Book Opener

CHAPTERASSESSMENTAcquiring and Evaluating InformationConsider the different business organizations.18. Contrast the legal documentation requiredin forming different types of businessorganizations (proprietorship, partnership,and corporation).19. Describe the significance of each type ofdocumentation, noting the similarities anddifferences.20. Name three businesses in your localcommunity, and identify the type oforganization that each exemplifies.Corporate ExpansionTim and Eric own a small corporation calledBe a Good Sport, Inc. Tim wants to keep theemphasis on court sports. Eric wants to expandby opening a subsidiary that would sell skiequipment and clothing.Debate21. What should Tim and Eric consider whentrying to make this decision?22. How can Tim and Eric resolve theirdifferences without harming theirrelationship or their business?23. Would the resolution be any different iftheir business were a partnership?24. What would you recommend they do?For the following cases, give your decision andstate a legal principle that applies.25. Ethel Holmes, Chris MacLeod, and AliciaStevens decide to incorporate their printingbusiness, naming it HMS, Inc. GeorgeKitchel, their attorney, assures them thatthe articles will be approved. Because of amisunderstanding between Kitchel and acoworker, the articles are never filed. WhenWilliam Blake is injured by an HMSdelivery truck, he sues Holmes, MacLeod,and Stevens as individuals because theincorporation papers were not filed. Howcould the owners protect themselves?26. Alice Pryor and Jessica Tunney operate theirbusiness for several years as a partnership.Pryor convinces Tunney that it would be agood idea to incorporate. Tunney agrees, sothey change the name of the business toPryor and Tunney, Inc. They do nothingfurther, although they tell their customersand creditors that they have formed a corporation.What would be their legal status ifthey were involved in a tort-based lawsuit?27. Dennis Tharp and Merle Coffman decideto incorporate. They call their corporationFord Motors because they figure that usinga well-known name would attract business.They draw up the articles and include thecorporation’s name, proposed duration, andpurpose; the number, classes and par valueof corporate shares; and the names andsignatures of the original directors and theincorporators. They then take the articlesto the state attorney general’s office forfiling. Name four mistakes they made.28. Martin Greenlawn, Gladys Chilcote, andLillian Brunner decide to incorporate theirflower shop, calling it the Hearts andFlowers Florist Shop, Inc. They file articlesof incorporation with the appropriate stateoffice, not knowing that they need astatutory agent. Through an oversight, acertificate of incorporation is issued.Eventually the state office discovers theerror. Does the Hearts and Flowerscorporation exist? Why or why not?622 Unit 6: Starting a Business