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64 Cards in this Set

  • Front
  • Back

Under new post... ENRON legislation....

the company CEO may be charged and JAILED... even if he/she had no personal knowledge of infractions... and even if he/she never ordered or "approved" of the wrong doings.

Corporate Responsibility

* Both the corporation and the responsible employee/ officer are legally liable for violations a company commits
* The government now places the responsibility for controlling and preventing misconduct squarely on the shoulders of top management.

Lost Leader Pricing

selling an item to a consumer below the store cost

Business Ethics

an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical

Social Responsibility

business obligation to maximize its positive impact and minimize its negative impact on society

Laws and Regulations

* encourage businesses to conform to society's basic standards, values, and attitudes.
* Sarbanes-Oxley Act, 2002
* Troubled Assets Relief Program

Role of Ethics

growing concerns about legal and ethical issues in business

* antitrust violations
* accounting fraud
* cyber crimes
* unfair competitive practices
* tax fraud

Ethical Issue

* an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical

* Helps to build trust, promote confidence, and validate relationships

Judge Ethics

* Examine the situation from the stakeholders' position, including customers and competitors
* People often need years of experience to accurately recognize and react to ethical situations
* ethical situations vary by culture

*** Highly Ethical Companies are generally more profitable!!!!

Conflict of Interest

* Advance personal interest over other's interest

* Benefit self at the expense of the company
* "A decision that you are empowered to make can have the effect of enriching you."


Represent a conflict of interest because they benefit an individual at the expense of an organization or company

Most Common Misuse of Company Resources

* time theft
* use of personal email and social networking sites at work is a growing problem
* stealing office supplies
* unauthorized use of software and programs

Fairness and Honesty

* are the heart of business ethics

* how employees use resources

Ethical Concerns

* false/misleading advertising

* deceptive personal selling tactics

* truthfulness in product safety and quality

* unsubstantial claims

* product labeling


the act of taking someone else's work and presenting it as your own without mentioning the source

-major problem is schools and businesses

Code of Ethics

formalized rules and standards that describe what a company expects of its employees

Whistleblowing (tattletale)

occurs when an employee exposes an employers' wrong doing to outsiders.

4 Dimensions to Social Responsibilities

1. Economic
2. Legal
3. Ethical
4. Voluntary

Corporate Citizenship

the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders

- if you open a business citizens in that town expect you to give back to the community


* an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation

* primarily concerned with profit or ROI (return on investment)
* financial community at large

Employees wants from employer

* a safe workplace
* fair treatment
* adequate compensation
* listen to grievances


* activities that independent individuals, groups, and organizations undertake to protect their rights as consumers
* critical issue is businesses responsibility to customers to provide satisfying, safe products and to respect their rights as consumers

Kennedy's Consumer Bill of Rights

1. the right to safety
2. the right to be informed
3. the right to choose
4. the right to be heard


conducting activities in a way that allows for the long-term well-being of the natural environment in mind.

Involves: nature, individuals, organizations, polution (land, water, and air), waste, and disposal; future of energy and alternative energy

Business Law

Rules and Regulations that govern the conduct of business
Important because....

* promises are made but not always kept
* misunderstandings occur
* expectations were not made clear
* Individuals & corporations sometimes take advantage of others
* And thus, we need an "arena" for a fair fight to resolve disputes

Criminal Law

* certain activites or behaviors are prohibited by statute
* the "state" is the aggrieved party, and the wrongdoer is prosecuted
* remedy? jail and/or fines

Civil Law

(no prosecution/no one is arrested)

* establishes that persons have right. the violation of which is a "civil" wrong
* the wronged party must "SUE" in his own name and at his own expense
* Remedy? Damage$$

Going to Trial

A court trial MAY be avoided by

* mediation (not binding)
* arbitration (binding)
* mini trial
* private court system

---Case begins in a court house having jurisdiction
---May be appealed to an Appellate Court

Administrative & Regulatory Agencies

* have the authority to issue rules and regulations and to enforce them.
* Examples: FTC, CPSC, EEOC, OSHA, and EPA
* These may conduct investigations and give fines/penalites on their own authority.


Notice of Apparent Liability


Federal Trade Commission

* enforces laws and guidelines regarding business practices, take action to stop false and deceptive advertising and labeling.


Consumer Product Safety Commission

* Ensures compliance with the Consumer Product Safety Act; protects the public from unreasonable risk of injury from any consumer product not covered by other regulatory agencies.


Equal Employment Opportunity Commission

* Investigates and resolves discrimination in employment practices.


Occupational Safety and Health Administration

* Develops policy to promote worker safety and health and investigates infractions.


Environmental Protection Agency

* Develops and enforces environmental protection standards and conducts research into the adverse effects of pollution.


Food and Drug Administration

* Enforces laws and regulations to prevent distribution of adulterated or misbranded foods, drugs, medical devices, cosmetics, veterinary products, and particularly hazardous consumer products.


Interstate Commerce Commission

* Regulates franchises, rates, and finances of interstate rail, bus, truck, and water carriers.


Federal Communications Commission

* Regulates communication by wire, radio, and television in interstate and foreign commerce.


Federal Energy Regulatory Commission

* Regulates rates and sales of natural gas products, thereby affecting the supply and price of gas available to consumers; also regulates wholesale rates for electricity and gas, pipeline construction, and U.S. importsand exports of natural gas and electricity.


Federal Aviation Administration

* Oversees the policies and regulations of the airline industry.


Federal Highway Administration

* Regulates vehicle safety requirements.


Securities and Exchange Commission

* Regulates corporate securities trading and develops protection from fraud and other abuses; provides an accounting oversight board.

The Uniform Commercial Code

* Meant to provide uniformity in laws governing business, the UCC has been enacted by the Federal Government and by 49 of 50 states. (Louisiana is the exception)

* Primarily deals with contracts and sales


* a civil wrong, where one party has caused "injury" to another

* "injury" is more than physical--ECONOMIC
* The injured party may sue the one who "injured" him.


an act of deception that, again, injuries another party


* includes Product Liability
* A Failure to exercise a required level of care.


Mutual agreement between two or more parties that can be enforced in a court if one party chooses not to comply with the terms of the contract.

"Virtually every business transaction is carried out by means of a contract."

Courts will enforce every single legally-valid contracts, in all cases, all the time.

Legally-valid--- contains all of the elements required

Breach of Contract

failure to abide by, or carry out your agreement- has penalties that the court will enforce

* monetary damage$
* specific performance

*** If no money changes hands, you do not have all the elements required; therefore, you have no valid contract.


one who acts on behalf of, and in the interests of another party, his principal

-an agent may make legally binding agreements on behalf of his principal

Note: a corporations' officers act as its agent(s)

Power of Attorney

standard "agency creating" documentation

The Law of Property

property rights mean "ownership"

* the right to use, possess, and enjoy... and to prevent others from using, possessing, and enjoying
* anyone that uses your property without your permission has committed a tort and the property owner can sue for damage$

Three types of Property

1.) real property
2.) personal property
3.) intellectual property


begins when a company (or person!) become insolvent

Definition: your liabilities exceed your assets and you can't repay your debts.

* In court preceeding, your assets are seized and sold to pay off your creditors
* As a consequence, all debts are discharged

Three types of Bankruptcy

1.) chapter 7
2.) chapter 11
3.) chapter 13

Chapter 7 Bankruptcy

"straight bankruptcy"

Chapter 11 bankruptcy

"corporate reorganization"

Chapter 13 Bankruptcy

only available to individuals; "wage earner plan" (5 years to pay off)

Laws Directly Affecting Business

1.) Sherman Antitrust Law
2.) Clayton Act (crime of fixing prices)
3.) Federal Trade Commission Act
4.) Wheeler Lee
5.) Lanham Act

Sherman Antitrust Act 1890

The first measure passed by the U.S. Congress to prohibit trusts.

The Clayton Act

Designed to prevent companies from creating monopolies through mergers and acquisition

Federal Trade Commission Act

* created regulatory agency helping businesses determine whether actions acceptable
* launch prosecutions against unfair trade practices

Wheeler Lee Amendment

expanded powers of FTC to include unfair or deceptive acts/practices

Lanham Act

Provides protections for and regulations of brand names, brand markes, trade names and trademarks


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