Introduction
The type of business and existing laws has an impact on the performance of a business. ACME as a sole proprietorship requires the owner to make all the decisions and take all the responsibilities. In the case, the owner of ACME made all the decisions regarding the contract with other businesses. As a result, some elements of the enforceable contract, such as competency and mutuality of obligation, were neglected. The business also has unlimited liability, which puts the owner at risk of losing his assets. To solve this problem, the owner of ACME should consider looking for partners and shift the business to a partnership model. Therefore, ACME can perform well when they change to a partnership and look deeper at all contracts that are agreed upon to ensure they are enforceable and protect against lawsuits.
The Contractual Responsibility
ACME Fireworks and the businesses’ contracts will be governed by common law rather than a uniform commercial code. A common law contract requires an inclusion of an offer, type of work, price, quantity, and achievement whereas the uniform commercial code requires the quantity to be stated (Tepper, 2021). The organizations’ contracts took into account factors such as the cost of the fireworks, the type of the work, and the number. The owner of ACME went on to say that the majority of the expense for a firework display is due to skilled personnel, insurance, and the actual service of setting the firecracker. Therefore, the contract will be guided by common law because it includes the pricing of the fireworks, quantity, and services to be offered during display.
Enforceable Contract
The contract was not formed because some parts of an enforceable contract did not exist. In the case, the businesses inquired if ACME could create many fireworks shows regularly. The owner of ACME accepted the offer by informing the businesses that they could fill the displays, and they agreed on the price. There was also an element of consideration in the contract because both parties had something to bring (Smits, 2017). However, elements such as competency and mutuality of obligation were missing in the contract. There was no evidence of a binding agreement between ACME and the businesses to the terms of considerations. Therefore, the absence of the two elements confirms that the parties did not form the contract.
Personal Liability
Whenever a spectator is wounded during a display by a wayward firework, the owner of ACME will be held accountable. In a sole proprietorship, there is no legal separation between a person and an organization (Keightley, 2020). This is one of the downsides of operating a sole proprietorship model. The liability of the business is also a liability of an individual. As a result, the owner of ACME has full responsibility for all the business dealings. The owner will be required by law to pay for all the damages realized during the accident. For example, the owner is likely to compensate the spectator and ensure that they are well. In addition, they will be required by law to pay for hospital bills and any other compensation. Thus, the owner of ACME is personally responsible for all the business operations.
Full-Time Employment
Full-time Employment is a working arrangement where an employee is required to work on a regular basis. The employees must work for more than 30 hours every week (Stovell & Besamusca, 2021, p.4). In this arrangement, ACME has the ability to regularly create fireworks displays because the employees spend more time at work. In addition, there is increased loyalty due to the benefits attached that tend to foster more engagement and dedication. The business should expect a high rate of productivity because employees feel satisfied (Stovell & Besamusca, 2021). With this arrangement, the employees get conversant with the business culture and can perform the work effectively. This means that ACME is sure of meeting the customers’ needs, which is a regular fireworks display.
Despite the advantages, there are some disadvantages of engaging in a full-time employment working arrangement. ACME should be prepared to spend more because of the benefits attached to the full-time arrangement. However, a business may offer the benefits of fostering a positive relationship with employees and building a positive reputation. The owner of ACME may also consider training their employees to increase their performance. Due to overtime rules, the business will pay more for their work. Therefore, this type of Employment may not be beneficial to ACME at the moment.
Part-Time Employment
Part-time Employment is a flexible work arrangement where employees work less than full-time hours. It is an excellent arrangement because it gives the parties involved a lot of flexibility (Stovell & Besamusca, 2021). Since there is no law that defines the hours a part-time worker is required to work, it is up to an employer to determine the condition for arrangement. The employees working on this arrangement are not salaried as full-time. Instead, they are usually paid an hourly wage depending on the work they perform. This arrangement is a great way for the business to test the process while using the 15 available employees to ensure it runs smoothly. As a result, ACME will be able to retain the best talent to help increase its performance.
The disadvantages of part-time Employment are high administration cost, reduced productivity, and lack of control. With this arrangement, it can be challenging for ACME to get the necessary work done in a reduced time. For example, the business may find it hard to produce fireworks regularly. There is also a possibility of a business experiencing a high cost of administration linked with maintaining a part-time worker (Stovell & Besamusca, 2021). A business may provide some benefits to maintain a skilled part-time worker. Additionally, in the absence of full control of a part-time worker, the business may be forced to look for another person to perform the task.
Contract Employment
Contract employment is an arrangement where an employee is hired for a given task and is paid a specific rate. A timeline is usually set, and the arrangement does not go beyond that as per the agreement (Ahmadian Fard Fini et al., 2018). One of the benefits is cost saving for ACME if they use this arrangement. This is because the employees are not entitled to benefits such as leave wages, bonuses, and employees’ state insurance. With this arrangement, the owner of ACME gives all the burden of completing the task to contract employees (Ahmadian Fard Fini et al., 2018). The employee retention period becomes less of a concern when an employment contract is in place. This means that high-performing employees are more likely to stay onboard until all employment contract stipulations have been fulfilled.
The disadvantage of contract employment is inflexibility and lack of employer control over employees. Due to lack of flexibility, a contract employee may refuse to perform outside the contract tasks. According to the US labor laws, if the employer’s business needs change prior to the end of a contract, the employer may be subject to financial penalties for terminating the contract early. In addition, the employer’s control over the employees to limited in the contract terms and conditions. This means that an employer cannot act beyond what is provided. It also limits an employer’s capacity to respond swiftly to shifting labor demands. In essence, an employment contract runs counter to the prevalent willful employment assumption. This type of Employment may work for ACME because they can assign fireworks to contract employees.
Casual Employment
Casual Employment is a work arrangement where an employee is employed on an irregular basis as demanded. The contractual position for work can allow ACME to have flexibility in the workforce, which ensures it has adequate staff when there are more tasks. Once the tasks are over, the contract can be terminated without consideration (Ahmadian Fard Fini et al., 2018). This type of arrangement can save ACME from its obligations when working with a full-time employee. It enables a business to test employees and determine whether they have the skills that can benefit the organization. An employer can change the terms and employ an individual under a full-time arrangement.
Despite the benefits, there are some disadvantages to this working arrangement. There is a risk of low performance due to a high level of stress caused by job insecurity. If employees feel they are part of ACME, they will be less productive. Even though employers are not required to provide any shifts, it can be difficult for casual workers to feel comfortable in their workplaces (Ahmadian Fard Fini et al., 2018). Work can dry up for any reason at any time, producing anxiety and strain among individuals who value a stable job. The negative side of this arrangement, such as terminating employees, may give an impression that they do not care. ACME may also employ employees who lack the experience to perform the task as required.
Why Acme Fireworks Should Not Operate as A Sole Proprietorship
The main disadvantage of a sole proprietorship is unlimited liability and lawsuit susceptibility. Unlike an organization, the owner’s assets can be confiscated in the event of legal action (Keightley, 2020). The owner’s and the institution’s finances cannot be separated, and one can be substituted for the other. There is no legal line to be drawn between the two. This means that the owner’s house, cars, bank account, and other assets could be seized to pay off business debts or escape insolvency. The owner of ACME can also take funds from the business and purchase personal assets. The business owner is at risk when there is a lawsuit and a fine is established. Therefore, the owner takes all the burden of the business from litigations to failure.
The other issue that comes with sole proprietorship is the difficulty to raise funds and access loans from financial institutions. Most banks prefer to lend money to organizations with a greater opportunity to perform well (Keightley, 2020). A sole proprietorship depends on the knowledge and experience of the owner and may operate in areas they lack expertise leading to business failure. In addition, because a single owner provides a sole proprietorship’s whole liability and backing, the entire organization relies on that individual’s initial investments, money, and credit history. This means that the owner of ACME may find it challenging to access funds for business expansion. As a result, a sole proprietorship is not considered as a reliable client by financial institutions.
Recommendations
Instead of operating Acme Fireworks as a sole proprietorship, I would strongly advise the owner to convert the entire firm to a partnership. The latter is a type of business in which two or more persons join forces to run and manage a company, with profits and losses split according to the capital contributions ratio (Keightley, 2020). The owner should consider this advice because there are several challenges that come with running a sole proprietor. For example, the main challenge is unlimited liability and the inability to obtain funds for operation. Therefore, they should shift to a partnership form of business because of the benefits of sharing the burden, easy to obtain funds from banks, and better decision-making.
Partnership encourages collaboration where each partner is allowed to provide their experience in human resources. Responsibilities are effectively distributed, and as a result, an individual finds himself in the role with which they are most comfortable (Keightley, 2020). The workload is substantially decreased, and partners have more time for other activities in their life, resulting in less hardship than in a sole proprietorship. This will enable the owner of ACME to have access to a broader range of skills for many aspects of the organization. A good business partner may also contribute expertise and experience that the organization lack, as well as complimentary abilities that will help the owner build the organization. Therefore, this form of business will improve the performance of the business.
The partners share all the responsibilities in a partnership, including raising funds and paying liabilities. When it comes to raising money, a partnership is effective because each partner will contribute (Keightley, 2020). The borrowing capacity from financial institutions is great because of the trust. This will provide a different situation to Acme Fireworks, where the proprietor was completely responsible for finding the capital. It is also worth noting that, unlike a sole proprietorship like Acme fireworks, losses and liabilities are shared based on capital contribution. This makes it easier for the business to survive even in difficult economic times like recessions. The partnership provides a conducive environment for the business to expand and grow.
Conclusion
ACME fireworks have the ability to perform effectively if decisions are made and followed. The business owner needs to change to a partnership to improve performance. In a partnership, the partners will contribute funds for running the business and share the liabilities. If proper safeguards are considered, such as choosing the right business entity and hiring personnel appropriately, the business may operate smoothly and achieve its goals. It is critical to consider contract employment instead of full-time, part-time and casual due to ACME’s nature of business. In addition, the contracts signed between ACME Fireworks and the clients will be governed by Common Law. Therefore, the business would benefit from becoming a partnership in the future, as it would increase productivity.
References
Ahmadian Fard Fini, A., Akbarnezhad, A., Rashidi, T. H., & Waller, S. T. (2018). Dynamic programming approach toward optimization of workforce planning decisions. Journal of Construction Engineering and Management, 144(2), 04017113.
Keightley, M. P. (2020). Brief overview of business types and their tax treatment. Congressional Research Service.
Stovell, C., & Besamusca, J. (2021). Full-time hours, part-time work: questioning the sufficiency of working hours as a measure of employment status. Community, Work & Family, 1-21. Web.
Smits, J. M. (Ed.). (2017). Contract law: a comparative introduction. Edward Elgar Publishing.
Tepper, P. (2021). The law of contracts and the uniform commercial code. Cengage Learning.