BMF 3.1
## Section 3.1: Legal Environment
- I will be able to describe the purpose of contracts
- I will be able to discuss the role of the legal system in business
- I will be able to explain workplace laws and regulations
- We will be able to identify laws and regulations that protect consumers
### How is the US government involved in business activities?
- Contract - a legally binding agreement between two or more people or businesses
- Ensure:
- Customers understand their roles and rights
- Businesses have the materials and resources to operate
- All parties understand the terms of agreement and consequences
- Required elements of legal contracts:
- Offer - proposal to provide a good or service
- Acceptance - all parties involved must agree to the terms of the contract
- Consideration - something of value must be promised in return
- Intention of Legal Consequences - requires that parties entering into the contract must understand that it can be enforced by law
- A signature is NOT required
- Capacity - person is legally able to enter into a binding agreement
- Contract Law - regulates how contracts are written, executed, and enforced
- Breah of Contract - when one or more parties do not follow the agreed terms of a contract without having a legitimate reason
- Business Contracts:
- Sales and Service Contracts - list the goods or services provided by a business and the price the customer pays in exchange
- Lease - a contract to rent something
- Software License - may be considered a tye of lease because the software publisher keeps ownership of the software
- Partnership Agreement - contract used when two or more individuals create a business
- Employee Contract - describes the terms of employment between a business and an employee
- The government regulates certain business activities to reinforce honest business practices and financial responsibility
- Areas of Business Regulation:
- Administrative Law - laws that regulate the activities and procedures of governmental agencies
- Antitrust Law - laws that support fair business practices in a free market economy
- Regulate business activities and practices to ensure fair competition
- Federal Trade Commision (FTC) enforces US antitrust laws
- Fair pricing regulation prevent price discrimination
- Common Law - laws and authority based on previous court rulings and judicial decisions
- Intellectual Property Law - regulations on establishing and enforcing ownership rights for inventions, artistic creations, ideas, and many other types of original work
- Martimie Law - laws that apply to interstate and international commerce activity on bodies of water
- Uniform Commercal Code - laws established to make commercial transactions, such as sales, contracts, and loans, more consisten in all fifty states
- Businesses that operate online have additional e-commerce guidelines and laws
- Electronic Fund Transfer Act (1978) - protect consumers who use electronic fund transfer (EFT) services, including ATMs, point-of-sale terminals, automated bill-payment arrangements, and remote banking programs
- Children’s Online Privacy Protection Act - COPPA (1998) - protects the personal information of children under 13 years of age who are using online services or websites
- Electronic Signatures in Global and National Commerce Act - ESIGN (2000) - allows electronic signatures to be used for interstate and international commerce transactions that require written signatures
- CAN-SPAM Act (2003) - Sets rules for commercial e-mail messages
- US Safe Web Act (2006) - Increases the scope for cooperation to enforce regulations related to spam, spyware, false advertising, breaches in security, and consumer privacy
- Many US laws regulate the financial activities of businesses
- Anititrust Laws - relate to businesses buying or investing in other businesses
- Bankruptcy Laws - apply to the handling of business debts when a business is no longer profitable
- Securities Laws - regulate businesses that have publicly traded stocks and bonds
- Employer Identification Number (EIN) - assigned by the IRS for use when preparing federal tax forms
- Environmental laws and regulations apply to every type of business in every industry
- Environment Protection Agency (EPA) enforces federal human health and environmental laws
- Clean Air Act (1970) - establishes the allowable air pollutant levels emitted by US businesses
- Clean Water Act (1972) - establishes the allowable water pollutant levels emitted by US buisinesses
- Noise Control Act (1972) - protects the public from excessive noise created by business operations
- Energy Policy Act (2005) - provides tax incentives for companies that use energy-efficient methods in the operation of their businesses
- Energy Independence and Security Act (2007) - requires companies to increase the energy efficiency of the products they create, as well as the buildings used for operations
- US Department of Labor (DOL) enforces workplace laws and regulations
- Enforce fair-wage laws and work-hours laws
- Prevent discrimination and harassment in the workplace
- Ensure employee safety
- Employee Protection Laws:
- Fair Labor Standards Act (1938) - establishes the minimum wage, overtime pay, recordkeeping, and youth employment standards
- Comprehensive Omnibus Budget Reconciliation Act (1985) - gives workers who lose their health benefits the optoin to continue the group health benefits provided by their group health plan
- Worker Adjustment and Retraining Notification Act - WARN (1988) - protects workers and communities by requiring employers to provide notice 60 days in advance of plant closings and mass layoffs
- Family and Medical Leave Act (1993) - requires that eligible employees be allowed to take unpaid, job-protected leave for specified family and medical reasons
- Laws regulate relationships between employees and employers
- Work hours and overtime pay
- Retirement income
- Medical leave
- Workplace safety
- Collective Bargaining - negotiating terms with employers and union employees
- Businesses are required to give all workers equal employment and advancement opportunities
- US Equal Employment Opportunity Commission (EEOC) enforces federal laws that regulate unfair employment practices
- Cannot discriminate due to a person’s race, ethnicity, religion, gender, national origin, age, disability, or genetic information
- Equal Employment Opportunity Laws
- Title VII of the Civil Rights Act–Title 7 (1964) - Employers cannot discriminate based on the race, color, religion, national origin, or gender of an individual.
- Pregnancy Discrimination Act (1978) - An addition to Title VII that makes it illegal to discriminate against a woman because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.
- Equal Pay Act (1963) - Employers cannot pay different wages to men and women if they perform equal work in the same workplace.
- Age Discrimination in Employment Act–ADEA (1967) - It is illegal for employers to discriminate against people who are age 40 and older based on age.
- Title I of the Americans with Disabilities Act–ADA (1990) - It is illegal for employers to discriminate against a qualified person with a disability in both the private sector and in government departments. Employers must make reasonable accommodations for known physical or mental limitations of an otherwise qualified individual.
- Section 501 of the Rehabilitation Act (1973) - The federal government cannot discriminate against a qualified employment candidate with a disability.
- The Genetic Information Nondiscrimination Act of 2008 (GINA) - Employers cannot discriminate against employees or applicants because of genetic information, such as information about any disease, disorder, or condition of an individual’s family members.
- Businesses must protect the health and safety of employees in the workplace
- Occupational Safety and Health Association (OSHA) - established by the US Department of Labor to assure the safe working conditions for employees
- Provides training, outreach, education, and assistance to businesses
- Consumer Bill of Rights are basic expectations of fair treatment of consumers
- The right to safety
- The right to be informed
- The right to choose freely
- The right to be heard
- The right to satisfy basic needs
- The right to redress
- The right to consumer education
- The right to a healthy environment
- US Consumer Product Safety Commision (CPSC) is in charge or protecting consumers from products that pose unreasonable risks
- Recall - an order to remove or repair unsafe products in the market
- Manufacturer must fix unsafe component
- Consumer Protection Laws
- Federal Food, Drug, and Cosmetic Act (1938) - gives the US Food and Drug Administration the power to oversee the safety of all food, drugs, and cosmetics
- Fair Packaging and Labeling Act (1966) - requires that product labels identify the product and list the manufacturer’s name and location and net amount of contents
- Truth-in-Lending Act (1968) - requires the disclosure of all finance charges on consumer credit agreements and in the advertising for credit plans
- Child Protection and Toy Safety Act (1969) - protects children from toys and other products that contain thermal, electrical, or mechanical hazards
- Fair Credit Reporting Act (1970) - gives individuals the right to examine and correct their own credit history records
- Consumer Product Safety Act (1972) - gives the Consumer Product Safety Commission the power to protect the public against risks of injury or death from unsafe products
- Nutrition Labeling and Education Act (1990) - requires food labels to list the amount of calories, fat, cholesterol, sodium, and fiber per serving
- Country of Origin Labeling Law (2009) - requires that product labels list a product’s country of origin