Running head: CASE STUDY 1 MEMO
BUS 307: Case Study 1 Memo
Emily Havel
Southern New Hampshire University
CASE STUDY 1 MEMO
Memorandum
To: Fred and Sally
From: Emily Havel
Date: May 23, 2021
Subject: Formation of Homeopathic Cough Syrup Business
The following memo is to aid in the starting of your homeopathic cough syrup business.
Your cough syrup is very popular within your community, and I understand that you want to take
it nationwide. Going nationwide is a great goal, and I am happy to help you in any way possible
with that goal. In the following paragraphs, you will find all the answers to your questions and
my recommendations. I look forward to working with you and your future business endeavors
There are three main types of business a corporation, a partnership, and a sole
proprietorship. A corporation is "a legal entity formed by issuing stock to investors, who are the
owners of the corporation." (Kubasek et al., 2016). A partnership is "a voluntary association
between two or more people who co-own a business for profit." (Kubasek et al., 2016). A sole
proprietorship is "A business in which one person (sole proprietor) controls the management
and profits." (Kubasek et al., 2016).
With any product, you have to consider product liability. Product Liability Law is
"based primarily on tort law. There are three commonly used theories of recovery in product
liability cases: negligence, strict product liability, and breach of warranty." (Kubasek et al..
2016). When it comes to product liability, if someone were to take the cough medicine and have
an adverse reaction, you could have a product liability suit on your hands. In a product liability
suit, "While a plaintiff must establish different elements under each of these theories, the plaintiff
CASE STUDY 1 MEMO
must generally show two common elements: (1) the product is defective, and (2) that the defect
existed when the product left the defendant's control." (Kubasek et al., 2016).
Since there is an ingredient that can cause a reaction when taken with aspirin, there needs
to be a warning label on every bottle. If there is no warning label on the bottle, this could
consider the product defective due to "failure to provide adequate warnings about potential
dangers associated with the product." (Kubasek et al., 2016). To avoid a product liability suit,
you need to make 100% sure that there is a short and easy read, easy to find label on the bottle
stating, "due to an ingredient in the cough syrup there could be a severe reaction when this
medicine is taken in conjunction with aspirin."
"An agency is generally defined as a relationship between a principal and an agent. In the
agency relationship, the agent is authorized to act for and on behalf of the principal, who hires
the agent to represent him or her." (Kubasek et al., 2016) In the cough syrup business, Sam talks
about his father's product to the locals. Sam has also offered to speak to national chains