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At the startup of House and Holmes, it was decided that a Limited Liability Partnership (LLP) was the best organization type for Chuck and Ben to start their House and Holmes Company. However, now that they have taken on business loans, have hired a crew, and increased their assets, it is now in their best interest that they convert their LLP business to a Limited Liability company (LLC). The primary reason for this change is liability. With a LLP business, the partners have unlimited personal liability for their own mistakes and the wrongful acts of all their subordinate employees. However, with a LLC business, all partners are risking only the capital contributions that they invest in the company, and they have no unlimited personal liability. (Twomey & Jennings, 2014, p. 970). As a business owner, it is very important to have no unlimited personal liability for the actions of your employees, because you just never know for sure what they might do to rack up debt. For example, House and Holmes’s new full time employee might get drunk one night and crash one of the company trucks into something expensive to replace. Then Chuck or Ben could be held personally liable for that, and it could put them out of business. Another example of why House and Holmes should convert to an LLC is because of loans. House and Holmes now has a loan from Regions Bank. If House and Holmes cannot repay the debt, they will want to file bankruptcy in a way that Regions Bank can only seize the assets of the House and Holmes Company, and not be able to seize Chuck and Ben’s personal assets, such as their own personal property. Either way, an LLC business will reduce the personal liability to the owners of the business in way an LLP does not. This is why Chuck and Ben should convert their business to an LLC type business
There are three potential legal issues in this scenario. First, Ryan, the customer, has a broken TV, he may want sue for damages. Second, Ryan, has scratches in the wood floors, he may want sue for damages. Third, Steve, the temporary laborer, tore his rotator cuff in the fall and is unable to work for two months, he may want sue for damages. If Ryan, wanted to sue for damages to his TV or wood floor, Steve could use the defense that the homeowner’s dog ran under his feet, causing him to lose his balance. Because pet owners are responsible their pets actions, Ryan, is responsible for negligent in controlling his dog. (Dog Law, Hug Pug. 2015, p. 1) Therefore the liability for damage to the TV and wood floor falls on Ryan, because it was Ryan’s dogs fault. Ryan might deny it was his dogs fault, but chuck was there as a witness. That gives Steve the upper hand.
In the state of Washington, chapter 16.08 of the RCW is a chapter of Washington state law that deals with the liability associated with the actions of dogs. However, most of the dog laws in the state of Washington are left to the counties and cities, and each have their own separate laws related to dogs.
To prevent similar future occurrences of issues like this one, House and Holms should have their customers fill out a form ahead of time stating that dogs will be temporary removed or restrained from the property while House and Holms do their work.
There are a few potential legal issues and an ethical issue in this scenario. The first is driving while under the influence (DUI) of alcohol. Most business’s that own or use vehicles for business use, have a “no driving while under the influence” policy. This scenario did not indicate whether or not House & Holmes had any such policy, however, there are DUI laws in every state. There is also an ethical issue here. If you are the on-call guy for the night, you should not be drinking alcohol, because if a call came in and you took the call, you would show up a client’s residence intoxicated. This is an ethical business practice, regardless of the laws. Jason’s intoxication could impair his craftsmanship judgment and he could make an error that could lead the client to sue him and House & Holmes. If the “couple of beers” that Jason drank put him over the blood alcohol limit in his local area, he could have been arrested for DUI on the way to the client’s residence. Then the House & Holmes company truck would have gotten towed away. This could lead to another potential legal issue if House & Holmes wanted to make Jason pay for the truck recovery and Jason refused to pay for the tow. House & Holmes may want to deduct such costs directly from Jason’s paycheck.
Another potential legal issue in this scenario is Charmaine Wilson’s car damage. Because Jason had “swerved,” there is no doubt that Jason is at fault in the collision with Miss Wilson’s car. Miss Wilson’s car sustained $4,500 in damages. Miss Wilson could sue Jason and House & Holmes for the $4,500 in car damages. Assuming both drivers had insurance, Jason’s insurance will have to pay for Miss Wilson’s injuries. An exception to this might be if House and Holmes had a premium insurance plan that covered anything that might happen with their trucks, then House and Homes premium insurance plan would cover Miss Wilson’s injuries. It all comes down to what kind of insurance plans each party had as to what legal action might need to be taken.
To prevent similar issues occurring again in the future, House and Holmes should make it company policy that all employees may not be intoxicated while on the job or while on call. Failure to abide by this policy will be grounds for termination of employment. House and Holmes could also invest in top notch premium insurance plans for their trucks.
“A suretyship is a contract between three parties in which a third party (surety) agrees to be the primary party liable to creditors for the debt of another party (debtor).” (South University Online, 2015, para. 2). Chuck, Ben, and Phil are all equally responsible for the debt, not just Phil. It would be unethical for Regions Bank to only go after Phil, when there are three sureties to the loan. Regions Bank is not required to seek payment from House and Holmes before demanding payment from the co-sureties. Regions Bank can collect the full amount of the loan from Phil, or any of the co-sureties because each co-surety is fully responsible for the full amount of the debt. This also means one surety cannot try (in a legal manner) to make other sureties take responsibility for the bill.
A good way to prevent this type of issue is to become a LLC type business, so nobody will have personal liability. Then to not sign up as sureties or co-sureties on a loan. If House and Holmes are going to take out any loans, they should set it up so only the company is liable for the debt, and not individuals. Another option could be that House and Holmes sell bonds instead of taking a bank loan to raise capital.
In this scenario, there are three legal issues, contract law, bankruptcy law, repossession law. Looking at contract law, the homeowner is in breach of contract by not paying their third months payment due to House & Holmes. Therefore House & Holmes has a right to have a claim on the home owner’s assets until the debt is repaid. However the homeowner has filed for bankruptcy, but the scenario did not say what chapter of bankruptcy. If it was Chapter 7 or chapter 13 bankruptcy, the court may stop House & Holmes from repossession. (Nolo, 2015, para 1). If the court does not stop House and Holmes from repossession, House and Holmes could repossess the outdoor kitchen appliances to satisfy the debt.
To prevent this issue from happing again, House and Holmes can begin doing extensive credit checks on homeowners before doing business with them to see the likelihood that the homeowner would be able pay their bills without going into bankruptcy. This will not guarantee that they will never run into this issue again, but it is a good start. Another option is to renegotiate the terms of payment, giving the customer more time to make the payment. This may allow the customer to pay off other debts first and avoid having to file for bankruptcy.
There is a possibility that House and Holmes discriminated against Gabrella Garcia by not hiring her because of her sex or national origin. However the scenario did not give any real evidence that there was discrimination. House and Holmes may simply hired someone else whom they thought was more qualified. If House and Holmes is innocent of this charge, there is not much they can do to prevent these kinds of lawsuits being thrown at them. However, they can show evidence that they hired the most qualified person, which should allow them to win the case. If House and Holmes is guilty of this charge, against Title VII, they can prevent future issues by stopping the discrimination.
There are many business related laws that govern how a business should be ran and laws that provide rights to both parties in business deals. When things go wrong, the law provides remedies. Tort laws are laws that attempt to keep things fair and provide remedies when there is a civil breach against a party. Remedies usually include suing for damages and/or compensation. The three main types of torts are negligence, product liability, and intentional torts. There are four fundamental aspects to tort law. They are duty, breach of duty, causation, and injury. (Tort laws, 2015, p. 1).
Another type of law is the Uniform Commercial Code or UCC. The UCC standardizes business laws in the U.S. and strives to create consistency among all fifty US states. The UCC is a recommendation of laws that has been adopted by all fifty US states. The code has the effect of law only when it is adopted by and put into effect by the state. (U.S. Legal, 2015, p. 1)
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