Textbook Notes (368,562)
Canada (161,962)
LAW 122 (625)
Stan Benda (71)
Chapter 1

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Department
Law and Business
Course
LAW 122
Professor
Stan Benda
Semester
Fall

Description
Chapter 1 Risk ManagementSources of LawWHY STUDY LAWAs consumers we all need to be aware of the rules that govern commercial transaction In terms of employment you may intend to work in the public sector thus you need to understand not only the nature of govt org but also the different types of laws that may affect youEvery business decision or choices has a legal consequence Some consequences are profitable while others maybe financially disastrous The difference between winninglosing in the business world often depends upon the ability to make the right choice from a legal perspectiveRisk ManagementoRisk Management is the process of identifying evaluating and responding to the possibility of harmful eventsaIdentification For eg If you are accuse your exemployee of theft she can sue you for defamation thats the riskbEvaluation After identifying the risk you may decide that a candid letter would nevertheless be legally acceptable Assess you casedetermine if you should share this info with her new employercResponse After identifying and evaluating your risks you need to formulate a response Do you write the letterThe goal in risk management is not to eliminate the risk but to manage them The appropriate strategy depends upon the circumstancesRisk Avoidance Some risks are so serious that they should be avoided altogether Eg A car that regularly explodes should be taken off the market Aside from issues of morality the financial liability will probably outweigh the sales profitsRisk Reduction Some risk can be reduced to an acceptable level via precautions Eg A bank can lead 500000 to a manufacturing company and to reduce their risk of nonrepayment they can have the company put a mortgage over its factoryRisk shifting Even if a risk cannot be avoided or reduced it may be shifted onto another party Two important methods of shifting include insurance and exclusionRisk Acceptance It is sometimes appropriate to simply accept a risk If a golf course operates behind a factory it is possible that a wild shot might hit a factory windowthat the golf course could be held responsible for the resulting demageThree important conceptsaInsurance is a contract in which one party agrees in exchange for a price to pay a certain amount of money if another party suffers a lossiLiability insurance provides a benefit if the purchaser is held liable for doing something wrongiiProperty insurance provides a benefit if the purchases property is damaged lost or destroyed1 of 7
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