CHAPTER 24 (SOLE PROPRIETORSHIPS, PARTNERSHIPS, AND LIMITED LIABILITY COMPANIES) This Assignment consist of six separate parts (cases), you will need to answer in detail the following specific questions on business organizations (BUSINESS LAW). Five of the six cases are part of the following questions that posed in the ?Hypothetical Scenarios and Case Problems? And the six is base on ethics 24.1 Limited Liability Companies John, Lesa, and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits, in accordance with his contribution. Lesa and Tabir, however, assume that the profits will be divided equally. A dispute over the question arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place? Discuss fully. 24.3 Partnership Formation Daniel is the owner of a chain of shoe stores. He hires Rubya to be the manager of a new store, which is to open in Grand Rapids, Michigan. Daniel, by written contract, agrees to pay Rubya a monthly salary and 20 percent of the profits. Without Daniel?s knowledge, Rubya represent himself to Classen as Daniel?s partner, showing Classen the agreement to share profits. Classen extends credit to Rubya. Rubya defaults. Discuss whether Classen can hold Daniel liable as a partner 24.4 Indications of Partnership At least six months before the 1996 Summer Olympic Games in Atlanta, Georgia, Stafford Fontenot, Steve Turner, Mike Montelaro, Joe Sokol, and Doug Brinsmade agreed to sell Cajun Food at the games and began making preparations. Calling themselves ?Prairie Cajun Seafood Catering of Louisiana,? on May 19 the group applied for a license with the Fulton County, Georgia. Department of Public Health-Environmental Health Services. Later Ted Norris sold a mobile kitchen for an $8,000 check drawn on the ?Prairie Cajun Seafood Catering of Louisiana? account and two promissory notes, one for $12,000 and the other for $20,000. The notes, which were dated June 12, listed only Fontenot ?d/b/a Prairie Cajun Seafood? as the maker (d/b/a is an abbreviation for ?doing business as?). On July 31, Fontenot and his friends signed a partnership agreement, which listed specific percentages of profit and losses. They drove the mobile kitchen to Atlanta, but business was ?disastrous.? When the notes were not paid, Norris filed a suit in a Louisiana state court against Fontenot, seeking payment. What are the elements of a partnership? Was there a partnership among Fontenot and the others? Who is liable on the notes? Explain (Norris v. Fontenot, 867 So.2d 179(La.App. 3 Cir. 2004)) 24.7 Limited Liability Companies A ?Certificate of Formation? (CF) for Grupo Dos Chile, LLC, was filed with the Delaware secretary of state in February 2000. The CF named Jamie Rivera as the ?initial member.? The next month, Jamie?s mother, Yolanda Martinez, and Alfred Shriver, who had a personal relationship with Martinez at the time, signed an ?LLC Agreement? for Grupo, naming themselves ?managing partners.? Grupo?s business was the operation of Dancing Peppers Cantina, a restaurant in Alexandria, Virginia. Identifying themselves as Grupo?s owners. Shriver and Martinez Borrowed funds from Advanceme, Inc., a restaurant lender. In June 2003, Grupo lost its LLC status in Delaware for failing to pay state taxes, and by the end of July, Martinez and Shriver had ended their relationship. Shriver filed a suit in a Virginia state court against Martinez to wind up Grupo?s affairs. Meanwhile, without consulting Shriver, Martinez paid Grupo?s back taxes. Shriver filed a suit in Delaware state court against Martinez, asking the court to dissolve the firm. What effect did the LLC agreement have on the ?Certificate of Formation? (CF)? Did Martinez?s unilateral act reestablish Grupo?s LLC status? Should the Delaware court grant Shriver?s request? Why or why not? (In re Grupo Dos Chiles, LLC,_A.2d_(Del.Ch. 2006)) 24.8 Limited Liability Companies An LLC owned a Manhattan apartment building that was sold. The plaintiffs owned 25 percent of the membership interests in the LLC. They filed a lawsuit on behalf of the LLC ? called a derivative suit- claiming that those in majority control of the LLC has sold the building for less than its market value and had personally profited from the deal. The trial court dismissed the suit, holding that the plaintiffs individually could not bring a derivative suit ? to redress wrongs suffered by the corporation? because such actions could not be brought for a LLC. The appellate court reversed, holding that derivative suits on behalf of LLCs are permitted. That decision was appealed. A key problem was that the state law allowing the creation of LLCs did not address the issue. How should such matters logically be resolved? Are the minority members in an LLC at the mercy of the decisions of the majority members? Explain answer (Tzolis v Wolff, 10 N.Y. 3d 100, 884 N.E. 2d 1005 (2008)) 24.9 ?A Question of Ethics? Blushing Brides, LLC, a publisher of wedding planning magazines in Ohio, opened an account with Gray Printing Co. in July 2000. On behalf of Blushing Brides, Louis Zacks, the firm?s member-manager, signed a credit agreement that identified the firm as the ?purchaser? and required payment within thirty days. Despite the agreement, Blushing Brides typically took up to six months to pay the full amount for its orders. Gray printed and shipped 10,000 copies of a 2001 issue for Blushing Brides but had not been paid when the firm ordered the 15,000 copies of a 2002 issue. Gray refused to print the new order without an assurance of payment. Zacks signed a promissory note for $14,778, plus interest at 6 percent per year, payable to Gray on June 22. Gray printed the new order but by October had been paid only $7,500. Gray Filed a suit in an Ohio state court against Blushing Brides and Zacks to collect the balance. (Gray Printing Co. v. Blushing Brides, LLC, the balance. (Gray Printing Co. v. Blushing Brides, LLC, _ N.E.2d_(Ohio App.3d 2006)) 1. Under what circumstances is a member of an LLC liable for the firm?s debts? In this case, is Zacks personally liable under the credit agreement for the unpaid amount on Blushing Brides? account? Did Zack?s promissory note affect the parties? liability on the account? Explain. 2. Should a member of an LLC assume an ethical responsibility to meet the obligations of the firm? Discuss. 3. Gray shipped only 10,000 copies of the 2002 issue of Blushing Brides? magazine, waiting for the publisher to identify a destination for the other 5,000 copies. The magazine had a retail price of $4.50 per copy. Did Gray have a legal or ethical duty to ?mitigate the damages? by attempting to sell or otherwise distribute these copies itself? Why or why not? PLEASE, based ANSWERS on your analysis and understanding of the legal issues, as well as your presentation of the applicable business law for each scenario. And for each question, discuss whether your answer would be different under Florida law. AS PART OF THE ANALYSIS OF THIS QUESTION BASE INFORMATION FROM Companion Site of the book Companion Site of the book: AND Florida Statutes USE RELATIVE CASE TO THE QUESTION AND QUOTE Please submit your assignment as a œWord document attachment in the Assignment Drop-Box, and to Turn-It-In.Com for plagiarism review. Failure to submit in both platforms by the due date will result in a grade penalty, no exceptions granted.