Commercial law questions and key concepts

Alan Dershowitz & Maven's Court

Because the deli failed, it would be safe to assume that Mr. Dershowitz and his associates would ideally prefer a company variety that would protect them against a personal liability in the event their business would go under.

The owners might have chosen a partnership, which would equally distribute the profits and losses between the members of the business. This would allow for every member to equally be financially responsible in the event that the business were to fail. However, if the members want full financial protection, it would be best to choose to be a limited liability company (LLC) or a corporation, where the business and its owners are two or more separate entities.

Question #2 - Mrs. Meadows & The Biscuit Shop:

A promoter is someone who organizes a corporation. If a promoter signs a contract before a company has become legally incorporated, the promoter is financially responsible for those contracts signed.

This particular scenario states that Mrs. Meadows has opened a biscuit shop. The shop is not incorporated. This means that as the company promoter, Mrs. Meadows is financially responsible for her company's unpaid flour bill because she signed for it. Once the business becomes incorporated, the only way for her to no longer be financially responsible for the particular sale would be to have The Biscuit Bakery to adopt the previous contract that was in her name.

Question #3 - The Logan Foundation: Limited

A limited partnership requires two or more entities and at least one general partner. Within the partnership, the limited partner has pass-through taxation. A limited partnership is only such if it meets specific requirements. A partnership may not receive pass-through rights in the event that it does not file and renew for such treatment or recognition. In this case, it most likely will be taxed as a general partnership or as a corporation.

Question #4 - Asher Hyman and Stephan Stahl: Ampersand

Under Ampersand, Stahl and Hyman produced "Philly's Beat." As the two men disagreed, Stahl left with "Philly's Beat," but Ampersand Corporation had rights to keep the play as their own.

Officers and directors of corporations have a duty to loyalty and care. Under these two duties, a manager must remember to make the best decision possible for the company, not for themselves. They must also act without a conflict of interest. In this particular situation, Stahl left the company. While this action was allowable, the taking of the play with him was not.