Transcript Slide 1
Bonus Chapter A
Working within the Legal Environment
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Bonus Chapter A
LEARNING GOALS
1.
Define business law, distinguish between statutory and common law, and explain the role of administrative agencies.
2.
Define tort law and explain the role of product liability in tort law.
3. Identify the purposes and conditions of patents, copyrights, and trademarks.
4.
5.
Describe warranties and negotiable instruments as covered in the Uniform Commercial Code.
List and describe the conditions necessary to make a legally enforceable contract, and describe the possible consequences if such a contract is violated.
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Bonus Chapter A
LEARNING GOALS
6. Summarize several laws that regulate competition and protect consumers in the United States.
7. Explain the role of tax laws in generating income for the government and as a method of discouraging or encouraging certain behaviors among taxpayers.
8. Distinguish among the various types of bankruptcy as outlined by the Bankruptcy Code.
9. Explain the role of deregulation as a tool to encourage competition.
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Profile
KENNETH FRAZIER
Merck • Frazier started as Merck ’ s general counsel in 1999. • Greatest challenge was a sea of lawsuits involving Vioxx. • Frazier won 11 of 16 lawsuits at trial before agreeing to a settlement fund. A-4
Bonus Chapter A
NAME that COMPANY
This automaker sells more cars in the United States than any other auto producer. In 2010 2011, however, the company was forced to recall 3 million cars due to sudden accelerator incidents. It ’ s likely the company will face years of litigation from customers that were affected by the product problem. Name that company!
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The Case for Laws
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The NEED for LAWS
• Laws are a key part of a civilized society, but must change with the times.
•
Judiciary --
The branch of government chosen to oversee the legal system through a system of courts.
• The U.S. courts system is organized at the federal, state, and local levels.
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The Case for Laws
LG1
TYPES of COURT
• Trial courts hear cases of criminal and civil law.
• Appellate courts hear appeals from the losing party at the trial court level.
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The Case for Laws
LG1
TYPES of LAW
•
Criminal law
defines crimes, establishes punishments, and regulates the investigation and prosecution of people accused of committing crimes.
•
Civil law
proceedings cover non-criminal acts divorce, personal injury lawsuits and more.
•
Business Law --
Refers to the rules, statutes, codes and regulations that provide a legal framework for the conduct of business.
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Statutory and Common Law
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MAJOR AREAS of LAW
•
Statutory Law --
Includes state and federal constitutions, legislative enactments, treaties of the federal government and ordinances; written law.
•
Common Law --
The body of law that comes from decisions handed down by courts; unwritten law.
•
Precedent --
Decisions judges have made in previous cases to guide their handling of new cases.
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Administrative Agencies
LG1
ADMINISTRATIVE AGENCIES
•
Administrative Agencies --
Federal or state institutions and other government organizations with delegated power to create rules and regulations within their given area of authority.
• Examples of Administrative Agencies: The Federal Reserve Board The Securities and Exchange Commission The Equal Employment Opportunity Commission The Federal Trade Commission A-10
Progress Assessment
PROGRESS ASSESSMENT
• What is business law?
• What is the difference between statutory and common law?
• What is an administrative agency?
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Tort Law
WHAT is TORT LAW?
LG2
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Tort --
A wrongful act that causes injury to another person
’
s body, property or reputation.
• An intentional tort is a willful act that results in injury.
•
Negligence –
Behavior that causes unintentional harm or injury.
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Product Liability
LG2
PRODUCT LIABILITY LAWS
•
Product Liability --
Holds businesses liable for harm that results from the production, design, or inadequate warnings of products they market.
•
Strict Product Liability --
Liability without regard to fault; a company can be held liable for a defective product even if they didn
’
t know of the defect.
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Product Liability
LG2
MAJOR PRODUCT LIABILITY CASES
Company
Ford Motor Company A.H. Robins Jack In the Box General Motors Major Tobacco Firms
Year
1978 1987 1993 1999 2004
Settlement
$125 million in punitive damages awarded after a boy was severely burned during a rear end collision Dalkon Shield recalled after eight separate punitive damage settlements Assessed large damages after a child died of E. coli and others became ill Paid $4.8 billion in damages in faulty fuel-tank case $130 billion sought by the federal government for smoking cessation programs (settled for $10 billion) A-14
Legally Protecting Ideas: Patents, Copyrights and Trademarks
LG3
PATENTS, COPYRIGHTS, and TRADEMARKS
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Patent --
A document that gives inventors exclusive rights to their inventions for 20 years.
•
Copyright --
Protects a creator
’
s rights to materials such as books, articles, photos, paintings, and cartoons.
• A trademark is a legally protected name, symbol, or design that identifies the goods or services of a seller.
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Legally Protecting Ideas: Patents, Copyrights and Trademarks
LG3
PATENT FACTS
• Patent applicants should seek the advice of a lawyer.
• Foreign applicants are eligible to file for U.S. patents.
• Patent owners have the right to sell or license the use of their patent to others.
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Legally Protecting Ideas: Patents, Copyrights and Trademarks
LG3
PATENT LEADERS in 2010
Company
IBM Samsung Microsoft Canon Panasonic
# of Patents
5,896 4,551 3,094 2,552 2,482
Home Country
USA Korea USA Japan Japan Source: IFI Patent Intelligence, www.ificlaims.com
, accessed July 2011.
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Progress Assessment
PROGRESS ASSESSMENT
• What is tort law?
• What is product liability? What is strict product liability?
• How many years is a patent protected from infringement?
• What is a copyright?
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Sales Law: The Uniform Commercial Code
LG4
WHAT is the UNIFORM COMMERCIAL CODE?
•
Uniform Commercial Code (UCC) --
A comprehensive commercial law that covers sales laws and other commercial laws.
• The UCC has 11 articles that contain laws covering a wide range of business issues.
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Warranties
UNDERSTANDING WARRANTIES
LG4
• A warranty guarantees that the product sold will be acceptable for the purpose for which the buyer intends to use it.
•
Express Warranties --
Specific representations made by the seller that buyers rely on regarding the goods they purchase.
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Implied Warranties --
Legally imposed on the seller, who implies that a product will conform to the standards of trade.
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Negotiable Instruments
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NEGOTIABLE INSTRUMENTS
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Negotiable Instruments --
Forms of commercial paper that are transferable among businesses and individuals.
• Four conditions for using negotiable instruments: 1. They must be written and signed by the maker or drawer.
2. Be made payable on demand or at a certain time.
3. Be made payable to the bearer.
4. Contain an unconditional promise to pay a specified amount.
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Contract Law
LG5
CONTRACT LAW
•
Contract --
A legally enforceable agreement between two or more parties.
•
Contract Law --
Specifies what constitutes a legally enforceable agreement.
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Breach of Contract --
When one party fails to follow the terms of a contract.
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Contract Law
CONTRACT REQUIREMENTS
LG5
• A contract is
legal
and
binding
when: 1.
An offer is made 2.
There ’ s a voluntary acceptance of the offer 3.
Both parties give consideration 4.
Both parties are competent 5.
The contract covers a legal act 6.
The contract is in the proper form A-23
Contract Law
LG5
BREACHED CONTRACTS
• If a contract is breached the following may be ordered: Specific performance Payment of damages Discharge of obligation A-24
Progress Assessment
PROGRESS ASSESSMENT
• What Is the purpose of the Uniform Commercial Code (UCC)?
• Compare express and implied warranties.
• What are the four elements of a negotiable instrument specified in the UCC?
• What are the six conditions for a legally binding contract? What could happen if it ’ s breached?
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The History of Antitrust Legislation
LG6
The CLAYTON ACT of 1914
• The Clayton Act prohibits: Exclusive dealing Tying contracts Interlocking directorates A-26
The History of Antitrust Legislation
LG6
ANTITRUST LEGISLATION
•
The Federal Trade Commission Act of 1914
created the FTC and prohibits unfair methods of competition in commerce.
•
The Wheeler Lea Amendment of 1938
gave the FTC additional control over false and misleading ads.
•
The Robinson-Patman Act of 1936
prohibits price discrimination and applies to buyers and sellers.
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The History of Antitrust Legislation
LG6
HISTORY of HIGH PROFILE ANTITRUST CASES
Case
U.S. v. Standard Oil U.S. v. American Tobacco U.S. v. E. I. du Pont de Nemours U.S. v. AT&T
Year
1911 1911 1961 1982 U.S. v. Microsoft 2000
Outcome
Standard Oil broken into 34 companies American Tobacco split into 16 companies DuPont ordered to divest its 23% ownership in General Motors Settled after Ma Bell spun off into regional companies Microsoft ordered to halt prior anticompetitive practices A-28
Laws to Protect Consumers
LG6
CONSUMER PROTECTIONS
•
Consumerism --
A social movement that seeks to increase and strengthen the rights and powers of buyers in relations to sellers.
• The collapse of the real estate market and crisis in the banking industry led to the Dodd-Frank Wall Street Reform and Consumer Protection Act. • Dodd-Frank created the Consumer Financial Protection Bureau.
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Laws to Protect Consumers
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NUMBER of IDENTITY THEFT COMPLAINTS
Source: Federal Trade Commission, www.ftc.gov
, accessed July 2011. A-30
Tax Laws
LG7
TAXES
•
Taxes --
The way federal, state, and local governments raise money.
• Some forms of taxes: Income taxes Property taxes Sales taxes Excise taxes A-31
Tax Laws
SIN TAXES
State Tax Rates per Pack of Cigarettes
LG7 State(s)
New York Rhode Island Washington Connecticut & Hawaii New Jersey Wisconsin Massachusetts Source: National Conference of State Legislators, www.ncsl.org
, accessed July 2011.
Rate per Pack
$4.35
$3.46
$3.02
$3.00
$2.70
$2.52
$2.51
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Tax Laws
LG7
DO the RICH PAY TAXES?
Taxpayers
Top 1% Top 5% Top 25% Top 50%
Bottom
50%
% of Total Taxes
40% of total taxes 60% of total taxes 86% of total taxes 97% of total taxes 3% of total taxes Source: IRS, Statistics of Income, www.irs.gov
, accessed July 2011. A-33
Bankruptcy Laws
LG8
BANKRUPTCY LAWS
•
Bankruptcy --
The legal process by which a person, business, or government entity, unable to meet financial obligations, is relieved of those debts by a court.
• Options of declaring bankruptcy: Chapter 7: Straight bankruptcy Chapter 11: Reorganization Chapter 13: Repayment plan A-34
Bankruptcy Laws
LG8
CHAPTER 7 BANKRUPTCY
• Creditors with secured claims receive their collateral or repossess the asset.
• Unsecured claims are paid in this order: 1) Costs of the bankruptcy case 2) Any business costs after filing 3) Wages, salaries, commissions 4) Contributions to employee benefits 5) Refunds to consumers for products not delivered 6) Federal and state taxes A-35
Bankruptcy Laws
LG8
How ASSETS are DIVIDED in BANKRUPTCY
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Bankruptcy Laws
LG8
GOING, GOING, GONE
Big Bankruptcies of 2008-2011 • Circuit City • KB Toys • Linens ‘ n Things • Mrs. Field ’ s Cookies • Borders A-37
Deregulation vs. Regulation
LG9
DEREGULATING COMMERCE
•
Deregulation --
The government withdraws certain laws and regulations that seem to hinder competition.
• Deregulation efforts were active in: The airline industry Telecommunication Some public utilities A-38
Deregulation vs. Regulation
LG9
HAMBURGER REGULATIONS
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Progress Assessment
PROGRESS ASSESSMENT
• What is the primary purpose of antitrust law?
• Describe the different bankruptcy provisions under Chapters 7, 11, and 13.
• What is deregulation? Give examples of successful and unsuccessful deregulation.
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