Legal and Ethical Reasonings in Business

Argument

Group of statements made up of premises and a conclusion

Premises

The reasons or evidence that support the conclusion of an argument

Conclusion

The main point the premises are meant to prove

Statement

Sentence that can be either true or false

Deductive Argument

Tries proves its conclusion for certain

Valid

When there is no way for the premises to be true and the conclusion false

Inductive Argument

Reasons from specific examples or evidence to a likely conclusion

Fallacy

A mistake in reasoning

Post Hoc Fallacy

Assuming that because one event came after another, the first event caused it

Correlation

Two things happening together

Causation

One thing actually making the other happen

Bias

An interest that could slant a source’s education

Verifiability

Can others confirm the claim

Credibility

Does the source have the right expertise

What are the steps to handle ethical decisions

1.) Spot ethical issues 2.) Get the relevant facts 3.) Evaluate the alternatives (the possible choices) 4.) Make a decision 5.) Test/Reflect on the outcome 6.) Putting profit ahead of ethics is not one of them

Ethical Relativism

Says right and wrong depend on each person’s or culture’s beliefs, so there are no moral truth that apply to everyone

Consequentialist Ethics

Judges an action by its result

Deontological Ethics

Judges actions by duties and moral rules no matter the results

Virtue Ethics

Focuses on good character

What does utilitarianism aims for…

The greatest good for the greatest number of people

Immanuel Kant taught ______

Deontological (Duty-Based) Ethics

Categorical Imperative sats to only act ________

Only on a personal rule that you would accept as a rule for everyone

Premise

Reason or piece of evidence given to support a point

Conclusion

The thing/main point the reasons are meant to prove

“Because our store’s sales rose 20% this year…” Is a?

Premise

“… so we should open a second store” Is a?

Conclusion

Deductive Argument

Tries to prove the conclusion for certain. If the reasons are true, the conclusion must be true

Inductive Argument

The reasons make the conclusion likely, but not certain

“All employees must finish safety training. Ana is an employee. So Ana must finish safety training”

Deductive Argument

“The last 50 customers who tried our new sandwhich liked it. SO the net customer will probably like it.”

Inductive Argument

Valid

Describes how an argument is built. If the reasons were true the conclusion would have to be true

True

Describes a single statemtn that matches the facts

Correlation

Two things change together or happen around the same time

Causation

One thing actually makes the other happen

Appeal to popularity

Believing a claim just because many people

Appeal to authority

Believing a claim just because of who said it

Our team wins whenever we wear blue, so blue jersey make us win

Correlation, not causation

A famous chef says this stock will double, so I'm buying it

Appeal to authority

Most new restaurants close within 3 years. Ours will probably close too

Inductive arugment

Consequentialist

Judges an action by its results. The best choice creates the greatest goodfor the greatest number of people.

Deontological

Judges an action by duties moral rules, whatever the results. Never treat people merely as tools.

Virtue Ethics

Focuses on character. Asks what a person of good character would do.

Shareholder

A person who owns shares, meaning a piece of ownership, in a corporation

Stakeholder

Anyone with an interest in the company or who is affected by it: shareholders, employees, customers, suppliers, and the community

Shareholder pirmacy

A company’s main job is to make money for its owners, within the law and basic ethics. This is Milton Friedman’s view

Stakeholder Theory

Managers should balance the interests of everyone with a stake in the company

Corporate Citizenship

The idea that a company, like a good citizen, has a duty to help make society better, including helping fix problems it did little or nothing to cause

Corporate Social Responsibility

A business model: the company weighs its effects on people and the planet alongside profit, through actions no law requires

Statute

A law passed by a legislature, such as Congress or a state legislature

Regulation

A rule written by a government agency that a legislature created

Ordinance

A law passed by a city or county

Constitutional Law

The highest law. Every other law must follow it, or courts will strike it down

Case Law

Rules that come from judges’ decision in court cases

Precedent

A rule set by an earlier court decision

Stare Decsis

The practice of following precedent. it is Latin for “to stand by the decision”

Board of Directors

A group elected by the shareholders. It sets the company’s big picture policies and hires the officers.

Officers

Managers who run the company day to day and carry out the board’s plans

Inside Director

A board member who is also an officer of the company

Outside (independent) director

A board member who is not an officer of the company

Duty of loyalty

Directors and officers must put the company’s interests ahead of their own

Duty of care

Directors and officers must act carefully and stay informed, like a reasonable person in the job would

Offeror

The person who makes an offer

Offeree

The person who receives the offer

Executed Contract

Both sides have fully done everything they promised

Executory contract

Something is still left to be done

Void

Never a contract at all. It has no legal effect

Voidable

A valid contract that one side can choose to cancel or keep

Unenforceable

A real contract that a court won’t enforce because of a legal barrier

Revocation

The offeror takes back the offer before it is accepted

Rejection

The offeree turns down the offer

Acceptance

The offeree agrees to the exact terms of the offer

Counteroffer

A reply that changes the terms. It ends the original offer and becomes a new offer

Past Consideration

A promise made in exchange for something already done

Preexisting duty

A promise to do something you are already required to do

Illusory Promise

A promise the person can choose not to keep

Objective Intent

What a reasonable person would conclude from someone’s words, actions, and the situation. Courts use this.

Subjective Intent

What someone was privately thinking. Courts ignore it

Procedural

The way the deal was made was unfair. One side had no real choice

Substantive

The terms themselves are harsh or oppressive