Explain the potential personal liability to Acme Fireworks if a spectator is injured by a stray firework from a fireworks display.
You are the manager of Acme Fireworks, a fireworks retailer who sells fireworks, puts on ground display fireworks, and large aerial display fireworks. The company started in the owner’s garage two years ago and now has 15 employees that you manage. The company started as a sole proprietorship, and the owner has never changed the entity. The owner has informed you that the company has received inquiries from several large businesses wondering if the company could create several fireworks displays on a regular basis. The owner told the inquirers that the company could fill such display orders, and a price per display was agreed upon. It was discussed that most of the cost for a fireworks display is for skilled labor, insurance, and the actual service of setting off the fireworks. No other details were discussed. The owner is anticipating that new employees will need to be hired, but he is worried that if the large orders for fireworks displays do not continue, the company will not have the funds to pay the new employees. The owner is now considering changing the business entity, but he does not know what entity to form or how to form it.
The owner has asked you to do the following:
Determine if the contracts with the businesses will be governed by common law or the Uniform Commercial Code (UCC), and explain why.
Analyze whether the owner formed a contract with the businesses, and apply the five essential elements of an enforceable contract.
Explain the potential personal liability to Acme Fireworks if a spectator is injured by a stray firework from a fireworks display.
Discuss the different employment types and relationships relevant to agency law, and analyze the advantages and disadvantages of each type specific to Acme Fireworks.
Explain why Acme Fireworks should not operate as a sole proprietorship. Recommend a new business entity, and provide rationale to support your recommendation.
For each task, be sure to analyze the relevant law, apply the facts to the law, and make a conclusion.
Below is what I have for my outline currently
Acme is a fireworks retailer which sells fireworks, they put on ground displays and have large aerial display fireworks. Acme Fireworks is currently a sole proprietorship, which started their business in a garage. Acme Fireworks is now considering expanding their business because of the number of inquiries that have been put forth to their company. If their business is expanding Acme Fireworks has to reevaluate what kind of insurance they will need for dealing with explosive material as there are many liabilities for customers that could be involved, and they will have to decide what types of employees they will employ. With the business possibly expanding I will also have to evaluate whether the company adheres to common law or to the Uniform Commercial Code (UCC), make the analyzation of a contract being adhered to from the owner of Acme Fireworks, give explanations of potential personal liabilities for customers during a firework display, discuss the different employment types that are available to the company, and recommend what type of business entity Acme Fireworks should become other than a sole proprietorship since the owner would not be educated in this decision. As I am the manager of Acme Fireworks I have been asked to evaluate whether the business will governed under common law or the UCC.
For this specific business it would best be explained under the Uniform Commercial Code. The UCC is best because it deals with the ability of state to state transactions, and the ability for the company to sell the goods the company needs to sell. (Weiss, 2016, para 12)
Five Essential Elements – The five essential elements are:
1. Offer
2. Accept
3. Consideration
4. Legal Capacity
5. Legality (Rogers, 2012)
Company Protection
If an individual were to get hurt during a firework explosion, it would be covered with company liability. The company would not be personally liable as long as the company was staying within the specific safety requirements for fireworks. (Pakroo, 2016, pg 122& 123)
Employment Type and Agency
Acme would have to consider the different types of employees that they are going to retain because of the different types of business transactions that are occurring in their business.
1. Employees
2. Contractors
3. Agency Laws
4. Contracting vs. Employment (Rogers, 2012)
Single Member LLC
Financially speaking it would make more sense for Acme fireworks to be a single member LLC. They would be a single business entity, and that would be more beneficial for a small company to evaluate also what they want to do with employees. (Woehlke, 1995, para 10)
Resources
Weiss, M. J. (2016). Contract law. Salem Press Encyclopedia,
Pakroo, P. H. (2016). CHAPTER 7: Risk Management. Small Business Start-Up Kit, 121-138.
Peek-Asa, C., Casteel, C., Kaus, J., & Whitten, P. (2006). Employee and customer injury during violent crimes in retail and service businesses. American Journal Of Public Health, 96(10), 1867-1872 6p. doi:10.2105/AJPH.2005.071365
Woehlke, J. A. (1995). LLCs: The business planner’s dream entity. CPA Journal, 65(6), 16.
Robinson, O. (1993). Employment ins Services: Perspectives on Part-time Employment Growth in North America. Service Industries Journal, 13(3), 1.
Rogers, S. (2012). Essentials of Business Law [Electronic version]. Retrieved from https://content.ashford.edu/.
