Chapter 1 Nature of Law | Definition of Law “a rule of civil conduct prescribed by the supreme power in a state, commanding what is right, and prohibiting what is wrong’ (Blackstone)Functions of Law to maintain stability in the social, political, and economic system through dispute resolution, protection of property, and the preservation of the state, while simultaneously permitting ordered change. Legal Sanctions are means by which the law enforces the decisions of the courts.Law and Morals are different but overlapping; law provides sanctions, while morals do not.Law and Justice are separate and distinct concepts; justice is the fair, equitable, and impartial treatment of competing interests with due regard for the common good. | Classification of Law | Substantive and Procedural Law * Substantive Law: Law creating rights and duties. * Procedural Law: Rules for enforcing substantive law.Public and Private Law * Public Law dealing with the relationship between government and individuals. * Private Law governing the relationships among individuals and legal entities.Civil and Criminal Law * Civil Law dealing with rights and duties the violation of which constitutes a wrong against an individual or other legal entity. * Criminal Law establishing duties, which, if violated, constitute a wrong against the entire community. | Source of Law | Constitutional Law fundamental law of a government establishing its powers and limitations.Judical Law * Common Law body of law developed by the courts that serves as precedent for determination of later controversies. * Equity body of law based upon principles distinct from common law and providing remedies not available at law.Legislative Law statues adopted by legislative bodies. * Treaties agreements between or among independent nations. * Executive Orders laws issued by the President or by the governor of a State.Administrative Law body of law created by administrative agencies to carry out their regulatory powers and duties. |

Chapter 2 Definitions | Ethics study of what is right or good for human beings.Business Ethics study of what is right and good in a business setting. | Ethical Theories | Ethical Fundamentalism individuals look to a central authority or set of rules to guide them in ethical decision making.Ethical Relativism actions must be judged by what individuals subjectively feel is right or wrong for themselves.Situational Ethics one must judge a person’s actions by first putting oneself in the actor’s situation.Utilitarianism moral actions are those that produce the greatest net pleasure compared with net pain. * Act Utilitarianism assesses each separate act according to whether it maximizes pleasure over pain. * Role Utilitarianism supports rules that on balance produce the greatest pleasure for society. * Cost-Benefit Analysis quantifies the benefits and costs of alternatives.Deontology actions must be judged by their motives and means as well as their results.Social Ethics Theories focus is on a person’s obligations to other members in society and also on the individual’s rights and obligations within society. * Social Egalitarians believe that society should provide all its members with equal amounts of goods and services regardless of their relative contributions. * Distributive Justice stresses equality of opportunity rather than results. * Libertarians stress market outcomes as the basis for distributing society’s rewards.Other Theories * Intuitionism a rational person possesses inherent power to assess the correctness of actions. * Good Person individuals should seek out and emulate good role models. | Ethical Standards in Business | Choosing an Ethical System Kohlberg’s stages of moral development is a widely accepted model (see Figure 2-1, page 19)Corporations as Moral Agents because a corporation is a statutorily crated entity, it is not clear whether it should be held morally responsible. | Ethical Responsibilities of Business | Regulation of Business governmental regulation has been necessary because all the conditions for perfect competition have not been satisfied free competition cannot by itself achieve other societal objectives.Corporate Governance vast amounts of wealth and power have become concentrated in a small number of corporations, which are in turn controlled by a small group of corporate officers.Arguments against Social Responsibility * Profitability because corporations are artificial entities established for profit-making activities, their only social obligation should be to return as much money as possible to shareholders. * Unfairness whenever corporations engage in social activities such as supporting the arts or education, they divert funds rightfully belonging to shareholders and/or employees to unrelated third parties. * Accountability a corporation is subject to less public accountability than public bodies are. * Expertise although a corporation may have a high level of expertise in selling its goods and services, there is absolutely no guarantee that any promotion of social activities will be carried on with the same degree of competence.Arguments in Favor of Social Responsibility * The Social Contract because society allows for the creation of corporation and gives them special rights, including a grant of limited liability, corporations owe a responsibility to our society. * Less Government Regulation by taking a more proactive role in addressing society’s problems, corporations create of trust and respect that has the effect of reducing government regulation. * Long-Run Profits corporate involvement in social causes crates goodwill, which simply makes good business sense. |