Assignment 2: Legal Problems Managing a Small Business Part IRead the scenario and the questions that follow. Identify the legal issue(s) and apply legal concepts and possible arguments for each quest

Assignment 2: Legal Problems Managing a Small Business Part I

Read the scenario and the questions that follow. Identify the legal issue(s) and apply legal concepts and possible arguments for each question. Prepare a solution for each question using laws, cases, examples, and/or other relevant materials. Identify potential ethical issues and propose a solution for each issue. Support your answers with information from the textbook and at least two outside scholarly sources. By Saturday, July 18, 2015, prepare a 5- to 8-page paper that identifies the legal issues and potential solutions and answers all questions presented, supported by relevant legal authority. Properly cite all sources using APA format.

This assignment requires application of the concepts learned in Weeks 1–3 and is worth significantly more than previous assignments.


Nick worked as a maintenance supervisor for Southern Medical Supplies for 20 years before being laid off after a merger. Since Nick was licensed as an electrical and air conditioning contractor in Florida, he decided to start a little handyman business. With a downturn in the economy, Nick discovered that people repaired things instead of replacing them, so his services were always in demand, especially in the summer months. Mike worked with his father (Nick) in the afternoons and on the days he didn’t have classes in project management at the university. Mike enjoyed the work and it paid well, so he suggested they form a partnership and call it N & M Air and Electrical Contractors.Although Nick prefers cash, a new customer paid for some electrical work with a check for $330, made payable to Nick and signed by the customer. Nick takes the check to the bank at the end of the week and finds that the bank had issued a stop payment on the check. Mike orders 16 windows from a wholesaler. The salesman comes out to measure for the windows and they agree on the double pane high impact style for all windows. Since the windows were special ordered, Mike paid for the entire shipment. The windows arrived two weeks later; however, one window was missing and two windows did not fit properly.Nick looks for deals on materials. An air conditioning supply company offered to sell Nick 15 air handlers and 15 compressors for $10,000 cash. Since Nick receives more business related to air conditioning, especially in the summer, he thought this was a great deal. Nick and the seller entered into an oral contract whereby Nick would pay the seller $10,000 cash on delivery. In the meantime, Nick lined up air conditioning jobs. When time came for delivery of the goods, the seller said that the compressors had already sold to another contractor, but the air handlers would be delivered.  Although Nick and Mike did not normally accept plumbing jobs, they installed a new hot water heater manufactured by Rheman Products for Josie, a single mother with two children. Warnings were provided on the water heater itself in large bold letters and in the manual Nick provided to Josie at the time of installation. The warning on the water heater read “CAUTION: HOT WATER CAN SCALD.” The heater itself contained a picture of hot water coming from a faucet with the words “DANGER” printed above it. In addition, the following statement was printed on the water heater.Warning! Water temperature over 115°F can cause severe burns instantly. Elderly persons, children, and the disabled are at higher risk of being scalded. Test water temperature before bathing or showering.  Temperature limiting valves are available, see manual. Nick set the temperature to 105°F. The next day, 4-year-old Sara was being bathed by her 12-year-old sister, Lacy. When Lacy received a text on her cell phone, She left Sara alone in the bathtub with the water running. Lacy was scalded by the water from the tap. Lacy’s mother, Josie, brought suit against Nick and Rheman Products alleging defects in the design of the water heater and Nick’s failure to warn her about the heater’s dangers.


Based on the different situations described in the scenario, create a 5- to 8-page Microsoft Word document that includes the answers to the following:

  • Identify the types of business organizations for operating the contracting business and explain the advantages and disadvantages of each one. Select a type of business for the father/son team and provide support for your choice.
  • What are Nick’s options related to the stop payment on the customer’s check?
  • What are Mike’s options related to the damaged, undelivered, and incorrect-sized windows?
  • What rights does Nick have related to the oral contract for the air handlers and compressors? Is the seller in breach of contract? Discuss why or why not.
  • Can Josie prevail in a product liability lawsuit against Nick or Rheman Products? Explain why or why not for each party.
  • Consider any ethical concerns Nick and Mike may face related to the topics covered.
  • Conclude your paper by providing suggestions for Nick and Mike to help prevent future occurrences of these types of legal and ethical problems.

Support your answers with appropriate research, reasoning, cases, laws, and other relevant examples.Submit the paper in APA format and properly cite sources on a separate page using APA.

Submission Details

Name your document SU_ACC5015_W3_A2_LastName_FirstInitial.doc.Submit your document to the W3: Assignment 2 Dropbox by Saturday, July 18, 2015.

Assignment 2 Grading Criteria

Maximum Points

Identified and described types of business organizations Nick and Mike could operate. Selected one type of organization and provided support for the choice.


Explained thoroughly Nick’s options related to the stop payment on the customer’s check.


Identified remedies for the damaged, undelivered, and incorrect-sized goods. Report thoroughly explained options based on the scenario.


Explained Nick’s rights and remedies related to the oral contract.


Explained the liability of each party and the probable outcome in the product liability lawsuit.


Identified and explained any ethical issues.


Provided suggestions to prevent future occurrences of the legal and ethical issues identified in the dilemma.


The document is well organized with an introduction, thoughtful transitions to show how ideas relate, and a conclusion.


Tone, audience, and/or word choice is appropriate for the assignment and is clear and well written.


Used correct grammar, spelling, sentence structure, usage, and writing mechanics.


Submitted a properly formatted report. Quotations and other materials properly identified and cited using APA guidelines.




Click here to view the rubric for this assignment

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