Corporate Structuring and Business Law

Executive Summary of The Croissconenut

Joseph is the owner of a restaurant named “The Croissconenut”. He has invented a unique croissant and has hired me as his legal advisor to advise him with some the issue that he was facing relating to his business. With the application of various legislations like contract law, business law, torts, IPR laws, I tried to help him and give him the best advice possible.

Table of Contents

Brief Introduction

Issues

Legislations

Application

First issue

Second issue

Third issue

Fourth issue

References

Brief Introduction to The Croissconenut

Joseph is an entrepreneur in a restaurant named 'The Croissconenut.' The restaurant is famous for a unique pastry, croissconenut- a combination of croissant, scone and doughnut. Along with that, it also serves traditional pastry and tea and coffee. Joseph hired me as his legal advisor for certain issues that he faces. The aim of this report is to identify appliable legal concepts to the different issues in the scenario and apply them.A conclusion will be provided for each issue.

Issues in The Croissconenut

i) First, due to lack of space in the kitchen, he is not able to manufacture the croissconenut at his restaurant. Therefore, he gave this responsibility to his cousin Alfred, who has promised to supply the finished goods to his restaurant. Joseph now wants to increase his number of production and has no legal binding contract with Alfred and is sceptical about Alfred's reaction for supplying the increased production. Therefore, he wants to know what elements should be there to form a valid contract with Alfred.

ii) The second issue is on the structure of the business that should be formed. Joseph has two siblings and he wants them to participate in the business equally and make them secure. Also, he wants him to be secured too by owning full liability of the business if anything goes wrong.

iii) The third is, for protecting his exclusive croissconenut, he named his restaurant 'The Croissconenut.' Now he wants it to be solely one restaurant by this name in his town and wants to take a signature design on his product.

iv) Lastly, he wants to get from tortuous charges against him. On the first day of the opening of the restaurant, a cyclist ran over the signboard that Joseph had placed on the sidewalk outside his restaurant read as "grand opening.' The signboard was destroyed and the cyclist suffered from minor injuries. In a rage, the cyclist threatened to sue Joseph for his judgement on placing the board in the middle of the sidewalk.

Legislations of The Croissconenut

Legislations to be applied are Contract Law, IPR, Torts and Business law, limited liability partnership act, 2000, Patent Act, Trademark act

Application of The Croissconenut

First issue

During the inception of common law, the law of contracts was not that much of an importance. The lawyers did not judge a case based on facts but on procedural law meaning what forms the cause of the action. Up till the 19th century, contract law had no credibility. It was after that this law was recognized when a textbook was written on this subject. It was then that it came under the knowledge that there could be contractual disputes among the parties too. Classical contract theory gave a foundation to the modern contracts’ theory. The classical contract theory was based on three golden rules. First, it is a bargain, meaning a reciprocal contract. Like I promise to do a thing for you and in return, you promise to do a thing for me.

The second was that a contract can only be formed if the parties are willing to do so meaning that there is no pressure from anyone and that they want to bind themselves in a contract. Lastly, freedom of contract which means it is upon the parties to decide whether they want to enter into a contract or not. The law only plays a role to assure that there is no coercion or undue influence which compels either of the parties to enter into a contract (O' Sullivan, 2018). According to the modern law of contracts (common law), which recognized that six elements constitute a valid contract. First, there should be an intention to create a legal relationship. Second, there should be an offer. Third, there should an acceptance among the parties. Fourth, there should be a consideration. Fifth, there should a capacity to create a legal relationship. Sixth, the contract should be legal. All these elements are applied in the first issue of the given problem.

In the given problem, so far as it suited both the parties, Alfred was manufacturing for Joseph's restaurant. Now that when Joseph wants to expand his production, being his advisor, I would suggest him to talk to Alfred about his intention of expansion. That's how the first element of the formation of contract gets fulfilled that both the parties want to increase the production. The second stage, which is of making an offer, so Joseph should offer Alfred that he wants production of 100 croissconenut per day. If Alfred accepts that, it would amount to acceptance.

For the service of Alfred, Joseph would have to fix a minimum amount of remuneration per se otherwise the contract won’t stand valid in the eyes of law. However, consideration need not be monetary. The court does not interfere in this regard as long as a contract is backed by some consideration as held in Byrne v Van Tienhoven [1880] 5 CPD 344. The fifth and sixth element comes into recognition if the validity of the contract is disputable. The basic agenda of any contract is to minimize the conflicts. A contract is determined to make things legal and that neither of the parties has to waste their time in future on the credibility of the contract (MacMohan, 2018).

Therefore, to conclude the first issue, Joseph has to enter into a legal contract with Alfred even though he has a fiduciary relationship with him but in the world of business, everything has to be proved in writing. Contract saves the parties from any future atrocities like either of the parties refusing to perform the contract, withholding payments or supply of goods, questioning the competency of the parties etc.

Second issue

One has to understand the types of partnerships. Famously, there are three types of partnerships: general partnerships (GP), limited partnerships (LP), and limited liability partnerships (LLP). General partnerships are supposed to be the easiest of all structures as it requires no state filing, it has a low cost of operations and very liberal guidelines for such partnerships. For LPs, at least one partner, called the general partner/s have unlimited liability. The others, meaning the limited partners have limited liabilities. This means that their assets could not be utilized for the company's debts. Only the liability stands for the investments they make.

Such type of partnerships is suitable for family businesses. In LLPs, the personal assets of partners cannot be used for business debts. Partners have to take accountability for their actions. Such partnerships are best suitable for professional businesses like accountants, attorneys, architects etc. Many countries like the UK, US, India, Jersey, Panama, etc have recognized this form of partnership. In the UK, this concept was adopted mostly by the accountants' reason being that they cannot act as auditor for the other companies. Also, many law firms, solicitors, patent attornies have taken recourse to this as they are prohibited by law to form incorporations (Legal Department Financial Services Commission, 2015).

Section 1 to Section 19 of the Limited Liability Partnerships Act, 2000 of UK, deals with the details on limited liability partnerships. Starting from definition and its constitution to registration, to the funds of the general and limited partners, this act gives a detailed arena to the LLPs. In a very recent case, Wilsons Solicitors LLP v Roberts (Rev 1) [2018] EWCA Civ 52, it was held that members of the partnerships have the responsibility to compensate a member for the losses even if they expel that member on being a whistleblower.

The reason why business structures are important because that determines the ideology of the entrepreneurs and that in return affects the ideologies of its employees. A research was conducted on 216 employees of a hotel and they concluded that the organizational structure plays an important role in the level of adaptability of the employees with the organization (Kanten & Gurlek, 2015).

In the given problem, Joseph wants his siblings to be a part of his business but wants to keep them safe and himself too from the contingencies of the business, therefore being his legal advisor, would suggest him to go for Limited Liability Partnership (LLP). An LLP is a body corporate and works as a legal entity separate from its members. Only for tax purposes, it is treated as a partnership. The partners can own property and can sue or be sued under their names. It is suitable for Joseph since he does not want himself or his siblings to be put under any precarious position. All of them shall have limited liability towards the restaurant and their assets too shall be secured if any loss has to happen.

Third issue

One has to understand patent law. With rapid changes in the technology all over the world and availability of information being so handy, intellectual property rights gained its prominence. Inventions are not only limited to science but also in other industries too.

The Patent Act, 1977 is a UK based act that patents the inventions. Section 1 of this act defines what are patentable inventions like anything that involves inventions in literary works, artistic works, films etc. With a variety of judgements, it has been proved that food items too can be patented in the UK. For that, the most essential requirement is that item has to be purely exquisite and based on one's knowledge of food. The recipe of the product should be unusual or the process of it that no one could imagine.

Like if one uses a refrigerator to freeze an ice-cream, the novelist finds some other way to freeze the ice-cream (Bushnell, 2019). For example, a US-based restaurant Sypce received a patent for 'automated meal production system and apparatus.' (Albrecht, 2018). Therefore, it is often seen that patenting a food item is quite difficult until and unless that person is part of a food science lab where distinct inventions are done. However, there is another way to keep one's product safe from your competitors. Trademarking a recipe is the safest and cheapest way to prevent one's product from being stolen. As per section 1 of The

Trademark act, 1994 it could be done of goods and services that are unique in their sound, colour, design, shape, packaging etc. Elite companies like Coca-Cola, KFC they have trademarked their items.

Therefore, to keep his croissant save from being copied by anyone else in the town, Joseph should get his croissant and his restaurant trademarked. With this, no one shall be able to copy or steal his design or the name of his restaurant. Also, now the entrepreneurs of the company make their employees sign NDA (Non-Disclosure Agreement) which forbids the employees to leak out any trade secrets of the company after they have left their jobs.

Fourth issue

Just as an employer owes a duty of care to his employees, similarly pedestrians, like cyclists, too owe a duty of care to other people. Many countries have not made any law relating to the duties of cyclists but they must understand their duty. In the UK, there are certain guidelines for cyclists to follow, else liable to face civil or criminal charges. Like cyclists should always be on the right side of the road, they are prohibited to ride on sidewalks, use of alarm signals at blind-turns, etc. For cyclists to claim damages they have to show that it was because of the act of some other person. Just because that person is injured is no grounds to claim damages (Enjuris, 2015).

Similarly, in the given case, the cyclist cannot sue Joseph for being negligent. It was his mistake to be riding a bicycle on the sidewalks which are used by people for walking. Being his advisor would suggest Joseph not to pay much of heed to this matter as one can take a plea of volunti non fit injuria which means that if the cyclist was willing to ride his bicycle at the sidewalk, that moment he surrendered his right to sue anybody for any tortuous acts.

References for The Croissconenut

Albrecht, C. (2018). Spyce gets a patent for its robot restaurant. Retrieved from https://thespoon.tech/spyce-gets-a-patent-for-its-robot-restaurant/

Bushnell, M. (2019). Can you patent or trademark your original recipes? Retrieved from https://www.business.com/articles/can-you-patent-a-recipe/

Byrne v Van Tienhoven [1880] 5 CPD 344

Enjuris, (2015). Cycling accidents and your case. Retrieved from https://www.enjuris.com/transportation-accidents/cycling-accidents.html

Kanten, P., Kanten, S., Gurlek, M. (2015). The effects of organizational structures and learning organization on job embeddedness and individual adaptive performance. Procedia Economics and Finance, 23, 1358-1366

Legal Department Financial Services Commission, (2015). Concept Paper on Limited Liability Partnerships. Retrieved from https://www.fscmauritius.org/media/3014/fsc-llp-concept-paper4313.pdf

MacMohan P. (2018). Conflict and contract law. Oxford Journal of Legal Studies, 38(2), 270-298.

O’ Sullivan, J. (2018). O'Sullivan and Hilliard's the law of contract. Oxford University Press, 2018.

Wilsons Solicitors LLP v Roberts (Rev 1) [2018] EWCA Civ 52

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Law Assignment Help

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