Chapter 7 Legal Aspects of Business ©2008 Thomson/South-Western

Legal Aspects of Business Monopolies Monopoly — exists when only one company provides a product or service without competition from other companies Natural monopoly — usually involves providing public services, such as public utilities, which have a fairly stable demand and are costly to create Chapter 7 Legal Aspects of Business

Promoting Fair Competition Sherman Act (1890 / Anti-trust) Clayton Act (1914 / Anti-trust) Robinson-Patman Act (1936 / Anti-price Discrimination) Wheeler-Lea Act (1938 / Deceptive Advertising; Unfair Competition) Federal Trade Commission (FTC) Other federal agencies Bankruptcy relief (Chapters 7, 11, & 13) Chapter 7 Legal Aspects of Business

Intellectual Property Patent — agreement in which the federal government gives an inventor the sole right for 20 years to make, use, and sell an invention or process. Copyright — sole right to reproduce, publish, and sell literary or artistic work for the life of the author plus 70 years. Trademark — distinguishing name, symbol, or mark placed on a good or service that is legally reserved for the sole use of the owner for 10 years (renewable forever). Chapter 7 Legal Aspects of Business

Intellectual Property PATENTS Motors Mousetraps Games Computers COPYRIGHTS Software Novels Histories Poetry Textbooks TRADEMARKS Names Symbols Chapter 7 Legal Aspects of Business

Regulations Protecting the Public Food and drugs — Food and Drug Administration (FDA) Nonfood products — Federal Trade Commission (FTC), Consumer Product Safety Act Information — Electronic Communications Privacy Act Chapter 7 Legal Aspects of Business

State and Local Regulations Licensing — a way to limit and control those who plan to enter certain types of businesses Public franchise — contract that permits a person or organization to use public property for private profit Building codes (control the physical features of structures) and zoning (specifies which land areas may be used for homes and for different types of businesses) Chapter 7 Legal Aspects of Business

Legal Aspects of Business Fairness of Taxation Proportional tax (also called flat tax) — tax whose rate remains the same regardless of the amount on which the tax is imposed Progressive tax — tax based on ability to pay Regressive tax — tax whose rate decreases as taxable amount increases Chapter 7 Legal Aspects of Business

Legal Aspects of Business Types of Taxes Income tax — tax on the profits of businesses and the earnings of individuals Sales tax — tax levied on the retail price of goods and services at the time of sale Excise tax — applied only to selected goods or services Property tax — tax on material goods owned, such as real property tax (real estate) and personal property tax (movable possessions) Chapter 7 Legal Aspects of Business

Legal Aspects of Business Comparative Tax Rates Chapter 7 Legal Aspects of Business