Read the following case studies and thoroughly answer the questions that follow in at least one paragraph each. Be sure to explain the reasoning behind your answer.
Case Study 1
Joe was an extremely busy entrepreneur. He was balancing starting a dry cleaning business and becoming a drug dealer. He decided that it was time to delegate some duties and appoint some agents. On May 2nd, Joe entered into a written agency agreement with Betsy, which granted her "all power necessary to carry out business for the dry cleaning business." Three days later, the dry cleaning business needed more chemicals.
Does Betsy have the power to purchase more chemicals? Why or why not?
On May 4th, Joe entered into an agency agreement with Amber, which granted her "all power necessary to carry out the drug dealing transactions." Amber starts acting as Joe's agent immediately and dealt a considerable amount in her first week. She gives Joe the proceeds from the transactions and requests her commission. He refuses to pay.
Will Amber be successful if she sues Joe for a breach of the agency agreement? Why or Why not?
Case Study 2
Lillian wants to open a wine bar, in which patrons can sample the wines in the bar area prior to buying a bottle. She has fantastic ideas, but very little capital or collateral. She calls upon her friend PJ, who has cash available and is looking for an investment opportunity, for some assistance. He loves the idea, but does not want to be involved with the daily operations of the business. He is willing to invest the initial capital, but wants be minimally involved.
What would be the best type of business organization for Lillian and PJ? Why?
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