Legal Environment of Business - Term Paper Example

Legal Environment of Business. Legal environment of business relates to the legal concepts and principles which impact upon business. An organizationhas a legal obligation for producing and selling a particular product. The organization must follow the legal rules and regulations for manufacturing and selling of their products. These legal matters regulates the legal liability of an organization. In the modern complex business environment, all businesses need to have proper awareness of their social responsibilities.The successful growth of a business is related to its responsibilities to the society. All manufacturers and sellers seek to ensure that their products satisfy the customers’ needs and also meet the legal norms. The main responsibility of a business is to provide quality products to the customers, and also protect the market from illegal activities and sale of harmful and defective products. There are several Government Organizations instituted for controlling and protecting the market from illegal business activities like Black marketeering, adulterating and selling defective and dangerous products. These activities are illegal and are considered as offences. All consumers purchase products for their use and they expect utility value from those products. When a consumer buys a product, he is solely liable for all problems that may arise from that product.A legal issue that may arise from this crisis in called Product Liability. The law protects the consumer from damaged or dangerous products. Usually manufactures use labels and other statutory warnings to inform the consumers about any problem associated with the products before they are bought, “Product liability refers to a manufacturer or seller being held liable for placing a defective product into the hands of a consumer.”(What is product liability? (2007) (http://injury.findlaw.com/defective-dangerous-products/defective-dangerous-products-law/defective-dangerous-products-law-overview.html). Normally the product liability Act requires that a product must meet the normal expectations of a buyer.A defective or dangerous products cannot meet the expectations of the buyers. In the US, product liability claims depend on the state laws and these laws vary from state to state. There is no federal product liability law, and mainly this laws are claimed depending upon negligence of the manufacturers. Product liability claims can only be entertained when the customers show the tangible defects of the product in Court.Manufacture has a great responsibly to ensure quality in the Production and sale of their goods. Currently, the liability of manufacture for defective or dangerous products have increased. The Government and the judiciary follow the ‘strict liability’ and it is highly cognizable offence. Legal liability is a liability of an organization to the legal system of a country.All organizations of a country are responsible for obeying the legal rules and regulations of the country. They are liable to compensate customers for any negligent activities in their business function, includes production and sale for which,they are liable to compensate customers. Products liability relates to the liability of all parties involved in the function of manufacturing and selling of any damaged or defect products. All chain members are liable to ensure the quality and fitness of the products they deal in,. it is starts from the Manufacture at the top of the chain and the wholesaler and retailer at the bottom of chain, so that every members, of any stage, has his own responsibility to provide quality and fitness to products and protect customers from dangerous products. “Products liability claims can be based on negligence, strict liability, or breach of warranty of fitness depending on the jurisdiction within which the claim is based.”(Product liability law: an overview Legal information institute, Wex) (http://www.law.cornell.edu/wex/index.php/Products_liability). Most of the product liability issues are related to manufacturers’ negligence in production and selling.Product liability Claims, are mainly of three possible types: Claim on Product design defects Claim on manufacturing defects. Claim on Marketing defects. These three defects are the liabilities of the manufacturers and they are responsible to give compensation to the consumers, but in case of the customer’s incorrect usage and purchase of date expired products,the manufacturers are not liable, and it is the customer’s responsibility to use the product correctly and buy new products from the original manufacture. The case of product liability, and other consumer cases are mainly based on where the customer buy a product and whether it is it new or old. There are many Governmental statutory bodies which control and ensure that the product is not harmful to the consumers. Generally, Product Liability is considered as Strict Liability offence in the business. Since defects in the Product Design are problems occuring in the product design stage, organization must ensure that the real customer requirements and their products design are met..The main problem relating to the design defect is that customer are not aware of the usage of the new products; incorect usage creates problems for customers. The law also relates to the proper usage of a particular product. Some customers fail to understand the real functions of a particular product and their wrong usage may cause the malfunctioning of the product, which may result in harm to the customers or their users.The law relating to this area says that some products need proper information on its usage so the manufacturers need to provide proper guide lines and user menus along with the products.Another important aspect about product liability is that manufacture cannot give any guarantee regarding second hand products and so, are not able to give any protection regarding these products. the main aspect is that customers should ensure the quality and fitness of products before buying them. Car seats Unlimited Inc.,is an Ontario Corporation. Their problem is relating to the marketing of car seats for children. The requirement of the product is to protect childrens from automobile accidents. In all stages of its manufacturing, this product ensures its quality and fitness but there is a problem relating to its incorrect usage by the customers. Parents,mainly, use these child seats for protecting their Children from accidents.But, mainly, the problems reported are relating to factors of poor design, incorrect use, inadequate warning of the child seats,which may cause injuries to children. The problem of legal liability relating to the childs’ car seats in manufactures are their irresponsible manufacturing and marketing of products and other problem in manufacturing. Also, failure in providing proper guide lines of the product use to customers. Many of such cases are negligence on the part of the manufacturers.. Other main problem relate to customers. They are confused with the labels regarding poor information about children car seat use and many customers are troubled with this labels. Most of the child car seat liability cases based on misuse of the product by the customer are successfully litigated. “Most infant seats rely upon a "bib" clip to keep the harness straps in proper position. If the clip, which is plastic, breaks or is deformed, the infant can be easily ejected.”(Types of defects – is there a case?, Child car Restraints: Safety Takes A Back seat) (http://www.clarkgoldner.com/CM/Articles/Child-Car-Restraints-Safety-Takes-A-Back-Seat.asp) Another main problem relating to children car seats is its weak production materials, defective handles, and child car seat manufacturers which are liable for injuries resulting from their defective products. In this context, Car seats Unlimited Inc. the case is relating, mainly, to the parents’ failure for proper usage of child car seats. In this case study, the manufacturer of the child car seat is not having a mistake in their design and production, but the main problem here is, customers lack of awareness in use of the product, and incorrect use of child car seat may cause injuries to the children causing accidents.This problem forces the company to provide product liability to their customers. mainly the case only considers the evidence of accident and customers report. Cases are filed against the manufacturers for defective manufacturing, but the real problem is that customers make incorrect use of products. Many manufactures defend themselves by collecting customers feed back about products performance and they receive complaints through companies customer care departments, uphold these reports and present this reports as evident of their products fitness. Another key problem is that some customers sell used child seats to other peoples.These child seats are not fit for use and are not able to protect children from road accidents and are unsuccessful in protecting children from such situations. A manufacturer is not legally responsible to ensure the quality and fitness of second hand products. Primarily the parents want to make sure about the fitness of the products and the proper use of the child seats. The manufacturer of the children car seat can manage this problem by making the seats extra comfortable and user friendly and thus protecting the children, but these Design changes require high research and development expenses for the organization and also using of high quality materials for production,which will affect the price of the product. The price increase of the child seat also creates problems for the marketability of the product. The main reason for child car seats liability is wrong use of the product by the customer. Many customers are not well aware of use of the product so the manufacture has a responsibility to provide the proper guide lines and demonstration of product use to the actual users. Presently, many of the child seat manufacture modify their product design and the product is now available in the market in a two piece model - a carrier and a base. The base of the seat can be permanently attached to the vehicle and the carrier can be fixed on the base and this can be taken out by using of a spring button. This new model is very comfortable and useful for the consumers. In US, National Highway Traffic Safety Agency (NHTSA) is the government organization who is responsible for the quality and fitness of the child car seats. However, this organizations has a very limited authority, to manage the manufacture of child seats and similar types of products ,and ensure that their safety requirements are trouble-free.All manufacturers can meet these requirements easily. NHTSA’s responsibility is to ensure only the functional standards, and not the area of Design Standard. They receive all customers’ problems and complaints about the child car seat and inform about this to the manufacturers. This system helps the manufactures to identify the problem with their product and take necessary steps to rectify the problems. “NHTSA does not "approve" or "certify" that vehicles and vehicle equipment meet standards or that they are "safe". NHTSA relies on child seat manufacturers to certify their products.”( NHTSAS Role in regulating child safety seats, Child car Restraints: Safety Takes a Back seat) (http://www.clarkgoldner.com/CM/Articles/Child-Car-Restraints-Safety-Takes-A-Back-Seat.asp). The ultimate decision of product design and model is taken by the manufacturer and product standard is set by the manufacture and they certify that the product meet the FMVSS 213 Standard. NHTSA only conducts Random Tests so the product only have a minimum standard. Compared to other government agencies, NHTSA is a very small agency with limited staff and budget. The government organization has very limited control over the manufacturing and marketing of these products, so the manufacturer needs to give more priority on the quality aspect and ensure its fitness for use in child car seats. The Car Seats Unlimited Inc. are dealing with a major problem relating to the product liability of child car seats. They are maintaining a good quality for their products and providing apt products to the customers but they are behest with a lot of litigations relating to product liability and arising out of their products utility.. The using of high technology products are not a suitable method because it influences the price of the product. The price increases influence the marketability of the product. In a profitable business, the manufacture wishes to provide comfortable and simple use of child car seats. Primarily, the manufacture wants to receive all problems relating to child car seats and manufacturing defect from the customer, and set up a Customer Care and Maintenance Service for this products. It would help the customers make sure regarding the fitness of the product ,and protection of their children from accidental injury.Another responsibility of the Manufactures is to ensure and promote the use of new quality products. Manufacturers want to give more exchanges and other facilities for promoting new child car seats for avoiding the problem of old and obsolete products.Another main thing in child car seat marketing is to provide useful guidelines and demonstrations for solving customers dilemma regarding the use of child car seats. WORKS CITED 1. What is product liability? (2007) http://injury.findlaw.com/defective-dangerous-products/defective-dangerous-products-law/defective-dangerous-products-law-overview.html 2. Product liability law: an overview Legal information institute, Wex http://www.law.cornell.edu/wex/index.php/Products_liability 3. Types of defects – is there a case?, Child car Restraints: Safety Takes A Back seat http://www.clarkgoldner.com/CM/Articles/Child-Car-Restraints-Safety-Takes-A-Back-Seat.asp 4.NHTSAS Role in regulating child safety seats, Child car Restraints: Safety Takes a Back seat http://www.clarkgoldner.com/CM/Articles/Child-Car-Restraints-Safety-Takes-A-Back-Seat.asp Read More