Type of business and breach of contract
Sole proprietorship
In case a sole proprietor breaches the contract, the proprietor’s personal property, including car, home, and other belongings could be at risk because the supplier could require the owner to reimburse the losses due to the contract violation (Adamson and Morrison 475).
General partnership
In case one of the partners violates the agreement, all the business owners should be responsible for the losses. Therefore, if one is being sued, then another partner should also respond to the breach.
LP
If a limited partner breaches the contract, the general partner will take full responsibility for the losses and, therefore, he/she should reimburse the damage imposed on contract party (Miller and Jentz 539). The limited partner does not hold responsibility for all the debts of the firm either.
Corporation
In case a corporation breaches the contract, all the liabilities will be imposed on them, but not on the investors financing the project. Therefore, this entity is a risky business for people involved into corporation.
LLC
Usually, contracts are usually the responsibility of the entire company. Although the company imposes limited liabilities on partners, the limitations disappear as soon as the violation of contract takes place (Miller and Jentz 541).
The best business organizational form, considering personal liability exposure.
While planning business, corporation could be considered a beneficial form for carrying out operations. The term was historically used in England to describe the municipal government heading one of boroughs. Corporation, therefore, embodies a legal person who takes liabilities for conducting business. This form of business can undertake lawsuits, sell and buy property, conclude agreements, pay taxations, and violate the terms of the contract (Miller and Jentz 540). The most notable characteristics of corporation consist in protecting its proprietors from personal responsibility for corporate obligations within the established limits.
Corporation has a high level of sustainability due to the shareholder’s right to pass on a corporation and transfer their liabilities on other individuals who are able to continue carrying out business. The corporation is controlled by the board of directors who take orders to shareholders. The latter group appoints corporate officers who execute their tasks. The main advantage of corporation lies in the possibility to increase investment capital and, therefore, shareholders need only to sell their stocks to another individual to raise the capital (Miller and Jentz 540). The purchase of shares is under the auspices of the U.S. Securities and Exchange Commission.
Shareholders, directors, managers, and officers of the corporation should adhere to certain formalities of its administration and operation. During regular meetings, managers and shareholders must be notified of the requirements that relate to reporting on corporations’ profitability and results.
There are a great number of advantages that the shareholders of the corporation receive. To begin with, proprietors are protected from responsibility for company’s liabilities and debts. Further corporations are reliable in case of legal precedent to monitor the work of managers and owners. Corporations can transfer shareholder’s rights from one legal person to another and, therefore, this form of business is sustainable.
Finally, corporations offer beneficial terms of taxation under certain circumstance, although there are cases when tax payment is doubled due to the increased profits. Despite the evident advantages, heading corporation may be problematic for several reasons. In particular, corporations require owners to organize annual meeting and introduce annual reports. Corporations require significant investment, which are much higher than those introduced under sole proprietorships and partnerships. After all, corporations must be liable for annuals and lawsuits.
To organize a business corporation, certain qualification requirements should be fulfilled. First, corporation should be operated at a domestic level and the owners should not belong to a group of other corporations. According to the legislature, shareholders must be physical or legal entities. Partnerships could not be accepted as shareholders of a corporation. No more than one hundred shareholders is permitted to hold a corporation and this form of business should have on type of stock despite different privileges for shareholders are proposed. Shareholders should not originate from host country. Corporations are much more flexible in holding responsibilities for losses and damages made to the third party, which another potential benefit for organization this form of business.
Governing corporation is a separate topic for discussion because it involves a set of principles and rules. Specifically, the management frameworks should worked out with regard to its influence on the general economic performance, employees’ incentives, market integrity, and promotion of transparent information exchange. Legal requirement that has an impact on corporate governance should also be in accord with the legislature. The allocation of responsibilities among judicial authorities should be defined to ensure the presence of the public interest. Finally, supervisory and enforcement authorities have the right to perform their duties objectively. Moreover, the legal procedures should be transparent and timely to adhere to generally accepted rules and regulations.
Works Cited
Adamson, John. E, & Amanda Morrison. Law for Business and Personal Use. US: Cengage Learning. 2011, Print.
Miller, LeRoy Roger and Gaylord A. Jentz. Fundamentals of Business Law: Excerpted Cases. US: Cengage Learning, 2009. Print.