Maury and Sons is an oilfield-drilling contractor. Maury has been dead for years and Monty and Max, two of Maury's grandsons, now operate the business as a general partnership. They contract with companies such as Exxon Mobil and BP-Amoco. Last year's contracts exceeded $1 million in revenues, an all-time high. The partnership currently employs 50 people on oil-rig crews and 10 in administrative positions.
Monty and Max each own 25% of the business (they acquired their interests from their deceased fathers, Fred and Barney). Two aunts, Wilma and Betty, own the remaining 50%. Wilma and Betty, each in their early 80s, have no children.
The business was originally a sole proprietorship. Maury brought Fred and Barney into the business, yet there is no formal partnership agreement. Wilma and Betty have never been actively involved in the business, yet were given their interests after Maury's wife, Mable, passed away.
Monty and Max want to continue to expand the business and, eventually, sell the business to a "consolidator" (a company that buys local businesses, usually in exchange for a combination of stock, cash, and debt).
Identify the types of suppliers an business customers with which the organization will be contracting. Prepare a letter to the organization's legal counsel identifying the following criteria he or she must utilize in developing standard contracting language for your organization in dealing with a specific supplier or business customer.
1) Performance specifications?describes the basic elements of what is to be provided under the contract such as product specifications, description of services, project deliverables, etc.
2) Terms and conditions?the basic elements of how the parties will work together including payment, timing, contact information, penalties, notification procedures, personnel, etc.
3) Dispute resolution?the method(s) to be used to resolve disputes arising under performance of the agreement.
After providing the contract guidance requested, legal counsel is suggesting that you insure against potential risks in your new venture. Based on your description of the likely risks, counsel will provide a legal evaluation to help guide you on your insurance needs. In a letter to counsel identify and assess the likely risks of tort and criminal liability arising from the operations of the company.
Legal Due Diligence Checklist
Your role for this assignment is to act as an analyst of a venture capital firm being asked to assess the viability of investing in this Project Company. To do so you will need to apply critical thinking methodologies in issue identification and risk assessment.
Conduct research on the elements of legal due diligence for the potential investment in companies. Based upon that research, develop an applicable legal due diligence checklist. Explain the importance of each checklist item you selected and how they may impact the making of an investment decision.
Memo to Venture Capital Committee
Utilizing your conclusions from applying the Legal Due Diligence Checklist above, write a memo to the venture capital committee with your recommendation for or against investment in the Project Company and the rationale for that recommendation; Please make sure that you focus this recommendation on the legal aspects of the business and that you do so using critical thinking skills.
The type of business customer Monty and Max will be contracting with: They contract with companies like Exxon Mobil and BP-Amoco. Usually, such companies are large oil companies and usually they have their own contracts that they will require Monty and Max to sign.
Monty and Max should ascertain the following important aspects of the contract before they sign the contract.
This material is taken from the website: http://www.bris.ac.uk" [The Parties warrant to each other that:-
o they have power to enter into this agreement.
o they will have finances to meet their obligations under this agreement at all times during its life.
o they are not aware of any reason why they should not be able to discharge their obligations under this agreement.
o the obligations they undertake under this agreement are valid, binding and enforceable upon each of them.]
2. [The Parties undertake to do all such acts and things and execute all such deeds and documents that may be necessary to give effect to this agreement.]
3. [The Parties agree that they will act towards each other in connection with this agreement with good faith, with complete openness and on the basis of equality.]
4. [The Parties must keep such records, including financial records, as may be necessary and to disclose the records to the other on request.]
5. [The contractual arrangements created by this agreement are not intended to constitute or evidence the existence of a partnership between the Parties. Neither of the Parties is to do or say anything that might ...
The solution gives a memo to the venture capital committee. The memo outlines the risks of the project and the measures that have been taken to counter these.