Able is recently retired from the United States Coast Guard and is a licensed Captain allowed to...

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Able is recently retired from the United States Coast Guard and is a licensed Captain allowed to operate large offshore vessels that carry as many as 200 passengers. Able will be in charge of the businesses’ vessels and will train deck hands and supervise all other vessel captains. He is putting no money into the venture. He will work full time for the venture.

Baker is an environmental scientist with a Ph.D. in marine biology. Baker will recruit and supervise the graduate student marine biologists who will accompany all trips. During the trips, the grad students provide commentary on the whales, their behavior, etc. She is putting no money into the venture. She will work full time during the summer for the venture, but will work only part time during the school year as she is a full time college professor.

Charlie is an entrepreneur. He will manage day to day operations, including hiring and training of summer and permanent staff (except grad students and captains), purchase and financing of vessels, wharfage (leasing dock space), arrange office space, bookkeeping and marketing and advertising. Charlie is investing $500,000.00 in the venture.

Delta is a venture capitalist (investor). She lives in Norway. She is investing $500,000.00 in the venture. Delta will have nothing to do with the day-to-day operations of the venture.

In order to generate enough money to buy three (3) used whale watch boats, the group must borrow $2,250,000.00 from a bank. The bank will take a $750,000 security interest (a mortgage) on each vessel and will require a $750,000 promissory note for each vessel payable with interest over ten (10) years.
Question 1. What type or types of business entity(ies) do you recommend Able, Baker, Charlie and Delta create? Explain your answer. BE CREATIVE.
Question 2. The bank requires that Able, Baker, Charlie and Delta sign the vessel mortgages and promissory notes in their individual names. Able forgets to sign the papers and in the rush of getting the financing the bank fails to note this fact. If the bank were to foreclose on one of the mortgages, Able may be able to assert which legal defense?
Question 3. Same as 2 above except Baker signs but later says that although she put her name on the paper, she had no intention of guaranteeing the business debt when she signed. If the bank were to foreclose on one of the mortgages, is Baker’s belief a good defense?
Question 4. A statute of the United States (federal) passed by Congress states that it shall be a civil offense to pilot a vessel within fifty (50) yards of a whale known to the operator of the vessel. From what source of law may the U.S. government pass such a statute?
Question 5. Delta says that the business(es) should be non-profit. After all, she reasons, we are teaching parents and their kids about whales, their habitat and their protection. Support or attack Delta’s idea. Explain your answer.
Question 6. Is the whale watch venture responsible for Elana’s action? Explain your answer.
Question 7. Is there a binding contract for the office space? Explain your answer.
Question 8. Able says to the other members of the group, “I think we need a logo and I think it should be a cartoon drawing of whale with a tour boat balanced on top of water shooting out of the whale’s spout!” What type of intellectual property, if any, is the quoted language?
Question 9. A 16 year old student buys a whale watch ticket and goes on a cruise. He slips on a wet deck and suffers a serious injury. Will the above ticket language bar his claim? Explain your answer.
Question 10. Is the discharge of the bookkeeper a wrongful discharge? Explain your answer.

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Robert · Accepted Answer

1. Partnership is the most suitable form of organization for Able, Baker, Charlie and Delta 
because “In partnership there is a group of persons who have diverse expertise and skills 
and are called as partners. Since each partner possesses different skills, partnership firm 
can be managed efficiently”; “Partnership is a type of organization where large amount of 
funds is accumulated because there is more than one person contributes capital or fund, 
Partnership carries very less formalities and regulations”, “Formation of partnership is an 
easy task; the losses and risk in the business in case of partnership are shared by the 
partners. Hence the individual portion of risk of each partner is less if we compare their 
portion of risk in sole proprietorship”, “Since the partners meet quite frequently; they can 
arrive at decisions promptly. Thus, business opportunities requiring quick decision shall 
not be lost”.  
2. The defense available with Able is postponing the foreclosure which is possible through a 
process called trustee verification. If there is a mandatory requirement which one of the 
partner fails to follow and still banks sanction the mortgage, than the contract between 
lender and borrower will not be a valid contract and will not be effective. Banker has no 
right to foreclose the property because the contract is not a valid contract.  
3.  Baker’s belief that although she put her name on the paper, she had no intention of 
guaranteeing the business debt when she signed will not be considered as a good defense 
because putting the name as a sign is an indication that Bakers have read the conditions 
stated above and  agree to follow the terms.

Able is recently retired from the United States Coast Guard and is a licensed Captain allowed to operate large offshore vessels that carry as many as 200 passengers. Able will be in charge of the...

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