The Miller family, who operates a musical instrument manufacturing concern, has decided to incorporate. The three (3) members of the Miller family, Mary, Mark and Sue, would like to become a corporation and obtain limited liability; however, taxation at the corporate level would be very costly for them. If possible, Mary Miller would rather be taxed as a partnership. Mark Miller is worried about the additional paperwork and meetings that incorporation would surely bring. Sue Miller does not want a large board of directors to be formed. Sue fears that the board would somehow detract from the family goals and orientation the business has always enjoyed. In light of these concerns, is there a corporate form that would better suit the Miller family?

Donna called her stockbroker Henry and told him to purchase 300 shares of Royex Corporation shares at $15 per share, the current market price. Henry agreed to do so, but became distracted and failed to do so. The price of the shares rose $3 in price that day. In the evening, Donna in a telephone conversation agreed to sell 300 shares of Royex to Sid. Assuming Henry and Donna dispute the validity of the contracts, which of the contracts are enforceable in court?

Arnold was the sole shareholder, president, and chief executive officer of Algernon Enterprises, Inc. Acting on behalf of Algernon, Arnold negotiated the credit purchase of inventory from Amax. The contract was signed in the name of Algernon Enterprises. Algernon never paid the sums due on the contract, and Arnold and the corporation were sued. Is Arnold personally liable to Amax?

You are asked to provide two friends who are in business together with advice regarding what they need to do to legally in order to form a limited liability company. Although your friends like the general notion of limited liability in the operation of their business, they are totally unfamiliar with the legal processes for forming a LLC, so you need to provide them with the basic requirements for LLC creation. What specific advice would you give them?

Robertson and Enrickson prepared an agreement to enter into a partnership. Both of the partners realized that outside capital was needed for the firm to begin operations; however, they also realized that their individual and combined credit ratings would not attract sufficient funds. In order to improve the new partnership's ability to attract investment capital, and with the approval of Enrickson, Robertson added his friend Thompson's name to the partnership agreement. Thompson, a well-known personality from a family of means, was not asked to be a partner and knew nothing of Robertson's and Enrickson's actions. Upon seeing Thompson's name on the partnership agreement, a local bank readily agreed to advance Robertson and Enrickson the total sum required to begin operations. The partnership has now failed, and the bank would like to hold Thompson, Robertson and Enrickson liable for the amount of the loan. Will the bank recover from Thompson, Robertson and Enrickson?

Ping was the president and chairman of the board of directors of Oh Imports, Inc. Ping was also a major shareholder. Acting as president, Ping negotiated a series of contracts that caused the corporation serious economic losses. In this role, Ping failed to exercise the care of a reasonably prudent person acting in similar circumstances. When substantial economic losses began to pile up, Ping insisted that the corporation breach a contract with Ory in favor of a larger contract that was later entered into with Magnificent Enterprises. Ping hoped to reverse Oh's economic fortunes through this contract with Magnificent, but the attempt failed. Oh then became insolvent. Ultimately, the corporation failed. Two law-suits were initiated against Ping. In the first, a creditor of Oh who never was paid because the business failed sued Ping alleging that the negligence of Ping had caused Oh to fail to pay the creditor what was owed. The second lawsuit instituted by Ory claimed damages from Ping because Ping caused Oh to breach its contract with Ory. Decide both lawsuits.

The stockholders of the Apex Corporation attended a special meeting of the stockholders called to discuss matters of extreme urgency to the corporation. A quorum was not present when the meeting opened, nor was a quorum present when the matters to be treated in the meeting were discussed. Management, however, felt that the importance of the issue was significant enough to warrant continuation of the meeting without a quorum, and the stockholders voted on the issues presented during the meeting. During the last fifteen (15) minutes of the meeting, just prior to the cocktail hour regularly attended by many stockholders, enough stockholders had arrived to constitute a quorum. Were the issues of this meeting dealt with in a valid manner?

Rundles, Kreiger, and Larson formed a partnership to breed and show horses. Rundles and Kreiger each contributed $25,000 to the partnership. Larson contributed four (4) horses valued at $25,000. The partnership agreement provided that the partners would share profits equally. When the horses failed to perform as expected, Rundles and Kreiger decided to reduce Larson's share of the profits. Larson claims that this decision must be unanimous to be binding. How will the case be decided?

Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite wealthy and is ready to contribute money to the venture. Betty has a degree in business from an excellent university, worked for five years as a manager in a major corporation, and currently is a leadership/management consultant. Cathy is a scientist who has developed a process that will, according to her, "revolutionize cancer treatment throughout the world." Alice, Betty, and Cathy believe it is in their best interest to form a general partnership. Do you agree? Is there a more appropriate form of business you might recommend?

Sally Gomez is interested in starting a new business. Although Gomez has developed her business plan and is ready to implement her ideas, she lacks the necessary finances to begin her new business. Along with a lack of finances, Gomez worries about the potential liability involved with starting a new business. Gomez would hate to lose all that she has personally accumulated to date in the event of a successful lawsuit against her. She is considering a sole proprietorship, a partnership, or a corporation as the organizing structure of her new venture. Which type of business would best serve Gomez's needs at this given time?