Case Study: 1
In accordance with the case given, it is clear that Lowe, Ball and Lynch were partners in a New York law firm. Lowe was in failing health, and notified the partners that she wanted to retire and ready to assign full interest in the partnership to her son Jessie Stringham. With her consent, Stringham who was a New York bar-licensed attorney with several years of professional experience is able to attend management meetings as well as inspecting the books. But, he was not permitted for doing this, which is actually wrong as per the partnership laws created by the government. In accordance to the Uniform Partnership Act, a partner may transfer his rights to someone he knows and recommends for further partnership (Schneeman, 2012).
In case of health issues, one can take a voluntary retirement while working in a law firm, as well as liable to transfer his partnership interest to one of his relative or some agent. In case of Lowe, she transferred her partnership rights to her son, who is a New York bar-licensed attorney with several years of professional experience. As per his professional experience, he can be assigned full interest in the position of his mother, as well as also entitle to attend management meetings and inspect the books (James, 2008).Other, legal aspect applies to the case is a Durable Power of Attorney, which provide a right to an individual to decide who will handle my affairs if, I can’t. Most of the people find it suitable to decide, when they are not well or capable to handle their roles and responsibilities. The durable power of attorney appropriates an individual to select, who will be in control of his/her affairs as done by Lowe in case of her partnership with the law firm (Crumbley & Smith, 2002). She has a right to assign her partnership interest to his son, and other partners should also respect that, and if they were having any issues, they should have clearly discussed it with Lowe. After assigning her interest, they don’t allow her son to attend management meetings and books, which is actually not right or appropriate.
Case Study: 2
Selecting a right business structure is essential as it saves money in filing fees, taxes, and general overhead costs. Two most common structures used are limited liability companies (LLCs) and limited partnerships (LPs). Limited partnerships, or LPs, include at least one general partner and one limited partner. General partners are in charge of all business activities as well as liable for business debts. Limited partners, on the other hand, only contribute financially and have minor control over company operations. These types of structures were popular in the 1970s and 1980s (Miller & Jentz, 2009). In contrast to LPs, LLCs or limited liability partnerships consist different players, playing a role in business activities and receives limited liability protection. Use of LLCs is best in case of professional groups like dentists and lawyers.
Both of these business structures have their own advantages and disadvantages which are as follows:
One of the key advantages of a Limited Liability Company is that members can receive liability protection, but can avoid the burden of widespread paperwork and high filing fees requisite by corporations. In an LLC, members’ rights of management are also determined, making it easy to manage all activities. LLPs, give both management power and limited liability to all partners. On the other hand, it also has disadvantages like operating as an LLC is that the business entity does not possess a centralized management, which in turn may make it difficult to have an effective decision-making process. As well, if other arrangements are not made, the LLC stops existing, in case an owner dies (Gitman & McDaniel, 2008).
One of the key advantages of establishing an LP is that business owners can easily look for investors without giving up management rights. General partners stay in control of the company whereas limited partners offer the capital. As well, an LP is not dissolved even if its limited partner dies, leaves or is interchanged. The main disadvantage of an LP is that the general partners have a great deal of the risks, and general partners bear the overall responsibility of all business duties (Schneeman, 2012).In regard to gave case, the business structure suitable is LLC as it is widely used in present and does not include the burden of widespread paperwork and higher filing fees. LLCs only need to file one form with the state and, depending on the location, perhaps publish legal notice in local newspapers. On the other hand and LP requires filing paperwork with the states and Revised Uniform Limited Partnership Act or RULPA (Schneeman, 2012). For effective management of the Animal Park decentralized decision-making will be effective in regard to the use of LLCs.
- Crumbley, D.L. & Smith, L.M. (2002). Keys to Personal Financial Planning (3rd ed.). USA: Barron’s Educational Series.
- Gitman, L.J. & McDaniel, C.D. (2008). The Future of Business: The Essentials (4th ed.). USA: Cengage Learning.
- James, V.M. (2008). The Alzheimer’s Advisor: A Caregiver’s Guide to Dealing with the Tough Legal and Practical Issues. New York: AMACOM Div American Mgmt Assn.
- Miller, R.L. & Jentz, G.A. (2009). Fundamentals of Business Law: Excerpted Cases: Excerpted Cases (2nd ed). USA: Cengage Learning.
- Schneeman, A. (2012). The Law of Corporations and Other Business Organizations (6th ed). USA: Cengage Learning.