Your friend Jennifer is excited to start a new business which she is confident will be successful. However, she needs her father’s (Robert) financial assistance for start up costs. Her father is able to contribute up to $50 000 but wants a number of safeguards. He wants to know that he will not lose more than his investment, he wants a 5% return on his investment, he wants to take an active role in management (since he does not trust Jennifer’s business knowledge or judgment) and he does not want any liability for anything which might go wrong. He probably cannot achieve all of these goals. Advise Robert of the consequences of the following with regard to his stated goals:
- If the business was incorporated and Robert, as a director, committed the tort of negligence, who is liable? Why?
- If the business was incorporated, Robert and Jennifer are directors, and the business failed to pay its taxes, who is liable? Why?
- If the business was incorporated and the business does not pay its creditors, who is liable? Why?
