LASELL COLLEGE
BUSS205,”B”, LEGAL ENVIRONMENT OF BUSINESS
SPRING 2013
STEVEN B. BORIS
WEDNESDAYS 5:00 P.M. TO 7:30 P.M.
WOLFE 102
OFFICE HOURS: BY APPOINTMENT
E-MAIL: XXXXXXXXXX
TELEPHONE: XXXXXXXXXXExt. 14
FINAL EXAMINATION
STUDENT’S NAME __________________________________________________________
Instructions: Carefully read the entire exam. Answer the question asked. Spot issues. Argue in the alternative, if appropriate. Write legibly and on the back of the pages if necessary. Use short sentences. Proof read. Grading: 100 points with Question 1 having 34 points and Questions 2 -12 having 6 points each (6 x 11 is 66). Lastly, have a great summer!
A group of four (4) people decide to operate a whale watch business on Cape Cod. The mission is to create a tourist business that is environmentally friendly. Each brings something different to the enterprise:
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.
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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?
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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?
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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?
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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.
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The whale watch venture is up and running. Baker places an ad on Craigslist for graduate students to act as naturalist narrators on whale watches. The ad says:
Biology—especially marine biology-- graduate students wanted! Qualified grad students wanted to serve as narrators onboard Cape Cod whale watch vessels May through September. Must be familiar with marine mammal behavior. Earn $200 per day talking about whatever you think would be interesting for the passengers to learn! You must provide your own khaki shorts, white polo shirt and deck shoes. We’ll give you a distinctive hat to wear. Send your resume to XXXXXXXXXX.
Elana submits her resume and is offered the work. After disembarking from a mid-day cruise, Elana uses her own car to drive into town to get a gift for her Captain. On the way back to the wharf, Elana negligently causes an auto accident and seriously injures the driver of the other vehicle. Elana is from New Hampshire and as no car insurance.
Question 6. Is the whale watch venture responsible for Elana’s action? Explain your answer.
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Office space is needed by the whale watch venture. Charlie negotiates with the owner of commercial office space close to the wharf. The owner emails Charlie a proposed lease which states the monthly rent as, “$1,000.00 per month plus utilities.” Charlie emails the owner right back stating, “OK, we want the space, all lease terms are OK but you pay the heat and we will pay the other utilities.” Charlie then loses battery power and his smart phone shuts down. The owner then emails Charlie right back and states, “OK, we have a deal.” The owner then has second thoughts. He emails Charlie, “Never mind, do not want to lease out the space after all.” Charlie then plugs in his smart phone and reads the string of emails.
Question 7. Is there a binding contract for the office space? Explain your answer.
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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? ___________________________________________________________
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The front of every whale watch ticket states, “read the back of this ticket.” The back of every whale watch ticket states:
“I hereby release the company from any and all claims of any nature arising out of my whale watch cruise.”
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.
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Business has been brisk for the whale watch venture. A bookkeeper is hired as an employee. The bookkeeper has no written employment contract. Able tells the bookkeeper to pay the deck hands as salaried employees and not keep the time sheets the deck hands complete each day. By treating the deck hands as salaried employees, there is no risk of having to pay them overtime if they work more than 40 hours in one week. The bookkeeper tells Able that it is not fair to do that because the deck hands were all hired as hourly workers and some of them do work more than 40 hours per week. Able fires the bookkeeper on the spot.
Question 10. Is the discharge of the bookkeeper a wrongful discharge? Explain your answer.
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Question 11. Assume the bookkeeper has a written employment contract. Several weeks after she is hired, Charlie asks her to sign an addendum to the contract that states, “all disputes related to your employment shall be resolved only by arbitration.” No other terms of her employment are changed. The bookkeeper signs the addendum. She then sues her employer in court for wrongful discharge. Must the case be dismissed and sent to arbitration? Explain your answer.
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Question 12. Assume the case of the bookkeeper does go to trial in a court.
a.) What is the role of the jury? _________________________________________
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b.) What is the role of the judge? ___________________________________________
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