ch01 - The Modern Environment of Business Chapter 1 Chapter...

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Unformatted text preview: The Modern Environment of Business Chapter 1 Chapter The Modern Environment of Business Chapter Issues • • • • Key Functions of the Legal Systems Sources of Law Classifications of Law Ethics and Business September 11, 2001 The Effects of Terrorism in the Modern The Business World Business • Loss of thousands of lives and billions of dollars in Loss assets assets • Increase in military and domestic security • Ripple effect to businesses and legal relationships • Airlines cut about 100,000 employees, nearly go Airlines bankrupt and are bailed out by the federal government bankrupt • Companies lose employees through death and economic Companies losses and decide whether or not to invoke force majeure and “acts of war” clauses in contracts majeure • Some companies pushed over the brink to bankruptcy • Others are able to reorganize, working creatively and Others ethically in a significantly changed world Key functions of the Legal Systems • Enhancing social stability - limit actions that are detrimental to the “public interest” and encourage beneficial actions • Conflict resolution - courts are one mechanism for resolving disputes • Social maintenance - reflect the social values and customs of a society • Social change - effective way to change what is “acceptable” behavior • See “Chad: A Third-World Country Looks to Create a Legal System” Classification of Laws • Common Law vs. Statutory Law Statutory Law • Legislatures create statutory law – Federal Laws – State Laws – Municipal Laws • Judges interpret • Must pass Constitutional muster • Came from old English system • Judge usually followed earlier decisions that Judge resolved similar disputes resolved • Legal principle from cases is called precedent • Use of this precedent is Stare Decisis, which Use precedent Stare means “Let the Decision Stand” means • Novel issue? Judge makes new common law • Common law varies by state • Provides stability but allows change COMMON LAW Classifications of Law • Public and Private – Public- legal relationships between members of society and the government • influence behavior; bring about social change. • Criminal, constitutional, social security. – Private- legal relationships among members of society • resolves disputes; primarily common law. • Contracts, torts, agency, property. Contracts, Classifications of Law • Civil and Criminal • Criminal – The guilty can be fined, imprisoned or both – Either a felony or a misdemeanor – Burden of Proof: “beyond a reasonable doubt” • Civil – Wrongdoer pays money, but no jail time! – Burden of Proof: “preponderance of the evidence” • Substantive and Procedural • Substantive – Defines legal rights and regulates behavior • Procedural – How it is to be enforced (the “nuts and bolts”) United States v. Stanley (1987) • Stanley, in Army, volunteers to test special clothing • Instead, Army gives him LSD • Years later, Stanley, suffering mental problems, finds Years out and sues Army under Federal Tort Claims Act out • Court says “No Go” - you were in the Army, so Court government not liable government • Held: Art. I, Sec. 8 of Constitution gives total control Art. over rights of military personnel over • Dissenting Opinion: Re: Medical trials at Dissenting Nuremberg--Sue the officers, not the gov’t. Nuremberg--Sue Sources of Law Sources • • • • • • Common Law Constitutions Legislatures Administrative Agencies Judiciary Executive Constitutional Law Constitutional Law • Fundamental law of the land • Establishes limits and power of Establishes government government • U.S. Constitution, the oldest written U.S. constitution in force in the world constitution • Establishes legislative, executive and Establishes judicial branches of government judicial • Each state also has its own constitution Statutory Law • Legislatures create statutory law – Federal Laws – State Laws – Municipal Laws • Judges interpret • Must pass Constitutional muster Administrative Regulations Administrative • Congress creates statute • Statute names administrative agency • Agency makes regulations • Chapter 6 will study in depth • Civil Law Countries • France, Germany, Italy, Spain, Japan • Code Law • Statutory Interpretation • Common Law Countries • U.S., Britain, Nigeria • Judge-Made Law • See “Sources of Law in Japan” International Sources of the Law the • • • • • • Religious Law Countries Middle East, India Islam, Hinduism, Communist Law Tradition China, Cuba Political Agenda part of the law • State ownership Ethics and Business • Public perception of business Public leaders has fallen, probably from increased expectations & big horror stories stories • More and more focus is on ethics • Not to be confused with rules of law • See Soldano v. O’Daniels • See also United States v. Stanley Soldano v. O’Daniels - Gunman enters saloon - pulls gun and threatens Gunman to kill Soldano. to - Patron runs across the street and asks bartender to call police or let him call. to - O’Daniels refuses and Soldano is killed. - Ethics or legal violation? - What duties do we have to assist others? Held: There are enough legal issues to permit the case Held: to go forward for trial. to Cyberlaw: Online Ethics and Legal Compliance Legal • The evolution of computer and the Internet in relation The to the law have created ethical challenges for businesses to • Invasion of privacy is an issue in ethical discussions by Invasion employers and employees employers • Sexual harassment and obscene e-mails are problems in Sexual companies companies • How do businesses choose to monitor the company How computers? computers? • Does legal and ethics on-line training for employees Does have benefits? have International Perspective: “What Does Business Do When A Government Is Immoral?” Government • Prison labor is used in China to make export products • There are international concerns about US companies There who have joint ventures using prisoners who • Levi Strauss and Timberland have stopped their Levi productions out of ethical considerations productions • One Theory: “Only the rules of law keep state One enterprises from riding roughshod over people . . . .” enterprises • See article: “China Fights Corruption With Slogans, See Not Rule of Law” ...
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