1. Law, society and business
Rule of law : established legal principles that treat all persons equally and that
government itself obeys
Public law: law that regulates the conduct of government and the relations
between government and persons
Private law (civil law): law that regulates the relations between private persons
and groups of private persons
When a person breaks the law, they are held responsible for the consequences
– legal liability.
Criminal liability: responsibility arising from commission of an offence against the
government or society as a whole
Regulatory or quasi-criminal liability: responsibility arising from breaches of less
serious rules of public law, enforced through specialize regulatory tribunals set
up by the government for specific purposes
Civil liability: responsibility arising from a breach of a private law, enforced
through a lawsuit initiated by the victim
Legal Risk Management Plan: Identify potential risks. Assess and prioritize each
legal risk. Develop effective strategies (reaction or prevention). Implement the
plan. Review and update plans.
1. Avoid risk – discontinue product
2. Reduce risk – decrease the likelihood of the risk
3. Transfer risk- shift the consequences to someone else(insurance)
4. Absorb risk – used for remote or small valued risks. “self-insuring” Accept
risk may occur.
Why would businesses adopt a higher standard than law?
A firm behaves ethically because that’s how its owners or managers believe it
Corporate Social Responsibilities: ethical, legal and economic. Consider ethical
issues including the interests of customers, employees, creditors, the public and
Code of Conducts 1. Binding Code. Similar to law, if you are part of a trade association, you
must follow these codes.
2. Voluntary codes. Implicit threat that if you don’t follow these codes, the