You are the manager of Acme 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 proprietor, and the owner has never changed the entity. The company makes and sells fireworks. The owner has informed you that the company has received inquiries from several large retailers about the company’s ability to fill large orders on a regular basis. The owner told the retailers that the company could fill such orders, and a price per unit was agreed upon. No other details were discussed. The owner is anticipating that new employees will need to be hired but is worried that if the large orders 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 does not know what entity to form or how to form it.
The owner has asked you to do the following:
- Explain potential personal liability for injuries to consumers caused by the product.
- Analyze whether the owner formed a contract with the retailers applying the five elements as discussed from Week Two to the hypothetical facts.
- Analyze how different employment types could be used with application of hypothetical facts.
- Recommend a new business entity. Provide a rationale to support your recommendation.