Business Law Module 6

ethics

moral set of principles and values that govern the conduct of an individual or group

ethics vs law

ethics provide a foundation to law but what is legal is not always ethical

5 business ethics principles

ethical fundamentalism, utilitarianism, kantian, rawl’s social justice theory, ethical relativism

ethical fundamentalism

person looks to an outside sources for ethical rules

could be religious text or a person (bible or marx)

these sources provide clear lines between right and wrong

utilitarianism

moral theory that dictates that people must choose the action or follow the rule that provides the greatest good to society

difficult to estimate what the greatest good means for society

kantian ethics

immanuel kant

also called deontological ethics

“do unto others as you would have them do unto you”

people have a moral duty to follow universal rules

consistency (all cases are treated alike) reversibility (if you are going to make an exception for yourself that becomes a universal rule for all)

difficult to determine what universal rules should be

rawl’s social justice theory

social contract that states every person is presumed to have entered a social contract with all others to obey moral rules that are necessary for peace and harmony

“i will follow the rules if everyone else does”

ethical relativism

people decide what is ethical based on their feelings about right and wrong

people reach their own moral decisions instead of those from society

4 theories of social responsibility in business

maximize profits, moral minimum, stakeholder interest, corporate citizenship

maximize profits

traditional view of the social responsibility of business

interests of employees, suppliers, surrounding residents are not important compared to profit

moral minimum

make a profit while avoiding causing harm to others

as long as social injury is avoided the business has met its duty of social responsibility

stakeholder interest

corporation must consider the effects its actions have on other stakeholders

must consider the needs of employees, suppliers, customers, creditors, and the community

corporate citizenship

business has a responsibility to do good for society

corporations must promote the same social goals as individual members of society

administrative law

law enacted by governments that regulate industries and businesses and professionals

also known as regulatory statutes

administrative agencies

created by federal, state, and local governments to enforce regulatory statutes

can be large or small (department of agriculture to local zoning board)

more than 100 federal administrative agencies

specific government regulation

laws that regulate specific industries

industry specific administrative agencies are created to make these laws (FCC: TV and radio, FAA: aviation, office of comptroller and currency: licensing and operation of national banks)

general government regulation

government regulation that applies to many industries

national labor relations board regulates unions, occupational health and safety administration, US equal employment opportunity commission

cabinet-level departments

report directly to the president

each department head is appointed by the president and confirmed by the senate

15 cabinet-level departments: agriculture, commerce, defense, education, energy, HHS, homeland security, interior, housing, labor, justice, state, transportation, treasury, veterans affairs

federal administrative agencies

created by congress to regulate key areas of the national economy

SEC: regulates trading of securities, FTC: enforces antitrust and consumer protection, FCC: regulates radio and TV broadcasting

state and local administrative agencies

regulate business activity within the state by enforcing statutes and adopting rules and regulations to interpret their statutes

local administrative agencies are created to administer local regulatory law

substantive administrative law

law that administrative agency enforces (federal statutes enacted by congress or state statutes enacted by state legislatures)

procedural law

establishes the procedures that must be followed by an administrative agency while enforcing substantive law

administrative law judge

judge that presides over questioning of law and fact concerning a case

each ALJ is an employee of an administrative agency

the administrative agency and respondent must be represented with counsel

powers of administrative agencies

when an administrative agency is created, certain powers are delegated to it

the powers delegated are called the delegation doctrine

if an agency acts outside of the scope of its delegated powers it commits an unconstitutional act

legislative powers delegated to administrative agencies

substantive rulemaking, interpretive rulemaking, issuing statements of policy, granting licenses

judicial powers delegated to administrative agencies

ability to adjudicate cases through an administrative proceeding

must comply with the due process clause

prodedural due process requires the respondent to be given proper and timely notice of the allegations or charges against them

executive powers delegated to administrative agencies

ability to investigate and prosecute violations of statutes, administrative rules, and administrative orders

may issue an administrative search (subpoena) to search the business

government in the sunshine act

govt agencies must open their meetings to the public

meetings with criminals, issuance of a subpoena, times where audience would frustrate, and day to day operations meetings do not have public openings

equal access to justice act

protects people from harassment by federal administrative agencies

conduct must be extreme before an award can be made

federal privacy act

prevents individuals from overreach from federal agencies

agencies can only obtain information that is relevant and necessary to accomplish a legitimate purpose

caveat emptor

let the buyer beware

led to adulterated food products and unsafe products on the market

consumer protection laws

laws that prohibit false and deceptive business practices

us department of agriculture (usda)

creates policies that govern production and sale of meat, poultry, and eggs

brings actions against parties that sell or distribute adulterated food or make false/deceptive statements about meat and poultry

usda labeling requirements

meat, poultry, and eggs must be labeled

fruits and vegetables have optional labeling

organic foods production act

enacted in 1990

established a certification program for producers and handlers of agricultural products that have been produced organically

food, drugs, and cosmetic act (fdca) / food and drug administration (fda)

regulates the safety of food, drugs, cosmetics, and medical devices

• safety and labeling of food products

• prohibits adulterated food

• regulates drugs

• requires cosmetics to disclose ingredients

• regulates medical devices (pacemakers, dialysis, defibrillators etc)

nutrition labeling and education act

requires food manufacturers to provide a statement of ingredients and nutrition information on most foods

menu labeling rule

restaurants with more than 20 locations must disclose calorie counts and supply information on how many calories one should eat each day

consumer product safety act (cpsa)

created consumer product safety commision (cpsc)

enforces rules of defective and faulty products

• requires recall notices and other remedies for violations of the act

consumer product safety improvement act (cpsia)

sets requirements for testing and documentation of safety of products

decreases the levels of acceptable possible harmful substances

requires children’s toys to be safe

national highway traffic safety administration

national traffic and motor vehicle safety act:

• regulates the safety of automobiles, suvs, trucks, EVs, etc.

• creates NHTSA

federal trade commision

federal trade commision act

• regulate business conduct

• enact consumer protection laws

• combat false and deceptive advertising from corporations

freedom of information act

govt documents must be open to the public, published in the federal register

section 5 of the federal trade commision act

prohibits unfair methods of competition and deceptive business actions