Subject Course: Business Law For this case study, craft a professional email, ap
ID: 388144 • Letter: S
Question
Subject Course: Business Law
For this case study, craft a professional email, appropriate in format, tone, and content, to send to your clients Fred and Sally, with your preliminary thoughts on the issues within. Your email 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:
1. 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.
2. Identify potential personal property issues based on the use of Sam’s personal vehicle to deliver the product. Justify each potential issue.
3. 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.
4 Identify potential estate planning issues with regard to the business and the family farm. Justify each potential issue.
5. 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?
6 Applying your analysis of the issues above, which type of business entity do you recommend for Fred’s Miracle Cough Syrup and why?
Explanation / Answer
The new business entity would be limited liability company that would best serve the present given startup and business need and situation.
The LLC would be a separate legal entity and would give relief in case of any suit bought in court against the company. The liability will be of company and not members unless the court breaks the corporate veils.
Ans to Q1.
Yes, the manufacture of Fred’s Miracle Cough Syrup on the family farm necessitate a formal transfer of ownership or possessory rights because the company is separate legal person and there has to be contract or some kind of agreement wherein family farm can be used by company and in case of liability, the farm would be of family and not of company.
Ans to Q2.
The potential personal property issues based on the use of Sam’s personal vehicle to deliver the product could arise in case the company liquidates. Sam must have to have contract with company and that in case any issue arises the sam property or vehicle will be his own as personal properties.
Ans to Q3. No, the use of Sam’s personal vehicle in the course of business does not expose Sam or the business to any liability issues as under LLC. Personal properties cannot be part of liquidation process or in other words separate from corporate property.
Ans to Q4. There will have to be formal agreements and legal documents to be signed by directors so as to make distinction between the personal and company property and the personal property in use will be paid the required amount for use for purpose of company.
Ans to Q5 they can transfer the ownership any time they want to. They may however do it under some legal documents with stipulations as demanded or put forth by them.
Ans to Q6: Fred’s Miracle Cough Syrup business would require LLC that is corporate with limited liability as tis would safeguard them personally if any liability whether tax, debt or legal etc. would come their way personally. And that they can add other members as well to top management.