Legal Risks

Big Box, Inc. is a national retailer of a wide array of products, ranging from soft goods to automotive equipment.Big Box is incorporated in the State of Delaware, has its Home Office in Phoenix, Arizona and has over 1,000 retail outlets in all states, except Alaska and Hawaii.It also has a significant online retail presence.Big Box employs over 150,000 people in its corporate, retail and logistics operations.With regard to its retail operation, Big Box owns about half of its locations and leases the remainder.

In recent years, Big Box’s revenues have decreased and it is under increasing pressure to provide better returns to its shareholders.In an effort to improve the Company’s performance, Big Box’s CEO, Fred Steady, has told his merchant groups that no ideas are “off the table.”John Eager, Big Box’s Chief Merchant, has approached Mr. Steady with a proposal for Big Box to begin carrying firearms and ammunition.Although Big Box has never carried these products before, there is a large and increasing market for firearms and ammunition in many of the areas where Big Box operates and initial sales projections are impressive.

While Mr. Steady is enticed by the possibility of expanding product lines and the potential for high revenues, he is cautious and unfamiliar with the potential pitfalls of entering this new arena.He requests information from the Company’s Legal Department regarding legal issues that he and the rest of the Company’s leadership should consider before making a decision to move forward with Mr. Eager’s plan.He also asks the Legal Department to make a recommendation as to whether or not Big Box should proceed with this proposal.


Prepare a memorandum to Mr. Steady outlining potential legal risks presented to Big Box in connection with Mr. Eager’s proposal to sell firearms.Your memorandum should identify and provide at least a one-paragraph description of at least five (5) legal issues and one (1) ethical issue presented by Mr. Eager’s proposal.The legal risks identified may be from any area of law (public, private, regulatory, tort, contract, real estate, etc.) whether these areas have yet been covered in class or not.Your memorandum should conclude with a clear recommendation from the Legal Department as to whether Big Box should or should not proceed with Mr. Eager’s proposal.

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