Business Law and Ethics - Assignment Example

Business Law and Ethics Two twelve-year old boys were seriously injured while riding mini-bikes given to them by their parents. The boys were riding on a public street and ran through a stop sign and were hit by a truck. One boy was wearing a helmet; the other was not. The manufacturer had placed a warning placard on the mini-bikes stating that they were for off-road use only. The owner’s manual stated that the mini-bikes were not to be used on public streets, and that riders should wear an approved helmet. The Parents sued the manufacturer. The Supreme Court heard the case and said that there was one basic issue: “Is a manufacturer liable when youths are injured while riding one of its mini-bikes on a public road in violation of the manufacturer’s warnings?” What do you think the court held? What reasoning should the court apply? Is it unethical to make products like these mini-bikes that will be used by youth who lack the skills or judgment to keep safe? Under the court of law, when a manufacturer has provided adequate and precise information about the use of a product, then it is not their responsibility to take care of problems that occur because of violating that information or warnings. In this scenario, the court would not have held the manufacturer responsible because using the bike on public roads and one of the members not wearing a helmet were clearly against the warnings and instructions provided by the manufacturer. The manual and the placard on the bike both stated the same thing very precisely and the manual is an official document which can’t be challenged if something exists in it. The manufacturer would have been responsible only if the instructions were not clear regarding the use or if they were not being violated. It is clearly not unethical to make such products but care should be taken by the user who should follow the instructions regarding the safe usage of a certain product ( Cross & Miller, 2011). There could also be a minimum age limit for the use of products that could be potentially dangerous for users. 2. Knutsen formed an oral contract with Signoff wherein Knutsen sold Signoff 30 head of cattle for slaughter. Signoff sent Knutsen a check for $9,373 “in full payment … cattle, 30 head…” Knutsen claimed he was promised 34 cents per pound which would have earned $10,725. Signoff countered that he promised to pay based on “grade and yield,” a common industry practice. Knutsen cashed the check and then sued Signoff for the difference in price. Could Knutsen collect? In simple words, getting the check cashed means accepting the offer and the consideration that was made. If there were serious issues with the payment in this case, the check should not have been cashed ( Cross & Miller, 2011). Moreover, Signoff had promised to pay as per grade and yield, which in itself is somewhat an unclear term and does not specify the exact value to be paid to the seller. The seller is in a weaker position and cannot sue Signoff because for first, the check that was received in full payment was received and accepted hence cashed, and no specific amount had been promised as claimed by the seller. Only if the contract was clearer and precise mentioning the exact amount or if he had not collected and cashed the check (refusing acceptance) and if Signoff had not laid the condition of payment by grade and yield, would have Knutsen been able to sue him for difference in price. The case above shows that Knutsen is not in a position to sue Signoff. 3. Dr. Smith, the Chairman of the Department of Pediatrics at a medical school, negotiated with Dr. Jones to hire Dr. Jones as a professor at a specified salary. Jones accepted the offer, put his house up for sale, and resigned from his current job. A few days later, Dr. Smith sent a letter to Dr. Jones, withdrawing the offer on the basis that some faculty member opposed his appointment and that any job offer had to be approved by the Dean of the Medical School; that is, Dr. Smith did not have the authority to hire Dr. Jones. Dr. Jones sued for breach of contract. Do you think he could prevail? A contract is a document that is enforceable by law and can be challenged in the court of law in case it is not followed. It requires an offer and an acceptance according to freewill of both parties (Meiners, Ringleb, & Edward, 2011). In the case mentioned above, unfortunately, there was no contract made because it did not fulfill the requirement of the Dean’s signature, only after the approval of whom the hiring could be done. There was no written record of the offer made and past consideration is also not considered as a valid consideration for a contract. I believe that Dr. Jones could not sue for breach of contract because no legally binding contract was made due to lack of information and misconception. Probably Dr. Jones should have waited for an official contract before resigning from his job and putting his house on sale. If the Dean had sent the offer letter (the contract), signed by him as well as Dr. Jones, and then withdrawn the offer later, only then would have Mr. jones been able to sue them for breach of contract. 4. You are responsible for preparing a financial analysis of two alternative factory designs, either of which would meet your company’s requirements. One factory design would use inexpensive equipment and would need about 200 employees earning about $8 per hour. The other design used more expensive equipment, many having computer controls, and would require 70 employees earning about $20 per hour to operate. Is it more responsible to build one of the designs than the other? Is there an ethical issue here or simply business? What if you know that the 200 employees would never unionize, but that the more highly skilled workers would? The first design mentioned here is one that requires unskilled labor as they naturally get paid very low. They would also have very low power and the company is probably likely to earn more profits in comparison with its revenue. However the second design that would need more expensive equipment and more skilled labor is required to pay the employees higher wages who may as well be powerful enough to unionize later. It is definitely more responsible to build the second design as it would pay the employees a more decent wage, give them more rights, implying that they are likely to be treated more fairly. In order to fulfill the concept of corporate social responsibility and being confident enough to not fear about the unionization of employees by providing them a good environment and respectable salary, the second design would be a better choice as compared to the first one. It will also help the company treat employees justly, to avoid any confrontation from the potential unions that could be created by the skilled employees in the future. 5. A Colorado ski resort hired a cleaning woman who wore dentures. She had a good work record, she had a neat and clean appearance, and she was friendly and polite in all her dealings with staff and guests. But her dentures hurt, so she stopped wearing them. The resort manager ordered her to wear her dentures or face dismissal because without dentures her appearance hurt the resort’s high-class image. She refused and was fired. She then sued under a state statute that is virtually identical to the American’s with Disabilities Act. Do you think she should win or lose? The case mentioned above is a strong example of violation of rules of disabled people. The job of a cleaning woman which was to clean well and be polite to customers was being effectively fulfilled by her. Her personal appearance is her own choice and not wearing dentures was because of illness and because they hurt her. This is not by any means a valid reason for dismissal. It is a clear case of violation of human rights and ethics. She would win the case as she has stronger points to argue for and firing her was a baseless act when she was a dutiful employee doing all her chores very well. The employer deserves to bear a heavy consequence such as a fine as well as compensating her for the discrimination and inhumane behavior without any valid reason. Firing is process that requires strong reasoning but here, the employee is more powerful in this case and very well in a position to sue the employer ( Cross & Miller, 2011). There is also no mention regarding appearance in her employment contract. 6. The Robinson-Patman Act was passed in the 1930s when small-store owners (such as Patman’s father) were being hurt by competition from the growing chain-stores in the 1920s and by then dominated retailing. Some detractors claim the Act should be called the Anti-Chain Store Discrimination Act. Does this legislation benefit competition? Or do you think it hurts consumers? The concept being used in this case refers to the creation and existence of monopolies. A monopoly is when a single company has taken over the market for a certain product or category. A monopoly owns the market for that category and usually has negative impacts on the economy (Meiners, Ringleb, & Edward, 2011). A monopoly is very likely to exploit consumers by leaving them with no choice but to buy the products in whatever price available. However in exceptional cases such as state owned monopolies that exist for the betterment of the people, the case is different. This does not only discourage competition but kills is as well. It does not allow new companies to pop up that could bring more innovation, variety, better procedures or lower costs for consumers. It therefore hurts the consumers more than benefiting them in the long run. It could hurt the consumers by offering very high prices, poor quality, lesser variety and blocking better goods and services in the market. Therefore it is very important to control these by introducing laws such as the Robinson-Patman Act of 1930 7. On the train to work you overhear two executives, whom you recognize, discussing an important announcement to be made at 11 a.m. next Monday that both agree will their company stock “really shoot up.” Obviously, this information is inside information, not public information. Should you immediately call your broker to buy all of that company’s stock that you can afford? What if you knew the executives personally and they told you face-to-face about the announcement. Would that make a difference in your behavior? If you bought the stock, would you be violating the law in either case? Assume there is no way you actually would be caught. Does that make a difference in your decision-making? According to the court of law, the concept used in this case is referred to as insider trading. Insider trading is defined as the usage of nonpublic information to perform certain actions in the stock market, which is highly vulnerable to supply and demand (Jennings, 2012). It can be of two types which include legal insider trading and illegal insider trading. Illegal insider trading is when non-public information is misused to buy stock in the stick market which is likely to affect the share price in the entire stock market as well as likely to create panic. However, if the executives told about the announcement directly, then it would no longer remain ‘nonpublic’ information hence it would not be violating the law in that case. Buying the entire stock when the information is directly communicated is not illegal. Buying it by overhearing information like in this scenario which is supposed to be nonpublic is an offence in the court of law even if there are no chances of getting caught, it is still not legal. 8. Compare and contrast the merits of arbitration and judicial litigation as methods of dispute resolution in international trade. According to general perception, arbitration is considered to be a better way of resolving disputes owing to the fact that it is a relatively better for both parties as a consequence of dispute resolution. The benefits of arbitration include confidentiality, customization of processes and flexibility according to the situation under consideration and lower cost (Meiners, Ringleb, & Edward, 2011). Moreover, the proceedings of arbitration are less time consuming and the arbitrator can be chosen according to the field of knowledge required by the certain category. On the other hand, judicial litigation enforces the decision as binding on both parties; the rules and regulations are quite stringent and inflexible, it is more time consuming and the proceedings are long. It is a more formal process and has proper documentation in detail that could be a demerit for one or both the parties whereas arbitration does not have any backlog of proceedings. Even though arbitration is riskier in context with the flexibility and informality, it potentially possesses more benefits for both parties ultimately because it involves some compromise from both parties. Both of them get benefited that way as opposed to litigation in which the party that loses, loses everything. In terms of international trade, quicker decision making is required as per the situation so arbitrating seems to be a better option. Bibliography Cross, F. B., & Miller, R. L. (2011). The Legal Environment of Business: Text and Cases: Ethical, Regulatory, Global, and Corporate Issues. Cengage Learning. Jennings, M. M. (2012). Foundations of the Legal Environment of Business. Cengage Learning. Meiners, R. E., Ringleb, A. H., & Edward, F. L. (2011). The Legal Environment of Business. Cengage Learning. Read More