Chapter 2 Business ethics and social responsibility

Review for Midterm

Business ethics

Principles and standards that determine acceptable conduct in business.

Social responsibility

A business’s obligation to maximize its positive impact and minimize its negative impact on society.

Ethical issue

An identifiable problem, situation, or opportunity that requires a person to choose from several actions that may be right or wrong.

Conflict of interest

When an individual must choose to either advance their own interests or the interest of others.

Codes of ethics

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

Whistleblowing

An employee exposing an employer’s wrongdoings to outsiders; media or the government.

Corporate Citizenship

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

Consumerism

The activities that independent individuals, groups and organizations undertake to protect their rights as consumers.

Sustainability

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

Business law

The rules and regulations that govern the conduct of business.

Lawsuit

Where one individual or organization takes another to court using civil laws.

Jurisdiction

The legal power of a court, through a judge, to interpret and apply the law and make a binding decision in a particular case.

Trial court

When a court must determine the facts of the case, decide which law or set of laws is relevant to the case, and apply those laws to resolve the dispute.

Appellate court

A court that deals with appeals relating to the interpretation of law.

Mediation

A method of resolution in which the third party’s role is to suggest or propose a solution to the problem.

Arbitration

Settlement of a labor/Management dispute by a third party whose situation is legally binding and enforceable.

Mini-trial

A situation in which both parties agree to present a summarized version of their case to an independent third party.

Private court system

When an independent third party resolves the case after hearing both sides of the story.

Federal Trade Commission

The unit that most influences business activities related to questionable business practices that create disputes between businesses and their customers.

Uniform Commercial Code

Set of statutory laws covering several business law topics.

Express warranty

Specifies terms the seller will honor.

Implied warranty

Terms imposed on the producer of seller by law.

Fraud

Unlawful act to deceive or manipulate in order to damage others.

Tort

A private or civil wrong other than breach of contract.

Product liability

Business’s legal responsibility for any negligence in the design, production, sale, and consumption of products.

Breach of contract

The failure or refusal of a party to a contract to live up to his or her promises.

Agency

A common business relationship created when one person acts on behalf of another and under that person’s control.

Principal

The one in an agency relationship who wishes to have a specific task accomplished.

Agent

The one in an agency relationship who acts on behalf of the principal to accomplish the task.

Real property

Consists of real estate and everything permanently attached to it.

Personal property

All other property that is not real property.

Intellectual property

Refers to property such as music, art, books and computer software, generated by a person’s creative activities.

Sherman Antitrust act

Passed in 1980 to prevent businesses from restraining trade and monopolizing markets.

The Clayton Act

Prohibits price discrimination, tying and exclusive agreements, and the acquisition of stock in another corporation.

Sarbanes-Oxley act

A law that criminalized securities fraud and strengthened penalties for corporate fraud.