Question

Question #1(a)

Jessica, the owner of Plush Pizza, is a sole proprietor. Jessica wants to obtain additional capital to expand Plush Pizza, but she is having difficulty getting approved for a loan from the bank to do so. She also doesn’t want to lose control over the management of Plush Pizza. Jessica is contemplating converting Plush Pizza into another business form. What are Jessica’s best options for business form to attain all of her goals of more access to capital while retaining sole control over the management of Plush Pizza? Please explain why each option you describe for Jessica is appropriate. (5 pts)

Question #1(b)

Suppose in December 2014 Marco approaches Jessica and offers to invest money in Plush Pizza to finance the opening of 20 new Plush Pizza stores in southern New Jersey. Jessica agrees to convert Plush Pizza into a partnership and to accept Marco as a partner starting January 1, 2015. They agree that Jessica would manage the northern New Jersey stores and Marco would manage the new southern New Jersey stores. However, they do NOT sign a partnership agreement. In March of 2015, Jessica gets very sick, is hospitalized, and must be out of work for the remainder of the year. She asks Marco to take over her management duties for the northern New Jersey stores. At the end of the first year of operations, Plush Pizza makes significant profits because the southern New Jersey stores are extremely popular. Marco claims that he deserves 60% of the profits (and Jessica should get 40%) because he managed all of the company’s stores for most of the year because Jessica was sick. Is Marco correct? Why? (5 pts)

Question #1(c)

In April of 2016, one of the Plush Pizza locations is running behind in pizza delivery orders. Jessica has now fully recovered from her illness and is supervising this Plush Pizza location on the day that the delivery orders are running behind. Jessica decides to make some of the deliveries herself and rushes out the door to make the deliveries as quickly as possible to minimize customer wait times (and related complaints). On her way to make a delivery, Jessica hits Michelle, a pedestrian crossing the street, when she loses control of her car. Michelle breaks her back. It is later discovered that Jessica was driving above the speed limit in the area and was texting her boyfriend while driving when the accident occurred. Under what legal theory will Michelle likely bring suit against Jessica? Will Michelle succeed in her claim against Jessica? Explain why or why not. (12.5 pts)

Question #1(d)

Can Michelle bring a claim against Plush Pizza for her injuries suffered in the accident with Jessica? Explain your answer. (5 pts)

Question #1(e)

Assume that Michelle successfully sues Plush Pizza and wins (and assuming all other facts about Plush Pizza set forth above still apply), can Michelle seek to satisfy her judgment against Plush Pizza by enforcing the judgment against Marco (and his personal assets)? Explain why. (5 pts)

Question #1(f)

Would your answer to Question #5 change if Jessica had converted Plush Pizza into a Limited Liability Company (and both Jessica and Marco were members of the LLC)? Explain why or why not. (5 pts)

Answer 1

a) The best option to attain more capital and still maintain a sole propreitorship is to convert the bussiness into an LLC which is a "Limited Liability Corporation", wherein it is a hibrid form of business combining the characteristics of both a partnership and a corporation,But it is not considered to be a corporation since it is not incorporated.

Here the owner enjoys the flexibility of a limited liability like a corporation,an LLC may elect to be a sole proprietorship,a corporation or a corporation.

b)In a Partnership agreement,each partner should mention the amount they invest and the property they invest,and accordingly each partner should be predetermined with the amount of profit and liability they would share at the end of the period, hence Marco is wrong in assuming the greater profit he should be receiving when compared to Jessica because in the begining of the partnership agreement both Marc and Jesscia would have signed the amount of profit and liability to be distributed so only according to such agreement can they distributed the profit and not according to the work each one does.

c)Michelle has all the right to claim suit against Jessica under the legal theory that Pedestrian Hit by Car,and that fact that Michelle will win this case since it was the mistake of the driver as for reasons like Jessica was overspeeding,and it is not right to text anyone while driving which is again a legal offense,more over Michelle has a medical injury which she can claim from Jessica's insurance company as for Michelle she was following the lane rule of walking in the Pedestrian walk.

d) Yes, Michelle can bring a claim against Plush pizza for her injuries because the main reason for Jessica's overspeeding was for delivering the pizza's of Plush Pizza on time to her customers, which in turn led to reckless driving.

e) No, business and personal problem will not be taken into consideration which proving oneself guilty in terms of Company issues sued by a pedestrian.

f) If the case was changed from a Partnership agreement to a LLC,then Marco was correct because in a LLC,the decision to distribute the earning does not diminish the member's righful claim.The operating agreement of LLC may require any profit allocation that members agrees on.