1-The Legal-ethical Issues in Business

8/8/2019 1-The Legal-ethical Issues in Business

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The legal/ ethical issuesin business

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Lecturer: Dr. Ho Thuy Ngoc (LLM)

Deputy Dean ofFaculty of International EducationForeign Trade University


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Recap

1- Introduction to Law- Business Ethics and SocialResponsibility

2- History and Sources of Law in the United States3- Dispute Resolution

4- Torts- Crime6- Contract Law7- The Uniform Commercial Code, Sales, Product Liability

and Negotiable Instruments8-Starting a Business- Business Organizations- Agency-

Corporations9- Employment Law10- Secured Transactions and Bankruptcy, Securities

Regulation11- Consumer Law, Cyberlaw


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Books and references

1) Legal Environment, 3rd Ed. Beattyand Samuelson (Thomson

Southwestern,2005)

2) The Uniform Commercial Code

3) Tutorials


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Grading Breakdown

30%- 30% 2 Mid-Term Exams

30% Final Exam

10% ClassParticipation andAttendance

Total: 100%


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Rules required

when you are in class No mobile phone;

No eating (drinking is allowed);

Time for class shall be flexible anddepend on the load of work;

Feel free to stop the lecture and ask;

Doing private things shall be seriouslypunished.


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Q&AYou are manager of a company and you

face with these claims- Your staff- Sarah,complains that Rob,

her boss but under your level, isconstantly touching her and makinglewd comments

- You have a business dinner withJake- a director of a softwarecompany and he would like tocooperate with you. You want toengage but not to be bound

- You wanna invest in a kind of

software but similar products exist inthe market.


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Lecture 1-Introduction to Law;Business Ethics and Social Responsibility


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Alabama

Alaska

Arizona

ArkansasCalifornia

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

IndianaIowa

Kansas

Kentucky

Louisiana

Maine

Marylan

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North CarolinaNorth Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode IslandSouth Carolina

South Dakota

Tennessee

TexasUtah

Vermont

Virginia

Washington

West Virginia

WisconsinWyoming

UNITED STATES FEDERAL GOVERNMENT

American Samoa District of Columbia Guam Northern Mariana Islands

Puerto Rico Virgin Islands

1- Introduction to Law

Read page 100 to understand the history of

America!


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What is the difference bwt a state

and a territory? State is a political unit

in the United Statesthat occupies a

definite territory andhas an organizedgovernment with thepower to make lawsand enforce those laws

without approval fromany higher authority.

Territories, like Guam,the Virgin Islands, andWake Islands, havelaws enacted by the

Congress (Articles Iand IV of theConstitution) and canalso enact laws as longas they abide by the

laws enacted byCongress

The federalgovernment has moredirect control overterritories than it does

over states.


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Sources of law

Statute law Common law

Parliaments Judges

make

>Common

law

Equity >


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Three Sources of Law


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Changes in Common Law Bystander Cases

Over time, changes in societys normshave an effect on long-standingcommon law. An example of this is thelaw that applies to bystanders in

emergencies. Under common law, bystanders have no

obligation to assist a victim in anemergency.

Over time, courts have created exceptions,

making employers obliged to help anemployee who is suddenly stricken with anemergency situation when the employer ispresent.

Some courts now hold that anyone

witnessing an extreme situation or if there is-


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Statutory Law

Most new law is statutory, that is, it is

legislation passed by either a state

legislature or the Congress of the United

States.

Citizens who vote have some control over

statutory law. We elect the state

congressional representatives and the

United States Senators andRepresentatives.


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How New Laws are Made

Any member of Congress can initiate a bill,or proposed law.

A bill is debated in a committee in the housewhere it was introduced.

It then goes to the full house for a vote. If it passes both houses this way, it goes to

the President for his signature.

A Presidents signature turns a bill into law.

If the President does not sign the bill (veto),Congress can override the veto by passingthe bill again, with a two-thirds margin.


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Why Are Bills Proposed?

New issues or new worries such asemployment discrimination and Internetprivacy or copyright issues

Unpopular judicial rulings if Congress

disagrees with a judicial interpretation of astatute, it may pass a new statute to undothe decision of the court, unless the decisionat hand is based on the U.S. Constitution.

Criminal law must be set forth in clearterms through statutes rather than left to

judicial interpretation.


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Creation of a Statute: Example

In 1963, President Kennedy proposed legislationto guarantee equal rights to African Americans injobs, housing, voting, schools and other basicareas of life.

The bill was debated vigorously in Congress.

Wording was changed, terms added, meaning ofphrases discussed and clarified.

Since the wording had changed through debate,a committee of members of both houses ofCongress had to meet to reach a compromise.

Interpretation and enforcement of the CivilRights Amendment varied with the make-up ofthe Supreme Court.


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How New Laws Are Made

A bill, or proposed law, is introduced in the House of Representativesor the Senate and then assigned to a committee for discussion and

voting.Armed

ServicesAgriculture

Ways and

Means

Banking,

Finance, and

Urban Affairs

Education

and

Labor

Judiciary

Committee

Aeronautical

and Space

Sciences

Armed

Services

Judiciary

CommitteeAppropriation

Foreign

Relations

After it passes committee, thebill goes to the full body of

that house for a vote.

Major House

Committees

Major Senate Committees

If it passes there, it goes tothe other house (House to

Senate or Senate to House).

It is assigned to a

committee and the

process repeats.

If the second House of Congress made any changes, or amendments, to the bill, it must go to a

Conference Committee, made up of members of both houses. Here, they work out compromises

between the two different versions of the bill. The compromise bill then goes back to both houses

for a final vote.

Once both houses pass the

compromise bill, it is sent

to the President to be

signed.

If vetoed, it goes back to the

Congress, where it must pass

both houses by a 2/3 majority.

If signed, the bill becomes law.

House of

Representatives SenateConference

Committee


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Statutory Interpretation(giai thich luat) Sometimes wording is ambiguous, either by

oversight, or intentional -- as a compromise.

New laws must be interpreted by the courts. Plain Meaning Rule -- the courts must use the

common sense definition of words. (canadia, England:literal rule)

Legislative History and Intent (purpose approach)--sometimes the court can look to the reasons behindthe law to determine the legislators intent.

Public Policy -- the courts will use accepted socialpolicies, such as reducing crime or providingeducation to interpret a law.

Once the law (statute) has been applied by thecourts, its interpretation becomes a precedent tobe used in future court cases.


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The Other Player --$ In todays political climate, running a campaign for

political office is an expensive endeavor.

$ Financial contributions to candidates or political partiescome from many sources. Some limits have beenplaced on contributions, but loopholes exist.

$Donors usually expect to receive some benefit, such asfavored treatment in future legislative issues.

$ Supporters of contribution limits aim to equalize theaccess to politics for rich and poor; opponentsclaim that the First Amendment guarantees theirright to support whomever they choose.

Money

$ The very green bottom line is, MONEY TALKS -- andit often talks loudly in the political arena!


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Administrative Law

Federal agencies such as the FederalAviation Agency (FAA) and the Federal

Trade Commission (FTC) and the

Bureau of Land Management, all have

the power to make regulations whichaffect citizens and businesses.

Agencies are often called the fourth

branch of government.


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Classification of Agencies

Executive Federal Agency: Part ofexecutive branch, under the controlof the President; usually support

the Presidents policies. Independent Federal Agency: Not

part of executive branch; Presidentdoes not have the power to fire the

head of the agency. Agencies also exist at the state and

local levels.


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Administrative Law

Agencies were -- and are -- created to fulfill aneed. Someone needs to oversee changing

technologies and practices and their effects on

society. An agency is created when Congress

passes enabling legislation, describing aproblem and defining the agencys powers.

Agencies often have considerable power in

their areas of specialty, sometimes leading to

controversy. TheAdministrative Procedure Actregulates how agencies operate, in an attempt

to reduce the controversy.


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Power of Agencies --

Rulemaking

Two types of rulesLegislative rules -- require

businesses and people to act acertain way; have the effect ofa Congressional statute.Interpretive rules -- these do

not change the law; they defineor apply the laws to newsituations.


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Rulemaking Three types of rulemaking

Informal rulemaking -- proposed rulemust be published and public allowed to

comment.Formal rulemaking -- must hold a publichearing before establishing the rule.

Hybrid rulemaking -- some elements ofboth of the above -- perhaps theproposal and comment, with cross-examination, but not a full hearing.


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Voluntary -- Some businesses freely giveinformation and readily comply with agencyrecommendations.

Subpoena -- an order to appear at a hearingand produce evidence, sometimes documents. Must be relevant to the investigation and under

the agencys jurisdiction, or area of authority. Must not be unreasonably burdensome on the

business. Must not be privileged; this means that acorporate officer may not be required toincriminate himself.


Investigation


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Power of Agencies --Investigation

Search and Seizure -- a legal search ofa business, in order to take evidence ofwrongdoing.M

ost require a warrant before the search.Some industries are closely regulated andmay be searched at any time, with nowarning.


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Limits on Agency Power

Statutory ControlThe enabling legislation that created the

agency places controls on it throughrequirements and restrictions.

Political Control The President has control over agencies through

political pressure and through nominations ofagency heads.

Congress controls the budgets of agencies. Theycan eliminate funding for any program or an entire

agency. Congress can amend enabling legislation to place

limits.


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Limits on Agency PowerLimits on Agency Power

Judicial Review A party injured by an agency decision is entitled to

an appeal in a federal court, after all appealoptions are exhausted within the agency itself.

Informational Control and the Public The Freedom of Information Act (FOIA) -- allows

any citizen to request information from an agency.

The Privacy Act -- prohibits agencies from givinginformation about an individual to other agencies

without consent. There are some exceptions.


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Classification of law

Criminal law

Substantive law

Public Law

Civil law

Procedure law

Private law


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Criminal law (hinhluat)

Government Wrongdoers (prosecute,

threatening behavior) Injured parties

Wrong doers (neunan nha di kien:

nguyen cao bi cao:prosecutor - accused)

Jail, Imprisoned/ fine(money go to state)

Civil law (dan luat)

Between Individualand organizations

(sue, rights andduties)

Plantiff Defendant(2 tu nay chi dung

cho dan su. Lan 1:nguyen don, bi don.Nguyen cao/ ben khoito, bi cao -> applle:Appelant

Respondent/ Appelee31


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Criminal/ civil A killed B for money. Both Damages

to heir

Customer got poinsoned after havinglunch in a restaurant. Criminal ifsevere.

Disagree sharing hose, brothers

fought. Both. Civil: on how to share.

Similar labels lam hang gia ->criminal. Both.

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Doctrine ofthe separation of powers***

Parliament

makes law

Legislativepower

Government

administers the

law

Executivepower

Courts

interpret the

law

Judicialpower


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Laws are legally enforceable rules

made by authoritieswithin a

society.


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Actions may be legal, but immoral to some

people.

Actions may be moral, but not required by law.

Actions may be required by both

moral standards and the law.

Owning slaves in Colonial America was legal, but

this violates most peoples moral standards today.

Helping a hurt person is required by moral

standards, but is not mandated by the law.

Drunk driving is both immoral and illegal.

Law and Morality

LAW

MORALITY


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QUIGLEY v. FIRST

CHURCH OF CHRIST,

SCIENTIST

65 Cal.App. 4th 1027, 76 Cal.

Rptr. 2d 792, 1998 Cal.App.

LEXIS 677

California Court ofAppeal, 1998

Case Analysis

Facts: Gayle Quigley and James Wantland

had divorced. They had joint custody of

their12-year-old son,Andrew, who lived

with his father. James was a member of the

Christian Science church, a religion that

regards disease as an error of the mind

and discourages the use of traditional

medicine. Members of the faith

Issue: Did the defendants have a duty to

summon medical help forAndrew?

Excerpts from Judge Bedsworths

Decision: [The judge began by

mentioning an earlier California case, in

which the states highest court ruled that

one person generally has no duty to protect

another from harm, unless there is a special

relationship between the two, such as

custody or control...

PLAINTIFF:

the party

who is suing

DEFENDANT:

the partybeing sued

LEGAL

CITATION: where

to find the casein a law library

Where and when

the case wasdecided.

FACTS:

background

information onthe case

ISSUE: thequestion beingdecided

EXCERPTS: the

decision -- also

called the

holding -- and

the courtsrationale


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We depend upon the law to giveus a stable nation and economy,a fair society, a safe place to liveand work. But while law is a

vital tool for crafting the societywe want, there are no easyanswers about how to create it....Legal rules control us,

yet we create them.


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Quotes of the Day

The one and only social responsibility of

business is to increase its profits.

Milton Friedman (b. 1912),Nobel laureate in economics

The business of business is serving

society, not just making money.Dayton Hudson corporate constitution

2- Business Ethics and Social Responsibility


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Ethics

Ethics is the study of howpeople ought to act.

Law and ethics may not always agree...

Sometimes it is ethicalto commitan illegalact...

And some legalacts are unethical!


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Why Bother With Ethics?Why Bother With Ethics?

There is little evidence that ethical behaviorincreases profits or that unethical behavior

decreases profits so why bother?

Society as a whole benefits by encouraging

fair economic competition. Money does not buy happiness.

People feel better when they behave ethically.

Unethical behavior can be costly, if there is

public outrage leading to a boycott. Ethical behavior is more likelyto pay off.


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What is Ethical Behavior?What is Ethical Behavior?

Questions to Ensure Ethical Behavior What are the facts?

What are the critical issues?

Who are the stakeholders?

What are the alternatives? What are the implications of each choice?

Are the alternatives legal?

Do they look bad?

What are the consequences of this choice?

Does this action violate important values?

Is more than one alternative right?


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Businesses must take a stand on sexualand racial exploitation in advertising.

Alternatives in advertisement ethics Ignore ethics and try to create ads that sell the

most product, no matter the underlyingmessage.

Try generally to minimize exploitation.

Include a systematic, focused review ofunderlying messages as part of the

development process. Refuse to create any ads that are even

potentially offensive.

Responsibility To SocietyResponsibility To Society


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To customers Is a business responsible if its decisions create afinancial hardship for someone else? What if adecision leaves someone homeless?

To employees

Should employers be required to treat allemployees the same in regard to benefits?

Other ResponsibilitiesOther Responsibilities

To shareholders Questions are often raised about uses of a

companys profits -- distributed to shareholders,

raising executives salaries, improving business? Should a company be allowed to intentionally

lower profits to improve in other areas?


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To -- and in -- foreign countries Companies with operations in foreign countries are

often criticized for deplorable working conditionsand low wages.

Response to these criticisms is often that even low-

wage jobs are better than destitution and that thesejobs are the beginnings of economic growth.

Other Responsibilities (contd)Other Responsibilities (contd)

Employees responsibility to organization Should employees report unethical behavior among

co-workers? Should promotion decisions be made

based on friendships? These questions show the difficult choices that

have to be made every day in the work place.


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The Best InsuranceThe Best Insurance

Even employees who are ethical in theirpersonal lives may find it difficult to

uphold their standard at work if thosearound them behave differently.

The surest way to infuse ethicsthroughout an organization is for top

executives to behave ethically

themselves.


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