SHK14

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Kenyatta University *

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Law

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Nov 24, 2024

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1 Assignment Week 14 University of the Cumberland's Shubhangi Khanna 1 st December 2023

2 Response One In the situation that has been provided, the primary concern centers on Paul, who, as the only incorporator of the Hemp Company, enters into a pre-incorporation contract with a local farmer to purchase organic hemp. The board of directors does not ratify the deal once the company has been incorporated, and the reason given is that Paul is said to have purchased the crop at an inflated price. This situation involves various types of liabilities ( Goldberg, 2021). First, it is of the utmost importance to recognize that when an incorporator engages in a pre-incorporation contract, the corporation assumes typically contractual duties upon its inception. On the other hand, the legal repercussions could be different if the board decides against ratification. It is possible that Paul could be held personally liable for the contract if the farmer can demonstrate that Paul disregarded the terms of the agreement or exceeded his power ( Jennings et al., 2014). From a business perspective, the board of directors did not confirm the contract conditions, indicating that the organization does not accept such terms. As a consequence of this, Hemp Company may be able to avoid blame as a corporate body, but Paul may still be held personally responsible for his conduct if they violate both legal and ethical norms ( Goldberg, 2021). In a nutshell, the liability to the farmer may potentially extend to both Paul personally and, to a lesser degree, to Hemp Company. This is the case if Paul's acts fit within his power, and the board's failure to approve looks unjustifiable. In this particular setting, the complexities of liability highlight the significance of conducting a comprehensive investigation of pre-incorporation dealings and subsequent board decisions to ascertain who is responsible for the actions ( Knapp et al., 2023).

3 Response Two Intending to become exempt from SEC regulations, Tina Technology is starting an online fundraising campaign to raise $85,000. A thorough examination of the exemptions offered by the SEC under Regulation Crowdfunding (Reg CF) is essential for Tina's successful navigation of this path ( Jennings et al., 2014). If they satisfy the requirements, businesses can raise $5 million in 12 months from many small investors thanks to Reg CF, which is a great opportunity. Tina must disclose financial statements and other pertinent information transparently to prospective investors through a registered crowdfunding site or broker to realize this potential and stick scrupulously to the strict disclosure standards mandated by the SEC ( FBA & Cartwright, 2020). Reg CF is an appropriate channel for Tina's fundraising goals because the desired capital of $85,000 falls squarely within the threshold. Nevertheless, achieving success in this endeavor requires a continuous dedication to regulatory diligence and initial compliance. Tina has to keep in mind the restrictions on personal investments so her offering can qualify for the SEC exemption ( Chen-Wishart, 2012). Tina must know what happens once the fundraising ends, even though Reg CF gives her a strong foundation for online fundraising. Businesses that have used this exemption to obtain money successfully are required by the SEC to continue reporting. Accurate record- keeping, yearly report filing, and regular investor updates are all parts of Tina's plan for success. Both the fundraising campaign's legal compliance and the stakeholders' continued trust and confidence are guaranteed by this all-encompassing strategy ( Macaulay, 2020). Tina's chances of successfully raising $85,000 online through Regulation Crowdfunding and taking advantage of an SEC exemption are high. But what makes this a

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4 success story is Tina's steadfast dedication to following all reporting and disclosure rules to the letter. This has laid the groundwork for continued investor trust and success in the future ( Stone & Devenney, 2022).

5 Reference Chen-Wishart, M. (2012). Contract law . Oxford University Press, USA. FBA, Q. H. B., & Cartwright, J. (2020). Anson's law of contract . Oxford university press. Friedman, L. M. (2011). Contract law in America: a social and economic case study . Quid Pro Books. Goldberg, V. P. (2021). Toward an expanded economic theory of contract. In The Chicago School of Political Economy (pp. 259-275). Routledge. Jennings, M. M. (2014). Business: Its legal, ethical, and global environment . Cengage Learning. Knapp, C. L., Crystal, N. M., Prince, H. G., Hart, D. K., & Silverstein, J. M. (2023). Problems in Contract Law: cases and materials . Aspen Publishing. Macaulay, S. (2020). An empirical view of contract (pp. 399-414). Springer International Publishing. Stone, R., & Devenney, J. (2022). The modern law of contract . Routledge.

SHK14

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