Liability

1.  I know you are not a lawyer, and I don’t expect you to answer the questions in this problem as if you are a lawyer. I expect you to approach the questions from the perspective of a business owner who’s responsible for spotting legal issues and making a preliminary assessment of their impact on your business. Don’t be overly concerned about whether I agree with the exact judgment calls you make in your assessment. The objective here is for you to spot the issues and demonstrate your understanding of the legal implications.2. Please don’t cite cases or outside materials. If you make a statement in your answer, you can assume that the statement is supported.3. Your answer should not exceed five (5) pages. BackgroundAssume that you graduated from the University of Maryland three years ago. At a trade show shortly after graduation, you met Ann and Bob from Week 1 of the ENES671 course. You immediately hit it off with Ann and Bob. The three of you exchanged contact information at the trade show and soon began discussing ideas for forming a technology-based business together. You would bring the technical skills, Bob the sales experience, and Ann the business management skills. You had been working on an innovative way of integrating powerful circuitry into fabrics, and the three of you thought the possibilities of the technology were endless. Two years ago, the three of you decided to pursue an interactive clothing business, CloudFabric. You set up CloudFabric as a partnership in which the three of you owned equal shares and comprised the board of directors. Each of you initially contributed $10,000 to the business venture to support the business operations and development of your first product. Your first product would be BabySpeak, an interactive baby blanket that provides vital information to a parent via a mobile app. For example, BabySpeak can signal when a baby’s diaper needs to be changed and can monitor/regulate a baby’s temperature. CloudFabric had contracts in place with ICB, Inc. for the internal circuity and with WonderFiber Co. for the fabric. CloudFabric negotiated a deal with MagicBlankets, Inc. to be a non-exclusive retailer for BabySpeak. BabySpeak was successfully developed six months ago and CloudFabric immediately started offering the blankets for sale.

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