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Lecture 1

LAW 122 Lecture Notes - Lecture 1: Ultra Vires, Liability Insurance


Department
Law and Business
Course Code
LAW 122
Professor
Peter Wilson
Lecture
1

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LAW122 Business Law
Chapter 1: Risk Management and Sources of Law
For a business to fail and to succeed, it depends on the choices and decisions one makes
Legal consequences to keep in mind, such as, corruption, duties, safety
- Safety, risk, and contracts are things you need to keep in mind as well
- Negative consequences: such as pollutants dumped into the environment
- Positive consequences: such as binding to another party such as merging through
contracts
- Affects profits and losses
Reputation, fines and charges, illegal consequences will occur from doing
illegal acts and getting caught (financial and legal consequences)
Opportunities can be exploited by good decisions
Business and Risk Management:
Must manage legal risks
1. Identification: recognition of legal risks
2. Evaluation: assessment of legal risks
3. Response: reaction to legal risks
All decisions carry some degree of risk no matter what decision it is
Must know all the facts or use the facts we have to make a decision
Different risks have to be treated differently
Forms of risk management: 4 ways to manage risk (use one or some simultaneously)
Risk avoidance elimination of risk (e.g. withdraw dangerous product from market)
Risk reduction minimize risk (e.g. modify product to reduce danger)
Risk shifting make the risk someone else’s problem (e.g. insurance)
Risk acceptance choose to live with risk
Insurance (liability insurance): pay a premium and let the insurance company pay for the
damages, losses or other issues
Exclusion and limitation clauses: contractual terms that exclude liability for certain types
of acts/losses, or that limit the amount of compensation available
Incorporation: do not lose personal assets (shareholders) as the company is liable (limited
liability) but employees, directors and officers may still be held personally liable for the
torts they commit
Law vs. Ethics:
Law is the ultimate conclusion of debates: we must follow laws or else consequences will
follow
Ethics is in many ways is a factor of making laws: are based on beliefs
Following a moral rule, even if not legally obligated to do so:
- Strengthen brand awareness; bring in new clients/investors, free media, etc.
- Not to financial impacts, people not wanting to do business with you or invest
into your company, negative perspectives on the company (image)
The Nature of Law:
find more resources at oneclass.com
find more resources at oneclass.com
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