Question

Anthony is a chef who owns a small restaurant in Cleveland, Ohio as a sole proprietor. Because the business is struggling in the beginning, Anthony frequently puts money from his own personal account into the business account for the restaurant. After a while, business is picking up and he decides to expand by purchasing a food truck. In the beginning he is able to run the food truck during the day, and then open his restaurant just in the evening for dinner. Soon after opening the food truck Anthony starts receiving offers to have his food truck at different events in the evening. Since Anthony can’t be the chef at his restaurant and also run the food truck at the same time, he decides to bring another chef on board. He then hires Mario to run the food truck for him. One weekend, Mario is out working the food truck. A customer named Susan approaches him and tells him how much she loves the food and asks if he can cater her upcoming birthday party. Mario, excited to be bringing in additional business for the restaurant, readily agrees. Unbeknownst to Mario, Anthony already committed the food truck to catering another party for that same day. When Mario tells Anthony that he booked the food truck for the party, Anthony yells at Mario, telling him “I don’t pay you a salary to make business decisions of that kind when only I have the right to make those decisions! I’m the owner of this restaurant, not you, so I am the only one who should be booking the food truck. From now on, you have to check with me first before booking the truck for any more business!” Mario, embarrassed at his misstep, apologizes and says he understands. A week later, Mario is out again with the food truck. On his way to the normal lunch location where he parks to serve lunch to customers, he receives a text message and looks down at his phone to read it. When he looked up, he didn’t have enough time to stop and he accidentally rear-ended the vehicle in front of him. As a result, he received a traffic citation. When Mario reported to Anthony that he was involved in the fender-bender and that it was his fault, Anthony was upset, but told Mario that accidents happen, and that the new rule is that no cell phone use is permitted when operating the food truck. Business keeps increasing for the restaurant and Anthony is becoming well-known in the city. Anthony decides that he wants to grow his business by incorporating and gaining investors. Anthony incorporates his business and is the only shareholder, but intends to reach out to other investors. One day, Anthony fell on some hard times in his personal life. Due to some bad investments with what ended up being a pyramid scheme, Anthony lost most of his money. Embarrassed and desperate, Anthony deposits some money from the restaurant’s business account into his own account to cover his personal expenses. Anthony figures that he put enough of his own money into the restaurant in the beginning, and that he is entitled to be reimbursed for those contributions. After he takes money from the restaurant, one of the investors in the business sues the restaurant and Anthony personally, asserting that the business didn’t have enough funds to pay its creditors. Answer the following: 1) Discuss the business relationship between Anthony and Mario when Mario was first hired, including the law that applies. 2) Discuss the type of authority that Mario had when he agreed to cater the birthday party. Discuss whether or not the restaurant is obligated to cater that birthday party. 3) Assume that the person whose vehicle was rear-ended by Mario files suit against the restaurant. Discuss whether Anthony/the business is liable for the damage caused by Mario. 4) Discuss whether Anthony can be held personally liable in the lawsuit that was filed by the investor. Make sure to fully explain the law that applies.

Answer 1

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