Agreement As to Division of Expense

The notion of a separate legal entity is what differentiates sole proprietorships from businesses. A company exists in the eyes of the law as its own distinct entity. A company has its own independent legal position, in contrast to an individual who engages in sole proprietorship under the guise of a legitimate business name, in which case the individual’s rights and responsibilities are bound up with those of the firm. As a result, a corporation has many of the same rights and responsibilities as a typical legal person. For instance, it may hold land, have an ability to sue, or even be the target of a lawsuit. These are only a handful of the factors that contribute to the unique status of a corporation. The primary distinction between a department and a subordinate is that a branch is its own independent legal entity, whereas a division is part of the larger parent corporation to which it belongs. The company that is above it could be referred to as a parent company or a holding company. Even while one firm can legally be the primary shareholder of another business, a subordinate is still considered to be its own separate entity. Another definition of a parent business is simply a corporation that owns other business outright; in this context, the latter is referred to as a fully-owned subsidiary. On the other hand, the opposite of a department is a division, which refers to an arm or branch of a firm that performs a certain function inside that company. For instance, a bank might have a department that deals with loans. Despite the fact that it serves a distinct purpose inside the organization, the loan division is not a distinct entity in and of itself. Other examples include billing, human resources, grievances, sales, information technology, and so on and so forth.

Because a subdivision is an administrative section of a firm rather than a totally distinct entity, business owners are free to create new divisions at their pleasure and eliminate existing ones whenever they see fit. Because the people working in each division are hired by the same business, it is simpler to adjust workforce levels so that they are compatible with this organizational structure.

Because a division does not have the power to engage into a contract that is legally valid, it is possible that the corporation will argue in the future that the agreement is not binding.