II. Bob and James have been friends since high school. They decide to start a business (B&J Property Management) to acquire residential structures, fix them up, and then sell or rent them. They used some of their retirement money to capitalize the business. Bob put up $100,000 and James put up $80,000 for a total of $180,000. However, both men agreed that each one would have equal authority to manage and operate the business. They acquired six properties for $30,000 each. Without any formal or informal written agreement, they purchased the properties in the name of B&J Property Management and operated as a business for nine months. They leased an office, bought office furniture, opened a bank account, and obtained printed stationery. James sister Lisa moved into one of the homes. Lisa had not paid her rent for the last six months. Bob initiated eviction proceedings by sending Lisa notice to vacate the premises within ten days, as required by the lease. James challenged Bobs authority to file the eviction without his agreement. No court proceedings have yet occurred in the eviction. Although the relationship between Bob and James is strained, Bob and James decide that they should seek legal advice on how they should structure their business as well as other outstanding legal issues. They have concluded that they should either incorporate as a corporation or form a limited liability company.

1. Explain the common characteristics and differences between corporations and limited liability companies.

2. Explain the advantages of corporations and the advantages of limited liability companies.

3. What would you recommend to Bob and James to resolve their disagreement over whether to evict Lisa? (20 points)