Share
Explore BrainMass

Abe, Beth and Cindy want to form Marketing Specialties, LLC (limited liability company). What issues should they address in their operating agreement? If they fail to include some important operating details, what determines these details?

Please respond to the following questions:

1. Barb is a purchasing agent for Commercial Sales Corp. Alex, a Commercial Sales corporate officer, gives Barb a letter of authority to buy for the company as many computers and accessories as needed. The next day, Alex calls Barb and tells her to buy only 20 notebook computers and nothing else. Barb shows the letter of authority to Eager Computer Co., and enters into a contract with Eager to buy 40 notebook computers, 5 printers, and a scanner. Eager ships all of these items to Commercial Sales. Is Commercial Sales legally obligated to Eager under the contract? Explain why or why not. Is Barb personally obligated? Explain your answers.

2. Agents and employees of Blue Corporation and Green Corporation are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so, how can they be punished? Explain your answers.

3. Dan is a promoter for the soon-to-be-incorporated firm of E-Business, Inc. Dan signs a contract with Smith & Jones, Accountants, to render their services before E-Business is incorporated and for one year after the incorporation. E-Business is incorporated. Three months later, after Smith & Jones has continued performing under the contract, the E-Business board of directors tells the accountants that it is canceling their contract. Smith & Jones files a suit against Dan and E-Business, alleging breach of contract. Will Smith & Jones prevail? Explain your answers.

4. Arnold is the chief executive officer of Beta Corporation. Arnold's responsibilities include decisions on product development, marketing, and other significant business directions. Arnold is subject to the approval and oversight of Beta's board of directors. Carol is a Beta manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Dave is a Beta salesperson, whose daily activities are controlled by Carol. Erin writes technical manuals for Beta products according to Arnold's instructions and has no dealings with Beta customers or suppliers. Fred edits the manuals on a contract-per-manual basis and is not otherwise subject to Beta's control. Identify who among these people is a principal, who is an agent, who is an employee, and who is an independent contractor? Explain your answers.

5. Abe, Beth and Cindy want to form Marketing Specialties, LLC (limited liability company). What issues should they address in their operating agreement? If they fail to include some important operating details, what determines these details?

Solution Preview

1. Barb is a purchasing agent for Commercial Sales Corp. Alex, a Commercial Sales corporate officer, gives Barb a letter of authority to buy for the company as many computers and accessories as needed. The next day, Alex calls Barb and tells her to buy only 20 notebook computers and nothing else. Barb shows the letter of authority to Eager Computer Co., and enters into a contract with Eager to buy 40 notebook computers, 5 printers, and a scanner. Eager ships all of these items to Commercial Sales. Is Commercial Sales legally obligated to Eager under the contract? Explain why or why not. Is Barb personally obligated? Explain your answers.
Commercial Sales is legally obligated to Eager under the contract. Commercial must pay for the 40 notebooks, 5 printers, and a scanner that Eager has delivered. This is because there is a legally enforceable contract between the two. What is a contract? A contract is any legally-enforceable promise or set of promises made by one party to another and, as such, reflects the policies represented by freedom of contract. In the civil law, contracts are considered to be part of the general law of obligations. This article describes the law relating to contracts in common law jurisdictions. How can Barb form a contract that binds Commercial Sales? He can bind Commercial because he has the letter of authority and is the purchase agent. Now what is a letter of authority? If no purchase order or order for service is used on a credit account move, the commercial account paying for the move must write a letter authorizing or giving permission to move the employee and assuring that the company will pay for the said move. When Barb showed the letter of authority to Eager he became authorized to place the order.
Barb is not personally obligated to Eager, only Commercial is obligated to Eager. However, if the Barb is reporting to Alex and Barb is an employee or a purchase agent of Commercial, and if he has placed the orders in variance with the instructions of Alex then Barb is responsible to Commercial. Commercial may fire him and hold him responsible for the cost wrongly incurred in the original transaction.

2. Agents and employees of Blue Corporation and Green Corporation are ...

Solution Summary

About a paragraph for each question.

$2.19