Introduction
Acme Fireworks is a new technology company, specializing in the production and retailing of fireworks. Our fireworks are safe, magnificent aerial display at events. The company began from a humble background two years ago at a home garage. Today, Acme Fireworks has grown to have 15 full-time employees. The company was registered as a sole-proprietorship and has since remained a sole business over the last two years of operation. Acme receives a lot of inquiries and orders from big corporations interested in purchasing large scale fireworks regularly. The management believes that even though the business is still young, it can manufacture large scale fireworks and deliver on time as expected. The management guarantees that the fireworks products will come with insurance, they will be manufactured by skilled labor, and the fireworks will be professionally set up at the required destinations ( Teece, 2010 ). The Acme owner is interested in hiring new staff, but he is worried about the continuous flow of orders. If the great demand for the fireworks fails to continue, then there will be problems remunerating the newly hired staff. The owner is also interested in changing the nature of his business from a sole proprietorship to a new form of business entity that he is not sure.
Thesis Statement
We are presented with a business case study. Acme Fireworks is a sole proprietorship business, specializing in the manufacture and selling of fireworks. The company has several challenges in doing its fireworks business. The management has received a request for more considerable fireworks manufacture, but the administration seems to have doubts. The main aim of this paper is to present a business case analysis, identifying the pain problems of the business, and giving the solutions. The first eminent problem is the inefficient staff, lack of proper facility, the business entity as a sole proprietorship, the safety and regulations concerns, and the sustainability of the business (Cornell, 2015). This paper, therefore, provides solutions to these problems.
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Uniform Commercial Code or Common Law
Common-Law mainly conducts business with assets, insurance or security, and employment contracts. While the Uniform Commercial Code (UCC) is primarily about the sale of goods, the Common Law system focuses more on making their rules through the court rulings. For the case of UCC, the have to be liberally adopted to promote its supportive policies and purposes, which are: (a) to clarify, and simplify the laws that govern the commercial transactions, (b) to authorize the continued extension of commercial activities through the usage, custom, and agreement of involved parties; and (c) to make laws across jurisdictions uniform. Unless displaced by a specific UCC provision, the law principles and equity, constituting the law merchant, the capacity to contract, fraud, estopped duress, misrepresentation, bankruptcy, coercion, and other invalidating and validating cause supplement its provisions ( Minor & Morgan, 2011 ). Based on my opinion, it would be a better decision for the Acme Fireworks manager to consider using UCC when having contracts with other businesses.
Features of an Enforceable Contract
We have five main elements of an enforceable contract that the sole proprietorship (Acme Fireworks) must be aware of at any given time. The enforceable fireworks elements include Offer, Acceptance, Legality, Acceptability, and Capacity:
Offer : Rogers (2012) insists that a business offers must feature unambiguous and clear promise to enter a contract, the offer must also feature reasonably certain conditions, and must be passed on to the pledge by the offer promisor. The larger corporates ordering for large amounts of fireworks orders, and the Acme business being in a position to provide these massive amounts of fireworks constitute an offer.
Acceptance : An enforceable contract must be apparent from the words or actions by the offeree that he is looking forward to accepting the offer by the offeror's terms. When Acme's owners inform the larger corporations that the company can deliver the large quantities of fireworks they have demanded, then acceptance of the offer condition is met.
Legality : Legality is the legal position of the contract, the extent of abiding laws, and statutes of the agreement. In a commercial transaction, it is generally assumed that the parties entering a contract must have the intention of creating a legally binding document. This implies that if the Acme owners sign the contract to supply the vast amounts of fireworks, then they will be liable or answerable if they do not deliver the fireworks as promised because they shall have violated a contractual provision in the signed contract.
Consideration : An enforceable contract is a bargained-for exchange between two or more parties. A consideration is a product or service that is being exchanged. Rogers (2012) explains that consideration is just the contract price. A consideration is a price at which Acme owners and the buyers agree on the fireworks to be delivered.
Capacity : two separate issues typically arise in respect to a contractual capacity; mental competency and age. This requirement demand that a person is entering a contract must be mentally sober, and they must be adults aged 18 years and above. When a mentally ill or unstable person or minors aged below the legal, contractual age (18years) signs a contract, then that contract is not binding; it is null and void. A contract must, therefore, meet the legal capacity.
Every business Acme must engage in where an agreement has to be made, and then these five conditions must be met for the contract to be enforceable and for the contract to be valid. In case any of these five requirements are missing, then the contract is not legally binding. By observing all these requirements, the company is safe from a lawsuit.
Fireworks Injury
One of the potential problems that Acme Fireworks has to deal with is the injuries caused in the production and setup process of the fireworks. Sometimes the already sold fireworks could cause damages to the spectators, and Acme also needs to be worried about this. Any flaws in the manufacturing of the fireworks could imply that the company is liable, and as such, the victims may sue for negligence. This provides that businesses have to act with reasonable care to guarantee safety to all other people and to avoid cause harm to others. This means that Acme Fireworks needs to do its job correctly, safely, and carefully. Still, the clients also need to be responsible in their part when using the fireworks, given that they already know they are working with explosive devices. Changing Acme from a sole business to a limited liability entity will further give the company the appropriate protection from legal suits likely to arise from the nature of the business model. The liability status will also provide the owners with protection from individual responsibility of harm caused by fireworks explosions. However, as long as Acme follows the proper manufacturing guidelines, regulations, use warning labels, and observe all the industry regulations and standards, the company will significantly minimize liability cases arising from harm.
There are situations when Acme Fireworks will be held accountable when the spectators are injured in a firework show. The court will be able to press negligence charges against the organization. When fireworks malfunction and cause injury to the fans, they may be able to push for charges and recover damages from the manufacturer, the foreign manufactured fireworks importer, and the retailer on the local market. As an illustration of a fireworks injury case, Kathryn Hollis was compensated a handsome sum of $4.75 million by a jury court against a fireworks company in Virginia, Schaefer Company. Hollis was injured alongside her two sons after a linked fireworks box exploded, sending mortar where they were standing in the crowd during the celebration of the Vienna Independence Day. Hollis suffered a severed arm, shrapnel lodged in her shoulder and arm, destroyed eardrums, brain damage, and burns.
The best way to ensure Acme is not vulnerable to lawsuits and similar court cases due to injuries is to have more security. Acme needs to introduce insurance as a form of security against lawsuits. The same should apply to the larger corporation purchasing the fireworks from the company to protect them and Acme from such cases ( Sarasvathy et al., 1998 ). A fireworks insurance will go a long way in protecting the transportation, storage, and firing of the Acme fireworks at the bigger business shows. Injury demands have the potential to bring the Acme business down through death cases, and as such, taking insurance should be a major priority for the fireworks business model.
The US CPSC (Consumer Product Safety Commission) has several rules and regulations about the fireworks business and fireworks devices' safety regulations. These regulations are not just important for the fireworks business; they are necessary for fireworks manufacturing to be a sustainable business. Even though these regulations are highly demanding in terms of resources, safety needs, and monitoring, they help make the fireworks business more secure and trustworthy to the clients. Before embarking on the production of large-scale fireworks, the company must first consider the need to change the business to a company entity status. Again, changing the company name and taking bigger orders also means that the company must consider recruiting and hiring the services of more professionals. To expand operations, the company must also consider investing in a bigger facility to be able to meet the demand. This new facility must again meet the safety regulations by the appropriate authorities.
The US CPSC is responsible for regulating the fireworks manufacturing business in the united states. The US CPSC also formulates the safety standards and regulations that must be achieved in the manufacturing process and the storage and setup of the fireworks. The US CPSC also issues a compulsory safety regulation for the fireworks devices. They are mandated to enforce the fireworks rules under the FHS Act, 15 USC 1261. It is against federal law to import and sell fireworks that do not meet the CPSC standards. The CPSC fireworks regulations were created to ensure compliance with fireworks safety and measures to protect the customer. They, however, do not replace the Commission Interpretive Regulations or the Commission Statutes as outline in the Title 16, CFR (Code of Federal Regulations) sections 1500 and 1507.
Acme looks forward to serving more clientele and serving larger product amounts. This means that the company will need bigger and faster machines, bigger manufacturing space, and bigger storage space. This means that Acme must prepare to go for larger quantities production by moving from the small garage where the owner began operations as a sole proprietor to a bigger factory space. The garage does not meet the US CPSC manufacturing standards, and to avoid litigations, the company must consider finding the ideal manufacturing space, whether it is hiring a go-down or building one from scratch or purchasing a bigger space (Cunningham, 2013). After getting the facility required to do the manufacturing, then the company can begin considering the expertise needed to handle the manufacturing successfully without strain.
The US CPSC website provides critical information about fireworks regulations and fireworks safety. It is essential to review the demands by the regulating bodies to ensure the company is doing things right. It would even be more appropriate at this stage to hire safety and regulations experts to help steer the safety plan. Hiring a professional to guide the company on its expansion journey would be useful in saving the company a lot of money and time. The US CPSC has drafted some basic requirements that all fireworks businesses must adhere to ( Consumer Product Safety Commission, 2001 ). An expert understands these deeply in terms of ensuring quality end product and a product that will not cause harm or danger to the end-users.
The performance requirements are put in place to ensure the safety, quality, and functionality of the fireworks. Here are the performance requirements of the fireworks:
The fuses have to be resistant to the side ignition, and they must burn for not less than 3 seconds and not exceed 9 seconds
All the fireworks devices must conform to performance thresholds and requirements as provided in Title 16, Part 1505 of the CFR (Code of Federal Regulations).
The fuse has to provide support to double the weight of the device standing upright. And it must be not less than one-third of the device full height or have to pass the 12-degree tilt test.
The devices must not show blowout or burnout
The devices have to be sealed to avoid pyrotechnic material lean at any time
The spikes and handles have to be attached securely. The handles must also be at least four inches long, and the spikes at least two inches. The spikes must also have blunt tips.
The drivers must be securely attached to the wheels
The rockets must feature rigid, straight sticks, and they must be securely attached at all times
The smoke items also need not minimize too much external fire flame or explode when in operation.
The party poppers also must not be fixed with over 0.25 grains of pyrotechnic content. They must also not have plastic or paper inserts that ignite when it's under operation.
The shell devices and the enormous multiple tube mine with any tube that measures 1.5 inches or wider in the inside diameter must not be fitted with a tip angle lower than 60 degrees.
The fireworks must not contain these chemicals: arsenates, arsenic, picric acid, boron, chlorates, zirconium, mercury salts, thiocyanates, picrate, magnesium, phosphorous, and chlorates.
Conclusion
The most appropriate decision is to have Acme Fireworks change from a sole-proprietorship business entity to an LLC. By changing to a limited liability company, Acme owners will gain protection from personal liability for the business decisions. Additionally, if the company performance declines and the business is dissolved, the owner's personal assets will be protected from auction or lawsuits. With the new inquiries, the company will generate sufficient funds to conduct further marketing to attract more businesses to ensure the new employees keep their jobs. From this exercise, I have learned that a company will always experience liabilities in its production, sales, and in its business activities (Rogers, 2012). However, provided the business management follows the laid down rules, regulations, and safety measures, the risks will be significantly reduced. The company will be in a position to make its profits and experience growth. Besides the regulations, Acme needs to hire enough staff, conduct its marketing to ensure business continuity and sustainability.
References
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Consumer Product Safety Commission. (2001) Fireworks Business Guidance. Retrieved from: http://www.cpsc.gov/en/Business--Manufacturing/Business-Education/Business-Guidance/Fireworks/
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