Ferreras, Lourdes I.
BSBA FM 2-7
Mr. Senen Villanueva
November 22, 2022
Guide Questions:
1.Explain the principle of mutuality
2. Identify the 3R’s to solve the notion of making money by corporations. Explain how it can be done
with the use of 3R’s.
The "mutuality principle" is a fundamental tenet of legal reasoning based on case law. It is based
on the premise that a company cannot profit by selling itself. This principle declares that the function of
one element depends on another element's function as well. It also explains that, everyone who
contributes to the common fund should have the right to share in any surplus resulting from the fund's
operations, and everyone who shares in the surplus should have also contributed to the common fund. In
other words, there should be complete identity between the contributors and the participator. For
example, when an organization engages in transactions with its members to generate a surplus of
common funds, the activity is for a non-taxable purpose and is a mutual arrangement. For real life example,
a restaurant is provided for the benefit of all members, with member sales contributing to the common
fund surplus. There are some things that organizations need to have in order to reach mutuality. First, all
the members of the organization are working toward the same goal or have the right to do so. Second,
the main reason the organization was made and is run is to help its members work toward a common
goal. Third, all of the members' contributions to the common fund are used to help all of them, which is
in line with the common goal. Fourth, the members own and run the common fund, as well as many other
things.
On the other hand, it is important that we identify the 3R’s to solve the notion of making money
by corporations. The video states that, establish a corporation that not only generates profits for itself but
also contributes to the public good, the corporation should implement the three Rs: reinvent the
corporation, redesign the regulation, and reestablish the corporate contract between the government
and business. First is reinvent, corporations only focus on the things that can earn money or revenue
without knowing that there is something else that can help them gain more. They only use same pattern
and process that doesn’t allow them to expand their business. They must use reinvent since it helps them
develop and discover more that will help them expand their business and revenue. Reinvent will also allow
them to use technology more, allowing them to innovate. Second is redesign the regulations, we all know
that every corporation has it own rules and regulation implemented for the employees, members and
clients. It helps them to perform excellent jobs without committing any mistake and protect them in any
harm. But on the other hand, some regulations are not enough so redesign is must. Redesigning a
regulation must be also in accordance of the government imposes, which should also be in the public and
natural capital's interest. Lastly is to re-establish the corporate contract between government and
business. It would advise businesses on how to structure their practices and culture to have a better
capacity to run their businesses, not only for profit but also for the benefit of their clients and the
community. They can also further improve the things they lack and things that do not allow a business to
run smoothly. Furthermore, re-establishing the contract must be done if there is an agreement between
those parties involved. The agreement is essential since it avoids misunderstanding between both parties
since they must benefit from the decision they make. In conclusion, corporations ought to be formed not
only for their own good but also for the good of the general public because this will benefit more people.