Case Study A (50%):
Stan is thinking about starting a toxic waste disposal business. He plans to collect the waste from businesses that produce it and then dispose of it in a sanitary landfill. In order to start this business, Stan will need a substantial amount of money to buy and develop the landfill site and purchase five trucks capable of transporting toxic waste.
What concerns would you have about operating this business as a sole proprietorship if you were Stan? What alternative form of business organization would you recommend and why?
Marking Rubric
Marking Criteria
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Comments
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Mark
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Identifies the two most significant issues (areas of concern for Stan) raised by this new business and its needs
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/10
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Identifies consequences of operating as a sole proprietorship in relation to these concerns
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/20
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Identifies consequences of using other forms of business organization in relation to these concerns
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/10
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Comes to a conclusion that one form of business organization may be preferable and explains why
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/10
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Total
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/50
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Case Study B (50%):
In 2006, Sally opened a restaurant called Traders’ Place in rented premises in Ottawa’s booming financial district. She operated the restaurant as a sole proprietorship. By 2012, the business had grown and she determined that she needed experienced help to run the business. In November 2012, Sally approached Marty to see if he would become the manager of the Traders’ Place business. He agreed and the following were the terms of his agreement with Sally.
Each month, Marty was paid $1000 plus 1 percent of the total restaurant revenues for that month. Total monthly revenues, on average, were about $100 000. At the end of each complete calendar year that Marty worked, if the restaurant had made a profit for the year equal to or exceeding $200 000, Marty was entitled to receive 10 percent of the profits.
Marty was responsible for managing the restaurant, including
- opening and closing the restaurant,
- hiring, firing and scheduling staff, and
- ordering food and paying suppliers.
Sally was responsible for the financial side of the business, including budgeting, accounting and payroll, as well as marketing. In 2013, Traders’ Place profits exceeded $200 000 and Marty was paid 10 percent of the profits in accordance with the agreement.
Are Marty and Sally carrying on business as a partnership?Explain your reasoning in relation to the facts involved.
Marking Rubric
Marking Criteria
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Comments
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Mark
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Identifies the legal description (or definition) of a partnership to be used to help answer the question
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/5
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Lists the factors a court would look at to help decide if the legal definition applied to Marty and Sally
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/20
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Identifies facts that support answering “yes” to the question whether they are partners or not and explains why they are relevant to the factors mentioned above
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/10
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Identifies facts that support answering “no” to the question and explains why they are relevant to the factors mentioned above
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/10
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Arrives at a reasoned conclusion based on all the facts and the discussion presented
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/5
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Total
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/50
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