The Conquest of Limited Liability (Essay Sample)

The Legal Details of Different Forms of Commercial Ownership: The Conquest of Limited Liability
Name
Institution
The Legal Details of Different Forms of Commercial Ownership: The Conquest of Limited Liability
Introduction
The world of business had learned the principle of limited liability when the courts had determined the nature of the company as a separate entity that dwells independently of its owners, and in legal terms, the organization had the ability to live. The companies go through the process of birth when their initial documents such as Memorandum of Association pass the regulatory tests emplaced by the government in this regard, and the businesses die as the legal procedure of wounding up takes place when the due need arises. However, the companies have different organizational and legal designs those may or may not offer the cover of limited liability to the managers and investors.
Sole Proprietor: Tinker’s Home Security Service
The company has a single owner as it name suggests, and therefore, the company would not have the ability to exist separately without depending on the personal identity of the attached manager who is at the same time the only investor in the business (Astrachan, 2003, p.212). The person is doing business in order to make his living, and his contributions towards the society is not that substantial, and the government does not consider the organization and the manager as separate entities because the company does not meet basic financial requirements such as significant paid-up capital and multiplicity of the ownership. The Tinker’s Home Security Service would not offer limited liability to the owner, and therefore, the government would not refrain from auctioning out the owner’s personal belongings in order to pay the debt of the relevant organizations. The person can apply and petition the court to have insolvency if his current worth is less than the amount of debt that appears against the company.
General Partnership: Tinker and Taylor’s Security Service
The agreement of General Partnership does not offer limited liability to the owners because the owner will have to lose everything if the business has unexpected financial needs those the generalized business model of the company cannot cater, and the partners will face unlimited liability in a limited fashion because the agreement would use established percentage of profits that goes to each owner as a standard to determine the partial liability of every owner, and the only advantage that partnership provides to the owners is its contractual ability to dilute the burden of payout that one owner has to cover by using his or her personal properties if necessary (Callison, 2003, p. 1381).
The partnership offers some informal sort of financial cover for the owners, and therefore, the experts treat the featured organizational setup as a better one in comparison to the system of sole ownership. The owners still have the unlimited liability, but the weight divides amongst various persons, and the individuals can have sigh of relief because they might not have to sell everything they have in order to satisfy the monetary thirst of the organizational creditors. The partners in general partnership would have equal share in the profits, and they have the right to participate in managerial affairs of the business as well.
Tinker and Taylor’s Home Security Service: Limited Partnership
The Limited Partnership is a philosophy that believes in the principle of sharing, but the ownership had to have a tilted nature towards one or two parties those occupy major percentage of the total investments. The profit sharing regime of the company would reflect the similar realities, and therefore, by definition, the parties those have a limited investments, and subsequent managerial rights would not be subjected to sheer financial pressures by the law (Callison, 2003, p.1375).
In this way, the company does not offer the option of limited liability to the owners by design, but the arrangements do so by settling the affairs in a specific fashion. The major stakeholders of the organization would have to bear main chunk of the debts, and the minor ones have to share the load in less significant terms.
The legal literature still does not offer the option of limited liability to the owners who enter into the deal of limited partnership, and they have to share the burden of debt collectively, but in different proportions this time. The managerial rights vary because the investors have different percentages of investment to their names, and they have to craft managerial controls in order to prevent their vested interests from going down the drain to say the least.
Tinker and Taylor’s Home Security Service Inc: Corporation
The Corporations offer full immunity to the investors, and their personal properties, and belongings remain untouched regardless of the company’s financial health. The types of businesses discussed in the preceding sections of the reports were simpler in nature, and the present form of organization is the most complex one in the organizational jungle of the modern world (Winter, 1977, p.253).
With the passage of time, the world has learned to treat the corporation as the separate entity that exist independently, and the owners along with the managers of the business do not have unlimited liability to the firm. However, in case of criminal charges, the law treats the investors and managers as the agents of the company. In civil suits and affairs related to debt, the personal assets of the individuals remain a set of theoretical irrelevancies.
Tinker and Taylor’s Home Security Service, LLC: Limited Liability Company
The Limited Liability Company is a special form of organization that has an indigenous nature to the socioeconomic setup of the Americ...