Knowledge of Business Law as a Business Asset PDF

Knowledge of Business Law as a Business Asset Canadian Business and the Law, EIGHTH EDITION Objectives After studying this chapter, you should have an understanding of how legal knowledge is a strong advantage in the business environment the role of law in providing protection and gu...

Knowledge of Business Law as a Business Asset Canadian Business and the Law, EIGHTH EDITION Objectives After studying this chapter, you should have an understanding of how legal knowledge is a strong advantage in the business environment the role of law in providing protection and guiding conduct how the law facilitates commercial activity and dispute resolution the challenges posed by business ethics and their relationship to legal requirements 2 Law in the Business Environment (1) Business Law defines general rules of commerce protects business ideas and more tangible forms of property provides mechanisms that permit business people to select their desired degree of participation and exposure to risk in business ventures seeks to ensure that losses are borne by those who are responsible for them facilitates planning by ensuring compliance with commitments 3 Law in the Business Environment (2) business law: A set of established rules governing commercial relationships, including the enforcement of rights. Lack of knowledge of business law o may result in failure to maximize opportunities or in losing out on them altogether; and o may result in the business being subjected to regulatory and judicial sanctions, including being fined, forced to pay penalties, or closed down altogether 4 Business and Legislation 1.1 (1) The Regulation of Business Names A business owner named her café and plant store “Haus of Plants.” Another local business had trademarked the name “House of Plants” in relation to “the trade of flowering plants, live flower arrangements, live flowers, live plants and other forms of natural plants.” House of Plants alleged use of “Haus of Plants” would cause confusion of customers because of the similar sounding names. “Haus of Plants” reluctantly agreed to change its name. trademark: A sign or a combination of signs used to distinguish a person’s products or services from those of others. 5 Business and Legislation 1.1 (2) The Regulation of Business Names According to the Supreme Court of Canada in Mattel Inc v 3894207 Canada Inc, 2006 SCC 22, at para 21: “[T]rademarks assure consumers ‘that they are buying from the source from whom they think they are buying and receiving the quality which they associate with that particular trademark’.” Trademark legislation protects the holder from use by others of names that are similar, especially if the two operate in a similar commercial space. 6 Rules and Principles law: The set of rules and principles guiding conduct in society. The law guides conduct in society o by protecting persons and their property; o facilitating personal and commercial interactions; and o providing mechanisms for dispute resolution. 7 Protecting Persons and Their Property The law offers protection in two related ways: o It sets rules to safeguard interests. o It sets penalties and other consequences for breach of those rules to ensure accountability and encourage future compliance. Examples of laws that protect: o privacy laws o criminal laws breach of contract: Failure to comply with a contractual promise. o Failure to comply with a contract can lead to being sued for damages. 8 Technology and the Law 1.1 (1) Breach of Privacy by Tim Hortons Privacy legislation requires private-sector organizations to seek consent to collect, use, or disclose personal information by fair and lawful means, and only for purposes that are stated and reasonable. Tim Hortons created an app to advertise special deals close to the customer’s location as revealed by the app. The app collected data feed of the daily travels of its mobile phone customers, including at their places of work and residence. 9 Technology and the Law 1.1 (2) Breach of Privacy by Tim Hortons Privacy commissioner: o Tim Hortons violated users’ privacy. o The consent was not valid because it did not disclose that it was collecting location data every few minutes, whenever the customer’s mobile device was on. o The collection was not appropriate, reasonable, or legitimate. Class actions against Tim Hortons in relation to its app have recently been settled, with no admission of liability. 10 Ethical Considerations 1.1 (1) Maple Lodge Farms’ Conviction Maple Lodge had 25 450 chickens died inhumanely by undue exposure to weather or inadequate ventilation during transport. It was sentenced by an Ontario court for violating the Health of Animals Act. The court fined Maple Lodge Farms $80 000, required the business to spend at least $1M to improve its vehicles and facilities, and placed the corporation on probation for three years. Maple Lodge issued an online apology. 11 Ethical Considerations 1.1 (2) Maple Lodge Farms’ Conviction Canadian Coalition for Farm Animals (CCFA): o CCFA spoke out against Maple Lodge for considering economics over proper animal welfare and for not following Canada’s voluntary codes of practice or the company’s standard operating procedures. o It published a video taken by a hidden camera allegedly showing horrific mistreatment. While on probation, thousands of hens were left in an unheated barn over a 12- hour period on a cold day in January. 12 Facilitating Interactions (1) The law facilitates interactions, such as the following: o disposal of property upon death o marriage o adoption The law facilitates commercial activity by providing rules governing the marketplace. o The law provides certainty and security. o The law allows businesses to plan for the future. o The law addresses failed relationships. o The law forbids certain activities. 13 Facilitating Interactions (2) contract law: Rules that make agreements binding and, therefore, facilitate the planning and enforcement of expectations. litigation: The process involved when one person sues another. 14 Providing Methods for Dispute Resolution (1) Maintaining the relationship and avoiding disputes should be the priority, rather than litigating disputes. Ask: o Are legal proceedings absolutely necessary, at least right now? o Is there a way to resolve the problem from a larger, relationship-preserving perspective, rather than from a strictly legal viewpoint? The logical first step is to reach a voluntary resolution, and possibly a formalized settlement agreement. Only once this fails, should the parties resort to the legal system and methods such as mediation and arbitration. 15 Providing Methods for Dispute Resolution (2) mediation: A process through which the parties to a dispute endeavour to reach a resolution with the assistance of a neutral person. arbitration: A process through which a neutral party makes a decision (usually binding) that resolves a dispute. If non-litigation methods fail, it may be necessary to seek a court ruling. liability: Legal responsibility for the event or loss that has occurred. 16 Why and How the Law Works The Canadian legal system demands that both the process for determining liability and the rules or laws that are applied in that process are impartial, fair, and free from bias. Judges must apply the law as impartially as possible to the situation. The law seeks to resolve disputes fairly: o For example, bankruptcy law attempts to ensure all those affected are treated fairly. o Anti-discrimination law confronts bigotry and ensures just treatment. o Tort law ensures that those who wrongfully injure others are held financially accountable. 17 Knowledge of the Law as a Business Asset Ignoring the law can cause anxiety, grief, and financial loss. Informing oneself of the consequences of failing to abide by the law can lead to more positive and profitable experiences. One way to avoid legal difficulties is to implement a legal risk management plan. legal risk management plan: A comprehensive action plan for dealing with the legal risks involved in operating a business. 18 Law and Business Ethics (1) business ethics: Moral principles and values that seek to determine right and wrong in the business world. It is not enough to simply comply with the law—ethics may demand more. Skirting ethical norms can lead to lost revenue, bad publicity, public demonstrations, and condemnation. 19 Law and Business Ethics (2) It is useful to consider how ethics impacts on business decisions from a number of vantage points: o Business to consumer: How far should a company go in extolling the virtues of its product? When does sales talk become deception? o Business to society: To what lengths should a company go to enhance shareholder return? To reduce costs, should a business employ child labour in those countries where it is legal to do so? What if the child’s income is essential to the family’s survival? o Business to employee: Should a business monitor employee emails and internet use on company computers? o Business to business: Short of lying or fraud, is it ethical to bluff during business negotiations? When does bluffing become a form of corruption? 20 International Perspective 1.1 (1) SNC-Lavalin in Libya Bribery, in an international context, is prohibited by the Corruption of Foreign Public Officials Act and by the Criminal Code of Canada (which also prohibits other forms of corruption). Bribery imposes economic and social cost on Canadians. Bribery diverts resources, undermines democracy and the rule of law, and distorts markets. Consequences for bribery include multi-year bans on doing business with the federal government. 21 International Perspective 1.1 (2) SNC-Lavalin in Libya The Criminal Code of Canada now permits Remediation Agreements (RAs), which extract accountability from a company engaged in criminal conduct, while reducing harm. SNC-Lavalin sought and failed to secure an RA in relation to bribery offences in Libya. o The company had paid $27M in bribes to Saadi Gadhafi to secure construction contracts. In 2019, a division of SNC-Lavalin plead guilty to fraud, was fined $280M and received three years’ probation. 22