Exploring Business © 2009 FlatWorld Knowledge 16-1 The Legal and Regulatory Environment of Business

Exploring Business © 2009 FlatWorld Knowledge

16-1The Legal and Regulatory The Legal and Regulatory Environment of BusinessEnvironment of Business


16-2

Chapter ObjectivesChapter Objectives

1.1.Law and the legal systemLaw and the legal system2.2.Criminal versus Civil LawCriminal versus Civil Law3.3.Negligence tortsNegligence torts4.4.Product liabilityProduct liability5.5.Some principles of public lawSome principles of public law

The Legal SystemThe Legal System

•““...the institutions and ...the institutions and processes that actually processes that actually enforce our rules and enforce our rules and

principles.”principles.”


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System ofSystem ofRules and PrinciplesRules and Principles

• FlexibilityFlexibility


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FairnessFairness

Functions of LawFunctions of Law Keeping the peaceKeeping the peace Shaping moral standardsShaping moral standards Promoting social justicePromoting social justice Maintaining the Maintaining the status quostatus quo Facilitating orderly changeFacilitating orderly change Facilitating planningFacilitating planning Providing a basis for compromiseProviding a basis for compromise Maximize individual freedomMaximize individual freedom


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Areas of LawAreas of Law

Criminal LawCriminal Law

Civil LawCivil Law

LegalLegalEnvironment of BusinessEnvironment of Business

•““...the place where business ...the place where business interacts with the legal interacts with the legal

system.”system.”


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AdjudicatedAdjudicated

•““...resolved in court.”...resolved in court.”


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TortTort

•““...civil wrong- an injury to ...civil wrong- an injury to someone’s person or someone’s person or

property.”property.”


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Goals of Tort LawGoals of Tort Law

•““...restoring victims to the ...restoring victims to the conditions that they would conditions that they would

have been in had their have been in had their injuries never taken place.”injuries never taken place.”


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Types of TortsTypes of Torts

Intentional- an Intentional- an intentional act that intentional act that poses harm to the poses harm to the plaintiffplaintiff

Negligence- results Negligence- results from carelessnessfrom carelessness

Strict Liability- Strict Liability- don’t have to don’t have to prove prove negligencenegligence


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Intentional TortIntentional TortAgainst PropertyAgainst Property

1)1) Entering another’s land or placing object on it without Entering another’s land or placing object on it without permissionpermission

2)2) Interfering with another’s use or enjoyment of personal Interfering with another’s use or enjoyment of personal propertyproperty

3)3) Permanently removing property from owner’s possessionPermanently removing property from owner’s possession


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Intentional TortIntentional TortAgainst Economic InterestsAgainst Economic Interests

1)1) Making false statement of material fact Making false statement of material fact about productabout product

2)2) Enticing someone to breach valid Enticing someone to breach valid contractcontract

3)3) Going into business for sole purpose of Going into business for sole purpose of taking business from anothertaking business from another


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Personal TortsPersonal Torts

1)1) DefamationDefamation• LibelLibel• SlanderSlander

2)2) Intentional infliction of Intentional infliction of emotional distressemotional distress


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Elements of Negligence ClaimElements of Negligence Claim

1.1. Defendant owed a duty to care to Defendant owed a duty to care to plaintiffplaintiff

2.2. Defendant breached duty to careDefendant breached duty to care

3.3. Defendant’s breach caused injury to Defendant’s breach caused injury to plaintiff or propertyplaintiff or property

4.4. Defendant’s action caused injury in Defendant’s action caused injury in questionquestion


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14-16Parties to ContractParties to Contract

Contract RequirementsContract Requirements

AgreementAgreementConsiderationConsiderationContractual capacityContractual capacityLawful objectLawful object


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Employment ContractsEmployment Contracts

• Respondeat SuperiorRespondeat Superior


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Scope of Scope of EmploymentEmployment

Conditions ofConditions ofScope of EmploymentScope of Employment

1)1) Actions performed in order to fulfill Actions performed in order to fulfill employer’s contractual dutiesemployer’s contractual duties

2)2) Employer is/could be in some Employer is/could be in some control, directly or indirectly, over control, directly or indirectly, over employee’s actionsemployee’s actions


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Product LiabilityProduct Liability“Theories of Recovery”“Theories of Recovery”

•NegligenceNegligence


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Strict Strict LiabilityLiability

Breach of Breach of WarrantyWarranty

Grounds of NegligenceGrounds of Negligence

Negligent failure to warnNegligent failure to warn

Negligent designNegligent design

Negligence per seNegligence per se


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Grounds of Strict LiabilityGrounds of Strict Liability

1)1) People at risk of injury no matter People at risk of injury no matter how much care is taken to prevent how much care is taken to prevent injuryinjury

2)2) Consumers have some Consumers have some means of seeking compensation if means of seeking compensation if injured using productsinjured using products


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Reasons for Strict Liability Reasons for Strict Liability Manufacturer Can Protect SelfManufacturer Can Protect Self

A.A. By anticipating/preventing By anticipating/preventing hazardous featureshazardous features

B.B. By purchasing insurance and By purchasing insurance and passing cost on to public in form of passing cost on to public in form of

higher priceshigher prices


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14-24Negligence vs. Strict Negligence vs. Strict LiabilityLiability


14-25Agency RelationshipAgency Relationship

Compensatory Compensatory DamagesDamages

•““...monetary awards ...monetary awards intended to meet the intended to meet the primary goal of legal primary goal of legal action in tort action.”action in tort action.”


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Punitive DamagesPunitive Damages

•““...are intended to ...are intended to deter similar injurious deter similar injurious

conduct in the conduct in the future.”future.”


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Goals of Contract LawGoals of Contract Law

Compensatory damagesCompensatory damages Punitive damagesPunitive damages Remedies for Remedies for

breachbreach


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14-29Remedies for BreachRemedies for Breach


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Sources of Public LawSources of Public Law

CriminalCriminal

ConstitutionalConstitutional

AdministrativeAdministrative

Case Law- Judicial ReviewCase Law- Judicial Review

Government InterventionGovernment Interventionin the Marketplacein the Marketplace

Market Failure: Theory v. Market Failure: Theory v. RealityReality

Law and Economic Law and Economic Decision MakingDecision Making

Efficiency and the LawEfficiency and the LawEthics and the LawEthics and the Law


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14-32Contract GameContract Game


14-33Administrative Administrative AgenciesAgencies


16-34Laws & RegulationsLaws & RegulationsAffecting Business ActivitiesAffecting Business Activities

AreasAreas Examples of InfluencesExamples of Influences

Human ResourcesHuman Resources Fair employee treatmentFair employee treatment

OperationsOperations Workplace SafetyWorkplace Safety

Information TechnologyInformation Technology Information protection, Information protection, access, control, privacyaccess, control, privacy

MarketingMarketingTruth in advertising, Truth in advertising,

telemarketing, product labelingtelemarketing, product labeling

SalesSales Selling practices, Selling practices, distribution, & warrantiesdistribution, & warranties

AccountingAccounting Form/content Form/content of financial statementsof financial statements

FinanceFinance Credit, securitiesCredit, securities

Documents

Exploring Business © 2009 FlatWorld Knowledge 16-1 The Legal and Regulatory Environment of Business