Fact Pattern You decide to start making tee shirts in yourgarage with two ELAC classmates, Moe and Curly. Your tee shirts areselling fast all over Los Angeles. Your tee shirts are uniquebecause they feature animals in a cartoonish manner with cool hatswalking down the Venice Beach boardwalk. Your tee shirts sell for$20 a piece. It costs you $5 to make each tee shirt. You, Moe, andCurly are selling shirts as a hobby and had no idea that this wouldbecome so popular. You, Moe, and Curly operate under no formalbusiness entity. You handle the paperwork, Moe handles the money,and Curly is the creative designer.

You, Moe, and Curly attend the USC vs. UCLA football game andwear some of your shirts. Many people notice your shirts and likethem. Fans ask do you have them with USC or UCLA colors and mascotson them. You, Moe, and Curly decide to try to figure out how tomake this happen. Since you are an expert in business law, theyagree that you can handle this project. You reach out to both USCand UCLA and speak with their Athletic Departments. Both USC andUCLA like your idea.

If USC agrees to give you permission to place the USC Trojan onyour shirts and sale them. What kind of agreement should be signedbetween USC and you, Moe, and Curly? Which legal principle(s)applies to this situation? Define the principle(s). Explain theprinciple(s) and how it applies.

So far, you, Moe, and Curly have been selling shirts and keepingthe profit, without operating as a formal business entity. However,UCLA will not enter an agreement with you to sell them shirts anduse the Bruin logo unless your business operates as a corporation,limited liability company, or limited liability partnership. Youdecide that you will form a business entity. Which of the threebusiness entities, that UCLA will work with, do you decide to form?Why will you form that type of entity? What tax treatment, personalliability, and formation costs will your new company have?

You, Moe, and Curly decide to hire Edward as an employee. Edwardwill assist with general tasks and help carry products during setupand breakdown at events. A few months after you have establishedyour formal business entity (Husky Shirts) and registered HuskyShirts with the State of California, you decide to market yourshirts at Power 106’s Summer Jam. Edward is working at the SummerJam and gets upset with a potential customer, Annoying Aaron who isdrunk. Annoying Aaron curses out Edward for two straight minutes.Annoying Aaron then begins to go on Instagram Live and continue toberate Edward. Edward has enough and punches Annoying Aaron.Annoying Aaron falls, hurts his back, fractures his arm, andscratches his leg really bad. Aaron needs stitches and a cast.Aaron goes to the doctor and then hires an attorney to sue HuskyShirts for $75,000. Will your company, Husky Shirts, be liable forthe damage Edward did to Annoying Aaron? Why or why not? Will yoube personally liable for the damage done to Annoying Aaron? Do youthink that you should have a business agreement between you, Moe,and Curly governing how Husky Shirts will operate? what types ofterms would you insert in that agreement? Do you think that yourcompany, Husky Shirts, should have commercial liability insurance?Why or why not?

You decide to set up a website to take orders online for HuskyShirts. Customers can place orders by entering their name, address,email address, and credit/debit card information. Do you need anyspecific website policies on the Husky Shirts website? If so, whichpolicies should Husky Shirts use and why?