Scenario 2 – Accountant’s Liability
Walker, the CEO of Memphis Mini Golf and Go Carts (MMGGC), wanted to sell the business to Go Carts, Golf & Games. To provide a basis for the transaction, Walker retained Blanchard, an accountant, to conduct an audit of MMGGC. Blanchard was aware that Go Carts, Golf & Games would likely use the audit report in consideration of the purchase of the business from MMGGC. Blanchard’s audit report showed that MMGGC’s business was profitable. William, Go Cart’s president, relied on this report in agreeing to purchase the business of MMGGC and in agreeing to the terms of the purchase. Sometime later, it was discovered that the accountant made a number of mistakes and that the business that was sold was actually insolvent. William and Go Carts sued Walker and Blanchard for damages. The suit claimed that the accountant had negligently misrepresented the facts.
- Discuss the arguments for each party, determine which party should win, and provide legal support for your decision.
Discussion Question Part II
In two to three paragraphs, provide the following information about the business you created in Week 1.
- Based on the type of product your business will offer, discuss potential product liability issues and how your company can avoid these potential risks.
- If your business only provides a service, pick a product your business will purchase and use it to answer this part.
- Explain the applicability of the UCC to your transactions and your plans to handle sales contracts and warranties.
- If your business provides a service, explain why the UCC will not apply. Also, explain how you will handle product purchase contracts and warranties.
- What is the difference between FOB Shipment and FOB Destination? Explain the advantages and disadvantages of each. Identify shipping term(s) you plan to use for your business and explain the selection. (This applies to the sale and the purchase of goods.
The company’s name is Coffee Kettle. The product that I selected is food and beverages. The company is a corporation since it expanded its operation into 64 countries and has acquired other companies, for example, Seattle’s Best Coffee, and Ethos Water. The corporation is a type of business organization whereby the investors buy shares of stock to represent their ownership, (Wolfe, 2019). Some of the advantages of corporation structure include limited liability. The shareholder is only liable up to the amount of investment. It is easy to raise capital since the company can sell shares to the public.
There is no limit to the existence of cooperation since one can pass ownership from one generation to another. Some of the cons of corporate structure are that Income can be taxed twice since the corporation pays taxes on income, and the shareholder’s dividend is taxed. Another disadvantage is excessive tax filling. The legal requirement for forming of corporation business in my state includes a registered agent. The owner should fill the certificate of incorporation with the state. The state requires that the incorporator’s address, name, and signature be included, (Stout, et al., 2016). The corporation should include the number of shares of stock they wish to authorize.