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Exam Five

Christine and two of her relatives decide to form a corporation in the State of Tennessee called Big Events Catering, Inc. As the name suggests, the business will focus on catering large events. Christine and each of her relatives live in Tennessee. Christine will own $50\%$ of Big Events, and her relatives will each own $25\%.$ Christine promises her relatives $"$no corporate meetings, no corporate formalities, we'll just run Big Events together and make some easy money."

Christine filed the necessary Articles of Incorporation in Tennessee to legally form Big Events as a corporation. The next day, Christine opened a bank account in the name of Big Events to deposit all catering business revenue, to pay all expenses of the catering business, and to make distributions of Big Events' profits to the owners, including herself. Excited about the success of the new business, Christine used the Big Events bank account to buy a new car, a country club membership, and a new wardrobe for herself. Christine also made several donations of money and leftover food from Big Events catering jobs to local charities. In addition, Christine used the Big Events bank account to pay personal expenses for her co$-$owners on many occasions, usually when one of her relatives ran into a difficult financial situation.

One afternoon, Big Events catered a wedding reception in Marion, Virginia. Unfortunately, following the reception several guests became severely ill and required hospital stays. Following an internal investigation, Christine identified several questionable decisions made by her employees with respect to proper food preparation and refrigeration. Previously, Christine had warned her employees to maintain proper refrigeration to prevent such issues, but the proper protocol was not followed at this reception. In fact, the only training Christine provided employees was a directive to read the employee handbook, which detailed the proper protocol.

As a result of the internal investigation, Christine fired two male employees who worked the reception, but did not fire any of the female employees. One of the male employees was twenty years of age, and the other was sixteen years of age. Although Christine was uncertain which employee was directly responsible, she decided to fire the males to send a "message" to all employees. She also plans to implement a random drug testing process for all employees in the future.

The two male employees are upset about the firing, and claim they have employment contracts as Christine verbally made them offers to work for Big Events for the next three years, which they verbally accepted. The male employees also claim to have witnesses to Christine making such offers. Christine informs the two male employees that she can fire them regardless of whether a contract exists as they are at$-$will employees. After arguing with Christine about the firing, the

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