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Task Description: Case Study 2 – Judbury Apple Bakery Cafe Task Length No more than 1500 words – approximately 500 words per question Assessment Criteria: Link to Unit’s LOs: As listed on page 5 in...

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Task Description: Case Study 2 – Judbury Apple Bakery Cafe Task Length No more than 1500 words – approximately 500 words per question Assessment Criteria: Link to Unit’s LOs: As listed on page 5 in the unit outline and on the attached rubric. Refer to table on page 5 in the unit outline Due Date: Due 24 May at 2pm Value: 20% The Parties:  Essence Crofton  Scarlett Jonagold  Marigold Sturmer  Daisy Delicious The Facts: Essence is an apple farmer living in Judbury in Tasmania. After a recent bad experience where she attempted to work with an apple juicer to expand her business opportunities she wants to take a cautious approach in business and correctly document any future business dealings that she may enter into. A neighbour – Scarlett has recently purchased a small commercial building in Judbury. This building has received council approval to operate as a bakery/cafe. Scarlett knows that Essence is a good baker and has a number of recipes involving apples and other fruit that could be sold in the bakery/cafe. Scarlett spent $ XXXXXXXXXXbuying the building and asks Essence to invest $50 000 and to consider working in the bakery/cafe four days a week. Scarlett confirms she will work two days per week. Scarlett suggests that they share any profit that the business makes as follows: - 10% to be provided to the local council annually to use to enhance the local environment; - 60% to Scarlett; - 30% to Essence; Scarlett suggests that this arrangement be reviewed after a year. Scarlett also informs Essence that she intends to invite two more friends of hers to become involved in the bakery/cafe if after a year the business is running profitably. Scarlett believes that these people will be able to invest funds into the business that will enable it to grow and extend it into a licenced restaurant and catering business. You are approached by Essence, she is seeking advice on the following issues: 1. What type of business structure would you suggest that Scarlett and Essence consider and why? 2. Assume that Essence and Scarlett have decided now to register a company. They are unsure of the role of the ‘replaceable rules’ and the benefits, or otherwise of adopting a constitution for any company that they may establish. Provide them with advice on the role of replaceable rules and/or a constitution and the ways that a constitution can be adopted and the major limits on the rights to alter a constitution; 3. Assume now that the bakery/cafe has been running successfully for a year and Scarlett and Essence are both directors of the company that they established to run the business. Scarlett needs to travel overseas for a year. Provide some advice to Essence about directors meetings. She wonders – does the Corporations Act 2001 (Cth) mandate that their company need to have regular meetings and how can these meetings take place if Scarlett is overseas? 4. Assume the company now has four directors – Essence, Scarlett, Marigold and Daisy. Neither Daisy nor Marigold work in the bakery/cafe but each have contributed money to enable the bakery/cafe to expand and Marigold does the business’s bookkeeping. All shares in the company are owned by the four directors in the following proportions: i. Scarlett – 50 shares ii. Essence – 30 shares iii. Marigold – 10 shares iv. Daisy – 10 shares The four shareholders have a disagreement when Marigold says she should be paid for undertaking the bookkeeping work. Scarlett calls a meeting and proposes that they other three shareholders pass a resolution removing Marigold as both director and shareholder. Marigold paid $20 000 for her shares but Scarlett believes the business has not increased in value so she proposes that Marigold not be repaid any of the funds she paid to acquire her shares. Provide some advice to Essence of the likelihood of such a resolution as proposed by Scarlett being successful and if Marigold might have any rights to contest such a resolution should it be passed by the company? 5. Scarlett seeks to issue another 100 shares in the company and provide these shares to her husband for $1000 per share. Essence does not want this to happen and seeks your advice about the protection that the Corporations Act 2001 (Cth) provides to existing shareholders in respect of a new share issue? 6. A customer – John becomes ill when he eats a chicken pie made in the bakery/cafe. On the day when John eats in the bakery/cafe neither Essence nor Scarlett where working. They had left the new apprentice, Azalea in charge. She had not prepared the chicken correctly, leaving it out of the fridge for too long. She also did not cook the pie for the required cooking time. Advice Essence if the company or Azalea is liable for any compensation that John might claim as a result of his illness and the time had to take off from work to recover from the food poisoning? Required: You must answer questions 4 and 6 plus either question 1, 2, 3 or 5. (Three questions in total) Please use case law and/or legislation to illustrate your answers. Prepare your answers in report format, in any way that informs the parties of their legal obligations and/or rights that have arisen as a result of the above scenarios. The use of a mind map or some diagram to illustrate the essential legal aspects in the facts would be a beneficial addition in the introduction of the report but the inclusion of such a diagram is not compulsory.
Answered Same Day May 10, 2020 BAA215


Vineet Kumar answered on May 16 2020
145 Votes
BAA215 – Business and Corporate Law Assessment Item 1 – Case Study 2
Answer 1
There are some effective business structures that can be considered by Scarlett and Essence.
Partnership: this is a non-incorporated structure. It can be created by the minimum two or more than two people. In this type of the business structure, the available financial resources of involved partners are combined. The profits of the business are shared by the partner(s) as per the legal agreement between them for the distribution of profits (Maynard and Wa
en 2014). There are two types of the partnership that can take place. One is known as a general partnership in which each business partner jointly liable for that debt which is taken by them to run the business activities. The second type of partnership is called limited partnership. In this type of partnership, a person may contribute to business activities without taking an active participation in the business (Spadaccini 2007). Followings are some advantages of this business structure that is below explained:
• Inexpensive and fairly easy to form a business structure
• Costs of start-up are shared by partner(s) equally
• Each business partner shares assets, profits and management equally
• Tax advantage
Corporation: It is another method that can be used to form a business structure. This structure can be adopted after fulfilling the rules and laws of te
itories/provincial or federal. This structure limits the liability of the partner(s). Partners can transfer ownership rights (Fontana 2010). They also separate their legal rights from the legal rights of a formed business structure. It is an easy structure to increase the capital of business but this structure is more expensive. This business structure is good but it needs filling of documents annually and effort in reporting to the government may cause legal action against the business (Fontana 2010). It may cause termination of the business license.
As per the above discussion, it can be said that the partnership structure of the business is only an effective structure that can be used by Scarlett and Essence. This is because that both have finalized a business contract for the distribution of profits. They have invested in the business and they are concerns to add two friends after the successful completion of one-year business. In this context, only partnership-based business structure may facilitate both partners to run business activities as per the signed contract between the parties. With the help of this, they may not see the issue or conflicts on the matter of the profit sharing. This proposed business structure may not need to time to the establishment. This business structure does not need to maintain any paper that will be submitted to the...

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