This is a legal process that is used when a group of people come together to form a company or a corporate entity. It therefore becomes a separate entity from its owners and is legal in its own right. A corporation has its own obligations and rights and can be created anywhere in the world with the use of the terms Inc or limited. They are the most common trading units in the world and are used as vehicles to fasten the process of business. Although the legal details of a corporation formation may differ in different jurisdiction, most of the elements in corporations are very common.
Articles of Incorporation are the legal documents that are used in incorporations. In these documents, the incorporated company name, purpose, location, class of shares and the number of shares that are being issued is enlisted. It also involves registration information and the fees(State business incorporation, 2009, 2011).
In creation of a company, shareholders are entitled to part of the profit a company makes. Small companies may have a single shareholder while large publicly trading companies may have thousands of shareholders. They usually receive the profits in form of dividends and they also elect the directors of the company according to their preferences. The directors of the company are directly involved in the day to day operations of the business but do not carry any personal responsibility or liability incase the company falls into debts. However, the exceptional cause would be tax fraud and evasion(State business incorporation, 2009, 2011).
There are various advantages of incorporations
There are many advantages of incorporation for the owners and the business; they include protection of owners’ assets as the company is responsible for its own debt. In many countries, the tax processes for a limited liability company is much lower than personal tax rates. There is also easy access to finance with sale of share stock being the most notable and appropriate and easiest financing method.
Introduction- Legal Concept Review
There are many legal concepts that are used in review for case laws like laws of contract and torts. However, the concepts below shows the two cases in laws of contract that shows the difference between an invitation to treat and an actual offer.
Law of contract
Case; Partridge v Crittenden( 1968)
Facts of the Case
In this case, there was an advertisement in a magazine that advertised the sale of Bramblefinch hens and cocks. This species was protected by the government. The person, who was responsible for placing the advertisement, was charged for placing an unlawful advertisement that is contrary to the protection of wild birds Act that was established in 1954(Beatson, Burrows, Cartwright & Anson, n.d.). The conviction however was quashed by the court of law as the defendant argued on ground of an offer and that the advertisement was an invitation to treat.
The lord CJ Parker of the court of appeal said that an advertisement put in a shop with a price on it shows an invitation to treat and was not considered as an offer. It was said that where the goods are sold in a shop on a self servicebasis, it is the customer who makes an offer and not the person who has placed an advertisement. The shopkeeper may otherwise reject or on the other hand accept the offer(Koffman & Macdonald, 2010).
Case 2; Pharmaceutical Society vs Southern Ltd(1953)
Facts of the case
Southern limited was charged with selling certain types of medicine which were only supposed to be sold under the supervision of the pharmaceutical society or a qualified pharmacist(Collins, 2008). Two customers at the shop requested for the said medicine which was under a price mark that was at the open shelves and were placed in the shops wire basket. The issue that arose was whether the person was instructed by a qualified pharmacist. The shelves were not under the supervision of the qualified pharmacists and that there was no offence that was commited therefore(Mayer,2010).
It was decided by the court of appeal that displaying a price tag on the shelf was like placing an advertisement for a contract that is bilateral and should be treated as an invitation to treat and not as an offer. The offer should therefore have been made by the customer and subsequently presented at the cash desk by the customer. Since there was a qualified pharmacist that was supervising at that the cash desk, there was no offence that was conducted(Stone & Devenney, n.d.).
Beatson, J., Burrows, A., Cartwright, J., & Anson, W. Anson's law of contract.
Collins, H. (2008). The law of contract. Cambridge: Cambridge University Press.
Koffman, L., & Macdonald, E. (2010). The law of contract. New York: Oxford University Press.
Meyer, L. (2010). Non-performance and remedies under international contract law principles and Indian contract law. Frankfurt, M. [u.a.]: Lang.
State business incorporation, 2009. (2011). Washington.
Stone, R., & Devenney, J. The modern law of contract.