Ethical Theories and Legal Principles in Business and International Law

Blanchard and Peale

Is it legal? Is it balanced? How does it make me feel?

Categorical Imperative (Kant)

One ought only to act such that the principle of one's act could become a universal law of human action in a world in which one would hope to live.

Contractarians and Justice

Putting ethical standards in place by a social contract; using rational thinking, people would develop a set of rules that everyone can agree on.

Divine Command Theory

Ethical standards are based upon religious beliefs.

Ethical Egoism

We all act in our own self-interest and limit our judgments to our own conduct, not the conduct of others.

Ethics

The unwritten rules we have developed for our interaction with each other.

Front Page of the Newspaper Test

Contemplating any business act, an employee should ask himself whether he would be willing to see it immediately described by an informed and critical reporter on the front page of his local paper, there to be read by his spouse, children, and friends.

Laura Nash

(1) Have you defined the problem accurately? (2) How would you define the problem if you stood on the other side of the fence? (3) How did this occur in the first place? (4) To whom and what do you give your loyalties as a person and as a member of the corporation? (5) What is your intention in making this decision? (6) How does this intention compare with the likely results? (7) Whom could your decision or action injure? (8) Can you engage the affected parties in a discussion of the problem before you make your decision? (9) Are you confident that your position will be as valid over a long period of time as it seems now? (10) Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family, or society as a whole? (11) What is the symbolic potential of your action if understood? If misunderstood? (12) Under what conditions would you allow exceptions to your stand?

Categories of Ethical Dilemmas

a. Taking things that don't belong to you. b. Saying things you know are not true. c. Giving or allowing false impressions. d. Buying influence or engaging in conflicts of interest. e. Hiding or divulging information. f. Taking unfair advantage. g. Committing acts of personal decadence. h. Perpetrating interpersonal abuse. i. Permitting organizational abuse. j. Violating rules. k. Condoning unethical conduct. l. Balancing ethical dilemmas.

Methods We Use to Avoid Analyzing Ethical Dilemmas

Re-labeling (copyright infringement vs. peer-to-peer file sharing) and rationalizing.

Moral Relativists

Time-and-place ethics; making ethical choices based on the circumstances.

primum non nocere

Above all do no harm.

Rights Theory

Everyone has a set of rights and it is the role of government to enforce those rights.

Steps to Follow for Analyzing an Ethical Dilemma

1. Make sure you have a grasp of all of the facts available. 2. List any information you would like to have but don't and what assumptions you would have to make, if any, in resolving the dilemma. 3. Take each person involved in the dilemma and list the concerns they face or might have. 4. Develop a list of resolutions for the problem. 5. Evaluate the resolutions for costs, legalities, and impact. 6. Make a recommendation on the actions that should be taken.

Utilitarian Theory

Greatest good for the greatest number of people.

Virtue Ethicists

Develop virtues and determine conduct by those virtues.

Wall Street Journal Test

Is this in compliance with the law? What contribution does this make to the company, shareholders, community and others? What are the long-term and short-term consequences of the decision?

Censorship

According to the American Civil Liberties Union (ACLU), it is the "Suppression of words, images, or ideas that are 'offensive'.

Enlightened Self-interest School of Social Responsibility

Advises managers to be responsible to shareholders by being responsive to the larger society.

Inherence School of Social Responsibility

Advises managers to serve shareholders and to act only with shareholders' interests in mind.

Invisible Hand School of Social Responsibility

Role of business is to serve larger society and it does so best when serving shareholders only.

Social Responsibility School of Social Responsibility

Role of business is to serve larger society, so it should serve the needs of the larger society.

Morals clause

Part of a contract for actors, athletes and others that prohibits private conduct that would subject that person to public ridicule.

Shareholders

Owners of shares of stock in a corporation.

Stakeholders

Groups of people who are impacted by a company's business decisions including customers, suppliers and the government.

Steroids

Prescription medication often used illegally to increase the performance of competitive athletes.

"Toes to the Line" philosophy

Doing no more than what is required under the law while violating the spirit (or intent) of the law.

Affirm

When the appellate court upholds the lower court's decision.

Appellant (or petitioner)

The party who appeals a lower court's decision.

Appellate Court

A court of review that reviews the trial court proceedings for errors of law and procedure.

Attorney-client privilege

An attorney cannot disclose statements or information given by the client.

Concurrent Jurisdiction

Authority of more than one court to hear a case.

Contentious Jurisdiction

Consensual jurisdiction of a court that is consented to when the parties have a dispute; for example, UN courts.

Court of Justice of European Communities

The court of dispute settlement for the nations of the European Community.

Defendant

Party who is alleged to have committed a wrong in a civil lawsuit; the charged party in a criminal prosecution.

Diversity of citizenship

A requirement for federal court jurisdiction whereby the plaintiff and defendant must be citizens of different states. [Note that the amount in controversy must be $75K or more as well.]

European Court of Human Rights

A noncommercial court dealing with disputes over the treatment of a country's citizens.

Federal Circuits

Geographic groupings of the federal district courts for purpose of appellate jurisdiction.

Federal District Court

The trial court of the federal system.

In Personam jurisdiction

Jurisdiction over a person.

In Rem Jurisdiction

A method whereby a court obtains jurisdiction by having property or money located within its geographic jurisdiction, provided that the property is the subject of the dispute.

Inter-American Court of Human Rights

In international law, the court for resolution of noncommercial issues or the violation of human rights by a particular nation in North or South America.

International Court of Justice (ICJ)

Voluntary court in the international system of law; nonbinding decisions.

Jurisdiction

The power of a court to settle disputes.

Limited Jurisdiction

Specialty courts that have only limited authority over certain types of cases with distinct subjects matter; probate courts have limited jurisdiction over probate matters only.

Long-Arm Statutes

Statutes in each state that allow the courts to bring in defendants from outside the state so long as they have some 'minimum contact' with the state.

Minimum Contacts

Standard used for determining in personam jurisdiction over residents outside the state of the court of litigation; nonresident defendants must have some relationship with the state to justify a court taking jurisdiction.

Modify

Action of an appellate court when it agrees with the trial court's verdict changes the judgment amount of the remedy.

Plaintiff

Party filing suit, who is alleging a wrong committed by the defendant.

Precedent

Prior judicial decisions.

Remand

When an appellate court sends a case to the a trial court for retrial or other proceeding as the result of the appellate court's decision.

Respondent (or Appellee)

The party against whom a petition or an appeal is filed.

Reverse

Action of an appellate court in changing the decision of a lower court.

Reversible error

Mistake made in lower court proceedings that is sufficient in magnitude to change the outcome of a case.

Small Claims Court

Specialized court designed to allow the hearing of claims of limited monetary amounts without the complexities of litigation and (usually) without attorneys.

Stare Decisis

The principle of adhering to the rule of law from prior decisions.

Trial Court

The court where the case is initially presented and witnesses testify.

U.S. Supreme Court

The highest appellate court in the federal system and also the highest appellate court for state appeals.

Venue

Geographic location of a trial.

Acts of state doctrine

Each country's governmental actions are not subject to judicial review by the courts in other countries.

Bilateral Treaty

In international law, a treaty between two nations.

Civil Law

These are laws affecting the private rights of individuals. They are enforced by the individuals who are harmed.

Common Law

The legal customs from England that were adopted by the courts which are now considered to be judicial precedent in the US.

Constitution

Document that contains an individual's basic rights in a society and the structure of the government.

Criminal Laws

Wrongs against society that are enforced by the government.

Equity

That portion of the law that originated to give remedies when money damages were not appropriate or adequate.

Injunction

Equitable remedy in which courts order someone to stop a particular activity.

Jurisprudence

The philosophy of law.

Ordinances

Laws at the city, town, or county level.

Party autonomy

The right of parties to determine privately their choice of law.

Statutory Laws

Laws that are passed by some governmental entity.

Universal Treaty

A treaty accepted and recognized by all countries.

Alternative Dispute Resolution (ADR)

Means other than litigation used to resolve disputes and claims; includes arbitration, mediation, and negotiated settlements.

Answer

Pleading filed by the defendant containing the defendant's version of the basis of the suit.

Binding Arbitration

Arbitration from which there is no judicial appeal.

Burden of Proof

The responsibility of the party for providing the facts needed to recover in a lawsuit.

Class action suits

Civil suits by a group of plaintiffs with the same claims.

Complaint

Pleading that outlines the plaintiff's allegations against the defendant and the remedies sought.

Counterclaim

Pleading in a lawsuit in which the defendant makes allegations against the plaintiff in response to the plaintiff's complaint.

Default

Judgment entered when the defendant fails to file an answer or other responsive pleading in a lawsuit.

Depositions

Form of discovery in which witnesses or parties can be questioned under oath in recorded testimony outside the courtroom.

Derivative suit

Lawsuit brought on behalf of another through the other's rights; for example, a shareholder suing to enforce a corporation's rights.

Discovery

Pretrial process to gather evidence for a case.

Equitable remedy

A remedy other than money damages, such as specific performance, injunction, and so on.

Injunctions

Equitable remedy in which the courts order or stop a particular activity.

International Chamber of Commerce (ICC)

Voluntary body with uniform rules on commerce and contracts.

Interrogatories

Method of discovery in which parties send written questions to each other, with responses that are given under oath.

Legal remedy

In common law, a legal remedy consisted of money damages only.

Mediation

ADR mechanism in which a third party helps the parties come to an agreement that settles a dispute.

Minitrial

ADR method in which the officers of two firms in a dispute listen to the key evidence in a case to see if a settlement can be determined.

Motion

A party's request to the court for action.

Peremptory Challenge

Right to strike jurors with or without cause (usually limited in number).

Pleadings

The complaint, answer, and counterclaim filed in a lawsuit.

Prima Facie Case

A case establishing all the necessary elements; without rebuttal evidence from the defendant, entitles the plaintiff to a verdict.

Process servers

Individuals licensed by a state to deliver summonses and subpoenas to individuals.

Rent-A-Judge

ADR method in which the parties hire a former judge and a private hearing room and the judge determine liability.

Request for Admissions

Discovery tool in which one side asks the other to admit certain facts in a case.

Request for Production

Discovery tool in which one side asks the other side to produce documents relevant to the case.

Specific performance

Equitable remedy in which party asks for performance of the contract as damages.

Statute of limitations

Statute controlling the time periods in which suits must be brought by plaintiffs.