QUESTION THREE

Presented below are five independent situations. (a) Three physics professors at ZICTA have formed a business to improve the speed of information transfer over the Internet for stock exchange transactions. Each has contributed an equal amount of cash and knowledge to the venture. Although their approach looks promising, they are concerned about the legal liabilities that their business might confront. (b) Chanda, a college student looking for summer employment, opened a bait shop in a small shed at a local marina. (c) Joan Mulenga and Ron Kangwa each owned separate shoe manufacturing businesses. They have decided to combine their businesses. They expect that within the coming year they will need significant funds to expand their operations. (d) Crystal, Allie, and Harry recently graduated with marketing degrees. They have been friends since childhood. They have decided to start a consulting business focused on marketing sporting goods over the Internet. (e) Mark Willis wants to rent CD players and CDs in airports across the country. His idea is that customers will be able to rent equipment and CDs at one airport, listen to the CDs on their flights, and return the equipment and CDs at their destination airport. Of course, this will require a substantial investment in equipment and CDs, as well as employees and locations in each airport. Mark has no savings or personal assets. He wants to maintain control over the business.

REQUIRED: In each case, explain what form of organization the business is likely to takesole proprietorship, partnership, or corporation. Give reasons for your choice. [25 Marks]