APIC INTRODUCTION TO BUSINESS LAW Assignment 1, Semester 1, 2016 INSTRUCTIONS TOPIC Business structures (sole trader, partnerships, companies) DUE DATE No later than Monday of week 6 of the semester. Marks will be deducted for unauthorised late submission at the rate of 5% of the awarded mark per day late. NO. OF WORDS 1,500 (one thousand five hundred). A 10% leeway is allowed in the maximum number of words. VALUE This assignment is worth 20% of the total marks for the unit INTRODUCTION TO BUSINESS LAW. COVERSHEET A fully completed coversheet must be attached to the front of the assignment for submission. The coversheet is contained on the APIC computer. SUBMISSION Submission is to be via computer. Details will be announced at lectures and tutorials. PRESENTATION Assignments must be typed, double-spaced, on one side of the page only, with a bibliography. All pages, including coverpage and bibliography must be stapled together n the top lefthand corner. Failure to submit a bibliography will attract a penalty of 10% of the marks awarded. 'TURN IT IN' Assignments may be subjected to processing by Turn It In at the discretion of the lecturer. RETENTION OF ORIGINAL Students are to retain the original assignment on their computer until the final mark for the Unit is announced by the APIC academic board. RUBIC In law, this type of assignment is called a 'problem question.' The rubic (rationale/principles) used in marking) will be issued in week 3 of the semester. TASK This is a typical problem question that students studying law deal with frequently in their course. You are put the position of an adviser, given a set of facts they would impact in real life, and asked to advise they key players in the problem. You are a public accountant in practise in McKay, a medium sized city in Victoria, Australia. You are approached by Jack and Jill, who run a successful secondhand book business. Jack and Jill tell you the following facts and request your advice. FACTS Among other things, Jack and Jill tell you about Melissa, a major competitor of theirs in McKay. Melissa is the owner of a prosperous business in central McKay selling secondhand books. The full name of her business is 'Melissa Jones, Secondhand Book Dealer.' In the last five years the business has blossomed, and proven to be very profitable. So much so that Melissa is now the proud owner of a new house, plus a holiday house on the coast, and a share portfolio. She intends to buy an investment property later this year. While she sees herself as being risk averse, she is unaware of the nature of business structures and has had no training in business principles and law, and therefore has no understanding of the risk associated with unincorporated business entities. Jack and Jill are the joint owners of similar shop to Melissa's, located in South McKay. Jack and Jill's business is called "Jack and Jill's Secondhand Books" They are well aware of Melissa's business and for some time now have been considering acquiring Melissa's business and merging it with their own. Indeed Jack and Jill have approached Melissa who is prepared to consider a sale to Jack and Jill provided: (a) she will be allowed to retain a stake in the newly created business, and (b) that she be able to sell that stake at any time she chooses to whomsoever she chooses, at whatever price she negotiates with a buyer of her stake. Jack and Jill are also risk averse, but they have been concerned for some time to review their existing business structure. In fact, this is the key reason for their approach to you. They are worried at the number of businesses which collapsed in Australia in 2007 as result of the "US subprime mortgage crisis" and the affect on similar businesses. YOUR TASK Examine the structure of both businesses (Melissa's and Jack and Jill's) and how their structure is or is not compatible with their respective owner's risk profile. Recommend a structure for the newly merged business resulting from the acquisition of Melissa's business by Jack and Jill. Ensure that the new business takes into consideration Melissa's conditions (a) and (b) above. Consider too any additional benefits that might stem from the business structure you recommend to Jack and Jill. It is very important to take into account how to deal with any undisclosed debts that may come across to the newly merged business.