CHAPTER ONE.docx

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13 Apr 2012
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CHAPTER ONE: LAW, SOCIETY, AND BUSINESS
THE ROLE OF LAW
What does law do?
It influences and controls the behaviour of individuals in society
to protect person, property, and society as a whole
It empowers, influences, and controls the actions of government
It influences and controls interaction between individuals
Rule of law: established 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
private persons
Private law: law that regulates the relations between private persons and groups of private persons
Legal liability: responsibility for the consequences of breaking the law
Types of legal liability:
Criminal liability: responsibility arising from commission of an offence against the government or
society as a whole ex. murder
Regulatory or quasi-criminal liability: breaches of less serious rules of public law often enforced
through specialized regulatory tribunals set up by the government for specific purposes ex. driving
Civil liability: breach of private law enforced through a law suit initiated by the victim ex. paying rent
LAW AND BUSINESS
Non-governmental organizations: voluntary non-profit associations of private individuals or groups
working together to influence policy, raise awareness, or affect change
Super-governmental organizations: non-profit associations of governments from around the world
working to find common approaches to international issues ex. UN, WTO
LEGAL BUSINESS MANAGEMENT
Business managers must understand the legal risks associated with the everyday choices they make
Legal risks: expose a business to any type of legal liability
Early identification of a legal risk is vital to its effective management. Businesses must develop legal risk
management plans to anticipate possible legal liabilities and provide preventive and remedial
strategies.
Steps in developing a Legal Risk Management Plan
1. identify potential legal risks
2. assess and prioritize each legal risk based on likelihood and magnitude
3. develop a strategy to address each risk from both proactive and reactive perspectives
4. implement the plan
5. regularly review and update the plan
Strategies to Manage Legal Risks
AVOID the risk: discontinue the conduct or find another ay to achieve the result
REDUCE the risk: quality control initiatives that decreases the likelihood or minimizes the damage of
the risk
TRANSFER the risk: accept that it may occur, and shift the consequences to someone else such as
the insurance company or a client through contracts that indicate responsibility
ABSORB the risk: accept that it may occur and budget for the expenses.
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