Q1: Jerold Murphy and three others incorporated Country House, Inc. All four shareholders worked for the company. When the company had a surplus, it gave “bonuses” to the four individuals. Murphy initially contributed one-fourth of the capital to Country House, but he owned only one-ninth of the company at the time of the payments and was offered one-ninth of the surplus as his bonus. He claimed that he did one-fourth of the work and should receive one-fourth of the surplus as his bonus. Discuss the magnitude of the bonus to which Murphy is entitled.
Q2: Alan Dershowitz, a law professor famous for his wealthy clients (O. J. Simpson, Claus von Bulow, Leona Helmsley), joined with other lawyers to open a kosher delicatessen, Maven’s Court. Dershowitz met with greater success at the bar than in the kitchen—the deli failed after barely a year in business. One supplier sued for overdue bills. What form of business organization would have been the best choice for Maven’s Court?
