Business Law for Commercial Transactions

Week 3 Assignment 2 Assignment 2: Legal

Issues in Business Organizations Part I
Read the scenarios and the...

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Business Law for Commercial Transactions Week 3 Assignment 2

Assignment 2: Legal Issues in Business Organizations Part I
Read the scenarios and the questions that follow. Identify and analyze the legal issue(s) as
instructed. Apply legal concepts and make potential arguments as directed using laws, cases,
examples, and/or other relevant scholarly materials. Consider using short headings (consult APA
materials) to separate the topics. Summarize the facts; do not copy the scenarios into the paper.
After you have answered the questions propose recommendations to help the organization avoid at
least three of the issues identified in the scenarios in the future. Support your answers with
information from the textbook and at least three scholarly sources other than the text
and course lectures. By Tuesday, May 31, 2016, prepare a 5 to 8-page paper that
identifies the legal issues and potential solutions and answers all questions presented, supported by
relevant legal authority. Properly cite all sources using APA format.

This assignment requires application of the concepts learned in Weeks 13 and is worth significantly
more than previous assignments.
Part 1 Business Organizations
Donny Woods, Jamaica Johnson and Gerald Smith met while working at Applebees and attending
college in Tampa. Donny and Jamaica attended South University to study business, while Gerald
 attended the Art Institute for culinary management. The three friends were tired of working for
someone else and planned to open their own restaurant and bar in a growing area of Tampa.
Analyze three types of business organizations Woods, Johnson and Smith might
consider for starting their new restaurant. Be sure to consider at least one limited
liability option. Explain the advantages and disadvantages of each type.
Select one type of business for Woods, Johnson and Smith and provide support
for your choice. Based on your selection for the business type, create a name for the
business. Replace [Restaurant Name] found in future scenarios with the name you
selected for your restaurant.
Part 2 Dishonored Checks
The restaurant provides catering services to local businesses. Corporate clients paid by check or
electronic transfers. A new customer paid for a catering order with a check for $575, made payable
to [Restaurant Name]. Woods took the check to the bank the next afternoon and was informed that
the customers bank issued a stop payment on the check.
Evaluate the restaurants options related to the stop payment on the customers
check and the potential liability of the customer and customers bank.
Part 3 - Liability on Negotiable Instruments
Woods, Johnson and Smith hired a bookkeeper, Janie Johnson, and gave her general authority to
issue company checks drawn on Bank of America so that Johnson can pay employees wages and
other company bills. Johnson decides to cheat her employers out of $7,500 by issuing a check
payable to the Bayfood Distributors, one of the suppliers of seafood and fresh local
produce. Johnson does not intend for Bayfood to receive any of the money, nor is Bayfood entitled to
the payment. Johnson indorses the check in Bayfoods name and deposits the check in an account
that she opened in Wells Fargo Bank in the name Bayfood Dist. Co. Wells Fargo accepts the check
and collects payment from the drawee bank, Bank of America. America charges [Name of
Restaurant] account $7,500. Johnson transfers $7,500 out of the Bayfood account and closes it.
[Name of Restaurant] discovers the fraud and demands that their account be re-credited.
Evaluate which party bears the loss.
Part 4 Breach of Contract
Woods ordered 10 tables to seat parties of two, 25 square tables to seat parties of four, 5 tables to
seat larger parties and 150 chairs. The tables were specially ordered to contain the logo of the
restaurant. Woods paid for the entire shipment when placing the order; however, the supplier was
responsible for making the shipping arrangements. The tables and chairs arrived three weeks later;
however, five were scratched and damaged. Seven of the chairs were missing.
Analyze the restaurants options related to the damaged tables and missing
chairs. Be sure to address the applicability of the UCC to the transaction.
 Part 5 Product Liability
After some of the customers complained of becoming sick after eating at [Restaurant Name], it was
determined that the hamburger meat was contaminated with E. coli, a bacteria that causes
abdominal cramping, fever and other gastrointestinal discomfort.
Analyze at least one basis for a lawsuit the customers who became sick from
eating the tainted food could file against the restaurant.
Part 6 Holder in Due Course
Joe Craftsman had a bank account with Wells Fargo. On November 8, Craftsman received a check
for $18,500 from [Restaurant Name] as payment for construction work done at the restaurant to bring
it up to the county code requirements. Craftsman deposited the check at Wells Fargo on November 9
and was permitted to draw the funds up to November 12. Craftsman wrote checks totaling $9,500,
which Wells Fargo cleared. On November 12, [Restaurant Name] stopped payment on the check as
a result of a contract dispute over the modifications at the restaurant. Craftsman's account was then
overdrawn once the check was denied clearance by [Restaurant Names] bank. Wells Fargo brought
suit against both Craftsman and [Restaurant Name] to collect its loss. [Restaurant Name]
counterclaims against Craftsman for breach of contract on the restaurant modifications. Wells Fargo
maintained that it had given value and was a holder in due course and, as such, it was not required
to be subject to the contract dispute or stop payment order.
Justify the validity of the claims made by each party. Determine which party
should win the case and provide support for your choice.
Part 7 - Recommendations
Conclude your paper by justifying suggestions for [Restaurant Name] to help
prevent future occurrences of these types of legal problems and ethical issues, if
applicable. Be specific in your recommendations.
Support your answers with appropriate research, reasoning, cases, laws, and other relevant
examples.

Submit the paper in APA format and properly cite sources on a separate page using APA.
Submission Details
Name your document SU_BUS3055_W3_A2_LastName_FirstInitial.doc.

Submit your document to the W3: Assignment 2 Dropbox by Tuesday, May 31, 2016.

Maximu
Assignment 2 Grading Criteria
Points
 Part 1 Business Organizations
Analyzed three types of business organizations Woods, Johnson, and Smith might
consider for starting their new restaurant. Considered at least one limited liability
option. Explained the advantages and disadvantages of each type. 40
Selected one type of business for the restaurant and provided support for the
choice. Created a name for the business.

Part 2 Dishonored Checks

Evaluated the restaurant's options related to the stop payment on the customer's
20
check?

Part 3 Liability on Negotiable Instruments

Evaluated which party bears the loss. 20

Part 4 Breach of Contract

Analyzed the restaurant's options related to the damaged tables and missing
20
chairs.

Part 5 Product Liability

Analyzed at least one basis for a lawsuit the customers who became sick from
20
eating the tainted food could file against the restaurant.

Part 6 Holder in Due Course

Justified the validity of claims made by each party. Determined which party should
20
win the case and provided support for the choice.

Part 7 Recommendations 20
Concluded the paper by justifying suggestions for [Restaurant Name] to help
prevent future occurrences of these types of legal problems and ethical issues, if
 applicable.

Report was clear, concise and organized; demonstrated ethical scholarship in accurate
representation and attribution of sources; displayed accurate spelling, grammar, and
40
punctuation. Report was properly formatted and contained citations and references using
APA rules.

Total: 200