Business Law for Business Managers

This is the first course of the three that together form the Business Law series.

After completing this topic, you should be able to:

• describe the nature and function of business law, and

• recognize the value of learning the essentials of business law as a manager.

Business law regulates how individuals and companies do business. As a result, it helps protect people from wrongful or harmful business behavior.

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It's therefore important for you, as a manager, to recognize the value of learning the essentials of business law. That way, you can ensure that situations that are unfavorable for yourself and your company are avoided.

After completing this topic, you should be able to

· classify manager responsibilities related to sales law and contract law

Business law regulates almost all aspects of businesses and their operations in some way. Five key areas of business law are sales, contracts, intellectual property, employment, and liability.

In the area of sales, business law typically defines when a transaction is complete. It requires that goods correspond to their descriptions, and defines obligations regarding quality.

A contract can be more technically defined as an agreement containing obligations that are enforceable by law. Individuals who enter into contracts agree to honor certain promises, which the law then recognizes as binding.

Use this job aid to review what the sales and contracts areas of business law encompass and the associated managerial responsibilities.

After completing this topic, you should be able to classify manager responsibilities related to employment law and intellectual property law

Intellectual property is one of the five key areas of business law. It includes any creation of the mind, such as logos, scientific inventions, sound recordings, and literary or artistic works.

It's crucial for organizations to protect their intellectual property, or they risk losing the competitive advantage that their information, ideas, and processes give them.

Another category of business law that managers need to be familiar with is employment law. The scope and focus of employment law has shifted dramatically over the last hundred or so years. Initially, it was generally accepted that power was held by employers only.

Use this job aid to review what the employment and intellectual property areas of business law encompass and the associated managerial responsibilities.

After completing this topic, you should be able to assess a business scenario in terms of the responsibilities of managers and implications for liability

Liability is one of the five key areas of business law. In law, liability refers to the obligations that businesses or individuals incur as a result of their actions, or sometimes their inaction.

As a manager, it's important to recognize that your organization is a legal entity, and to understand what that means with respect to liability.

It depends on what type of organization you work for - is it a sole proprietorship, general or limited partnership, corporation, or limited liability company?

Use this follow-on activity to practice identifying your responsibilities as a manager in relation to the different areas of business law.

Congratulations! You finished the Business Law Basic Concepts course. This is the first course of the three that together form the Business Law series.

As a manager, you have both legal and ethical responsibilities. Your conduct is expected to meet both the letter and the spirit of the law.

Managers who bypass their ethical responsibilities risk getting themselves and their companies into deep legal trouble. Corporate scandals have ruined both careers and companies.

After completing this topic, you should be able to:

• describe the convergence and divergence of law and ethics

• recognize how laws and ethics function in a business environment

In business, people are subject to a range of business laws, which are published and consistently enforced within a given jurisdiction. Laws frame and define rules regarding proper and improper behavior, and are developed by societies to limit people's tendency to act based on self-interest. Third parties enforce these laws using specified punishments.

Although laws and ethical principles differ, they do overlap. In many cases, what's perceived as unethical is also illegal. This is because law is typically designed to uphold standards of ethical behavior and to embody a society's expectations of its members in this regard.

Although the law and ethics overlap, they're not the same. For example, an action such as breaking a promise to a friend is unethical – but it's legal.

In a business environment, laws help simplify rules of conduct and decisions. In addition, the law in some jurisdictions requires that each organization have a written code of ethics to guide its conduct and decisions.

After completing this topic, you should be able to perform key steps in the process for making a decision that complies with the spirit of the law

Following the letter of the law means complying with the minimum legal requirements but not attempting to do any more than is strictly required.

Following the spirit of the law involves moving deeper into the territory of ethical behavior than simply following the letter of the law. Although difficult to define exactly, the spirit of the law refers to the underlying ethics, purpose, and intentions that the law is designed to uphold.

People are often far more aware of what a law requires than of the rationale behind the law – or the principle that law makers intended to further by developing the law. This is particularly true in organizational cultures that focus on adhering to rules, or on not getting caught violating the rules. Such a focus can cloud the ethical principles that are the foundation of the law.

Use this follow-on activity to guide you in making ethical decisions.

After completing this topic, you should be able to recognize how managers can encourage fulfillment of the spirit of the law through a culture of ethics

Most people are familiar with cases of corporate scandals that brought down powerful companies. But have you considered how common it is that behaving ethically saves companies and even boosts their profits?

Statistics show an increasing number of businesses establishing ethics programs, but no clear reduction in observed misconduct. So what's preventing businesses from behaving more ethically?

Use this job aid to review the common obstacles to ethical behavior in business.

To overcome the obstacles to legal and ethical behavior, an organization needs to develop a culture of ethics. In this type of culture, there's a shared understanding of what constitutes ethical behavior and how decisions about ethical issues and dilemmas should be handled.

Just having a written code of ethics isn't enough to create a culture of ethics. Employees should also receive training, support, and guidance on ethical behavior.

Ethics training should include instruction on ethical decision making, and on the challenges and obstacles to ethical behavior.

You can build ethics into an organization's structure by ensuring checks and balances, reinforcing ethical behavior, allowing dissent, and encouraging employee input.

If all other measures are in place, but you as a manager are not sincere about following them, the initiative to encourage ethical behavior is likely to fail.

Research over the years confirms that managers' own attitudes and behavior have a significant impact on employee conduct.

Use this job aid to review the recommendations for creating a culture of ethical behavior in an organization.

Congratulations! You just finished the Business Law and Ethics course. This was the second course of the three that together form the Business Law series.

A corporation is a legal entity, separate and distinct from its shareholders, directors, and managers. In practice, this means that executives and managers of a corporation may be shielded from the company's liabilities by what's referred to as the corporate veil.

However, managers shouldn't trust the corporate veil to protect them legally. When they consider it necessary, the courts pierce this veil, finding individual managers legally culpable for their behavior, or even for the behavior of their employees.

After completing this topic, you should be able to

• recognize which elements of a corporate scenario justify piercing the corporate veil

• recognize the importance of the corporate veil concept for the actions of individual managers and employees

Understanding your legal responsibilities as a manager can help you avoid legal problems for both yourself and your company.

As a manager, being implicated in the illegal behavior of a corporation can have devastating consequences. Just ask two former WorldCom employees who found themselves at the center of its highly publicized fraud scandal.

The legal concept that the Salomon principle and others like it support is also known as the corporate veil. The veil shields the people behind a corporation from liability for the corporation's actions.

Real case examples illustrate some of the criteria courts take into account before piercing the corporate veil. These examples also set precedents for future cases.

Use this job aid to review the definition, benefits, and drawbacks of the corporate veil, and the types of cases in which courts have found reason to pierce the corporate veil.

After completing this topic, you should be able to

• recognize how to handle concerns and warnings appropriately

• recognize the sensitivities in a communication scenario that could potentially lead to legal consequences

Legally, a corporation and its members are separate entities. However, precedents for lifting the corporate veil mean that managers, directors, and other high-ranking personnel can be held personally liable for actions of their company – even when they have no direct knowledge of these actions.

The second way to protect yourself and your organization legally is to respond appropriately to concerns and warnings. When you receive early warnings about possible illegal or unethical activities in your organization, it's easy to view the warnings in a negative light. However, these types of warnings can greatly benefit you and your company by saving you from significant legal trouble later on.

The final way of protecting yourself and your organization is by communicating wisely. In the legal system, courts can use communications, correspondence, and documentation as evidence of an action, or of intent.

Use this job aid to review the guidelines for responsible management behavior.

After completing this topic, you should be able to

• determine the manager's responsibilities in terms of the implications of vicarious liability in a scenario

According to the principle of vicarious liability, a superior may be held responsible for the actions of subordinates. So in the case of the restaurant, the employer may be held responsible for the injuries caused by the drivers, whether they acted independently or not.

As a manager, many of your responsibilities in relation to avoiding vicarious liability are an extrapolation of your general responsibilities as a manager.

Use this job aid to review the guidelines for responsible management behavior.

Congratulations! You just finished the Business Law and the Manager's Responsibilities course. This was the third course of the three that together form the Business Law series.

Congratulations! You just finished the Business Law course.

This course included three sections also presented as independent courses for your convenience:

· The Business Law Basic Concepts,

· The Business Law and Ethics, and

· The Business Law and the Manager's Responsibilities.

You think knowing stuff changes the game? You think sitting in a library, stacking up facts like you’re building a Jenga tower, is gonna make you a winner? Man, that’s cute. But life ain't a trivia night. Information alone? It’s worthless. It’s like having a Lamborghini in your garage but you never learned how to drive. You just sit in it, making engine noises. Vroom vroom. People walk by, they see the car, but they also see you ain't going nowhere. You got all this knowledge, all these textbooks, but when life throws a punch, you’re still looking up the definition of "duck." It’s what you *do* with that information that actually matters. Don't be the person with the shiny car and no keys.