Demonstrate knowledge of substantive law including the American legal system, civil litigation, contracts, and business organizations.

Course Objective This assessment addresses the following course objective(s): • Demonstrate knowledge of substantive law including the American legal system, civil litigation, contracts, and business organizations. • Demonstrate knowledge of judgment and analytical ability. Instructions Consider the following before responding: Molly, Thomas, and Daisy met while studying business at Herzing University. Not long after graduating they decide to go into business together selling hand-painted figurines and customized mailboxes. Molly dipped into her trust fund and contributed $45,000 to the business, while Thomas wrote a check for $11,000 and Daisy borrowed $3,000 from her mother. After their first year in business, the company lost $12,000, mostly because Thomas made a poor business decision. At the end of the second year, the business reported a profit of $75,000. The profit was largely due to Daisy’s ambitious work ethic and willingness to sell the figurines door to door. At the end of the second year, the three decide to take the profits from the business. Draft an interoffice memorandum to your supervising attorney addressing each of the following: • What type of business organization would you recommend the trio form? Explain your choice and identify how the benefits of your choice outweigh those available from other organizations. Be sure to consider the interests of each party. • If the group formed a general partnership how would the $75,000 be distributed at the end of the second year? Explain and support your answer. • If the group had formed a corporation how should they declare the profits? Should they declare them as bonuses, loans, dividends, or something else? Explain and support your response.

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