Law and Ethics in the Business Environment


Lawand Ethics in the Business Environment

Lawand Ethics in the Business Environment

Question1: Halbert and Ingulli ethical frameworks

Halbertand Ingulli provide a detailed ethical framework that typicallyidentifies with the western philosophical schools of thought. Thethree ethics frameworks include: deontological ethics (the ethics ofduty to one another and the society), consequentialism(utilitarianism), and virtue ethics (in the scope of the humanistethics)(Halbert &amp Ingulli, 2011).

Deontologicalethics (rights and duties)

Unlikeutilitarianism that focuses on the consequences of actions and themaximization of social welfare, deontological ethics are all aboutuniversal principles such as fairness, keeping promises, and respectfor life. Hence, any actions that a person takes should be a subjectof the rights and duties they have to the society. Deontologyemanates from Kantian philosophy that postulated that human beingshad the capability to set a framework of universal rules of rightbehavior. Thus, ethical human behavior entails holding, withoutdiscrimination, to principles that emphasize ones duty to respect therights of other people.


Utilitarianismwas first coined by John Stuart Mills, which stated that any actionthat a person takes must produce the best overall good for the entiresociety.For instance, the cost-benefit analysis is a tool that guidesdecision making so that the decisions that executives make have thegreatest good for both the organization and the society.


Unlikedeontology and consequentialism, virtue ethics provide a threshold ofmoral excellence. Virtue ethics also explain the extent which actionsare acceptable within the paradigm of ethics. Hence, virtue ethicsare simply an improvement of deontology and consequentialism. Virtueethics also prescribe ways in which individuals can cultivate anethical environment that would enable people to exploit their fullestpotential. Virtue ethics are coined on Aristotelian ethics on virtuethat state thathuman beings have the capability to inculcate moralhabits through training or being exposed to repeated scenarios ofmoral behavior within their families and communities.Some of thevirtues that individuals are likely to learn from moral settings aregenerosity, cooperativeness, courage, and cheerfulness to name a few.If an organizational environment applies the value ethics framework,employees are likely to exploit their fullest potential.

Question2: Schaefer`s position on shareholders and social responsibility

Schaeferargues that organizations have the social responsibility obligationother than making profits and obeying the law. Schaefer disagreeswith those who view the organization’s obligation as only makingprofits. Viewing the organization only in such terms goes the ethicalframework of virtue ethics that mandates the organization to be partof the society’s moral initiatives(Schaefer, 2008). Schaefer’sassertions are agreeable. They are agreeable because the society alsoplays a role in the continuity of the organization. Thus, it is amoral duty for the organization to be socially responsible to thesociety.

Question3: Three factors that Maffei considers are a subject of the court’sdecision to pierce the corporate veil

Piercingthe corporate veil is the act of accessing the personal assets ofshareholders in the event that the company fails to pay creditors dueto lack of assets. The following factors will enable the court topierce the corporate veil(Thompson, 1990):

  1. Evidence of the company’s involvement in fraudulent activities

  2. Evidence of the breach of the company formalities

  3. The company must have enough capital to run its operations as proof that it operate as a separate entity. Any evidence contrary to this is likely cast a picture of a company under undue influence from its owners.

  4. Evidence that reveals any case of undue influence from an individual or group of people that have another relationship apart from the business relationship.

Question4: The two major laws enforced by the department of labor

Thetwo major laws under the jurisdiction of the department of laborinclude(Fine &amp Gordon, 2010):

TheFair Labor Standards Act (FLSA): The law applies to private andpublic employees in the United States. The Act has both civil andcriminal remedies for employees offended in different industries. Italso provides them with the framework to file private lawsuitsagainst organizations that violate industry standards, ethics, andcorporate law.

TheMigrant and Seasonal Agricultural Worker Protection Act (MSPA): Thedepartment of labor ensures that federal officers and law enforcersensure that all migrant and seasonal employees have the neededprotections for a fair working environment. The department serves asthe government that registers workers who fall in this category.

Question5: The disadvantages of sole proprietorship (Epstein, 2007)

Unlimitedliability: The owners are not immune to the financial problems of thebusiness. When the business has to pay debts, their assets can belegally confiscated to repay them.

Limitedlife: The continuity of the business depends on the continued life ofthe owners. Death, insanity, incapacitation or any other problem thatcan make the owners stop carrying out their duties leads totermination of the business.

Managementability: Considering that the business is not a separate entity fromits owners, management is prone to the individual weaknesses of theowner.

Limitedinvestment potential: Most sole proprietorships depend on the capitalof individual investors. Thus, their capital base cannot accommodatefurther investment in other sectors of the economy.


Epstein,D. G. (2007).BusinessStructures.Missouri Bar Center.Retrieved from:

Fine,J., &amp Gordon, J. (2010).Strengthening labor standards enforcementthrough partnerships with workers’ organizations. Politics&amp Society,38(4), 552-585.

Halbert,T., &amp Ingulli, E. (2011).Lawand ethics in the business environment.CengageLearning.

Thompson,R. B. (1990). Piercing the corporate veil: an empirical study.Cornell L. Rev.,76, 1036.

Schaefer,B. P. (2008). Shareholders and social responsibility. Journalof Business Ethics,81(2), 297-312.

Law and Ethics in the Business Environment

Lawand Ethics in the Business Environment

Lawand ethics in the business environment

&nbspDefensesto a breach of contract claim

Accordingto the Judicial Education Centre, there are a number of commondefences to enforcement of either a contract or liability, whichinclude:

  • In a case where there would be a violation of public policy if the contract is enforced, it would be enough ground to defend contract claim breach. For instance: if there is transfer of business ownership from one party to the other considering the entities are autonomous, the contract to transfer the business cannot be enforced since it violate the public policy of the state involving the two persons involved.

  • In a case where the enforcement of the contract cannot be honoured due to unavoidable circumstances or act of nature. For instance, X enters into an agreement to sell Z a house but before the contract is enforced, the house is demolished by either earthquake or storm.

  • In a case where the terms of the contract are illegal. For instance: party A contracts party C to sell and distribute cocaine on his behalf.

  • In a case where the involved entities accept the enforcement of a contract in form of a substitute to be equivalent to the original agreement. For instance, Paul owes a Sherlock $250 as per their contract agreement. The Sherlock agrees to take Paul’s watch as a form of compensation to the original debt. In case the Sherlock decides to press charges against Paul for the remaining balance, the court cannot enforce the original agreement since the Sherlock chose a different mode of payment other than the one stipulated in the original contract.

  • In case one of the involved parties is does not have the capacity to make a contract

Forinstance, for being either a minor or is mentally incapacitated.

ForJim to get into a valid car sale contract with his friend Marsha heneeds to consider the following elements:

Theyshould involve an offer in the form of a promise, which should bemade by both parties to facilitate the car sale terms in the future(Halbert &amp Ingulli, 2011).They should also involve consideration, which involves somethingvaluable in the event of honouring or failure to honour their agreedtransactional terms (Halbert&amp Ingulli, 2011).He should also ensure that both parties have accepted the terms oftheir contract in either writing or orally based on voluntary andinformed consent. Lastly, he should ensure that he and his friendMarsha understand and agree voluntarily to fundamental aspects oftheir contract (Halbert&amp Ingulli, 2011).

Jimand Marsha’s contract would not fall under the UCC. According tothe Judicial Education Centre, the UCC is only applicable in the saleof goods that involves a dealer. Considering that Jim is not a cardealer, the UCC cannot apply in their contract since theirs is aprivate party’s agreement and transaction.

AccordingtoEisenberg (2000),there is a big difference between patent and trade secret. Theyobserve that patents are a legally acceptable monopoly granted by thefederal government so that the company can in exchange disclose tothe public its inventions. Trade secret involves the company keepingsecret all its inventories to maintain competitive advantage(Eisenberg,2000).

Someof the major differences between the two include:

  • In the patent situation, the monopoly and the manufacturing secrets are governed by the state and in case infringed by another entity, the company has the legal obligation to bring a lawsuit (Eisenberg, 2000). On the contrary trade secrets are protected by the company itself and in case of a breach, they cannot sue unless if the breach has been caused by an employee who shares the secret (Eisenberg, 2000).

  • Patents have a specified time span set as per the federal act upon which the copyright owner must enjoy the monopoly before other entities can start manufacturing dissimilar products (Eisenberg, 2000). This does not give the company a prolonged competitive advantage. Trade secrets on the other side have no time span and are best placed to give a company competitive advantage (Eisenberg, 2000). This means that it can be as long as the secret remains or as short as the secret is leaked whether intentionally or accidentally.

  • Licensing in a patent situation is less clear since the licensee already knows the existing terms of the business nature (Eisenberg, 2000).This gives one the confident of getting involved in the business venture. On the other side trade secret, limit a licensees’ confidence since there is no guarantee in protecting the business secret for a long period without being discovered (Eisenberg, 2000).

  • Trade secret is more viable in a case where the technology is short-lived (Eisenberg, 2000). This means that before others can discover the technology or it becomes obsolete, the company shall have benefitted from the secret monopoly. On the contrary, patents would not be necessary in a case where the technology discovered is short lived since, the technology might expire before the patents” stipulated time span (Eisenberg, 2000).


Eisenberg,H. M. (2000). Patent law you can use-inventorship vs. ownership of apatent.&nbspChernoff,Vilhauer, McClung &amp Stenzel, LLP.

Halbert,T., &amp Ingulli, E. (2011).&nbspLawand ethics in the business environment.Cengage Learning.