商法答案1

Case Study 1

Question 1

The main business organisations recognised by Scots Law are:

.

sole trader

.

partnerships

.

limited partnerships

.

limited liability partnerships

.

private companies

.

public companies

Question 2

Given the fact that Lisa is running a very small business, it will almost be certainly run as a sole trader enterprise. There is the very remote possibility — and it is very remote — that a small business could be run as a single member private company in terms of the Companies (Single Member Private Limited Companies) Regulations 1992. Such a private company is limited by shares or by guarantee and need only have one member. Nowhere, however, does it mention that the business is limited by shares or by guarantee and we would, therefore, assume that it has the character of a sole trader.

Question 3

The advantages of a sole trader business are:

1

It is the simplest form of business organisation recognised by Scots Law.

2

A sole trader is to all intents and purposes to be regarded as a self-employed person. In

other words, no difference is made between the sole trader and his or her business; they

are legally indistinguishable.

3 Very basic legal requirements to comply with ie submission of income tax returns to the Inland Revenue and the disclosure requirements of the Business Names Act 1985.

4 Total control over his or her business and does not have to take into account the opinions

of any shareholders, members or partners.

The disadvantages of a sole trader business are:

1 If the business fails, the sole trader is said to have unlimited liability for any debts or obligations owed to third parties.

2 A sole trader may find it difficult to fund an expansion of the business because she/he cannot offer shares to other parties in order to raise funds.

3

In any case, a business expansion requiring a major injection of capital might entail a loss

of control over the business because new partners, shareholders or members who are a source of new finance will almost certainly demand a say in the running of the business.

4

The inclusion of new partners, members or shareholders would force a change in the

nature of the business operation by converting it into a partnership or some other form of corporate body (public/private companies or a limited liability partnership).

Case Study 2

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Question 1

There are many differences between a traditional partnership and a limited liability partnership