Introduction
Intending to expand and grow, Acme Fireworks as a business needs to enter into various contracts with other new businesses interested in buying their fireworks. The business must undergo various changes that must be legal and still beneficial for the owner and his employees. It is necessary to study certain areas of the company and change the legal entity, obligations, and contracts, which will increase the number of employees already for the new business. Remember that hiring new employees and expanding the business involves more risks, so protecting against personal claims will be in the owner’s and business’s best interests. The work will be based on an analysis of the main structures that need to be changed to reduce risks to the business and allow it to expand.
Some major retailers want to deal with Acme Fireworks is a deal which allows large orders to be placed regularly. An assessment is needed to determine whether Acme can Fireworks support large shipments and what is needed to fulfill high-volume orders. A verbal agreement has been negotiated between the customer and the supplier (Acme) and needs to be evaluated to determine if it meets the criteria for a legally binding contract. Future cooperation will require a possible increase in the volume of work and an active presence in retail. In this regard, it makes sense to consider other activities to change your status as a legal entity to reduce the company’s liability. It may be necessary to increase and diversify the workforce to accommodate this large work volume while adjusting when the volume of work decreases. An analysis needs to be carried out to determine the best solutions to meet the new workflow and all new potential commitments.
Law on the Regulation of Trade Relations
Not so long ago, Acme Fireworks was approached by major retailers who plan to purchase large shipments of fireworks, meaning they are looking to collaborate. Acme’s owner convinced retailers that his facility could handle the expected workload. Further, the estimated price per unit was discussed between the customer and the enterprise’s owner. In the future, the Acme executive wanted to make sure the deal was executable and legal by checking that all the contract components were in place to ensure the promise of more work. An enforceable and regulated contract requires five main components: proposal, acceptance, consideration, legality, and capacity (Beatty et al., 2019). The first stage is discussing the offer between the owner and large retailers. As a result of negotiations, the parties concluded that the fireworks were offered to be sold at retail, after which the price per unit of fireworks, which is the main subject of the contract, was discussed. The owner stated that he could fulfill the large recurring orders retailers were looking for and accepted the offer.
Selling fireworks to retailers is a legal transaction; between the owner and retailers, there is a need to conclude a contract. Even though the negotiated agreement is already legally binding, according to the Uniform law commercial code (UCC) on fraud, all contracts between sellers must be in writing if they are $500 or more (Uniform commercial code). The Fraud Act allows for some exceptions: specially manufactured goods; pleadings in pleadings regarding the existence of an oral contract; partially executed contracts; and is between the two sellers except for supporting memos (Beatty et al., 2019). Since Acme Fireworks offers custom-made products and not the public domain, this will be considered a legally binding contract.
The standard law system emphasizes establishing rules through judicial decisions and has its roots in England. Contracts based only on current results based on workload and display size for that business will apply to the common law because the service requires actual labor (Beatty et al., 2019). The UCC was developed from common law but only applies when goods are sold from state to state or business to business (Uniform commercial code). Some areas in the law are critical to businesses, and even slight variations in the law depending on a state can have negative consequences.
In this regard, a detailed consideration of the specifics of a particular state might be required. The UCC was created to combine state laws that affect commerce into a single code that all states could adopt to make interstate commerce more accessible and efficient (Uniform commercial code). As a result of these concerted efforts by some leading jurists, the legislatures of all states (Beatty et al., 2019). As a result of the general consideration of the uniform rules of the UCC, in many places, they are identical to the rules of the common law.
The UCC is a body of traditional standard law rules. It governs commercial transactions enacted in whole or as statutory law by state legislatures (Beatty et al., 2019). In the case of Acme Fireworks, for a contract to take effect, it is placed in the UCC because it is not under any service or operation that requires labor at the time. It may be determined elsewhere or, for example, registered at the customer’s address when placing an order. However, the actual creation of the contract is necessary for the common law to take effect (Uniform commercial code). That is because services and labor are required at the start of a contract.
Contract Based on UCC and Agreements with Customers
Considering the facts of the agreement with Acme Fireworks, it is essential to determine if the owner has a legally enforceable contract with the business. Studying the main elements that must be observed when entering a regulated and enforceable contract is necessary. Generally, this includes five elements: offer, acceptance, consideration, capacity, and legitimacy (Salih, 2020). First, the parties going to conclude a deal consider an offer, that is, when one party offers the other a set of conditions for the exchange or provision of services or goods. The offer must be specific and clear in intention; otherwise, the offer is not formed (Beatty et al., 2019). An agreement or acceptance occurred when the party offered something by the other party accepts the offer (Salih, 2020). It is fundamental to draft a contract in which both parties agree to abide by the agreed terms.
Next, the proposals specified in the future contract are considered. Both parties must have considered the contract; otherwise, it is unilateral. The fee can be considered the price each party pays for entering a contract (Beatty et al., 2019). After consideration, an assessment of legal capacity takes place, which implies the legal capacity of the parties to agree. That prevents children or those who are not of sound mind, that is, incompetent, from being bound by the terms of the contract (Salih, 2020). Finally, legality means that the contract terms refer to legal things (Salih, 2020). Retail sale of pyrotechnics as a product is legal provided all necessary aspects are met.
When concluding a contract, all listed elements must be present, or it loses its legitimacy. Even if at least one element is not fulfilled, the contract is invalid and cannot be performed. Considering the main elements of the contract, we can say that at this stage, only some elements have been observed. In this regard, there may be a problem with the implementation of some parts of the agreement. It can be assumed that the fireworks are legal and that both parties have the legal capacity as adults of sound mind. Moreover, the consideration is evident when one party offers fireworks for the money. However, when considering the facts of the case, the elements of offer and acceptance are still not clearly defined.
Several retailers asked if Asme could hold regular fireworks displays. The business stated that it could handle a large order, after which a price for the product was agreed upon with an explanation of what would be covered by that price. However, no other details were discussed, such as how many fireworks were needed, when they were needed, and whether the regularity of displays is a valid contract. In addition, it is unclear whether Asme has entered into price agreements with individual businesses or worked out a price per display with a group of businesses that could apply to any business if they agree. In addition, a possible ambiguity can be interpreted as a group of several companies requesting fireworks, to which Asme replies to each company negotiating that, at a price of x dollars, Asme will provide fireworks. The described problem, which is not stated in Asme’s agreement with retail businesses, is an offer, one of the main elements of a regulated contract.
If the company accepts the agreed price in exchange for the goods, this means acceptance. However, if the given price is stated and neither facility accepts that price, no acceptance takes place, and therefore the contract cannot be executed. The terms of the offer and acceptance of the Asme contract are somewhat unclear, but it can be assumed that individual enterprises agree on a price. It means that they accept the agreed price offer, and thus there is an enforceable contract governed by UCC law.
5 Main Elements of the Acme Fireworks’s Contract
A contract is legally binding; it arises from the voluntary consent of two or more persons to enter into a legally binding agreement. A mutual agreement is critical to the conclusion of a contract. As the previous section clarifies, all five essential elements must be present for a contract to be valid (Salih, 2020). Everything was legal because the services were offered, and compensation was agreed upon. Reimbursement has been granted because Acme Fireworks covers their reimbursement by obtaining insurance to prevent lawsuits or damages to customers or employees. Both businesses and Acme fireworks can be included in the contract as Acme can provide the service, and the businesses pay for it. The agreement was made voluntarily because the other company was not forced into the contract and had to remain in it for some time.
Contracts are governed by the Uniform commercial code and common law. As a result of a detailed examination of the case’s specifics, it can be noted that the owner entered into an oral agreement with retailers. The five main elements of an enforceable contract can support this assertion. Each of the aspects exists in sufficient measure, except for the points that need to be more clearly formulated, for signing a written legitimate contract so that a particular contract can be successfully implemented. Since the first aspect focuses on the offer and discussion of the exchange or provision of services or products, the SP is ready to provide the described services to enterprises.
The element of acceptance is implemented since both parties did not propose to make any changes to the terms of the agreement; the parties agreed to the terms of the contracts. The supplier agreed to offer his fireworks to the businesses. Consideration is the third essential attribute of an enforceable agreement (Beatty et al., 2019). This element is known to have been negotiated and accepted by the price per unit of the product, as the agreement is being negotiated with retailers. That is, consideration between Acme Fireworks and the other side of the deal is the approved monetary compensation the SP will receive.
In a legally regulated contract, it is also important to consider capacity, which partners must take seriously and not overlook when concluding a contract. According to Beatty et al. (2019), any party planning to formulate a specific agreement must be able to conclude it. Thus, the current agreement is enforceable since the parties can offer and receive the intended services. The legitimate aim is the fifth element to consider when considering the possibility of enforcing a particular agreement (Salih, 2020). This attribute indicates whether the target contract is for an illegal or legal purpose. These elements show that the sole proprietorship and the businesses have entered into a binding contract. Appropriate observance of all necessary and, most importantly, mandatory elements will ensure the timely implementation of the intended goals.
The Question of Changing the Economy
To fulfill the conditions set, individual entrepreneurs and other business firms must hire employees whose competencies correspond to the stated goals. As you know, the owner of Acme Fireworks has been a sole proprietorship for 15 years, which can cause significant contract expansion problems. That is the cause of many risks associated with the fulfillment of responsibility. In this sole proprietorship, there is no separation between the owner and his company; they are one inseparable whole. It means that the problems that have arisen at the enterprise are the owner’s problems directly and may affect his property when solving them. Thus, the owner of Acme Fireworks can consider various types of employment before finding the right people to fulfill the contract terms at maximum performance.
Researchers argue that agency law can analyze various contracts between individuals and legal entities. It is necessary to understand how to increase production productivity, that is, in the future, to expand the organization (USA Corporate Services Inc). Since the owner of Acme Fireworks strives to develop a successful business, it can consider the most appropriate options for changing the economy and reducing risks. Currently, Acme Fireworks employs fifteen employees whose contract types are not specified. When considering the most appropriate type of farm, workers’ unique job descriptions, duties, positions, and benefits must be considered.
Acme Fireworks is lucky that no consumer was harmed while using the product it makes. Pyrotechnics require special care and can be fatal if mishandled. If the fireworks caused any injuries, the owner would have to bear any penalties that may have been awarded to those affected (USA Corporate Services Inc). As mentioned earlier, this would be attached to all of his possessions in the first place. In addition, the owner also bears full responsibility for workers injured at work. Thus, a sole proprietorship is a hazardous type of economy in producing life-threatening products.
Different types of commercial organizations allow different levels of responsibility for the owner. The most suitable business entity options for Acme fireworks are limited liability companies. It provides the ability to operate similarly to a sole proprietorship but with a separate owner and business entity (USA Corporate Services Inc). The owner may even have partners, which will positively affect the prevention of financial risks and allow sharing of responsibility.
Despite reassuring retailers that he can fill large orders, Acme’s owner still requires help from new hires or outside companies. It is best to have pro bono agents to help with production. Finding highly qualified, reliable, and loyal staff for the complex and dangerous work associated with making fireworks would be better. In addition, the potential expansion of contracts may require an increase in the workforce. An employee or independent contractor will bring the most significant benefit to the company during the increase in the volume of work and during the decrease in its work.
As the business expects future productivity increases, this can be a problem if more permanent workers are not available to fill all orders. Full-time employment is one of the options available to the Acme owner fireworks. According to agency law, the benefits of this type include commitment, increased responsibility, and accountability (Barauskaite & Streimikiene, 2020). Companies with permanent employees can allocate specific roles and develop a long-term business plan. The disadvantages include that such workers must receive annual leave, have insurance, and not work on public holidays.
Liable for Injuries Caused to the Viewer by Accidental Fireworks
Due to current and future retail expansions, Acme, as the sole proprietor, is even more liable for injuries. If an accidental pyrotechnic explosion injures a spectator, Acme Fireworks will be held accountable (Sutter, 2017). Thus, based on the information in the previous section, Acme is liable for personal injury due to the company’s negligence, and so is the owner. While insurance can reduce the burden, it often does not eliminate the potential fines an owner may face.
Company personnel must ensure a high level of responsibility for fireworks and that work is carried out without undue negligence. The business assumes specific responsibilities towards the consumer since if employees show dishonesty in their work, the consumer may suffer. Acme and the retailer can be liable for consumer harm due to product liability (Sutter, 2017). If Acme has manufactured defective products, it will be held strictly liable. However, fireworks are highly hazardous materials, and the consumer assumes a certain level of risk when interacting with them; the company will not accept any liability as long as the fireworks are not defective.
Because of the relationship between the agent and the expectation principle, required tasks and responsibilities, loyalty, obedience, performance, and accountability are expected from the agent from the principle. Acme, being a principle, knows that they must enter into a cooperation agreement, compensation, compensation, and reimbursement for their employees (Sutter, 2017). Acme must ensure that agents are qualified and trained to ensure they can take on and complete the tasks assigned to each show. Acme needs to compensate them for their performance and work and reimburse them for any losses incurred under their agency agreement. Agents will not be liable or liable if an accidental fireworks display injures a bystander if they correctly follow the orders and directions given by Acme. Companies need insurance as part of contract negotiations between agent and owner.
Fireworks liability is very complex; however, people are encouraged to take out an individual fireworks insurance plan to cover injury or property damage that fireworks may cause. Under Title 16 of the Code of Federal Regulations, product labels must bear the following consumer protection seal (The Federal Register). Firework devices must have words like “CAUTION” or “WARNING” (Fireworks business guidance). In addition, a statement outlining the hazards associated with using devices includes “SPARKS OR IGNITE” (Fireworks business guidance). Finally, products must have labels describing how to store, use, and handle the devices (Fireworks business guidance). Honesty Acme Fireworks must not be infringed; therefore, the company must ensure that clear measures are in place to protect consumers. However, when consumers buy and use Acme products Fireworks, they are solely responsible for any damage they may cause.
Conclusion
Acme Fireworks is a growing pyrotechnics retail business that could attract and retain large buyers. However, the current business model brings a lot of risks and cannot fully meet the goals of the owner and customers. In this regard, the business owner needs to consider the identified problems and ways to solve them to competently cope with emerging difficulties and implement strategies to reduce business liability. Businesses should focus on the common law’s specifications since that governs the proposed contracts. The growth and expansion of Acme Fireworks should encourage the owner to focus on the power of the common law to govern targeted contracts. He needs to consider the essential elements mandatory for a legal transaction, change the type of economy and consider the limited liability partnership business model.
References
Barauskaite, G., & Streimikiene, D. (2020). Corporate Social Responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), 278–287.
Beatty, J. F., Samuelson, S. S., & Abril Sánchez Patricia. (2019). Essentials of business law. Cengage.
Fireworks business guidance. U.S. Consumer Product Safety Commission. (n.d.).
Salih, R. S. (2020). The concept of offer in different legal systems.Journal of Law, Policy and Globalization.
Sutter, B. O. (2017). Negligence in firework injuries.
The Federal Register. Federal Register. (n.d.).
Uniform commercial code. (n.d.). Legal Information Institute.
USA Corporate Services Inc. (n.d.). Most common types of business entities.