Ingram v. Deere.
Instructions:- Read Case 36-1, Ingram v. Deere (attached), and discuss the following:
On what facts did the court base its decision that there was insufficient evidence to demonstrate a partnership under the TRPA? Why do you think Dr. Ingram acted in this way? Do you agree with the court’s decision based on the language of the TRPA? Be specific and elaborate—do not just say yes or no. Why or why not? What do you think Dr. Deere should have done before entering into this arrangement with Dr. Ingram?
Solution.
Ingram v. Deere
Business Law
It would be advantageous to start the business as a Limited Liability Company (LLC). This type of entity does not provide for a limited number of owners and hence would allow any other inclusion of owners, including Sam, at a later stage as suggested by Fred. There is no separate taxation of an LLC as a separate entity, instead, any losses or profits are extended to each member and taxes are paid through individual income tax (Mancuso, 2016). All the members are expected to report their losses and profits each time they file their individual federal tax returns. Under the product liability laws, the strict liability rule established that any manufacturer, seller, or distributor of a product that is deemed defective and capable of causing injury to the user is liable to such a user (Miller, 2013). This is regardless of any efforts that may have been put in place to prevent the defect from taking place. Considering the fact that Fred’s product causes severe reaction if taken with aspirin, marketing the product without properly informing the consumers of such an outcome would hold the company liable. This can be overcome by ensuring that a proper caution label is included on the bottles used to package the drugs (Miller, 2013). This information should also be included in any advertisements that may be done for the product.
The interaction between Fred and Sam will lead to an agency relationship, which is, protected under the agency law. In this case, Sam is the agent, while Fred is the Principal. As such, Sam, acts on behalf of Fred, and he may be liable for his actions to both the principal and the customers, who are the third parties, depending on his level of authority. Sam may either me given actual authority, whereby all his decisions reflect the decisions of Fred, or he may acquire implied authority, which comes with position and implications of the words and conduct of the principal. The scope of employment, which is defined by the role of the job, the requirements, and reasonable expectations by the principle create a framework within which Sam or any other employee is expected to act (Miller, 2013). If acting within the scope of employment with actual or apparent authority, Sam’s conduct is inferred to the Principle, and so Fred would be liable for any actions taken. Nevertheless, when Sam acts out of the scope of employment, then he would be liable for his own actions.
As the owner of the farm, Fred holds possessory rights over the land and hence has all the right to use the land as he pleases. However, it is critical note that such usage is not absolute and considerations of other people must be considered. As such, it is important to ensure that all measures are put in place to control any toxic byproducts of the manufacturing process that may pose a risk to the community members (Bouckaert, 2010). Proper permits must be obtained from the authorities for such a business to be established. In addition, there is no need to transfer the possessory rights with the expansion of the business in the future. Instead, Fred may consider relocating the business to a different piece of purchased land or granting it nonpossessory rights, which would allow it to control the use of the land without necessarily owning it. On the other hand, with reference to Sam’s vehicle, any services rendered to consumers of Fred’s product are carried out on behalf of Fred’s company. Thus, Sam will have leased the vehicle to the company. This means that the company takes temporary ownership of the car. In this case, Fred would be held liable for the use of Sam’s vehicle in his business.
I highly recommend the starting of the business as a Limited Liability Company (LLC) due to the various advantages that this type of entity presents. One of the advantages of this type of entity is that it protect the owners, who are also referred to as members, from personal liability for the various actions or decisions that they make in the business (Mancuso, 2016). In such a case, if the business is sued or incurs a debt, the assets of the individual persons are exempted. On the other hand, this type of business involves less record-keeping, registration paperwork, and start-up costs. Last but not least, this type of business entity has less restrictions when it comes to profit sharing, with members left to decide how they will distribute the profits (Mancuso, 2016).
References
Bouckaert, B. (2010). Property Law and Economics. Cheltenham, UK: Edward Elgar.
Mancuso, A. (2016). Your Limited Liability Company: An Operating Manual. Berkeley, CA: Nolo.
Miller, R. L. (2013). Cengage Advantage Books: Fundamentals of Business Law: Excerpted Cases. Mason, OH: South-Western Cengage Learning.