Legal Underpinnings of Business Law
June 09, 2014
The aim of this paper is to discuss business structure and organization and how liability differs between each organizational form. Society has set standards that govern our interactions with others. In addition, though not often obvious to the naked eye, most businesses have standards that similar to one another in governing their activities and abilities to function continually. The state of origin joined with the type, scope, and form of business ultimately defines the standards by which a business will abide by. Looking at the various levels of responsibility dispersed to proprietors and partnerships aids in laying down the foundation for choosing the most applicable organization form recommended to graphically design and market a business.
It has been said that knowledge is a powerful possession for one to have. Successful business leaders that are armed with advanced levels of knowledge are more equipped to lead businesses to success. Organizational leaders must also possess some aspect of knowledge of business law in the modern world in order to function. “In fact, anyone that embarks on a professional career, whether in medicine, science, government, or accounting, will benefit from knowledge of contracts, real property law, landlord-tenant relationships and other significant legal matters.” (Clarkson & Miller, 2012) The research in this paper is focused on aspects of business law centered on the various levels of liability exposure that business leaders may face from litigation when there is a breach of contract. For the purpose of this research, a fictitious scenario has been created for this paper. The fictitious scenario involves a breach of the contract lawsuit that is directed at Tinker & Tailor Home Security Services and all the business entities established under it. In an effort to identify the various levels of liability exposure, the paper will also include a brief analysis of the following forms of businesses that are established under Tinker & Tailor Home Security Services: (a) a sole proprietorship, (b) a general partnership, (c) limited partnership (LP), (c) a corporation, and (d) limited liability corporation (LLC). Additionally, a chart has been provided to give a brief synopsis that compares and contrasts various personal liability exposures that an owner would face as a result of the lawsuit. The findings in this research will give owners a better understanding as to the underpinnings of business law and how the need for it will better equip them to guide their companies to success and escape litigation that may have disastrous outcomes. An Analysis of Tinker’s Home Security Services
There are five basic organizational forms recognized in the United States. Those forms include: the Sole Proprietorship, General Partnership, the Limited Partnership, the Corporation, and the Limited Liability Corporation. Each one of these organizational forms, grant both advantages and disadvantages to the business leader and organization. The fictitious business in this research is Tinker’s Home Security Service and each one of the entities under it is being sued for a breach of contract. “A breach of contract is considered failure of a party to perform to the specifications of a contract” (Seaquist, 2012) By using the example of Tinker’s Home Security Services, Table 1, each business will be compared and contrasted based on the personal liability exposure of the principal owner as a result of being sued for breach of contract. Name of Business Entity
Type of Business Entity
Personal Liability for Debts Tinker’s Home Security Service
Sole Proprietor Tinker & Tailor’s Home Security Service
Partners Tinker & Tailor’s Home Security Service
General Partner Tinker & Tailor’s Security Service, Inc.
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