Creating limited liability partnership (LLP) on T&G consulting

The Formation of a Limited Liability Partnership (LLP)

The formation of a limited liability partnership (LLP), which must be registered with the state’s authorities, is something I would advise the group to do. Three males who are mostly responsible for providing capital make up the team together with a woman with exceptional managerial abilities. The registration will guarantee that each partner is only liable for their capital contribution (Causey, 2012). The other partners would not be held responsible if one of the group members committed errors, carelessness, or unlawful behavior. Only an individual’s actions are subject to liability. The guy will be safeguarded by limited liability at the age of 70. In spite of their lack of financial literacy, the other two men will also gain. LLP is the most suitable for the group because income and losses pass through to the partners either in proportion to their ownership or according to the partnership agreement. This form of partnership ensures everyone gains or loses according to the amount of their investment (Causey, 2012). LLP has unlimited personal liability for contractual obligations. Therefore, it will ensure that none of the partners backs down from the partnership. The partnership is not responsible for paying taxes. Credits and deductions of the firm are passed to individual partners to file their tax returns. The loans and deductions of the company are passed to partners to submit their tax returns. LLP offers flexibility in business ownership. LLP partners can decide how they will individually contribute to the business’ operations (Causey, 2012). Managerial duties can either be shared equally or separated depending on the partners’ experiences. Some partners can choose not have authority over business decisions but still maintain their ownership rights. Not all states recognize LLPs as legal business structures. Some states only allow professionals to create LLPs (Causey, 2012). LLPs do not obligate individual partners to consult with other partners in certain business agreements. Therefore, it is essential for the partnership agreement to specifically outline what each limited partner can or cannot do when making business decisions.

Other Types of Business Entities

Apart from LLP, there are other types of business entities such as; Sole proprietorship, partnerships, Limited liability companies (LLC), corporations and small business corporations. A sole proprietorship is a business managed by one person (Causey, 2012). Proprietorships depend entirely on their owners to exist. Partnerships could be general or limited (Causey, 2012). A general partnership is an agreement between two or more people to operate a business together for profit. The partners also have unlimited liabilities for the business’ debts. The difference between limited partnerships and general partnerships is that the debts of the partners of a limited partnership are limited to their investment in the business (Causey, 2012). Partners of a limited partnership have the responsibility of filing certificates of limited partnership with the authorities of the state. Corporations function under the state law, and their activities and names are restricted by their charters. Small Business Corporations (S-Corporation) are formed to give small corporations tax advantage if they meet IRS Code requirements (Causey, 2012).

Question #2

‘Bona Fide’ is a term used mostly in contracts to means ‘in good faith.’ A contract is a written or spoken agreement between two or more parties (Atakishiyeva, 2015) concerning business, employment, sales, marriage or lease. For a contract to be enforcible by law, the parties to the contract must have the contractual capacity; there must be a consideration, all material facts about the contract must be disclosed as well as the legality of the components. Contracts must be bound by mutual promises or obligations between the parties that have an agreement (Atakishiyeva, 2015). Only current considerations with economic value can be relied upon to validate a contract. In order to be enforceable by law, some contracts must be in a written form such as; guaranteed contracts, contracts about sales, transfer or lease. Certain intellectual property rights and exclusive licensing must also be in writing as they cannot solely depend on a spoken agreement. The name of the firm should clearly specify if a company is limited or unlimited. A company’s name must also be written on any legal contracts and on all invoices about that particular company (Atakishiyeva, 2015). According to the law of most states, individuals below 18 years (minors) cannot enter into a contractual agreement. The only contracts that minors are legally allowed to enter into are necessity contracts. The necessities recognized by the law are; food, clothing and shelter, currently, education is also considered as a necessity. Minors are advised to nullify the necessity contracts before they become 18 years old. However, if a minor does not do anything to make the necessities contract void before he/she is 18, they can no longer make it void (Atakishiyeva, 2015). The court of law can declare contracts signed by the mentally ill, the drunk and the certifiably insane, void. For contracts that have ‘standard times’, it is crucial to remember which ‘standard times’ apply to which agreement. Failure to perform the strict requirements of a contract leads to a breach of contract. The non-breaching party should issue the breaching party with a written notice of breach of contract before issuing the court proceedings. In our scenario, the man in his 70s cannot enter into any contract because he is mentally incapacitated according to the ‘cognitive’ test. Through this cognitive test, we find that the old man is not strong enough intellectually as he easily confuses past occurrences with the present ones. It is common knowledge that at the old man’s age, he should neither participate nor get involved in signing any legal documents without the presence of his guardian. A person who is mentally incapacitated can void a contract or have a guardian void it for them except contracts for necessities (Atakishiyeva, 2015).

Question #3

T&G CONSULTING

INTERNAL MEMO

To: The Gulf Coast of Florida Developers
From: Margaret Anderson, The Financial Manager
Date: November 15, 2017
Subject: Acquisition of Real Property

I kindly ask you to understand everything that is included in the price request, before agreeing on any amount or signing any papers. I also would like to inform you that, until contracts are exchanged, the sale agreement is not binding and either of the parties can back down without penalties. Since you have already identified the property, the next step is to prepare the money needed for the purchase of the property. I recommend that you engage a surveyor to inspect the property thoroughly. Once your solicitor is satisfied with the legal aspects of the property, and the finance for the purchase is ready, then you can proceed to sign the contract. It is essential for you to discuss any requirements to pay deposits as they can be up to 10% of the purchase price. When the contracts are exchanged, the seller has a legal obligation to sell the property to you. The purchase of land should be complete on the date agreed on the contract after the rest of the money is transferred to the seller.

The purchased land owned by a group, thus, every member will have proportionate liability for the property, but you may structure your group constitutionally to protect each of your members from being personally liable for each other’s actions. This is a provision by Uniform Commercial Code (UCC). At the end of each financial year, surplus and profits to be retained in the property and among the owners should be determined. Common shareholders will have the right to receive any benefit. The group is required to make rules how they will share the use of the property to avoid future conflicts and for smooth management.

CC: All the group members

Attachments: Uniform Commercial Code copy- May 2007; Survey Findings, January - April 2007.

Question #4

The Unified Commercial Code (UCC)

The Unified Commercial Code (UCC) provides that, any contract of sale of $500 or more must be in writing (Smith, 2013). The agreement must be signed by the party against whom the enforcement is against for it to be enforceable by the law. The sufficient writing and signature are Statute of Frauds (Smith, 2013). In our scenario, the purchase price is $4000 which is more than $500 and must, therefore, be in writing for it to be effective since no valid contract is formed without writing. Personal property is the type of property that can be moved whereas real estate cannot be moved (Smith, 2013). Real property is land and anything that is permanently attached to it. Intellectual property is the type of property that cannot be touched and is as a result of creativity. Patents and copyrights are examples of mental properties (Smith, 2013).

Question #5

Third Parties and Supply Contracts

According to the Uniform Commercial Code (UCC), a material supplier supplies goods to a subcontractor. The subcontractor supplies the general contractor, who finally supplies the owner (Smith, 2013). The general contractor and owner are ’third parties’ to the supply contract between the subcontractor and the supplier. The owner and general contractor lack ’privity of contract’ with the supplier (Causey, 2012). In our scenario, the terms of the contract indicate that the trailer will be equipped with an HVAC system. In the contract, it is stated that the terms of the agreement are complete and exclusive. However, the client’s administrative assistant advised that the HVAC is not necessary and it was therefore not included in the delivery. According to requirements of a contract, the extrinsic evidence given by the client’s administrative assistant is not written and should not hold. Therefore, the client has the right to reject these goods as they do not conform to the terms of the contract (Smith, 2013). He has the option to either reject the whole delivery or ask for the installment of the HVAC system. The client must pay the contract price of any of the goods that he/she accepts (Smith, 2013). If the client chooses to reject the goods, he must do so at a reasonable time before they are deemed accepted. The client should give the seller a notice of any defect which is the lack of HVAC system; the defect should be ascertained by reasonable inspection (Smith, 2013). If the Client accepts the goods, he/she should require the installation of the HVAC system before he/she makes any payments for the accepted goods.

Question #6

Management Practices and Ethics

Most countries have adopted some legislation practices that cover the issue of sexual harassment. The International Labor Organization (ILO) has standards and guidelines to prevent sexual harassment in the workplace (Singh, 2017). Sexual harassment is a demonstration of gender discrimination. The woman in the group has been harassed sexually. Use of abusive and barbaric sentiments about a fellow employee is an act of cowardice, uncivilized and demean human dignity. Besides, being denied overtime request tantamount to professional irresponsibility on the part of the manager and lack of awareness of the trade regulations by the employer. It is unethical, unsanctioned and should be avoided at all cost. According to the law, every company with 10 or more employees is required to formulate a policy to prevent sexual harassment as per the act (Causey, 2012). The act gives a mandate for Internal Complaints Committee (ICC) to handle sexual harassment issues. The Committee is to sensitize its entire workforce to prevent and prohibit the sexual harassment of women in the workplace (Singh, 2017). Everything about sexual harassment and gender inequality should be handled using the inquiry procedure laid down by the law. It is a violation of the law to discriminate against an employee by gender. There are very grave penalties for the organization which includes termination of their business license and fines (Singh, 2017).

To demonstrate superior commitment and exceptional standards, appropriate management practices, and ethics have to be demonstrated in any institution (Singh, 2017). Such skills are; integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence. Integrity cannot co-exist with deceit; it demands honesty. However, there is an allowance for innocent error and different legal opinions. Professional services should be provided objectively, with intellectual honesty and impartiality (Singh, 2017). Subordination of judgment should be avoided. The knowledge and skills necessary to provide professional services should be maintained. Competent people should apply their knowledge and expertise to deliver quality services to everyone in the workplace; they should also aim to be fair and reasonable in their professional relationships (Singh, 2017). It is treating others the way you would like to be treated (Singh, 2017).

References

Atakishiyeva, G. (2015). Principle of Freedom of Contract and Bona Fide, Limitless Freedom of Contract null [article]. Baku State University Law Review, (1), 38.

Causey, C. (2012). A Comprehensive Approach to Types of Business Entity. Delhi: University Publications.

SINGH, K. V. (2017). Sexual Harassment Of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013. Human Capital, 21(5), 73.

Smith, E. E. (2013). Updated Summary of the 2010 Amendments to Article 9 of the Uniform Commercial Code, An null [article]. Uniform Commercial Code Law Journal, (2), 131.