the decision only affects those who consume the
products. Therefore, it was unethical putting the PYR chemical into the goods offered by the
company (product). Purpose; the purpose was to reduce the cost associated with the production
process, which led to the production of a harmful product by the company (Ray, Kennedy,
Herring & Essary, 2015).
Case Study 2

MILESTONE 1-3 4
A. Different elements must exist for the purpose of proving the existence of a valid
contract between the chain store and Sam. The major four elements that are significant to a
contract are the consideration, the agreement, legal object and contractual capacity. The first
elements would exist when Sam through word of mouth agreed to transfer the required 1000
units to a chain store. Sam agreed to send the required 1000 units to create the existence of
element to a contract. The consideration element would exist if the chain store and Sam agreed
on the exchange benefits that he would get after the transaction of the 1000 units. This was not
carried up to the agreement (contract) would be invalid. The third element that is contractual
capacity would be seen to be in place if Sam has the ability (legal ability) to of creating a binding
contract. Sam is old enough and is capable of creating contract agreement with the chain store
this makes the element to be valid. The 4th element that is legal agreement would exist if the two
parties made the legal contract on the basis of the legal object. Both the chain store and Sam did
not make the contract on the basis of the legal object so this is not valid.
B. Even if there is no valid legal agreement between the chain store and Sam, there exist
elements named as a promissory estoppel or a quasi-contract. A quasi – contract is the
obligations imposed by the court with the intention of preventing unjust enrichment. A quasi-
contract comes into existence with the inclusion of the following facts: in case Sam got some
kind of payment for his 1000 units supplied to the chain store for the completion of the
exchange. A promissory estoppel is where a party exchanges her/his position substantially either
by forbearing or acting depending on the promise gratuitous, thereafter the party can implement
the promise through the important elements of a contract are not available. The principle may
come into existence in this case when Sam agreed to a contract but did not succeed with the
actual promise that he made. The court can apply this because it is the gratuitous promise of
transferring 1000 units to the chain store. There was no conversation of exchange from the chain
store, therefore. The promissory estoppel is void because there is no conversation from the
exchange but only the 1000 units supplied to the chain store (Pryor, 2017).
C. The obligations and rights of both the tenant and Landlord rely upon the termination of their
contract. The contract may be in form of writing or verbal under a well-specified lease
agreement. Some of the fact that may support that Sam is in breach of contract is the noise which
he makes with his barking invention that causes the other tenants to complain. It is the duty of
the landlord to ensure that there is silence in the apartment and he should kick out those who
made noise. The other facts that support that Sam did not breach the contract are that he
informed his landlord about him making an invention in his apartment and instead the landlord
wished him well. The implication from the landlord should allow him to continue with his
invention in spite of complains from the tenant and the illegal business that Sam undertakes in
his apartment the landlord is able to enforce the eviction.
D. Based on the obligations and right, Sam’s Landlord has no authority to evict due to the fact
Sam does not have any valid business contract with the chain store (Fiadjoe & Okyir, 2016).

MILESTONE 1-3 5
E. Some of the defenses available for Sam in case his landlord attempts to evict him from the
building include: The land orders approval vote since Sam is yet to send anything to chain store.
Moreover, in return, Sam is yet to accept any kind of exchange. Sam should express that he is yet
to finalize any particular contract. Thus, Sam can show that he is able to move his enterprise to a
different office away from the apartment. Once this is done, Sam is able to send the 1,000 units
to chain store and finish his contract.
Case Study Three
A. A business entity describes an establishment former as well as administered according to the
law to engage in activities of business, charitable activities or additional allowable activities.
Many entities usually, business ones are established for services and product sales. Many kinds
of such entities have been identified and defined in various countries’ legal systems (Kubasek,
2011). They include cooperatives, sole traders, partnerships, corporations, limited liability
Company alongside additional particularly allowed and labeled kinds of entities. The particular
rules differ by country alongside province or state. Beneath, I present a discussion of 4 major
kinds of entities:
Sole Proprietor Partnership: This puts all business liabilities for operations and finance on the
proprietor. The business owners’ personal properties remain tied to his business and hence the
owner assumes all risks against his personal property in case there is a financial hardship. The
owner has to file self-employment taxes alongside yearly income tax returns on Form 1040. The
losses and profits and reported via owner and remain taxed at individual rate It is the simplest
entity to establish, however, the owner characteristically has to sell his business to regain his
investment (Cindy, 2015). Advantages: Easy to start and maintain; owner and business are single
entity legally; no fees in the creation and the owner could deduct a net business loss from his
personal income taxes. Disadvantages: The owner is liable personally for all debts, business
liabilities, and judgment; and owner has to pay taxes (personal income) for each net profit of the
firm.
Partnership: It has two or additional owners who share equal controls unless the agreements
indicate otherwise or structure is established as a limited one. Loses and profits of business flow
to partners and become taxed at the individual rate. Operating partners always assume risk
financially and legally. Creditors of the business are able to gather debts from a personal asset of
the partner. A partner has to sell his interest to recoup the investment. Advantages: Easy to
establish and maintain; no fees for creation; owners could report the share of net business loses
on their personal income. Disadvantages: All partners remain liable jointly and personally for all
debts, liabilities, and judgment. Owners have to pay personal income taxes for each business
profit.

MILESTONE 1-3 6
Corporation: It has unlimited owners/shareholders. Business is distinct from owners in financial
and legal issues. Loses and profits are taxed at corporate rates. In case of profit realization,
shareholders are paid and subsequently report it as income and subsequently pay tax at the
individual rate. A shareholder has to sell his interest to recoup his investment. A shareholder can
trade his shares in the publicly held corporation on the open market. Advantages: Owners enjoy
limited liabilities for debts, liabilities, and judgment. Certain benefits could be deducted as
expenses of the business. Owner and business could pay taxes with good accounting by splitting
business profits. Disadvantages: Expensive to create and maintain, complex paperwork has to be
filed with state secretary and has to pay its own taxes as distinct tax entry (Benefits and
Drawbacks of Different Types of Business Entities, 2015).
Limited Liability Company: LLC is hybrid of corporation and partnership. Owners are
safeguarded from liability (personal) as in the corporation. However, owners benefit from tax in
similar manner a partnership enjoys. LLC is never perceived as business kind for taxation
purposes by the government (federal). LLC business has to file its taxes using his chosen
acknowledged structures. The owner must file form 8832 with IRS (Internal Revenue Service) to
alter LLC classification. Advantages: Owners enjoy limited liability for debts, liabilities, and
judgment even where they engage in substantial business control; business losses and profits are
allocated to owners based on dissimilar lines compared to ownership interest. Owners are able to
select how LLC shall be taxed, either as done in partnership or corporation. Disadvantages:
Costly to establish compared to sole proprietorship or partnership.
B. The recommended entity for Arcadia Sports is LLC. The reason is that Owners are
safeguarded from personal liability as in the corporation; however, owners enjoy tax advantages.
LLC is never acknowledged as business kind for tax purposes by the government (federal).
C. The type of entity that Josh and Jeb might be personally liable to Jane for damages are sole
proprietorship and partnership.
D. The personal creditors of Jeb would be able to seize Arcadia Sports’ profits and assets under
partnership, sole-proprietorship and corporation. However, the ease of this ability reduces as one
moves from sole proprietorship to partnership and to corporation.
References

MILESTONE 1-3 7
Bachar, G. J., & Hensler, D. R. (2017). Does Alternative Dispute Resolution Facilitate Prejudice
and Bias: We Still Don't Know. SMUL Rev., 70, 817.
Benefits and Drawbacks of Different Types of Business Entities. (2015, May 19). Retrieved from
http://smallbusiness.findlaw.com/incorporation-and-legal-structures/benefits-and-
drawbacks-of-different-types-of-business-entities.html#sthash.CXkwh2Bh.dpuf
Blake, S. H., Browne, J., & Sime, S. (2016). A practical approach to alternative dispute
resolution. Oxford University Press.
Cindy, P. (2015). The Three Types of Business Entities in Accounting. Retrieved
from http://smallbusiness.chron.com/three-types-business-entities-accounting-10242.html
Delgado, R. (2017). The Unbearable Lightness of Alternative Dispute Resolution: Critical
Thoughts on Fairness and Formality. SMUL Rev., 70, 611.
Fiadjoe, A. K., & Okyir, N. T. (2016). The Alternative Dispute Resolution Act of Ghana
Deconstructed: Providing a More Positive-Sum Approach to Conflict
Resolution. Transnational Dispute Management (TDM), 13(4).
Kubasek, N. (2011) . Dynamic Business Law . Mc Graw,2011. 2nd Edition
Lee, C. K., Yiu, T. W., & Cheung, S. O. (2016). Selection and use of alternative dispute
resolution (ADR) in construction projects—Past and future research. International
Journal of Project Management, 34(3), 494-507.
Meyerson, A. L. (2015). Alternative Dispute Resolution. GPSolo, 32, 6.
Mikula, S. D. (2017). Alternative Dispute Resolution. The Catholic Lawyer, 33(1), 11.
Pryor, W. (2017). Alternative Dispute Resolution. SMU Annual Texas Survey, 3(1), 3.
Ray, A., Kennedy, R. B., Herring, S. D., & Essary, M. (2015). Alternative dispute resolution
(ADR) versus the court system. Journal of the Alabama Academy of Science, 86(2), 125-
126.
Resolution, D. (2013). Alternative dispute resolution.

MILESTONE 1-3 8
Ware, S. (2016). Principles of alternative dispute resolution. West Academic.