POST 1: What Does a “Promoter” Do?

A “promoter” plays a critical role in the formation and establishment of a corporation. In legal terms, a promoter is an individual or entity that takes the initiative to set up a corporation by performing various preliminary activities necessary for its creation. These activities can include organizing meetings, developing the business plan, securing financing, and filing necessary documents with the state to incorporate the business.

Promoters are responsible for entering into contracts on behalf of the corporation before it is officially formed. They may negotiate with suppliers, lease office space, or hire employees. It is essential to note that promoters may also bear personal liability for these contracts until the corporation is established and formally adopts them. Once the corporation is formed, it has the option to adopt or reject the contracts entered into by the promoter.

Additionally, promoters have a fiduciary duty to act in the best interest of the corporation and its future shareholders. This means they must avoid conflicts of interest and disclose any material information relevant to their actions during the promotion phase.

Citation:
Cheeseman, H. R. (2019). Business Law: Text and Cases. Cengage Learning.

POST 2: Explain the Differences Between an Employee and an Independent Contractor

The distinction between an employee and an independent contractor is significant in employment law, as it affects various rights, responsibilities, and tax obligations. Here are the key differences:

1. Control: One of the primary differences lies in the degree of control that an employer has over the worker’s activities. Employees typically work under the direction and control of their employer regarding how to perform their tasks. In contrast, independent contractors have more freedom in how they complete their work, often deciding their means and methods.

2. Tax Implications: Employers are required to withhold income taxes and pay payroll taxes (Social Security and Medicare) for employees. Conversely, independent contractors are responsible for paying their taxes, including self-employment taxes since they are considered self-employed.

3. Benefits: Employees are often entitled to benefits such as health insurance, retirement plans, and paid leave. Independent contractors generally do not receive these benefits since they are not considered employees.

4. Duration of Relationship: Employment relationships are usually ongoing and can be indefinite, while independent contractor relationships are typically temporary or project-based.

5. Legal Protections: Employees are protected by various labor laws, including minimum wage laws, anti-discrimination laws, and unemployment benefits. Independent contractors do not have these protections under the same laws.

Understanding these differences is essential for both employers and workers to ensure compliance with labor laws and appropriate classification.

Citation:
U.S. Department of Labor. (2023). Independent Contractor vs. Employee: How to Determine Your Worker’s Classification. Retrieved from DOL Website

POST 3: Responding to Instructor’s Question

Instructor’s Question: “What is ‘consideration’ as it relates to contract law?”

Consideration is a fundamental concept in contract law that refers to something of value that is exchanged between parties in a contract. It is one of the essential elements required for a contract to be legally binding. In simpler terms, consideration represents the “price” paid for a promise or an act.

Consideration can take various forms, such as money, services, goods, or a promise to refrain from doing something (forbearance). The key aspect is that both parties must provide consideration; this mutual exchange differentiates a contract from a gift, where no consideration is involved.

For example, if you agree to pay $100 for a bicycle, your payment serves as your consideration, while the bicycle represents the seller’s consideration. It is important to note that consideration must be lawful and sufficient but does not need to be equivalent in value; a court will not typically assess whether the consideration was fair.

In some cases, courts may scrutinize consideration to ensure it meets specific criteria—such as being adequate (though not necessarily equal) and having legal value—before enforcing a contract.

Overall, understanding consideration is crucial for anyone involved in contracting agreements, as it ensures that both parties are bound by their promises and can seek legal recourse if those promises are not fulfilled.

Citation:
Miller, R. L., & Jentz, G. A. (2018). Business Law Text and Cases: An Accelerated Course. Cengage Learning.