WRITE 2 PARAGRAPHS FOR YOUR RESPONSE. EACH PARAGRAPH SHOULD HAVE AT LEAST 5 SENTENCES: Discuss an advantages and disadvantages of the various business forms. The legal and practical differences are very important. 19-4 Special Business Forms Besides the business forms already discussed in this unit, several other forms can be used to organize a business. For the most part, these special business forms are hybrid organizations- that is, they combine features of other organizational forms, such as partnerships and corpora- tions. These forms include joint ventures, syndicates, joint stock companies, business trusts, and cooperatives. 19-4a Joint Ventures In a joint venture, two or more persons or business entities combine their efforts or their prop- erty for a single transaction or project or for a related series of transactions or projects. For instance, when several contractors combine their resources to build and sell houses in a single development, their relationship is a joint venture. Unless otherwise agreed, joint venturers share profits and losses equally Joint ventures range in size from very small activities to multimillion-dollar joint actions carried out by some of the world's largest corporations. Large organizations often investigate new markets or new ideas by forming joint ventures with other enterprises. EXAMPLE 19.11 Intel Corporation and Micron Technology, Inc., formed a joint venture to manufacture NAND flash memory. NAND is a data storage chip widely used in digital cameras, cell phones, and portable music players. The joint venture resembles a partnership and is taxed like a partnership. For this reason, most courts apply the same principles to joint ventures as they apply to partnerships. Joint venturers owe each other the same fiduciary duties, including the duty of loyalty, that part- ners owe each other. Like partners, joint ventures have equal rights to manage the activities of the enterprise, but they can agree to give control of the operation to one of the members. Joint venturers have authority as agents to enter into contracts for the business that will bind the joint venture. Because the activities of a joint venture are more limited than the business of a partnership, however, the members of a joint venture are presumed to have less power to bind their co-venturers. Accordingly, the members of a joint venture have less implied and apparent authority than the partners in a partnership (each of whom is treated as an agent of the other partners) Syndicate A group of individuals or firms that join together to finance a project. A syndicate is also called an investment group. 19-4b Syndicates In a syndicate, or investment group, several individuals or firms join together to finance a par- ticular project, such as the construction of a shopping center or the purchase of a professional basketball franchise. The form of such groups varies considerably. A syndicate may be orga- nized as a corporation or as a general or limited partnership. In some instances, the members do not have a legally recognized business arrangement but merely purchase and own property jointly Joint Stock Company A hybrid form of business organization that combines characteristics of a corporation and a partnership Usually, a joint stock company is regarded as a partnership for tax and other legal purposes. 19-4c Joint Stock Companies A joint stock company is a true hybrid of a partnership and a corporation. It has many char- acteristics of a corporation in that (1) its ownership is represented by transferable shares of stock, (2) it is usually managed by directors and officers of the company or association, and (3) it can have a perpetual existence. Most of its other features, however, are more characteristic of a partnership, and it is usu- ally treated like a partnership. Like a partnership, a joint stock company is formed by agree- ment (not statute). Property is usually held in the names of the members, who are called shareholders, and they have personal liability. In a joint stock company, however, shareholders are not considered to be agents of one another, as they are in a partnership 19-4d Business Trusts Business Trust A form of The business trust form of organization was started in Massachusetts in an attempt to obtain business organization created by a the limited liability advantage of a corporation while avoiding restrictions on real property written trust agreement, in which ownership. With a business trust, legal ownership and management of the trusts property stay trustees own and manage trust with one or more of the trustees, and the profits are distributed to the beneficiaries. property and distribute profits to the beneficiaries, who have limited A business trust is created by a written trust agreement that sets forth the interests of the liability beneficiaries and the obligations and powers of the trustees. A business trust resembles a cor- Cooperative An association, poration in many respects. Beneficiaries of the trust, for instance, are not personally responsi- which may or may not be ble for the debts or obligations of the trust. In fact, in a number of states, business trusts must incorporated, that is organized pay corporate taxes to provide an economic service to its members. Unincorporated cooperatives are often treated like 19-4e Cooperatives partnerships for tax and other legal purposes. A cooperative is an association that is organized to provide an economic service to its mem- bers (or shareholders). A cooperative may or may not be incorporated. Most cooperatives are organized under state statutes for cooperatives, general business corporations, or LLCS. Generally, an incorporated cooperative distributes dividends, or profits, to its owners on the basis of their transactions with the cooperative rather than on the basis of the amount of capital they contributed. Members of incorpo- rated cooperatives have limited liability, as do shareholders of corporations and members of LLC. Cooperatives that are unincorporated are often treated like partnerships, and members have joint liability for the cooperatives acts. # The cooperative form of business is generally adopted by groups of individ- uals who wish to pool their resources to gain some advantage in the market- Most people believe that cooperatives are small place. Consumer purchasing co-ops are formed to obtain lower prices through enterprises, but not all are. Ace Hardware is a nationwide "coop that was formed more than quantity discounts. Seller marketing co-ops are formed to control the market eighty years ago. What is the benefit of forming and thereby enable members to sell their goods at higher prices. Co-ops range a co-op? in size from small, local consumer cooperatives to national businesses such as Ace Hardware and Land O Lakes, a well-known producer of dairy products