Business entity implications for contracts


Write a 3–page executive briefing of potential factors and issues associated with four types of business entities in the context of contract law.

One of the most common ways in which business managers are involved with business law is in relation to contracts. Organizations of almost any size will most likely need to create, negotiate, review, approve, adhere to, and resolve conflicts associated with contracts. A business determines its legal standing by determining what type of legal entity it should be identified as. The type of legal entity can significantly impact how contracts are handled, as well as how they are interpreted by the courts.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 2: Evaluate the role of contracts in commercial transactions.
    • Analyze contract creation and negotiation for the most common types of business entities.
    • Analyze contract approval for the most common types of business entities.
  • Competency 4: Evaluate legal options to create a business entity.
    • Analyze contract liability for the most common types of business entities.
    • Analyze how choosing among the most common types of business entities affects the ability to sell a business.


For this assessment, consider that you work as a manager in a relatively small, privately-owned business. The company president (who is also the owner) inherited the company from his father, and thus has never started a business. He is considering creating a spin-off business (possibly with one or two associates), but is unsure of which type of business entity would be best to use for that new business. The new business will be utilizing numerous suppliers and distributors, and thus contracts will play a major role in the success of the business. The president knows you took a university-level business law class, and asked you to put together a paper analyzing the four most common business entities in the context of contracts to help him decide what to do.

Research each of the following types of business entities:

  • Sole proprietorship.
  • Partnership.
  • Corporation.
  • Limited liability company (LLC).

Consider potential factors and issues associated with each of these types of business entities in the context of contract law. Write a paper analyzing the following for each of the above four types of business entities:

  • Who in the business entity would typically create and negotiate a contract? Explain the pros and cons of each entity in this context.
  • Who in the business entity would typically approve and sign a contract? Explain the pros and cons of each entity in this context.
  • Who in the business entity would have liability associated with the contract? Explain the pros and cons of each entity in this context.
  • What are the effects of the type of business entity on the ability to contract for the sale of the business? Explain the pros and cons of each entity in this context.

Based on your executive audience, your executive briefing should be no more than three pages, and should be well organized and written in clear, succinct language. Follow APA rules for attributing sources that support your analysis and conclusions.

Academic Integrity and APA Formatting

 Use this presentation to help you complete your case analyses 


This is a capsule summary of the case that provides basic information about the parties, the controversy, and the disposition of the lower court.

The first paragraph in the Facts section usually explicitly identifies the heart of the controversy. In the first Fact paragraph, we learn that what is in controversy is the condition of a 1952 Mickey Mantle Topps baseball card worth $17,750.

Here we learn of the initial response from Strek, who essentially notes that had earlier notice been given a remedy might have been negotiated to resolve the situation.

This is Fitl’s follow-up action to the initial response from Strek, seeking a second opinion from a recognized expert in the field.

We learn that Fitl is basing his argument upon the expertise of Strek as a reputable sports card dealer. This will be an essential piece of information as we learn how the case will be analyzed by the Court and what the responsibilities are of a dealer in the field.

It is significant that the Court designates this entire paragraph regarding the background expertise of the expert who analyzed the card after Fitl’s purchase. Lengthy language is devoted to this expert because it will be relied upon by the Court as expert evidence in analyzing the value of the card and what, if anything, could or could not have been done to remedy the controversy.

The last part of any Fact section usually tells you what the lower court ruled if the case at issue is an appeals case. That is the case here. Here we learn that the lower court – the District Court – found in favor of Fitl for the full amount of the baseball card plus any related costs. Strek is appealing the decision hoping that the judgment will be reversed based upon an error of law made by the District Court.

The Court begins by stating what is recognized in most states in contract law. This comes out of the Nebraska Uniform Commercial Code.

After the law is stated, the Court explains what the public policy purposes are for the notice requirement.

The Court takes additional steps here, demarcating which of these considerations is the most important, which in this controversy is how a seller can cure a breach if given sufficient time to address a buyer’s complaint.

This is an essential part of the case; although Fitl did not have the card professionally examined until two years after purchase, the Court explicitly notes that once he learned of that fact he gave immediate notice to Strek.

As a matter of general law, the Court makes clear that in most cases a buyer needs to make timely notice of a defect to a seller regarding a defective product in order to maximize the opportunity of a successful remedy.

However, as we see here, the Court notes that in this specific situation it would not have mattered if Fitl had told the seller a day after the purchase or two years after purchase because timely notice would have been immaterial to curing the problem, which was a completely worthless card.

Pay close attention to the Court’s choice of quote here. The key word is “reasonable,” and the Court is noting that the buyer would not have had any immediate reason to have a card professionally examined if, as in this case, a buyer could reasonably rely upon the expertise of the seller in making a purchase of this amount.

The conclusion in this case states that the District Court judgment is affirmed, which means that it is upheld. It should be noted that Strek can still appeal this further, which in this case would be to the state Supreme Court.

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