BUS-206 Final Project - Grade: A PDF

Preview

Summary

Download BUS-206 Final Project - Grade: A PDF

Description

FINAL PROJECT CASE STUDY ANALYSIS

BUS-206 Final Project Case Study Analysis Heather Gail Sullivan Southern New Hampshire University

1

FINAL PROJECT CASE STUDY ANALYSIS

2

BUS-206 Final Project Case Study Analysis CEO Donald Margolin’s Face Blue from Funny Face Aftershave Lotion Chris, Matt, and Ian, founders of Funny Face contract with Novelty Now Inc. to manufacture and distribute their aftershave lotion. To increase the profit margin, Not FDA approved PYR (a lowcost chemical emulsifier) is substituted for a compound in the original formula. Donald Margolion, CEO of Donald Margolin Empire Inc., buys a bottle of the aftershave and after one use his face turns blue. He and his company file suit in the state of New York against Novelty Now Inc.

Milestone One The appropriate court for this lawsuit depends upon several factors. Three important considerations include Personal Jurisdiction, Subject Matter Jurisdiction, and Minimum contacts. Personal Jurisdiction, the power of a court to require that a party (usually the defendant) or a witness come before the court; extends to the state’s borders in the state court system and across the court’s geographic district in the federal system. Subject matter jurisdiction, the power of a court over the type of case presented to it. The jurisdiction for Margolis lawsuit against Funny Face would be decided by location which involves three different states, by the subject matter of the lawsuit, or by looking into the defendant's contacts in the state the lawsuit was filed and whether they reach requirements of minimum contacts in that state. The appropriate jurisdiction would be New York because It is a negligence case which is typically in state court, but Federal court also may have jurisdiction because the plaintiff and the defendants are from different states and there is a potential for more than 75k dollars in damages.

FINAL PROJECT CASE STUDY ANALYSIS

3

Alternative Dispute Resolution Alternative dispute resolution may be an option to resolve this dispute. Alternative dispute resolution (ADR) is the resolution of legal problems through methods other than litigation. Arbitration and mediation are two types of ADR appropriate for this case. Arbitration is a type of alternative dispute resolution wherein disputes are submitted for resolution to private nonofficial persons selected in a manner provided by law or the agreement of the parties. This would be an advantage for Funny Face because it keeps the lawsuit from going as public as it would in a court room. It would be a disadvantage for Donald Margolin for the same reason which would end up in less amount of damages. Mediation a type of intensive negotiation in which disputing parties select a neutral party to help facilitate communication and suggest ways for the parties to solve their dispute. This would be an advantage for both parties due to the neutral party leading the negotiations.

ADR. Language on the Funny Face website appears to limit any claim filed to arbitration as a means of resolving the dispute. Funny Face would prefer to use Mediation because there is a neutral party leading the negotiations and making suggestions that favor all parties involved equally. Margolin would probably prefer a trial. Going public will put pressure on the defendants to settle the case. Arbitration could be second, but it isn't public. yet will still produce a decision. Mediation may go on indefinitely and lead to no agreement. The defendants would prefer this because of its private nature and, it would put them in a position to agree to any damages and not have them put on them by a third party.

FINAL PROJECT CASE STUDY ANALYSIS

4

Criminal Acts. Chris, Matt, and Ian could be subject to corporate criminal liability. Corporations and/or corporate officers could be liable for a criminal act. Currently, corporations can be held criminally accountable for almost any crime except those punishable only by a prison sentence. (Kubasek, Browne, Dhooge, Herron, & Barkacs, 2019, p. 166) Today, it must be shown that (1) the individual was acting within the scope of her or his employment; (2) the individual was acting with the purpose of benefiting the corporation; and (3) the act was imputed to the corporation. (Kubasek, Browne, Dhooge, Herron, & Barkacs, 2019, p. Glossary).

Fraud. The primary crime that exists in the case with Chris, Matt, and Ian is that of fraud. Fraud is an intentional deception that causes harm to another and a basis for contesting a will if the testator relied on false statements when he or she made the will (Kubasek, Browne, Dhooge, Herron, & Barkacs, 2019, p. Glossary). Funny Face is criminally liable because they substituted an ingredient without listing it and the substitute is not FDA approved which is clearly fraud.

Potential Criminal Liability. Novelty Now is also criminally liable for knowingly substituting the original compound with the emulsifier PYR at Chris’s direction. By following that direction, they were knowingly breaking the law. PYR is not FDA approved therefore making it a criminal offense using it to make Funny Face aftershave.

Ethical Decision Making.

FINAL PROJECT CASE STUDY ANALYSIS

5

The WPH process of ethical decision making has three considerations. These key elements are a set of ethical guidelines that urges us to consider whom an action affects, the purpose of the action, and how we view its morality (whether by utilitarian ethics, deontology, etc.) by definition. (pg. 21) In this case Donald Margolin was the whom that was affected by the PYR emulsifier substitute Funny Face’s corporation used. The reason behind the decision to make an ingredient substitution was for profit gain. Lastly making the switch to an FDA nonapproved ingredient is against the law and therefore viewed morally wrong.

Milestone Two Sam Stevens has been working on an invention that a national chain store wants to sell exclusively. Sam stated to the store manager that he would ship 1,000 units. The invention that Sam has invented is a machine that plays the sound of a barking dog which is supposed to deter intruders and Sam has been working on this invention in his rented apartment. Sam receives two letters in the mail one day, one being an eviction notice from his landlord due to the barking of Sam’s invention disturbing all the neighbors, the other a letter from the chain store demanding that he ship the 1,000 units immediately. Sam is angered by the letter from his landlord because he had informed him about the invention he was working on in the apartment and the landlord had wished him good luck. Also, the letter stated that Sam was not allowed to conduct business from the apartment which due to the landlords regards he felt was unjust as well. Valid Contract There are four elements that need to be present for a contract to be valid. These four elements are the agreement, the consideration, contractual capacity, and a legal object. For a valid contract to exist between Sam and the chain store each element must exist and have

FINAL PROJECT CASE STUDY ANALYSIS

6

evidence of such. The chain store offered an exclusive contract and Sam responded that he would ship the 1,000 units. Second consideration must be deemed to exist by showing both Sam and the chain store make promises to one another about what each of them gets in exchange for their promise, which in this case only the chain store has been promised something under the contract. Third, it must be decided if contractual capacity exists, this is known by whether Sam and the chain store had legal ability to enter into the contract and neither one was a minor, suffered from mental illness, or was intoxicated at the time. Neither Sam nor the chain store meets this criteria, therefore contractual capacity does exist. Fourth, legal object is deemed to exist if the contract is not illegal or against public policy, making it enforceable. The contract between Sam and the chain store is one about the sale of goods from one party to another and does not contain any illegal components and does not go against any public policy. Only two of the four elements of a valid contract exist, contractual capacity and legal object. There is no acceptance of agreement or consideration of Sam making it not a valid contract.

Lack of Valid Contract If there is not a valid contract between Sam and the chain store there is the possibility of there being a quasi-contract or possible elements of a promissory estoppel. A quasi-contract is defined as a court-imposed contractual obligation to prevent unjust enrichment. A quasi-contract would exist if the chain store had conferred a benefit upon Sam, if Sam was aware of the benefit, and if retention of the benefit by Sam was under circumstances where it would be unjust to do so without payment. A promissory estoppel is defined as a court will enforce one party’s promise only if the other party promised some consideration in exchange. In this case Sam made a promise to deliver 1,000 units to the chain store. The chain store did not offer any exchange for

FINAL PROJECT CASE STUDY ANALYSIS

7

the units but, the promise that Sam made was done so knowing that the chain store might rely on said promise to ship the 1,000 units. There is no evidence in the facts that chain store did rely on promise to ship units and therefore it wouldn’t prevail on a claim of promissory estoppel for this reason.

Rights and Obligations Under a standard residential lease agreement both Sam and his landlord have certain rights and obligations. These rights and obligations are the landlord has a duty to put Sam in Possession and Sam has the right to retain possession of the property, the landlord has a duty of covenant of quiet enjoyment and Sam has a right to quiet enjoyment of the property, and lastly Sam has a duty not to commit waste and the landlord has a right to reimbursement for Sam’s waste if any.

Grounds to Evict. Under the rights and obligations discussed above Sam’s landlord could have grounds to evict Sam using the clause about the property being of quiet enjoyment, although the landlord would have to prove that it was a tenant disrupting the quiet and not, he, the landlord himself doing so. The landlord makes a promise in the lease of providing covenant of quiet enjoyment which in standard means the landlord promises that he will not interfere with Sam’s use and enjoyment of the property and if the landlord does interfere with Sam’s use then Sam would be able to sue his landlord for breach of covenant, which would do exactly the opposite of giving the landlord grounds to evict Sam. The use of the premises per the landlord was the premises was not to be used for a business, but this was only stated after the original lease. The landlord and

FINAL PROJECT CASE STUDY ANALYSIS

8

tenant of a property could come to an agreement about the use of a property and the limit of use of it. When the agreement states that the property will only be used for specific purposes then it is the tenants responsibility and duty to abide by that agreement and when there is not an agreement in place then the tenant will be able to use the premises in any way he chooses as long as it does not break the law or cause any damage to the premises. In Sam’s and his landlords’ case there was no such agreement in the original lease thus giving the landlord little to have grounds to evict Sam.

Sam’s Defense. Sam’s landlord had knowledge that the premises were being used by Sam in a business manner. Sam specifically told his landlord about his invention and the details of it and that he was working on it within his apartment. Sam’s landlord responded to Sam with well wishes, telling him “Good Luck”. This implies that the landlord and Sam entered into an oral contract that could be an ammendum to the original lease. The court could find this to be an Express Contract which is a contract in which all the terms are clearly set forth in either written or spoken word by definition or even an Implied Contract which is a contract that arises not from words of an agreement but from the conduct of the parties by definition. All in all, Sam did not receive notice or an opportunity to cure the residence. It seems clear that if Sam’s invention is not disrupting the premises and other tenants during unreasonable hours of the night then there truly is no grounds to evict Sam. Sam can also argue that he is not advertising, manufacturing, or shipping and he does not have a contract so he is not running a business. The landlord clearly had knowledge of Sam’s use of the premises and entered into an oral contract with Sam that granted

FINAL PROJECT CASE STUDY ANALYSIS

9

permission to Sam to use the property as Sam saw fit if it was legal activity and did not cause any damage to the premises. Case study two finds that while Sam’s landlord did not have reasonable grounds to evict Sam, Sam did have to abide by certain rules pertaining to his use of the property. Sam although is liable to hold up his end of the contract he made with the chain store and finish and ship the 1,000 units that he had agreed to ship.

Milestone Three Jeb and Josh's new company is one of three of the different types of business entities, a general partnership, a limited liability partnership, or a limited liability company. Due to the fact there is more than one owner their company is not a sole proprietorship, but the advantages and disadvantages are very much the same. The advantages here are that the business and the owner itself are the same entity. The business is not separate. There are not any requirements by state for formal filings in order to start up or maintain a business which makes it, so the owner is the one taxed and not the business itself. In a general partnership these advantages are the same. It is the disadvantages that differ slightly. This disadvantage is that each of the partners is liable for the acts of the other partner. In this case this would not be the best business entity for Jeb and Josh since Jeb is a wealthy tycoon that is facing possible bankruptcy due to an issue with another business venture and Josh could end up facing liability issues in a general partnership. Another business entity is a limited liability partnership (LLP) and this could be a good entity for Jeb and Josh's business. It is like a general partnership with an exception that it shields the partners from being liable for the others business issues but only up to the investment that was put in. They also have an advantage of pass-through taxation.

FINAL PROJECT CASE STUDY ANALYSIS

10

The last possible business entity that Josh and Jeb could have is a limited liability company (LLC). This entity is like an LLP. The difference is that as an LLC the company must file documents with the appropriate state agencies, the partners are shielded from being held personally liable for their partner. The advantages here are that the company does not have the tax liability that corporations or S corporations have and if property ownership is a possibility this is the entity that would be the best choice. For Jeb and Josh an LLC is the business entity that they should have. Being that Jeb is currently facing bankruptcy and Josh is not financially sound to be able to afford such a loss this entity protects him from being held liable for Jebs issue in another business venture. Also, the customer that fell off the raft could sue the entire company for her back injury and the accident could have been caused solely by Josh. In such an instance an LLC would keep Jeb protected from being held liable for Josh's mistake.

FINAL PROJECT CASE STUDY ANALYSIS

11

References Kubasek, N. K., Browne, M. N., Dhooge, L. J., Herron, D. J., & Barkacs, L. L. (2019). Dynamic business law. New York, NY: McGraw-Hill Education Anon (2019). Newconnect.mheducation.com. Retrieved 14 April 2019, from https://newconnect.mheducation.com/fl...