Textbook Notes (367,933)
Canada (161,513)
LAW 122 (618)
Stan Benda (71)
Chapter 1

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Law and Business
LAW 122
Stan Benda

Chapter 1Risk management and sources of law Why study lawRisk managementRisk management is the process of identifying evaluating and responding to the possibility of harmful events o IdentificationEx on pg 3 o EvaluationEx on pg 3 o ResponseEx on pg 3An accident may generate bad publicity and damage consumer confidence o Ex on pg 3There are possible costs linked with nearly every form of behavior and includes doing nothing at allBusiness cannot exist and not even profit unless it is willing to take some chances o Goal is not to eliminate risks but to manage themo Appropriate strategy depends on the situationRisk avoidance o Some risked are too serious and must be avoided o Ex on pg 4Risk reduction o Some risks can be reduced to an acceptable level through precautions o Ex on pg 4Risk shifting o If risk cannot be avoided or reduced it may be shifted onto another party o 2 important strategies of shifting risksInsuranceExclusion clausesEx on pg 4Risk acceptance o It is sometimes appropriate to simply accept a risk o Ex on pg 4 o It is possible to deal with individual problems as they arise o Many of the most effective forms of risk management apply more broadly o Businesses should ensure that employees are carefully selected and properly trained3 important concepts o InsuranceIt is a contract in which 1 party agrees in exchange for a price to pay a certain amount of money if another party suffers a lossMany types of insurance2 typesLiability insurance provides a benefit if the purchaser is held liable for doing something wrongProperty insurance provides a benefit if the purchasers property is damaged lost or destroyed o Exclusion and limitation clausesFor example a courier companys contract may say that it cannot be held responsible at all or for more than 100 if it loses damages or destroys a packageEntrance to a car park may have a big sign telling customers that they park at their own riskExclusion and limitation clauses are subject to certain rules and restrictions but law allows people to sue anyways o IncorporationMany ways to conduct businessIndividual who chooses to act in a personal way may be held personally liable for any debts or liabilities incurred by the businessTo avoid some risks many businesses are set up as corporations or companiesMost significant benefit of inc is limited liabilityMeans it is usually only the company itself and not directors or shareholders that may be held liable for debtsCompany may be lost but the people behind it will be safeHowever the concept of limited liability does not protect individuals from all risksEmployees directors and officers may be held personally liable for the torts they doMany businesses have inhouse counsel by creating a permanent legal department An introduction to the legal system The nature of lawIt is occasionally difficult to differentiate between moral obligations and legal obligationsLaw is a rule that can be enforced by the courtsEx on pg 7
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