Scenario
You are a trainee solicitor in Delaney Williams, Lawyers and Consultants. You work for Jo Delaney.
The client matter
Pat, Jac and Mat have set up a business recycling coffee cups and other takeaway containers.
The business has been operating for three months and is enjoying some success.
They have a business name, JetPac re-cycling. Each of them is giving the business twelve months to ‘see how they go.’ They have developed a new recycling method from a home garage based in Sunshine. It allows them to filter out the plastic, and the paper, and to recycle each of these two components as separate products. They have sought to register the intellectual property of the process.
Melbourne City Council (MCC) wants to enter a contract with them on an urgent basis to sort and recycle the 500,000 coffee cups and plastic drink bottles used in the central business district (CBD) each week. MCC will pay them $20,000 pcm for a year to recycle the products. It will also purchase back the commercial grade recycled products at the end of the initial twelve months.
The Chief Operating Officer (COO) of MCC has sent a draft contract to Jetpac for consideration.
If the MCC deal gets signed, they will also need to lease factory premises premises asap.
Legal issues
1. Pat, Jac, and Mat have run the business informally to date. What are the range of business entities available to three people, and what would the business entity relevant to this arrangement so far entail?
2. What is involved in the business becoming a company?
3. Can the business enter into a contract with MCC, assuming it later becomes a company? What is the process?
4. Is the company obliged to pay dividends? What are they, and what is the process for their payment?
5. The company plans to give away 10% of its net profits annually to a range of sustainability projects. The proprietor have heard of ‘csr,’ but wanted to know more about it, and also, how they might achieve their plan to donate.
Required
provide a memorandum format from you to Jo Delaney containing advice on the legal and commercial implications of each of the five issues referred to above.