Introduction Business Law Textbook Notes Legal study differs from other business study Business managers need to realize that their business relations are also legal relations The many regulations emanating from various government agencies requires managers to understand how public regulation affects their work Law of torts the law of accidents Before a court requires someone to compensate the victim of an accident the court must conclude that the person who caused the injury was under a duty to protect the victim from the injury that occurred Social duties like when 2 people agree to go out to dinner The concept of a duty is basic an understanding when one person is liable to another Moral duties like when you have the duty to come to the aid of another Voluntary duties we agree to undertake like when we enter business contracts Duties imposed by law as well A wrongful death action is a lawsuit that is brought on behalf of a dead person s beneficiaries spouse children against someone who negligently caused the death of another Plaintiff the party who brings the lawsuit Defendant the party who is being sued Otis Engineering Corp V Clark o Robert Matheson Otis employee sent home by Donald Roy because he was apparently intoxicated while on the heavy machinery o Ends up killing himself in an accident and two others o Larry and Clifford Clark brought suit against Otis claiming Otis was liable to the Clarks for the wrongful death of their wives o Trial court awarded summary judgment for Otis summary judgment is one made by the judge after a hearing but without the benefit of a trial it is granted if the judge decides that no dispute about the facts exists and one party is clearly entitled to judgment as a matter of law o Appellant the party who appeals the case o Appellee the party who responds to the appeal o Court s opinion majority opinion legal decision in a case o Dissenting opinion views of a justice or justices disagreeing with the court s majority o Deciding whether or not to change social standards and increase the complexities of human relationships in today s society and if this justifies imposing a duty upon an employer to act reasonably when he exercises control over his servant Things to include in your briefs o Parties who is suing whom Plaintiff Defendant o Legal Proceedings civil or criminal Result in trial court How did the case come before the appellate court o Issues issue or issues presented for decision o Holding how were the issues decided who won what was the nature of the award o Rationale what is the reasoning behind the court s decision o Concurring and Dissenting Opinions if there are any of these what do they say Concurring opinion is written by a judge who agrees with the court s result but disagrees with its reasoning A dissenting opinion is written by a judge who disagrees with the court s decision Chapter 1 Business Ethics industries regulation of business Ethics affects employees customers suppliers and even the broader markets and Unethical business behaviors often spurs public outcry for increased government Sarbanes Oxley Act enacted to regulate financial disclosure and reporting Law is society s way of providing the safety and security of its members by furnishing rules and ways for resolving disputes Ethics informs the law For a law or business practice to be ethical it has to meet the test of rational justification what is ethical is a rationally justified determination about whether an act or inaction or a law or lack of law is good bad right wrong moral immoral Laws and business practices that further sanity peace harmony fairness equality love compassion and cooperation are ethically justified The Cost Benefit Approach o Analyzes ethical and legal policy issues by focusing on the costs and benefits of an action o Any action that increases the overall good is considered right o When selecting action under this approach a person selects the action that brings about the greatest amount of good for the greatest amount of stakeholders o Wants to maximize benefits to the greatest number of people The Rights Approach o Analyzes ethical issues by focusing on an action s impact on human rights o Human rights are the rights all people have o An action that maximizes respect for human rights and minimizes their violation is considered correct o A person selects the action that minimizes the violation of stakeholders rights o Advocates that the two necessities to be fully human are freedom and well being Rights of Liberty privacy free consent free speech freedom of conscience Rights of Welfare employment food housing education People often refer to their fiduciary obligation when determining what they should do in matters affecting their relations with others Legal Business Principles o Exercise your fiduciary obligation to act solely in the interests of the person whose property or interests you are entrusted o Avoid the appearance of conflicts of interest o Respect confidentiality o Exercise due care and diligence in the performance of your duties o Act in good faith and deal fairly with others Business activity is a reflection of what is provided by the law The highest legal duty and standard for ethical business conduct is the fiduciary rule A fiduciary is someone who possesses property belonging to another or occupies a position of power and confidence regarding the property of another Examples real estate agents business partners According to the fiduciary rule whenever someone is in a special position of trust to another he or she is a fiduciary and owes a duty to that other person to act solely in the interest of the other person s property and interests Example of fiduciary rule is the case of Meinhard v Salmon o Meinhard and Salmon underwent a joint venture which is formed for a single purpose and terminates automatically upon completion of the purpose o Salmon undertook a new lease towards the very end of the original agreement and Meinhard sued that the new lease be held in trust as an asset of the venture Conflict of interest exists when someone has a personal interest or a duty that conflict with a professional interest or duty ex when a real estate agent represents both the seller and the buyer Conflicts of interest create the impression that the person in conflict cannot be fair and impartial In dealing with a conflict of interest situation there are two options o Disqualification the person who has the conflict simply avoids the