Suppose that your brother’s lemonade stand business has grown substantially. After signing the agreement with Peter, your brother’s lemonade has become so popular it is being sold at lemonade stands all over the neighborhood. Your brother has named himself “CEO” of the lemonade business, Peter has become his business partner and “Chief Operating Officer,” and they have five of their friends working for them. While their business is booming, they sometimes argue about the share of profits. You are also concerned that, now that their business is rapidly growing, they may face problems of potential lawsuits and liability, and you wish for your brother to come up with a formal legal structure for his business.
Carefully review the background materials on business organization and tort law. Then, write a 2- to 3-page paper discussing what kind of legal structure your brother’s business should adopt and potential liability risks that he faces. Specific issues to be covered in this paper include:
- What kind of liability might your brother’s business face? Refer to the Marson reading on business torts and Kelley (2012) in your answer. The optional chapter on product liability in Duboff (2004) might also be helpful.
- What kind of legal structure should your brother adopt for his business, and why? Will this structure you recommend reduce his liability? Refer to at least one of the required or optional readings from the background materials page to support your answer.