Determine if the contracts with the businesses will be governed by common law or the Uniform Commercial Code (UCC), and explain why.Analyze whether the owner formed a contract with the businesses, and apply the five essential elements of an enforceable contract. Explain the potential personal liability to Acme Fireworks if a spectator is injured by a stray firework from a fireworks display. Discuss the different employment types and relationships relevant to agency law, and analyze the advantages and disadvantages of each type specific to Acme Fireworks.Explain why Acme Fireworks should not operate as a sole proprietorship. Recommend a new business entity, and provide rationale to support your recommendation.
Business entities enter into various types of contracts in the course of undertaking their business activities. The nature and extent of these contracts differ according to the circumstances under which the contracting parties enter into the contracts. Contracts in USA are governed by the Unified Commercial Code (UCC) or by the common law (“Uniform Commercial Code – Uniform Commercial Code”, 2016). Common law is composed of the case laws decided by the courts and is followed as a principle wherever they are applicable. Another important piece of legislation is the Statute of Frauds that stipulates a few legislative requirements that are required to be fulfilled by a contract for it to be enforceable in the eyes of the law (“Statute of Frauds”, 2016).
Enforceability of Contracts and Organisational Structure
State laws in the USA mostly regulate contracts. The Statute of Frauds is one of the most important legislations that are related to contracts. The Uniform Commercial Code (UCC) incorporates some of the concepts of the Statute of Frauds that govern contracts (“Formation of Contract”, 2016). On the other hand, common law forms an important source of law related to contracts. In the given case, the contracts will be governed by common law, as UCC requires certain contracts to be reduced to writing.
Contracts are required to have a few essential elements in order for them to be enforceable and valid in the eyes of the law. The essential elements are as follows:
- Offer and Acceptance
- Legal intention of the parties to the contract
- Capacity to enter into a contract
- Written Requirement
As mentioned earlier, the agreements between the company and the inquiring parties are informal in nature and have not been reduced to writing contracts. This important factor determines the nature and validity of these agreements (“§ 2-201. Formal Requirements; Statute of Frauds.”, 2016).
The company is required to take all the necessary precautionary measures while performing firework show. This includes analysing all the risks associated with the event. Safety and security of the people performing the task and the audience is the responsibility of the company. Therefore, any injury arising out of the event shall be borne by the company.
The owner of the business is concerned about the workflow. He is required to undertake a full situational analysis. This will include the type and extent of labour that is required to be employed. In the given situation, there is an uncertainty of future work assumed by the business owner and he is also concerned about the payments to be made to the workforce in the absence of adequate work. Therefore, it will be best to employ temporary labour on wages.
The present organisational structure of the business is that of sole proprietorship. Given the nature and quantum of business operations of the organisation, the most suitable organisational structure for the business would be transform into a LLP (Limited Liability Partnership). It is the most suitable form as it has the flexibility of a partnership with the added advantage of limited liability of ownership.
It can be inferred from the above discussion that serious considerations are required to be made by the company for enforcing the agreements entered by it with other business organisations. These agreements are required to be reduced to writing for the UCC to be applicable on them.
2-201. Formal Requirements; Statute of Frauds.. (2016). LII / Legal Information Institute. Retrieved 9 June 2016, from https://www.law.cornell.edu/ucc/2/2-201
Formation of Contract. (2016). www.cisg.law.pace.edu. Retrieved 9 June 2016, from http://www.cisg.law.pace.edu/cisg/biblio/butler6-ch3.pdf
Statute of Frauds. (2016). Shsu.edu. Retrieved 9 June 2016, from http://www.shsu.edu/klett/Statute%20of%20Frauds%20Ch%2015.htm
Uniform Commercial Code – Uniform Commercial Code. (2016). Uniformcommercialcode.uslegal.com. Retrieved 9 June 2016, from http://uniformcommercialcode.uslegal.com/