Li, Shu and Lin have an idea for a computer export business. Li tells Shu and Lin that she will prepare and file articles of organization and other corporate documents necessary to register their business name and incorporate in Massachusetts. Their business makes a profit of $8,000,000.00 in the first 12 months of operation. Shu is busy with other activities and spends no time working for the business. Lin wants to leave the business and cash out. Li who has been working 50 hours a week for the business says no to both of them — she wants to continue with the business venture and bring in a new owner Zhu.

Li has received but has not yet paid for a $100,000.00 computer delivery she has ordered and received without Shu or Lin’s knowledge. Li still has in her handbag, but has never filed, any legal documents for the business. What form of business if any do they have together? What business forms are not relevant? What are Li’s rights? Shu’s rights? Lin’s rights? Zhu’s rights? How would your answers change if there business was an entirely different form? What are the legal issues and applicable rules of law. How is each form created, owned, managed and taxed? Compare the liability of owners for each form.