Business Ethics Study Guide
1A
• Limitations of the Law o The law does not and cannot codify all ethical requirements o Just because an action is legal does not make it ethical o So many laws, can violate without knowing o “Gray areas” in the law make it difficult to predict how the court will rule o Many laws require court to determine what is “foreseeable” or “reasonable”
• Ethics, Law, and CSR o Ethics: study of right and wrong behavior o Business ethics: study of right and wrong behavior in the business world o Moral minimum: the minimum acceptable standard for ethical business behavior, normally considered compliance with the law o Corporate Social Responsibility (CSR): the idea that corporations should be accountable to society for their actions
• 3 Approaches to Ethics o Duty-based: What are the relevant rules? o Outcome-based: What are the potential consequences for stakeholders? o Character-based: What might this say about my character and the character of my company
• Ethics Triangle o Character o Rules o Consequences
• Rules o Laws (statutory law, case law, contracts, local, state, national, international) o Company policies and precedents o Professional codes (GAAP, American Marketing Association codes, etc.) o Rights (civil, human) o Social norms o Moral Laws (eg, Golden Rule) o Religious laws (where applicable) o Standards of “common decency” (telling the truth, treating people with respect, etc.)
• Consequences o Cost-benefit analysis (financial consequences) o Stakeholder interests and values (PR, employee morale, investor reactions, consumer complaints, etc.)
• Character o Company mission and values o Expectations of particular work role (eg, how a “good sales manager” acts) o Virtues (intelligence, honesty, justice, courage, etc.) o Personal values, conscience, and emotional reactions
• Analyzing Ethics Cases o More complicated than legal cases (and legal cases are already complicated) o Less certain than legal cases (never going to determine a single “right” answer)
• Usually about recommendations for future actions rather than evaluating past actions- and the future is always uncertain
• Individuals often prioritize values differently o Need to be able to defend your recommendations to thoughtful, reasonable stakeholders o Ethical dilemma (right vs. right)
• Ex: It’s right to help someone in need and it’s right to obey the law o Moral temptation (right vs. wrong)
• Ex: Cheating on my taxes o Fallacy (error in reasoning)
• Ex: Milk has nutritional value. Therefore, Donut Cereal has nutritional value o Rationalization (excuse to avoid critically assessing our actions)
• Ex: It’s my jobs to make my numbers, so doing this (unethical thing) is justifiable
• Ethics and Profit o In capitalistic societies, making a reasonable profit is ethically acceptable o Difference between short-run and long-run profit maximization o Business ethics is often consistent only with long-run profit maximization o Overemphasis on short-term profit is most common reason ethical problems occur in business
• CSR o Can refer to many things: philanthropy, environmental protection, consumer protection, treatment of employees, community development o Involves addressing competing demands among stakeholders
• Stockholder Theory o Milton Friedman (1912-2006
• Most prominent economist advocate of free markets
• Winner of Nobel Prize for economics (1976)
• “The Social Responsibility of Business is to Increase its Profits” (1970) o Friedman’s Argument
• Corporate executives are employees of the owners of the business, i.e., the stockholders
• Their job is to maximize profits for the stockholders (while conforming to the basic rules of society)
• Executives are only authorized to do their jobs (i.e., to maximize profits)
• If executives spend company funds to discharge “social responsibilities” other than increasing profits, they are spending someone else’s money (owners’, employees’, or customers’) without their consent
• Spending money in this way is wrong (on principle and on consequences)
• *Therefore, the social responsibility of business is (simply) to increase its profits (within the rules of the game, i.e., open and free competitions without deception or fraud)
• Stakeholder Thoery o R. Edward Freeman (born 1951)
• American Philosopher, Darden School, University of Virginia
• “A Stakeholder Theory of the Modern Corporation”
• All stakeholders (stockholders, managers, employees, suppliers, customers, and the local community) have rights to be treated as “ends in themselves” and not “mere means” o Freeman’s Argument
• Changes in law (employment law, environmental law, tort law, etc.) have elevated other stakeholders
• Managing for stockholders has not always produced “greatest good for the greatest number” (tragedy of the commons, moral hazards, monopolies, etc.)
• The assumption of the primacy of stockholders is false (by 1 and 2)
• 6 stakeholder groups have rights to be treated as “ends in themselves” (stockholders, managers, employees, suppliers, customers, local community)
• To be treated as “ends,” their (competing) interests must weigh into managing decisions
• *Therefore, managers should balance stakeholder interests
• Ethics Triangle o Character- Risk: Ethics as Relativism o Consequences- Risk: Ethics as Strategy o Rules- Risk: Ethics as Compliance
1B
• Duty-Based Ethics (“Rules”) o Immanuel Kant (1724-1804) o “Categorical imperative”
• Act only in ways that can be “universalized”
• Treat all people as ends in themselves and not merely as means o Natural law
• Duty-Based Ethics and the Law o Consistency o Fairness o “Principle” o “The right things to do” o Respect for persons- “rights” o Protect the individual from the majority or ruling group o Motives/intentions are relevant in determining the ethics of an action
• Consequence-Based Ethics: Utilitarianism o Jeremy Bentham (1748-1832) o Act so as to promote the greatest happiness of the greatest number of people o Bentham’s morbid sense of humor
• Consequence-Based Ethics and the Law o Harm
• “No harm, no foul”
• Motives/intentions are irrelevant to the ethics of the action (though may be relevant to the character of the agent) o Majority rule o “Practical,” “realistic”
• Character-Based Ethics o Aristotle (384-322 BCE) o “The Philosopher” o The good is that which contributes to a “flourishing” life o “Golden mean”- everything in moderation
• Character-Based Ethics and the Law o History o Reputation o Patterns of behavior- repeated offenses o Role models- “reasonable person” standard o “Legitimate social interest”- community-oriented (an individual can only flourish when her/his community is flourishing)
• “The Law” o Enforceable rules governing relationships among individuals and between individuals and society o Establishes rights, duties, and privileges consistent with values and beliefs of a society or its ruling group o Creates stability and predictability essential for all civilized activities, including business activities
• Sources of American Law o Constitutional Law- US and State Constitutions o Statutory Law- federal and state statutes o Administrative Law- regulatory agencies o Case Law and Common Law doctrines- judge-made law
• The Common Law Tradition o American law is based largely on English Common Law originating in medieval England o The common law was based largely on traditions, social customs, rules and cases developed over hundreds of years after the Norman conquest in 1066
• Early English Courts o At common law, there were two separate court systems with two different types of remedies:
• Courts of law (monetary relief)
• Courts of equity (non-monetary relief) “notions of justice & fair dealing”
• Remedies at Law versus Equity o Remedies at law: land, chattel (moveable property), money (“damages”) o Remedies in equity: when there is no adequate remedy at law (i.e., money didn’t do it)
• Specific performance (do something)
• Injunction (stop doing something)
• Rescission (cancel the obligation)
• Stare Decisis o Stare decisis is a Latin phrase meaning “to stand on decided cases”
• Makes the law stable and predictable
• Increases judicial efficiency by relieving courts of having to reinvent legal principles for each case o Stare decisis is “judge made law” based on precedent
• Case Precedents and Case Reporters o Precedents are judicial decisions that give rise to legal principles that can be applied in future cases based upon similar facts o Precedents and other forms of positive law, such as statutes, constitutions, and regulations are referred to as binding authorities and must be followed o To help judges and lawyers follow precedents, the reasons or “opinions” for case decisions are published in volumes called “reporters” or “reports”
• Departure from Precedent o In cases are “first impression” where there is no precedent, the court may refer to positive law, public policy and widely held social values in order to craft the best new precedent
• Classification of Law o Every type of law will be either:
• Civil or Criminal
• Substantive or Procedural
• Public or Private o “Cyberlaw” is traditional law applied to online forums
• Civil versus Criminal Law o Civil law defines the rights between individuals or individuals and governments o Criminal law defines an individual’s obligations to society as a whole
• Substantive versus Procedural o Substantive law defines or creates the rights and obligations of persons and governments o Procedural law provides the steps on must follow in order to avail oneself of one’s legal rights or enforce another’s legal obligations
• Schools of Jurisprudential Thought o Natural Law: there are universal laws that apply to all humans that can be discovered through reason o Positivist: no higher law than that created by government o Historical: stresses evolutionary nature of law and looks to lasting doctrines o Legal Realism: stresses a more pragmatic approach. Context is important and purpose of law is to promote social justice
• Why Schools of Jurisprudential Thought Matter o Judges/justices are human beings with their own philosophical biases- the law is not “blind” in that sense o “The court” could decide a case very differently depending on the philosophy of the judge o It pays to know how a given judge thinks o It may help explain why the court ruled a certain way (when you see it differently) o It has a tremendous impact in higher courts, making justices very political appointments
• Judicial Requirements o Jurisdiction
• In personam
• In rem
• Other issues o Venue o Standing to sue
• Jurisdiction o “The power to speak the law” o For a court to hear a case, it must have jurisdiction over the person or company against whom the suit is brought (the defendant) or over the property involved o The court must also have jurisdiction over subject matter of the dispute
• Jurisdiction Over Persons o In personam jurisdiction applies to persons or businesses who reside in certain geographic areas- power to compel them to appear in court o Corporations are considered legal persons subject to personal jurisdiction o Courts use long-arm statutes for non-resident parties (including corporations) based on “minimum contacts” (or “sufficient contracts”) with state o Placing goods or services in the “stream of commerce” usually meets minimum contacts
• Jurisdiction Over Property o A court generally has in rem (over the thing) jurisdiction over any property situated within its geographical borders o In Rem jurisdiction is the power to decide issues relating to property and property rights
• Other Jurisdiction Issues o Subject matter
• General (unlimited), e.g., trial court
• Limited, e.g., bankruptcy, probate o Sum (amount) in controversy
• Felony (serious)
• Misdemeanor (less serious, e.g., larcenies of less than $1,000) o Original or appellate (stage of dispute resolution)
• Jurisdiction- Federal Courts o Federal Question cases involve rights or obligations of a party that are created or defined by federal law o Diversity of Citizenship cases exist where:
• Parties are not from the same state, and
• The amount in controversy is greater than $75,000 o Exclusive (federal crimes, issues) versus concurrent (either federal or state court appropriate, diversity of citizenship
• Venue o Venue is concerned with the most appropriate location for the trial o Generally, proper venue is where the injury occurred or where the defendant resides
• Standing to Sue o In order to bring a lawsuit, a party must have “standing” to sue o Standing is sufficient “stake” in the controversy; party must have suffered a legal injury o “Justiciable controversy”- real and substantial, rather than hypothetical or academic
• Trial Courts o Complaints are brought and answered o Juries are selected o Opening and closing arguments o Evidence, such as witness testimony, physical objects, documents, and pictures, is introduced o Witnesses are examined and cross-examined o Verdicts and judgments are rendered
• Appellate Courts o Middle level of the court system o Review trial court proceedings. Was the trial conducted according to the procedural and substantive rules of law? o Generally, appellate courts will consider questions of law, but not questions of fact
• Supreme Court(s) o Also known as courts of last resort…appealing the appeal o Request the Supreme Court to hear a case
• Rule of four- 4 of 9 justices agree
• Writ of certiorari order: send the records
1C
• Settling Legal Disputes o Trials o ADR (alternative dispute resolution) o Only 5-10% of filed lawsuits actually go to trial. Most are settled out of court through ADR
• Most Common Forms of ADR o Negotiation o Mediation o Arbitration
• Negotiation o Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case
• Assisted Negotiation o Early neutral case evaluation: expert evaluates positions of both parties. Forms basis of negotiation o Facilitation: neutral 3rd party assists parties to reconcile their differences o Mini-trial: attorneys for each side informally present their case before a mutually agreed- upon neutral 3rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement o Summary jury trial: mock trial with judge and jury. “Advisory” verdict only
• Mediation o Involves a neutral 3rd party (mediator) who’s more active than a facilitator o Mediator talks face-to-face with parties to determine “common ground”
• Advantages: few rules, customize process, parties control results (win-win)
• Disadvantages: mediator fees, no sanctions or deadlines
• Arbitration o Settling of a dispute by a neutral 3rd party (arbitrator) who renders a legally significant decision o Binding or non-binding o Arbitrator: professional, subject matter expert, or respected government official o Federal Arbitration Act: enforces the agreed-to arbitration
• Enforcement of Agreements to Submit to Arbitration o Courts are not involved in voluntary arbitration unless an arbitration clause in a contract needs enforcement o “Arbitrability”: if the subject matter of the controversy is covered by the agreement to arbitrate, then parties compelled to arbitrate o It is a contract issue-agreement has to be explicit (not inferred)
• Setting Aside an Arbitration Award o Facts and legal conclusions are final o Court’s role is limited to determining whether a “valid award” exists o Federal Arbitration Act (FAA) list 4 grounds for court to set aside award:
• Fraud, corruption, or other “undue means”
• Arbitrator bias
• Arbitrator abuse of discretion
• Arbitrator exceeded powers o Waiver: Failing to object to defect in timely fashion waives right to challenge the award
• Disadvantages of Arbitration o Results may be unpredictable
• Because arbitrators do not have to issue written opinions, there is no precedent to follow
• Arbitrators do not have to follow rules of procedure or evidence o Generally, no “discovery” available, so don’t know what the other side ahs or knows o Expensive (compared to mediation) o No appeal available (except on validity of award)
• Integration of ADR and Formal Court Procedures o Many states require some ADR before trial o “Court-annexed arbitration” (court-added or court-ordered arbitration)
• Have to participate
• But, because government cannot deny anyone their “day in court,” either party may reject outcome and request a trial de novo (starting anew)
• If reject outcome, may have to pay fees
• If don’t show up, waive right to reject award
• Online Dispute Resolution o Also called ODR o Uses the Internet to resolve disputes o Still in its infancy but is gaining momentum
• 3 Levels of Scrutiny o Strict scrutiny- involving limits on fundamental rights, including use of suspect traits (race, national origin, citizenship) o Intermediate scrutiny- discrimination based on gender or legitimacy (babies in or out of marriage) o Rational basis test- matter of economic and social welfare
• Constitutional Law History o Before the Revolutionary War, states wanted a confederation with weak national government with very limited powers o After the war, in 1787, the states voted to amend Articles of Confederation and create a new, federal government that shared power with states o Constitution was ratified in 1788
• Constitution was Compromise o Federalist: Strong central government, central bank, development of modern economic power; ideal was merchants & industrialists; Adams, Hamilton o Democratic Republicans: States rights, no standing army; ideal was yeoman farmer; Jefferson, Madison
• Relations with and between the States o By 10th Amendment to US Constitution, all non-designated powers are reserved for the states- preserves states rights and powers
• Constitutional Powers of Government o Constitution establishes federal form of government, with checks and balances among branches
• Executive
• Legislative
• Judicial
• Bill of Rights o First 10 Amendments to the US Constitution o Originally the Bill of Rights was a limit on the national government’s powers o During the early 1900s, the Supreme Court applied the Bill of Rights to the states via the “due process” clause of the 14th amendment- no state shall deprive any person of life, liberty, or property without the due process of law o Constitutional rights are not absolute
• Freedom of Speech o 1st Amendment o Afforded highest protection by courts o Symbolic speech: flag burning, hunger strikes, black armbands are all protected o But not absolute right to free speech
• Commercial Speech o Advertising is protected speech o Restrictions must
• Implement substantial government interest (truth in advertising; roadside beautification)
• Directly advance that interest
• Go no further than necessary
• Due Process & Equal Protection o 5th and 14th amendments provide that “no person shall be deprived of life, liberty or property without due process of law” o “Due process”: includes procedural and substantive issues
• Procedural Due Process o Constitution requires adequate notice and a fair and impartial hearing before government can take life, liberty or property
• Substantive Due Process o Focuses on the content or substance of legislation, which must be fair and reasonable, and further a legitimate government interest
• Substantive Due Process versus Equal Protection Clause o If it limits the liberty of everyone: substantive due process issue o If it limits the liberty of some but not others: equal protection issue
• Equal Protection o 14th Amendment: “a state may not deny to any person within its jurisdiction the equal protection of the laws”- equal protection clause o Also applies to federal government o Government can’t make laws that treat similarly situated individuals differently o 3 levels of scrutiny: strict, intermediate, and “rational basis”
• Equal Protection: 3 Levels o Strict scrutiny: fundamental rights; “compelling state interest” o Intermediate scrutiny: gender or legitimacy; “important government objective” o “Rational basis”: economic or social welfare; “legitimate government interest”
1D
• Civil versus Criminal Law o Civil and criminal law differ in:
• Party who brings the suit
• Civil- the person who suffered harm
• Criminal- the state
• Definition of “wrongful act”
• Civil- causing harm to a person or to a person’s property
• Criminal- violating a statute that prohibits some type of activity
• Burden of proof
• Civil- preponderance of the evidence
• Criminal- beyond a reasonable doubt
• Verdict
• Civil- three-fourths majority (typically)
• Criminal- unanimous (almost always)
• Remedy
• Civil- damagers to compensate for the harm or a decree to achieve an equitable result
• Criminal- punishment (fine, imprisonment, or death)
• Criminal versus Tort Law o Tort
• French tort= “wrong”
• Tort law (part of civil law) is designed to compensate those who have suffered a loss or injury due to another person’s wrongful act o Crime
• Latin crimen= “cry of distress”
• Wrong against society as a whole, proclaimed in statute, and punishable by fine and/or imprisonment
• Designed to punish and deter
• Classification of Crimes o Felony: serious crime, punishable by death or by imprisonment for more than one year o Misdemeanor: less serious crime, punishable by a fine or confinement for up to a year o Petty offense: minor crime, subset of misdemeanors, punishable by fines or a few days in jail
• Criminal Liability o Normally (but not always), two elements are needed to be convicted of a crime:
• Actus reus: guilty act. The person must do something (act of commission versus act of omission) that causes harm to a person or property. (Note: consequence-based)
• Mens rea: wrongful mental state. Mental state or intent to commit the crime. (Note: rule-based)
• Intent and Criminal Negligence o Negligence is usually a tort, not a crime. But in some cases it can also be prosecuted as a crime o Criminal recklessness:
• Consciously disregards a substantial and unjustifiable risk
• Intentionally careless o Criminal negligence
• Mental state that deviates into taking unjustified, substantial, foreseeable risk that resulted in harm
• Should have foreseen risk, even if didn’t
• Example: involuntary manslaughter
• Criminal Liability Without Intent o Strict liability crimes: do not require a wrongful mental state o Common with environmental laws, illegal drugs, “zero tolerance” policies o Controversial o Critics call use of such laws “over criminalization”: using criminal law to solve social problems at eh expense of unknowing offenders o Overzealous enforcement
• Corporate Criminal Liability: Corporation o Corporations normally are liable for the crimes committed by their agents and employees within the course and scope of their employment if:
• Could have prevented the act, or
• There was authorized consent to, or knowledge of, the act by persons in supervisory positions, or
• They fail to perform specific duties (acts of omission) imposed by law (e.g., environmental or securities laws)
• Corporate Criminal Liability: Officers o Corporate directors and officers are personally liable for the crimes they commit, even if committed for the benefit of the company o Responsible corporate officer doctrine: corporate directors and officers may be held liable for the actions of employees under their supervision, even if didn’t know about the violation
• Types of Crime o Violent crime (crimes against persons) o Property crime (economic gain or damage) o Public order crime (“victimless crime”) o White-collar crime (business context) o Organized crime (illegitimate business context
2A
• Defenses to Criminal Liability o Self-defense (reasonably necessary) o Necessity (to prevent a greater harm) o Insanity (lacks capacity for mens rea) o Mistake of fact (but not of law) o Duress (threat of immediate danger) o Entrapment (police suggest and induce) o Statute of limitations (time runs out) o Immunity (5th amendment, plea bargain)
• Self-defense and Stand Your Ground Laws o Traditionally, the justifiable use of force, or self-defense, required prosecutors to distinguish between deadly and non-deadly force. In general, state laws have allowed individuals to use that amount of non-deadly force that is necessary to protect themselves, their dwellings, or other property, or to prevent the commission of a crime. Deadly force can only be used when the defender reasonably believes that imminent death or grievous bodily harm will result and there are no means of escaping or avoiding the situation. Otherwise, there is a “duty to retreat” o The Castle Doctrine grants certain protections and immunities to persons who defend their homes from attack. A “stand your ground” law removes the duty to retreat under such a home attack. Some states have removed the duty to retreat from other locations, as well, such as vehicles, and even, as in Florida, from any locations where one is legally allowed to be
• What is administrative law? o Congress and state legislatures pass statutes (statutory laws) o But statues tend to be very general, and legislatures don’t enforce the laws themselves but delegate this duty to administrative agencies o Administrative agencies write more detailed rules and regulations to explain the statues and then enforce them
• Business and Administrative Law o Businesses have far more direct contact with administrative agencies than with legislatures or the courts o Examples of administrative agencies
• Securities and Exchange Commission (SEC)
• Federal Trade Commission (FTC)
• Occupational Safety and Health Administration (OSHA)
• Equal Employment Opportunity Commission (EEOC)
• US Patent and Trademark Office
• Powers of Administrative Agencies o There are dozens of administrative agencies, both at federal and state levels o They issue legislative rules (legally binding) and interpretive rules (declare policy) o They often have a lot of independence from the three branches of government (legislative, executive, judicial) o They often have powers that are usually reserved from one of the other branches of government, e.g., rulemaking, enforcement, and adjudication o Raises concerns about need for “checks and balances” over administrative agencies
• Checks and Balances over Administrative Agencies o Executive controls: president appoint (federal) officers; veto power (over enabling legislation); Office of Information and Regulatory Affairs (reviews their budgets) o Legislative controls: enabling legislation; funding; Administrative Procedure Act o Judicial controls: judicial review once “exhaustion doctrine” and “ripeness doctrine” are satisfied
• Judicial Review and Agency Actions o The courts only will review an agency’s actions once two conditions are met:
• Exhaustion doctrine: a complaining party must have gone through all proper administrative agency appeals processes first
• Ripeness doctrine: the case must be “ripe for review” (party ahs standing to sue, and it’s an actual controversy)
• Further Restrictions on Agencies o Administrative Procedure Act (APA) of 1946: no “arbitrary or capricious” rules (irrational rules) o Notice-and-comment rulemaking: must follow three steps if making or changing a rule: publish notice in Federal Register, 30-day comment period and publish final rule o Freedom of Information Act (FOIA) of 1966: must disclose (certain types of) information to any person or entity upon written request o Government in the Sunshine Act of 1976: requires agency meeting to be open to public (with exceptions) o Regulatory Flexibility Act and Small Business Regulatory Enforcement Act: protect small businesses
• Judicial Deference o Courts will typically defer to judgment of the agency in matters of fact and law (if meets Chevron standard) o Chevron standard (1984)
• Agency’s interpretation of law meets statutory and constitutional requirements
• Agency’s interpretation of law is “reasonable,” even if court would have ruled differently
• Arbitrary and Capricious Test o Under this standard, parties can challenge regulations as contrary to law or so irrational as to be arbitrary and capricious o Guidelines. Has the agency:
• Failed to provide a rational explanation for its decision
• Changed prior policy without justification
• Considered legally inappropriate factors
• Entirely failed to consider a relevant factor
• Rendered a decision plainly contrary to the evidence
• International Law o International law is the result of attempts to reconcile:
• The need of each country to be the final authority over its own affairs
• The desire to benefit from relations with one another o International law requires voluntary agreement of nations to be enforceable o By definition, a “nation” is a sovereign entity, i.e., there is no higher authority to which a nation must submit o International law is an effort to facilitate international trade, promote civilized discourse, and avoid use of coercive actions (severance of diplomatic relations, boycotts, war)
• Three Sources of International Law o International customs o Treaties o International organizations
• International customs o Defined by the Statue of the International Court of Justice as “evidence of a general practice accepted as law” o Limited somewhat by different national legal systems:
• Common law systems (court-made law)
• Civil law systems (statutory law only)
• Religious law systems (e.g., sharia) o Despite different legal systems, some common international legal principles and doctrines are:
• The principle of comity
• The act of state doctrine
• The doctrine of sovereign immunity
• The Principle of Comity o Latin comis means “friendly” o One nation will defer and giver effect to the laws and judicial decrees of another country as long as those laws and judicial decrees are consistent with the law and public policy of the accommodating nation o Similar to provisions in US Constitution for respect between states: “full faith and credit” clause and “privilege and immunities” clause
• The Act of State Doctrine o Judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory o This doctrine is often invoked to protect expropriation (government seizing private property and providing just compensation), which may be legal o Cases frequently claim the taking was confiscation (government taking private property for illegal purpose without just compensation), which is legal o In reality, US firms of individuals have little US legal protection against government actions in foreign countries
• Doctrine of Sovereign Immunity o Similar to act of state doctrine o This doctrine exempts foreign nations from jurisdiction in US courts o Exceptions: the Foreign Sovereign Immunities Act (FSIA) expanded the jurisdiction of US courts to foreign states:
• If the state has waived its immunity
• If the “foreign state” has engaged in “commercial activity” in the US or outside US but with “a direct effect in the US”
• If the foreign state has committed a US tort or has violated certain international laws
• Treaties o Treaty: an agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation
• Bilateral agreement- two nations
• Multilateral agreement- several nations, e.g., Association of Southeast Asian Nations (ASEAN), European Union (EU) o In US: president can make treaties with consent of the Senate
• International Organizations o Composed of official from member nations and usually established by treaty o Adopt resolutions, declarations and other standards for member nations o Examples:
• General Assembly of the United Nations
• International Court of Justice
• United Nations Commission on International Trade Law- created 1980 Convention on Contracts for the International Sale of Goods (CISG)- similar to Uniform Commercial Code
• UN Declaration of Human Rights o Adopted by the UN General Assembly on December 10, 1948, as a response to the atrocities of the Second World War o 48 countries signed, including US, China, Afghanistan, Iraq, Iran, Mexico, India, Pakistan
• Wage Standards o Home country standard- wages paid in one’s home country o Living wage standard- sufficient for food, shelter, clothing, medical care, and other basic necessities o Classical liberal standards (market standard)- voluntarily chosen by free and informed workers
• Regulation of International Business o Nations use laws and other controls to restrict or facilitate international business, based on national interest
• Investment protections
• Export controls
• Import controls
• Trade agreements
• Investment Protections o Few remedies are available for confiscation of property o Claims often resolved through lump-sum settlements between nations o Many countries guarantee compensation for expropriation through constitutional and statutory laws and by international treaty o Some countries provide insurance for their citizens’ investments abroad
• Export Controls o In US, Congress cannot impose export taxes o Can set export quotas on various items o Can use incentives and subsidies to stimulate exports o Export-Import Bank of the United States provides financial assistance
• Import Controls o Strict prohibitions- e.g., from enemies of the US, illegal drugs, books that urge insurrection against the US, goods that infringe on US patents o Quotas- limits on the amount of goods that can be imported o Tariffs- taxes on imports (which raise the price of imported goods and encourage purchasing domestic goods) o Antidumping duties- extra tariff for selling imported good at “less than fair value,” i.e., prices that undersell US businesses to obtain larger share of US market
• Trade Agreements o Goal of trade agreements is to stimulate international trade through minimizing “trade barriers” (i.e., restrictions on imports) o World Trade Organization (WTO): each member country required to grant normal trade relations (NTR) status (or “most favored nation status) to other member countries o NTR status means each member must treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports
• Other Trade Agreements o European Union (EU) o North American Free Trade Agreement (NAFTA) o Central American-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)
• US Laws in a Global Context o Antitrust laws- any conspiracy by foreign company or US company abroad that has a “substantial effect” on US commerce is within the reach of the Sherman Act o Tort liability
• US citizens can sue foreign or US entities abroad (e.g., human rights violations)
• Alien Tort Claims Act (ATCA) of 1789 allows foreign citizens to sue US companies for torts committed overseas (e.g., environmental destruction)
• Alien Tort Claims Act o Broadly applied since 1980s to address human rights abuses abroad o Kiobel versus Royal Dutch Petroleum (2013): Supreme Court ruled that Nigerian plaintiffs could not sue in US courts for alleged human rights abuses (torture and murder of protestors of environmental damage) o Law can be applied in three settings:
• Conduct took place in US, or
• Defendant is American citizen, or
• “substantially and adversely affects an important American national interest,” including preventing safe harbor in US for torturers
• US Laws in a Global Context o Antidiscrimination laws
• Generally apply “extraterritorially” to all US employees working for US employers abroad
• “Foreign laws exception”- if obeying US discrimination law would violate laws of local country, don’t have to obey US law
2B
• Contract Formation o Types of Contracts o 4 Elements of Valid Contract o Contract Enforceability
• Promises o Promise: a manifestation of the intent to act or refrain from acting in specified way o Intent is of prime importance o Promises are ethical acts- they create moral obligations o Moral versus legal promises
• Promises and Contracts o A contract is a legally binding agreement (promise) between two parties (offeror and offeree) o Contract law
• Sources of common law for all contacts except sales and leases (Uniform Commercial Code)
• Provides stability and predictability for commerce o Intent in contract- determined by objective theory of contracts (not by personal or subjective intent or belief of a party to the contract
• Objective Theory of Contracts o Judged by outward, objective facts as interpreted by a reasonable person o Objective facts:
• What the party said or wrote
• How the part acted or appeared
• The circumstances of the transaction
• Types of Contracts o Depends on what the offeree has to do to accept the offer and bind the offeror to the contract o Bilateral contracts
• “a promise for a promise”
• bilateral contract is formed when promises are exchanged o Unilateral contracts
• “a promise for an act”
• Unilateral contract is formed when act is performed
• 4 required Elements of Contracts o Agreement: an offer and an acceptance o Consideration: something of value is bargained for o Contractual capacity: both parties are competent to enter agreement o Legality: purpose of contract must be legal
• Agreement o Mutual assent to the same bargain o An offer and an acceptance o An offer must:
• Have serious intention
• Have reasonably certain and definite terms
• Be communicated to the offeree
• Things that are NOT Offers o Expressions of opinion (like predictions) o Statements of future intent (like planning to sell) o Preliminary negotiations (like invitations to submit bids) o Advertisements (including price lists; considered offers to negotiate) o *Agreements to agree- may be enforceable if clear parties intended to be bound by it (like preliminary agreements to all essential terms)
• Terminating an Offer o By actions of the parties
• Revocation
• Rejection
• Counteroffer (mirror image rule) o By operation of law
• Lapse of time
• Destruction of subject matter
• Death or incompetence of one of the parties
• Supervening illegality
• Consideration o Something of legally sufficient value must be exchanged for the promise o There must be a bargained-for exchange (as opposed to a gift, which is not enforceable) o Usually, courts will not question the fairness of the bargain (“a bad deal”) o Doctrine of freedom of contract: parties are free to decide how much something is worth and to bargain accordingly o Courts may question if consideration is shockingly inadequate and suggest fraud, duress, or undue influence
• Agreements that Lack Consideration o Preexisting duty (such as completing a contract already made) o Unforeseen difficulties (unless extraordinary) o Past consideration (promises made in return for actions that have already taken place) o *Promissory estoppel might be used to obtain recovery if justifiably relied on the promise
• Contractual Capacity o Assumed by the courts unless a party to the contract is:
• A minor (under 18 years old unless married or emancipated)- contracts voidable by minor
• Intoxicated- contracts either voidable or valid (and thus enforceable)
• Mentally incompetent- contracts void if courts already ruled incompetent, voidable if haven’t yet ruled, or valid if competent at time of contract
• Legality o A contract is void if it is:
• Contrary to statute
• Contracts to commit a crime
• Involves usury (charging interest over the maximum rate allowed by law)
• Involves gambling
• Violates a licensing statute o A contract is unenforceable if it is:
• Contrary to public policy
• An unreasonable restraint on trade
• Unconscionable- procedurally (unintelligible language; wide disparity in bargaining power) or substantively (oppressive or overly harsh)
• Exculpatory clause (when contrary to public policy)
• 2 Defenses to Enforceability o A valid contract can still be unenforceable if it lacks:
• Voluntary consent: not formed under fraud, undue influence, mistake of fact or duress
• Form: some contacts must be in writing (Statute of Frauds)
2C
• Consumer Protection
• What is “bluffing”? o Deception o Conscious misstatements o Concealment of pertinent facts o Exaggeration o Non-malicious lies o Half-truths o Misleading omissions o Evasiveness
• Business Ethics as Game Ethics o Business is a game of strategy, like poker o In poker, bluffing is ethically acceptable o Therefore, in business, bluffing is ethically acceptable o Bluffing is legal o If an action is legal, it’s within the rules of the business game o If it’s within the rules of the business game, then it’s ethical o Therefore, bluffing is ethical
• Sources of Continuing Debate on Carr’s Position o Business shares some but not all features of a game- imperfect analogy o Ambiguity surrounding “bluffing” o Bluffing relies on a background of trust o Ambiguity within the law and between law and ethics o “Psychological strain” either way- holding same ethics at work and home or living a double life o Ethics as a long-term business strategy may be indistinguishable from private ethics
• Consumer Protection o Freedom of contract is balanced by need to protect the parties o Today, laws protect US consumers from unfair trade practices, unsafe products, discrimination, unreasonable credit requirements and other risks
• Consumer Protection o Deceptive Advertising o Labeling o Sales o Credit Protection o Health and Safety
• Deceptive Advertising o Versus puffery o Versus entertainment o Deceptive is a reasonable consumer would be misled o Puffery is vague generalization or obvious exaggeration o “Advertising that misleads consumers, either by making unjustified claims concerning a product’s performance or by omitting a material fact concerning the product’s composition or performance”
• FTC Policy on Deception o A material representation, omission or practice that is likely to mislead the reasonable consumer
• Deceptive Advertising o If a reasonable consumer would be misled by the advertising claim o If it appears to be based on factual evidence but it is not reasonably supported o If the “half truths” lead consumer to false conclusion o If celebrity does not actually endorse product (may be ruled deceptive)
• Bait-and-switch o Seller refuses to show the advertised item o Fails to have a reasonable quantity of the item in stock o Fails to promise to deliver the advertised item within a reasonable time o Discourages employees from selling the item
• FTC Actions Against Deceptive Ads o Cease-and-desist order: stop the ad o Counter advertising: requires company to advertise the previous misinformation o Multiple product order: cease-and-desist extends to all products o Restitution: pay consumers back
• Labeling and Packaging o Labels must be accurate and use words easily understood by the ordinary customer o Must avoid exaggeration (e.g., “giant” when not) o Sometimes must specify raw materials (e.g., clothing, food) o Sometimes must carry a warning (e.g., cigarettes, cleaning supplies)
• Information Disclosure in Sales
• Sales and Credit Protection o Cooling-off laws: permits buyers in door-to-door sales to cancel contract in three business days o Truth-in-Lending Act (TILA): requires detailed disclosure of terms of loans: annual percentage rate, finance charges, amount financed, total payments o Regulation Z: disclosure requirements in Truth-in-Lending Act; governs credit for sales contracts o Equal Credit Opportunity Act (ECOA): prohibits denial of credit based on race, religion, gender, martial status, age, national origin
• Credit Card Rules o Limits to $50 liability for unauthorized charges before the creditor is notified o Prohibits liability for charges on unauthorized cards o No retroactive interest rate increases o Advance notice to change terms o Limits on over-limit fees
• Health and Safety o Regulating actual contents of product versus information dispensed about product o Federal Food, Drug and cosmetic Act (FEDCA): protects consumers against adulterated (and misbranded) foods and drugs o Consumer Product Safety Act of 1972: established Consumer Product Safety Commission (CPSC) to research product safety
• CPSC o Sets safety standards o Bans products posing “unreasonable risk” works with manufactures on voluntary recalls
• Limitations of the Law o The law does not and cannot codify all ethical requirements o Just because an action is legal does not make it ethical o So many laws, can violate without knowing o “Gray areas” in the law make it difficult to predict how the court will rule o Many laws require court to determine what is “foreseeable” or “reasonable”
• Ethics, Law, and CSR o Ethics: study of right and wrong behavior o Business ethics: study of right and wrong behavior in the business world o Moral minimum: the minimum acceptable standard for ethical business behavior, normally considered compliance with the law o Corporate Social Responsibility (CSR): the idea that corporations should be accountable to society for their actions
• 3 Approaches to Ethics o Duty-based: What are the relevant rules? o Outcome-based: What are the potential consequences for stakeholders? o Character-based: What might this say about my character and the character of my company
• Ethics Triangle o Character o Rules o Consequences
• Rules o Laws (statutory law, case law, contracts, local, state, national, international) o Company policies and precedents o Professional codes (GAAP, American Marketing Association codes, etc.) o Rights (civil, human) o Social norms o Moral Laws (eg, Golden Rule) o Religious laws (where applicable) o Standards of “common decency” (telling the truth, treating people with respect, etc.)
• Consequences o Cost-benefit analysis (financial consequences) o Stakeholder interests and values (PR, employee morale, investor reactions, consumer complaints, etc.)
• Character o Company mission and values o Expectations of particular work role (eg, how a “good sales manager” acts) o Virtues (intelligence, honesty, justice, courage, etc.) o Personal values, conscience, and emotional reactions
• Analyzing Ethics Cases o More complicated than legal cases (and legal cases are already complicated) o Less certain than legal cases (never going to determine a single “right” answer)
• Usually about recommendations for future actions rather than evaluating past actions- and the future is always uncertain
• Individuals often prioritize values differently o Need to be able to defend your recommendations to thoughtful, reasonable stakeholders o Ethical dilemma (right vs. right)
• Ex: It’s right to help someone in need and it’s right to obey the law o Moral temptation (right vs. wrong)
• Ex: Cheating on my taxes o Fallacy (error in reasoning)
• Ex: Milk has nutritional value. Therefore, Donut Cereal has nutritional value o Rationalization (excuse to avoid critically assessing our actions)
• Ex: It’s my jobs to make my numbers, so doing this (unethical thing) is justifiable
• Ethics and Profit o In capitalistic societies, making a reasonable profit is ethically acceptable o Difference between short-run and long-run profit maximization o Business ethics is often consistent only with long-run profit maximization o Overemphasis on short-term profit is most common reason ethical problems occur in business
• CSR o Can refer to many things: philanthropy, environmental protection, consumer protection, treatment of employees, community development o Involves addressing competing demands among stakeholders
• Stockholder Theory o Milton Friedman (1912-2006
• Most prominent economist advocate of free markets
• Winner of Nobel Prize for economics (1976)
• “The Social Responsibility of Business is to Increase its Profits” (1970) o Friedman’s Argument
• Corporate executives are employees of the owners of the business, i.e., the stockholders
• Their job is to maximize profits for the stockholders (while conforming to the basic rules of society)
• Executives are only authorized to do their jobs (i.e., to maximize profits)
• If executives spend company funds to discharge “social responsibilities” other than increasing profits, they are spending someone else’s money (owners’, employees’, or customers’) without their consent
• Spending money in this way is wrong (on principle and on consequences)
• *Therefore, the social responsibility of business is (simply) to increase its profits (within the rules of the game, i.e., open and free competitions without deception or fraud)
• Stakeholder Thoery o R. Edward Freeman (born 1951)
• American Philosopher, Darden School, University of Virginia
• “A Stakeholder Theory of the Modern Corporation”
• All stakeholders (stockholders, managers, employees, suppliers, customers, and the local community) have rights to be treated as “ends in themselves” and not “mere means” o Freeman’s Argument
• Changes in law (employment law, environmental law, tort law, etc.) have elevated other stakeholders
• Managing for stockholders has not always produced “greatest good for the greatest number” (tragedy of the commons, moral hazards, monopolies, etc.)
• The assumption of the primacy of stockholders is false (by 1 and 2)
• 6 stakeholder groups have rights to be treated as “ends in themselves” (stockholders, managers, employees, suppliers, customers, local community)
• To be treated as “ends,” their (competing) interests must weigh into managing decisions
• *Therefore, managers should balance stakeholder interests
• Ethics Triangle o Character- Risk: Ethics as Relativism o Consequences- Risk: Ethics as Strategy o Rules- Risk: Ethics as Compliance
1B
• Duty-Based Ethics (“Rules”) o Immanuel Kant (1724-1804) o “Categorical imperative”
• Act only in ways that can be “universalized”
• Treat all people as ends in themselves and not merely as means o Natural law
• Duty-Based Ethics and the Law o Consistency o Fairness o “Principle” o “The right things to do” o Respect for persons- “rights” o Protect the individual from the majority or ruling group o Motives/intentions are relevant in determining the ethics of an action
• Consequence-Based Ethics: Utilitarianism o Jeremy Bentham (1748-1832) o Act so as to promote the greatest happiness of the greatest number of people o Bentham’s morbid sense of humor
• Consequence-Based Ethics and the Law o Harm
• “No harm, no foul”
• Motives/intentions are irrelevant to the ethics of the action (though may be relevant to the character of the agent) o Majority rule o “Practical,” “realistic”
• Character-Based Ethics o Aristotle (384-322 BCE) o “The Philosopher” o The good is that which contributes to a “flourishing” life o “Golden mean”- everything in moderation
• Character-Based Ethics and the Law o History o Reputation o Patterns of behavior- repeated offenses o Role models- “reasonable person” standard o “Legitimate social interest”- community-oriented (an individual can only flourish when her/his community is flourishing)
• “The Law” o Enforceable rules governing relationships among individuals and between individuals and society o Establishes rights, duties, and privileges consistent with values and beliefs of a society or its ruling group o Creates stability and predictability essential for all civilized activities, including business activities
• Sources of American Law o Constitutional Law- US and State Constitutions o Statutory Law- federal and state statutes o Administrative Law- regulatory agencies o Case Law and Common Law doctrines- judge-made law
• The Common Law Tradition o American law is based largely on English Common Law originating in medieval England o The common law was based largely on traditions, social customs, rules and cases developed over hundreds of years after the Norman conquest in 1066
• Early English Courts o At common law, there were two separate court systems with two different types of remedies:
• Courts of law (monetary relief)
• Courts of equity (non-monetary relief) “notions of justice & fair dealing”
• Remedies at Law versus Equity o Remedies at law: land, chattel (moveable property), money (“damages”) o Remedies in equity: when there is no adequate remedy at law (i.e., money didn’t do it)
• Specific performance (do something)
• Injunction (stop doing something)
• Rescission (cancel the obligation)
• Stare Decisis o Stare decisis is a Latin phrase meaning “to stand on decided cases”
• Makes the law stable and predictable
• Increases judicial efficiency by relieving courts of having to reinvent legal principles for each case o Stare decisis is “judge made law” based on precedent
• Case Precedents and Case Reporters o Precedents are judicial decisions that give rise to legal principles that can be applied in future cases based upon similar facts o Precedents and other forms of positive law, such as statutes, constitutions, and regulations are referred to as binding authorities and must be followed o To help judges and lawyers follow precedents, the reasons or “opinions” for case decisions are published in volumes called “reporters” or “reports”
• Departure from Precedent o In cases are “first impression” where there is no precedent, the court may refer to positive law, public policy and widely held social values in order to craft the best new precedent
• Classification of Law o Every type of law will be either:
• Civil or Criminal
• Substantive or Procedural
• Public or Private o “Cyberlaw” is traditional law applied to online forums
• Civil versus Criminal Law o Civil law defines the rights between individuals or individuals and governments o Criminal law defines an individual’s obligations to society as a whole
• Substantive versus Procedural o Substantive law defines or creates the rights and obligations of persons and governments o Procedural law provides the steps on must follow in order to avail oneself of one’s legal rights or enforce another’s legal obligations
• Schools of Jurisprudential Thought o Natural Law: there are universal laws that apply to all humans that can be discovered through reason o Positivist: no higher law than that created by government o Historical: stresses evolutionary nature of law and looks to lasting doctrines o Legal Realism: stresses a more pragmatic approach. Context is important and purpose of law is to promote social justice
• Why Schools of Jurisprudential Thought Matter o Judges/justices are human beings with their own philosophical biases- the law is not “blind” in that sense o “The court” could decide a case very differently depending on the philosophy of the judge o It pays to know how a given judge thinks o It may help explain why the court ruled a certain way (when you see it differently) o It has a tremendous impact in higher courts, making justices very political appointments
• Judicial Requirements o Jurisdiction
• In personam
• In rem
• Other issues o Venue o Standing to sue
• Jurisdiction o “The power to speak the law” o For a court to hear a case, it must have jurisdiction over the person or company against whom the suit is brought (the defendant) or over the property involved o The court must also have jurisdiction over subject matter of the dispute
• Jurisdiction Over Persons o In personam jurisdiction applies to persons or businesses who reside in certain geographic areas- power to compel them to appear in court o Corporations are considered legal persons subject to personal jurisdiction o Courts use long-arm statutes for non-resident parties (including corporations) based on “minimum contacts” (or “sufficient contracts”) with state o Placing goods or services in the “stream of commerce” usually meets minimum contacts
• Jurisdiction Over Property o A court generally has in rem (over the thing) jurisdiction over any property situated within its geographical borders o In Rem jurisdiction is the power to decide issues relating to property and property rights
• Other Jurisdiction Issues o Subject matter
• General (unlimited), e.g., trial court
• Limited, e.g., bankruptcy, probate o Sum (amount) in controversy
• Felony (serious)
• Misdemeanor (less serious, e.g., larcenies of less than $1,000) o Original or appellate (stage of dispute resolution)
• Jurisdiction- Federal Courts o Federal Question cases involve rights or obligations of a party that are created or defined by federal law o Diversity of Citizenship cases exist where:
• Parties are not from the same state, and
• The amount in controversy is greater than $75,000 o Exclusive (federal crimes, issues) versus concurrent (either federal or state court appropriate, diversity of citizenship
• Venue o Venue is concerned with the most appropriate location for the trial o Generally, proper venue is where the injury occurred or where the defendant resides
• Standing to Sue o In order to bring a lawsuit, a party must have “standing” to sue o Standing is sufficient “stake” in the controversy; party must have suffered a legal injury o “Justiciable controversy”- real and substantial, rather than hypothetical or academic
• Trial Courts o Complaints are brought and answered o Juries are selected o Opening and closing arguments o Evidence, such as witness testimony, physical objects, documents, and pictures, is introduced o Witnesses are examined and cross-examined o Verdicts and judgments are rendered
• Appellate Courts o Middle level of the court system o Review trial court proceedings. Was the trial conducted according to the procedural and substantive rules of law? o Generally, appellate courts will consider questions of law, but not questions of fact
• Supreme Court(s) o Also known as courts of last resort…appealing the appeal o Request the Supreme Court to hear a case
• Rule of four- 4 of 9 justices agree
• Writ of certiorari order: send the records
1C
• Settling Legal Disputes o Trials o ADR (alternative dispute resolution) o Only 5-10% of filed lawsuits actually go to trial. Most are settled out of court through ADR
• Most Common Forms of ADR o Negotiation o Mediation o Arbitration
• Negotiation o Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case
• Assisted Negotiation o Early neutral case evaluation: expert evaluates positions of both parties. Forms basis of negotiation o Facilitation: neutral 3rd party assists parties to reconcile their differences o Mini-trial: attorneys for each side informally present their case before a mutually agreed- upon neutral 3rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement o Summary jury trial: mock trial with judge and jury. “Advisory” verdict only
• Mediation o Involves a neutral 3rd party (mediator) who’s more active than a facilitator o Mediator talks face-to-face with parties to determine “common ground”
• Advantages: few rules, customize process, parties control results (win-win)
• Disadvantages: mediator fees, no sanctions or deadlines
• Arbitration o Settling of a dispute by a neutral 3rd party (arbitrator) who renders a legally significant decision o Binding or non-binding o Arbitrator: professional, subject matter expert, or respected government official o Federal Arbitration Act: enforces the agreed-to arbitration
• Enforcement of Agreements to Submit to Arbitration o Courts are not involved in voluntary arbitration unless an arbitration clause in a contract needs enforcement o “Arbitrability”: if the subject matter of the controversy is covered by the agreement to arbitrate, then parties compelled to arbitrate o It is a contract issue-agreement has to be explicit (not inferred)
• Setting Aside an Arbitration Award o Facts and legal conclusions are final o Court’s role is limited to determining whether a “valid award” exists o Federal Arbitration Act (FAA) list 4 grounds for court to set aside award:
• Fraud, corruption, or other “undue means”
• Arbitrator bias
• Arbitrator abuse of discretion
• Arbitrator exceeded powers o Waiver: Failing to object to defect in timely fashion waives right to challenge the award
• Disadvantages of Arbitration o Results may be unpredictable
• Because arbitrators do not have to issue written opinions, there is no precedent to follow
• Arbitrators do not have to follow rules of procedure or evidence o Generally, no “discovery” available, so don’t know what the other side ahs or knows o Expensive (compared to mediation) o No appeal available (except on validity of award)
• Integration of ADR and Formal Court Procedures o Many states require some ADR before trial o “Court-annexed arbitration” (court-added or court-ordered arbitration)
• Have to participate
• But, because government cannot deny anyone their “day in court,” either party may reject outcome and request a trial de novo (starting anew)
• If reject outcome, may have to pay fees
• If don’t show up, waive right to reject award
• Online Dispute Resolution o Also called ODR o Uses the Internet to resolve disputes o Still in its infancy but is gaining momentum
• 3 Levels of Scrutiny o Strict scrutiny- involving limits on fundamental rights, including use of suspect traits (race, national origin, citizenship) o Intermediate scrutiny- discrimination based on gender or legitimacy (babies in or out of marriage) o Rational basis test- matter of economic and social welfare
• Constitutional Law History o Before the Revolutionary War, states wanted a confederation with weak national government with very limited powers o After the war, in 1787, the states voted to amend Articles of Confederation and create a new, federal government that shared power with states o Constitution was ratified in 1788
• Constitution was Compromise o Federalist: Strong central government, central bank, development of modern economic power; ideal was merchants & industrialists; Adams, Hamilton o Democratic Republicans: States rights, no standing army; ideal was yeoman farmer; Jefferson, Madison
• Relations with and between the States o By 10th Amendment to US Constitution, all non-designated powers are reserved for the states- preserves states rights and powers
• Constitutional Powers of Government o Constitution establishes federal form of government, with checks and balances among branches
• Executive
• Legislative
• Judicial
• Bill of Rights o First 10 Amendments to the US Constitution o Originally the Bill of Rights was a limit on the national government’s powers o During the early 1900s, the Supreme Court applied the Bill of Rights to the states via the “due process” clause of the 14th amendment- no state shall deprive any person of life, liberty, or property without the due process of law o Constitutional rights are not absolute
• Freedom of Speech o 1st Amendment o Afforded highest protection by courts o Symbolic speech: flag burning, hunger strikes, black armbands are all protected o But not absolute right to free speech
• Commercial Speech o Advertising is protected speech o Restrictions must
• Implement substantial government interest (truth in advertising; roadside beautification)
• Directly advance that interest
• Go no further than necessary
• Due Process & Equal Protection o 5th and 14th amendments provide that “no person shall be deprived of life, liberty or property without due process of law” o “Due process”: includes procedural and substantive issues
• Procedural Due Process o Constitution requires adequate notice and a fair and impartial hearing before government can take life, liberty or property
• Substantive Due Process o Focuses on the content or substance of legislation, which must be fair and reasonable, and further a legitimate government interest
• Substantive Due Process versus Equal Protection Clause o If it limits the liberty of everyone: substantive due process issue o If it limits the liberty of some but not others: equal protection issue
• Equal Protection o 14th Amendment: “a state may not deny to any person within its jurisdiction the equal protection of the laws”- equal protection clause o Also applies to federal government o Government can’t make laws that treat similarly situated individuals differently o 3 levels of scrutiny: strict, intermediate, and “rational basis”
• Equal Protection: 3 Levels o Strict scrutiny: fundamental rights; “compelling state interest” o Intermediate scrutiny: gender or legitimacy; “important government objective” o “Rational basis”: economic or social welfare; “legitimate government interest”
1D
• Civil versus Criminal Law o Civil and criminal law differ in:
• Party who brings the suit
• Civil- the person who suffered harm
• Criminal- the state
• Definition of “wrongful act”
• Civil- causing harm to a person or to a person’s property
• Criminal- violating a statute that prohibits some type of activity
• Burden of proof
• Civil- preponderance of the evidence
• Criminal- beyond a reasonable doubt
• Verdict
• Civil- three-fourths majority (typically)
• Criminal- unanimous (almost always)
• Remedy
• Civil- damagers to compensate for the harm or a decree to achieve an equitable result
• Criminal- punishment (fine, imprisonment, or death)
• Criminal versus Tort Law o Tort
• French tort= “wrong”
• Tort law (part of civil law) is designed to compensate those who have suffered a loss or injury due to another person’s wrongful act o Crime
• Latin crimen= “cry of distress”
• Wrong against society as a whole, proclaimed in statute, and punishable by fine and/or imprisonment
• Designed to punish and deter
• Classification of Crimes o Felony: serious crime, punishable by death or by imprisonment for more than one year o Misdemeanor: less serious crime, punishable by a fine or confinement for up to a year o Petty offense: minor crime, subset of misdemeanors, punishable by fines or a few days in jail
• Criminal Liability o Normally (but not always), two elements are needed to be convicted of a crime:
• Actus reus: guilty act. The person must do something (act of commission versus act of omission) that causes harm to a person or property. (Note: consequence-based)
• Mens rea: wrongful mental state. Mental state or intent to commit the crime. (Note: rule-based)
• Intent and Criminal Negligence o Negligence is usually a tort, not a crime. But in some cases it can also be prosecuted as a crime o Criminal recklessness:
• Consciously disregards a substantial and unjustifiable risk
• Intentionally careless o Criminal negligence
• Mental state that deviates into taking unjustified, substantial, foreseeable risk that resulted in harm
• Should have foreseen risk, even if didn’t
• Example: involuntary manslaughter
• Criminal Liability Without Intent o Strict liability crimes: do not require a wrongful mental state o Common with environmental laws, illegal drugs, “zero tolerance” policies o Controversial o Critics call use of such laws “over criminalization”: using criminal law to solve social problems at eh expense of unknowing offenders o Overzealous enforcement
• Corporate Criminal Liability: Corporation o Corporations normally are liable for the crimes committed by their agents and employees within the course and scope of their employment if:
• Could have prevented the act, or
• There was authorized consent to, or knowledge of, the act by persons in supervisory positions, or
• They fail to perform specific duties (acts of omission) imposed by law (e.g., environmental or securities laws)
• Corporate Criminal Liability: Officers o Corporate directors and officers are personally liable for the crimes they commit, even if committed for the benefit of the company o Responsible corporate officer doctrine: corporate directors and officers may be held liable for the actions of employees under their supervision, even if didn’t know about the violation
• Types of Crime o Violent crime (crimes against persons) o Property crime (economic gain or damage) o Public order crime (“victimless crime”) o White-collar crime (business context) o Organized crime (illegitimate business context
2A
• Defenses to Criminal Liability o Self-defense (reasonably necessary) o Necessity (to prevent a greater harm) o Insanity (lacks capacity for mens rea) o Mistake of fact (but not of law) o Duress (threat of immediate danger) o Entrapment (police suggest and induce) o Statute of limitations (time runs out) o Immunity (5th amendment, plea bargain)
• Self-defense and Stand Your Ground Laws o Traditionally, the justifiable use of force, or self-defense, required prosecutors to distinguish between deadly and non-deadly force. In general, state laws have allowed individuals to use that amount of non-deadly force that is necessary to protect themselves, their dwellings, or other property, or to prevent the commission of a crime. Deadly force can only be used when the defender reasonably believes that imminent death or grievous bodily harm will result and there are no means of escaping or avoiding the situation. Otherwise, there is a “duty to retreat” o The Castle Doctrine grants certain protections and immunities to persons who defend their homes from attack. A “stand your ground” law removes the duty to retreat under such a home attack. Some states have removed the duty to retreat from other locations, as well, such as vehicles, and even, as in Florida, from any locations where one is legally allowed to be
• What is administrative law? o Congress and state legislatures pass statutes (statutory laws) o But statues tend to be very general, and legislatures don’t enforce the laws themselves but delegate this duty to administrative agencies o Administrative agencies write more detailed rules and regulations to explain the statues and then enforce them
• Business and Administrative Law o Businesses have far more direct contact with administrative agencies than with legislatures or the courts o Examples of administrative agencies
• Securities and Exchange Commission (SEC)
• Federal Trade Commission (FTC)
• Occupational Safety and Health Administration (OSHA)
• Equal Employment Opportunity Commission (EEOC)
• US Patent and Trademark Office
• Powers of Administrative Agencies o There are dozens of administrative agencies, both at federal and state levels o They issue legislative rules (legally binding) and interpretive rules (declare policy) o They often have a lot of independence from the three branches of government (legislative, executive, judicial) o They often have powers that are usually reserved from one of the other branches of government, e.g., rulemaking, enforcement, and adjudication o Raises concerns about need for “checks and balances” over administrative agencies
• Checks and Balances over Administrative Agencies o Executive controls: president appoint (federal) officers; veto power (over enabling legislation); Office of Information and Regulatory Affairs (reviews their budgets) o Legislative controls: enabling legislation; funding; Administrative Procedure Act o Judicial controls: judicial review once “exhaustion doctrine” and “ripeness doctrine” are satisfied
• Judicial Review and Agency Actions o The courts only will review an agency’s actions once two conditions are met:
• Exhaustion doctrine: a complaining party must have gone through all proper administrative agency appeals processes first
• Ripeness doctrine: the case must be “ripe for review” (party ahs standing to sue, and it’s an actual controversy)
• Further Restrictions on Agencies o Administrative Procedure Act (APA) of 1946: no “arbitrary or capricious” rules (irrational rules) o Notice-and-comment rulemaking: must follow three steps if making or changing a rule: publish notice in Federal Register, 30-day comment period and publish final rule o Freedom of Information Act (FOIA) of 1966: must disclose (certain types of) information to any person or entity upon written request o Government in the Sunshine Act of 1976: requires agency meeting to be open to public (with exceptions) o Regulatory Flexibility Act and Small Business Regulatory Enforcement Act: protect small businesses
• Judicial Deference o Courts will typically defer to judgment of the agency in matters of fact and law (if meets Chevron standard) o Chevron standard (1984)
• Agency’s interpretation of law meets statutory and constitutional requirements
• Agency’s interpretation of law is “reasonable,” even if court would have ruled differently
• Arbitrary and Capricious Test o Under this standard, parties can challenge regulations as contrary to law or so irrational as to be arbitrary and capricious o Guidelines. Has the agency:
• Failed to provide a rational explanation for its decision
• Changed prior policy without justification
• Considered legally inappropriate factors
• Entirely failed to consider a relevant factor
• Rendered a decision plainly contrary to the evidence
• International Law o International law is the result of attempts to reconcile:
• The need of each country to be the final authority over its own affairs
• The desire to benefit from relations with one another o International law requires voluntary agreement of nations to be enforceable o By definition, a “nation” is a sovereign entity, i.e., there is no higher authority to which a nation must submit o International law is an effort to facilitate international trade, promote civilized discourse, and avoid use of coercive actions (severance of diplomatic relations, boycotts, war)
• Three Sources of International Law o International customs o Treaties o International organizations
• International customs o Defined by the Statue of the International Court of Justice as “evidence of a general practice accepted as law” o Limited somewhat by different national legal systems:
• Common law systems (court-made law)
• Civil law systems (statutory law only)
• Religious law systems (e.g., sharia) o Despite different legal systems, some common international legal principles and doctrines are:
• The principle of comity
• The act of state doctrine
• The doctrine of sovereign immunity
• The Principle of Comity o Latin comis means “friendly” o One nation will defer and giver effect to the laws and judicial decrees of another country as long as those laws and judicial decrees are consistent with the law and public policy of the accommodating nation o Similar to provisions in US Constitution for respect between states: “full faith and credit” clause and “privilege and immunities” clause
• The Act of State Doctrine o Judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory o This doctrine is often invoked to protect expropriation (government seizing private property and providing just compensation), which may be legal o Cases frequently claim the taking was confiscation (government taking private property for illegal purpose without just compensation), which is legal o In reality, US firms of individuals have little US legal protection against government actions in foreign countries
• Doctrine of Sovereign Immunity o Similar to act of state doctrine o This doctrine exempts foreign nations from jurisdiction in US courts o Exceptions: the Foreign Sovereign Immunities Act (FSIA) expanded the jurisdiction of US courts to foreign states:
• If the state has waived its immunity
• If the “foreign state” has engaged in “commercial activity” in the US or outside US but with “a direct effect in the US”
• If the foreign state has committed a US tort or has violated certain international laws
• Treaties o Treaty: an agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation
• Bilateral agreement- two nations
• Multilateral agreement- several nations, e.g., Association of Southeast Asian Nations (ASEAN), European Union (EU) o In US: president can make treaties with consent of the Senate
• International Organizations o Composed of official from member nations and usually established by treaty o Adopt resolutions, declarations and other standards for member nations o Examples:
• General Assembly of the United Nations
• International Court of Justice
• United Nations Commission on International Trade Law- created 1980 Convention on Contracts for the International Sale of Goods (CISG)- similar to Uniform Commercial Code
• UN Declaration of Human Rights o Adopted by the UN General Assembly on December 10, 1948, as a response to the atrocities of the Second World War o 48 countries signed, including US, China, Afghanistan, Iraq, Iran, Mexico, India, Pakistan
• Wage Standards o Home country standard- wages paid in one’s home country o Living wage standard- sufficient for food, shelter, clothing, medical care, and other basic necessities o Classical liberal standards (market standard)- voluntarily chosen by free and informed workers
• Regulation of International Business o Nations use laws and other controls to restrict or facilitate international business, based on national interest
• Investment protections
• Export controls
• Import controls
• Trade agreements
• Investment Protections o Few remedies are available for confiscation of property o Claims often resolved through lump-sum settlements between nations o Many countries guarantee compensation for expropriation through constitutional and statutory laws and by international treaty o Some countries provide insurance for their citizens’ investments abroad
• Export Controls o In US, Congress cannot impose export taxes o Can set export quotas on various items o Can use incentives and subsidies to stimulate exports o Export-Import Bank of the United States provides financial assistance
• Import Controls o Strict prohibitions- e.g., from enemies of the US, illegal drugs, books that urge insurrection against the US, goods that infringe on US patents o Quotas- limits on the amount of goods that can be imported o Tariffs- taxes on imports (which raise the price of imported goods and encourage purchasing domestic goods) o Antidumping duties- extra tariff for selling imported good at “less than fair value,” i.e., prices that undersell US businesses to obtain larger share of US market
• Trade Agreements o Goal of trade agreements is to stimulate international trade through minimizing “trade barriers” (i.e., restrictions on imports) o World Trade Organization (WTO): each member country required to grant normal trade relations (NTR) status (or “most favored nation status) to other member countries o NTR status means each member must treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports
• Other Trade Agreements o European Union (EU) o North American Free Trade Agreement (NAFTA) o Central American-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)
• US Laws in a Global Context o Antitrust laws- any conspiracy by foreign company or US company abroad that has a “substantial effect” on US commerce is within the reach of the Sherman Act o Tort liability
• US citizens can sue foreign or US entities abroad (e.g., human rights violations)
• Alien Tort Claims Act (ATCA) of 1789 allows foreign citizens to sue US companies for torts committed overseas (e.g., environmental destruction)
• Alien Tort Claims Act o Broadly applied since 1980s to address human rights abuses abroad o Kiobel versus Royal Dutch Petroleum (2013): Supreme Court ruled that Nigerian plaintiffs could not sue in US courts for alleged human rights abuses (torture and murder of protestors of environmental damage) o Law can be applied in three settings:
• Conduct took place in US, or
• Defendant is American citizen, or
• “substantially and adversely affects an important American national interest,” including preventing safe harbor in US for torturers
• US Laws in a Global Context o Antidiscrimination laws
• Generally apply “extraterritorially” to all US employees working for US employers abroad
• “Foreign laws exception”- if obeying US discrimination law would violate laws of local country, don’t have to obey US law
2B
• Contract Formation o Types of Contracts o 4 Elements of Valid Contract o Contract Enforceability
• Promises o Promise: a manifestation of the intent to act or refrain from acting in specified way o Intent is of prime importance o Promises are ethical acts- they create moral obligations o Moral versus legal promises
• Promises and Contracts o A contract is a legally binding agreement (promise) between two parties (offeror and offeree) o Contract law
• Sources of common law for all contacts except sales and leases (Uniform Commercial Code)
• Provides stability and predictability for commerce o Intent in contract- determined by objective theory of contracts (not by personal or subjective intent or belief of a party to the contract
• Objective Theory of Contracts o Judged by outward, objective facts as interpreted by a reasonable person o Objective facts:
• What the party said or wrote
• How the part acted or appeared
• The circumstances of the transaction
• Types of Contracts o Depends on what the offeree has to do to accept the offer and bind the offeror to the contract o Bilateral contracts
• “a promise for a promise”
• bilateral contract is formed when promises are exchanged o Unilateral contracts
• “a promise for an act”
• Unilateral contract is formed when act is performed
• 4 required Elements of Contracts o Agreement: an offer and an acceptance o Consideration: something of value is bargained for o Contractual capacity: both parties are competent to enter agreement o Legality: purpose of contract must be legal
• Agreement o Mutual assent to the same bargain o An offer and an acceptance o An offer must:
• Have serious intention
• Have reasonably certain and definite terms
• Be communicated to the offeree
• Things that are NOT Offers o Expressions of opinion (like predictions) o Statements of future intent (like planning to sell) o Preliminary negotiations (like invitations to submit bids) o Advertisements (including price lists; considered offers to negotiate) o *Agreements to agree- may be enforceable if clear parties intended to be bound by it (like preliminary agreements to all essential terms)
• Terminating an Offer o By actions of the parties
• Revocation
• Rejection
• Counteroffer (mirror image rule) o By operation of law
• Lapse of time
• Destruction of subject matter
• Death or incompetence of one of the parties
• Supervening illegality
• Consideration o Something of legally sufficient value must be exchanged for the promise o There must be a bargained-for exchange (as opposed to a gift, which is not enforceable) o Usually, courts will not question the fairness of the bargain (“a bad deal”) o Doctrine of freedom of contract: parties are free to decide how much something is worth and to bargain accordingly o Courts may question if consideration is shockingly inadequate and suggest fraud, duress, or undue influence
• Agreements that Lack Consideration o Preexisting duty (such as completing a contract already made) o Unforeseen difficulties (unless extraordinary) o Past consideration (promises made in return for actions that have already taken place) o *Promissory estoppel might be used to obtain recovery if justifiably relied on the promise
• Contractual Capacity o Assumed by the courts unless a party to the contract is:
• A minor (under 18 years old unless married or emancipated)- contracts voidable by minor
• Intoxicated- contracts either voidable or valid (and thus enforceable)
• Mentally incompetent- contracts void if courts already ruled incompetent, voidable if haven’t yet ruled, or valid if competent at time of contract
• Legality o A contract is void if it is:
• Contrary to statute
• Contracts to commit a crime
• Involves usury (charging interest over the maximum rate allowed by law)
• Involves gambling
• Violates a licensing statute o A contract is unenforceable if it is:
• Contrary to public policy
• An unreasonable restraint on trade
• Unconscionable- procedurally (unintelligible language; wide disparity in bargaining power) or substantively (oppressive or overly harsh)
• Exculpatory clause (when contrary to public policy)
• 2 Defenses to Enforceability o A valid contract can still be unenforceable if it lacks:
• Voluntary consent: not formed under fraud, undue influence, mistake of fact or duress
• Form: some contacts must be in writing (Statute of Frauds)
2C
• Consumer Protection
• What is “bluffing”? o Deception o Conscious misstatements o Concealment of pertinent facts o Exaggeration o Non-malicious lies o Half-truths o Misleading omissions o Evasiveness
• Business Ethics as Game Ethics o Business is a game of strategy, like poker o In poker, bluffing is ethically acceptable o Therefore, in business, bluffing is ethically acceptable o Bluffing is legal o If an action is legal, it’s within the rules of the business game o If it’s within the rules of the business game, then it’s ethical o Therefore, bluffing is ethical
• Sources of Continuing Debate on Carr’s Position o Business shares some but not all features of a game- imperfect analogy o Ambiguity surrounding “bluffing” o Bluffing relies on a background of trust o Ambiguity within the law and between law and ethics o “Psychological strain” either way- holding same ethics at work and home or living a double life o Ethics as a long-term business strategy may be indistinguishable from private ethics
• Consumer Protection o Freedom of contract is balanced by need to protect the parties o Today, laws protect US consumers from unfair trade practices, unsafe products, discrimination, unreasonable credit requirements and other risks
• Consumer Protection o Deceptive Advertising o Labeling o Sales o Credit Protection o Health and Safety
• Deceptive Advertising o Versus puffery o Versus entertainment o Deceptive is a reasonable consumer would be misled o Puffery is vague generalization or obvious exaggeration o “Advertising that misleads consumers, either by making unjustified claims concerning a product’s performance or by omitting a material fact concerning the product’s composition or performance”
• FTC Policy on Deception o A material representation, omission or practice that is likely to mislead the reasonable consumer
• Deceptive Advertising o If a reasonable consumer would be misled by the advertising claim o If it appears to be based on factual evidence but it is not reasonably supported o If the “half truths” lead consumer to false conclusion o If celebrity does not actually endorse product (may be ruled deceptive)
• Bait-and-switch o Seller refuses to show the advertised item o Fails to have a reasonable quantity of the item in stock o Fails to promise to deliver the advertised item within a reasonable time o Discourages employees from selling the item
• FTC Actions Against Deceptive Ads o Cease-and-desist order: stop the ad o Counter advertising: requires company to advertise the previous misinformation o Multiple product order: cease-and-desist extends to all products o Restitution: pay consumers back
• Labeling and Packaging o Labels must be accurate and use words easily understood by the ordinary customer o Must avoid exaggeration (e.g., “giant” when not) o Sometimes must specify raw materials (e.g., clothing, food) o Sometimes must carry a warning (e.g., cigarettes, cleaning supplies)
• Information Disclosure in Sales
• Sales and Credit Protection o Cooling-off laws: permits buyers in door-to-door sales to cancel contract in three business days o Truth-in-Lending Act (TILA): requires detailed disclosure of terms of loans: annual percentage rate, finance charges, amount financed, total payments o Regulation Z: disclosure requirements in Truth-in-Lending Act; governs credit for sales contracts o Equal Credit Opportunity Act (ECOA): prohibits denial of credit based on race, religion, gender, martial status, age, national origin
• Credit Card Rules o Limits to $50 liability for unauthorized charges before the creditor is notified o Prohibits liability for charges on unauthorized cards o No retroactive interest rate increases o Advance notice to change terms o Limits on over-limit fees
• Health and Safety o Regulating actual contents of product versus information dispensed about product o Federal Food, Drug and cosmetic Act (FEDCA): protects consumers against adulterated (and misbranded) foods and drugs o Consumer Product Safety Act of 1972: established Consumer Product Safety Commission (CPSC) to research product safety
• CPSC o Sets safety standards o Bans products posing “unreasonable risk” works with manufactures on voluntary recalls
You May Also Find These Documents Helpful
-
Corporate social responsibility (CSR) is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.…
- 949 Words
- 4 Pages
Good Essays -
--What is the effect of societal norms on business ethics? How does a business make ethical decisions if…
- 576 Words
- 3 Pages
Good Essays -
Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions. CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.…
- 1008 Words
- 4 Pages
Powerful Essays -
Corporate social responsibility is defined as the responsibility that businesses have to the societies within which they operate. The European Commission defines CSR as “a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment.” The idea behind corporate social responsibility is that companies have multiple responsibilities to maintain. These responsibilities can be arranged in a pyramid, with basic responsibilities closer to the bottom. As a business meets lower-level responsibilities that obligate it to shareholders and the law, it can move on to the higher level responsibilities that benefit society.…
- 339 Words
- 2 Pages
Good Essays -
Corporate social responsibility (CSR, also called corporate responsibility, corporate citizenship, and responsible business) is an idea of considering the interests of society by corporations. Companies take responsibility for the impact of their actions on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large1. Nowadays, CSR becomes more and more popular among big companies because it makes them able to be perceived in better light, by their customers. In current dense market, firms have to fight for the customer by offering something new or unique. They use CSR in order to create customers’ loyalty based on distinctive ethical values. On the other hand, many critics claim that the only reason why companies implement social projects is the benefit which they may generate by being perceived as socially aware entities.…
- 5412 Words
- 22 Pages
Powerful Essays -
Today, Corporate Social Responsibility (CSR) is much wider concept than just donations and philanthropy. It is viewed as a way of doing business, identified with the strategies and standards of business conduct that companies follow in their business. While focused on creating shareholder value, the companies seem to be equally focused on CSR for various reasons like - attracting socially responsible investors, customer group, marketing, branding, enhanced employee relations and Tax incentives.…
- 817 Words
- 4 Pages
Good Essays -
Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. While there is no universal definition of corporate social responsibility, it generally refers to transparent business practices that are based on ethical values, Compliance with legal requirements, and respect for people, communities, and the environment. Thus, beyond making profits, companies are responsible for the totality of their impact on people and the planet. In the business community, CSR is alternatively referred to as “corporate citizenship,” which essentially means that a company should be a “good neighbor” within its host community.…
- 1444 Words
- 6 Pages
Good Essays -
CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby businesses monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company 's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.…
- 5229 Words
- 21 Pages
Powerful Essays -
Businesses have clearly identified this responsibility and have started taking up the challenge to legitimate its practices to society at large. This in the last decade has been commonly referred to as Corporate Social Responsibility – CSR (Crane, A., Matten, D., Spence, L. 2008). As Carroll (1979, cited in Carroll, 1991) states that, CSR included the idea that the corporation has not only economic and legal obligations, but ethical and discretionary (philanthropic) responsibilities as well.…
- 1749 Words
- 7 Pages
Powerful Essays -
The term “corporate social responsibility” (CSR) first emerged in the 1960s to discuss the role of business in society. Its definition, however, was argued by Friedman (1970) as a responsibility towards maximising shareholders value, with its “one and only social responsibility… is to use its resource and engage in activities designed to increase the profits so along as it stays within the rules of the game”. Over time, there are more versions of what CSR entailed, including that of the European Commission (2011), as “the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly, and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large…” In essence, CSR is reflected as a contribution to sustainable development, implying the way…
- 2235 Words
- 8 Pages
Best Essays -
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures…
- 8485 Words
- 30 Pages
Powerful Essays -
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business)[1] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law."[2][3] CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.…
- 962 Words
- 4 Pages
Good Essays -
Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere,…
- 4961 Words
- 20 Pages
Powerful Essays -
For decades now law and society theorists have been preoccupied with attempts to explain the relationship between legal and social change in the context of development of legal institutions. They viewed the law both as an independent and dependent variable (cause and effect) in society and emphasized the interdependence of the law with other social systems.…
- 1546 Words
- 7 Pages
Best Essays -
Corporate social responsibility (CSR) refers to a business’s intension, beyond that required by law or economics, to pursue long-term goals that are good for the society.…
- 1063 Words
- 5 Pages
Powerful Essays