Legal Environment 1 Copyright 1999 Prentice Hall Publishing Company The Legal Environment: Business Law and Government Regulation

Legal Environment 2 Copyright 1999 Prentice Hall Publishing Company Elements of a Valid Contract l Agreement â Offer â Acceptance l Consideration l Contractual capacity l Legality Contract

Legal Environment 3 Copyright 1999 Prentice Hall Publishing Company Elements of a Valid Contract l Agreement â Offer â Acceptance l Consideration l Contractual capacity l Legality Plus Two Supplemental Requirements: Genuiness of Assent. Genuiness of Assent. Form. Form. Contract

Legal Environment 4 Copyright 1999 Prentice Hall Publishing Company Contract Principles l A written contract is preferred over an oral contract; however, most oral contracts are just as enforceable as written ones. l Oral agreements should be followed up by written confirmations. l A contract for goods priced at $500 or more must be in writing. l Contract terms should be clear and specific. l Any handwritten changes to a written contract should be initialed by both parties.

Legal Environment 5 Copyright 1999 Prentice Hall Publishing Company Contract Principles l A complete contract covers all material items to be enforced. l Past contractual practices have legal weight in a contract dispute. l As a buyer, you can reject goods that do not meet specs or are defective. l As a seller, you are entitled to prompt notification of shipment acceptance or rejection. l Courts will likely interpret unclear terms against the party who wrote the contract.

Legal Environment 6 Copyright 1999 Prentice Hall Publishing Company The Uniform Commercial Code (UCC) l A comprehensive document drafted in the 1940s that assembled a uniform set of laws across the states to govern routine business transaction. Its provisions reflect the way people conduct business. l The UCC contains ten articles, but Article 2, which governs the sale of goods, affects many small businesses.

Legal Environment 7 Copyright 1999 Prentice Hall Publishing Company The Uniform Commercial Code (UCC) l The UCC applies to every sale of goods, but it imposes a higher standard on professional merchant sellers and sometimes includes rules that vary slightly or substantially from basic contract law.

Legal Environment 8 Copyright 1999 Prentice Hall Publishing Company Sales Warranties l Express warranties l Implied warranties â Warranty of title â Warranty of merchantability â Warranty of fitness for a particular purpose

Legal Environment 9 Copyright 1999 Prentice Hall Publishing Company Protecting Intellectual Property Rights Three important tools: l Patents l Trademarks and service marks l Copyrights

Legal Environment 10 Copyright 1999 Prentice Hall Publishing Company Patents l Patent - a grant from the U.S. Patent and Trademark Office (PTO) to the inventor of a product, giving the exclusive right to make, use, or sell the invention in the U.S. for 20 years from the date of filing the patent application.

Legal Environment 11 Copyright 1999 Prentice Hall Publishing Company Obtaining A Patent l Establish novelty. l Document the device. l Search existing patents. l Study search results. l Submit the patent application. l Prosecute the patent application.

Legal Environment 12 Copyright 1999 Prentice Hall Publishing Company Trademarks l Trademark - any distinctive word, symbol, name, logo, slogan, or trade dress that a company uses to distinguish its product from other goods on the market. l Trademarks can also cover symbols, shapes, colors, and sounds - all part of “trade dress.” l A service mark is the same as a trademark except that it identifies and distinguishes the source of a service.

Legal Environment 13 Copyright 1999 Prentice Hall Publishing Company Copyrights l Copyright - an exclusive right that protects the creator of original works of authorship, such as literary, dramatic, musical, and artistic works.

Legal Environment 14 Copyright 1999 Prentice Hall Publishing Company The Law of Agency Agent’s duties: l Loyalty l Performance l Notification l Duty of Care l Accounting

Legal Environment 15 Copyright 1999 Prentice Hall Publishing Company The Law of Agency Principal’s duties: l Compensation l Reimbursement l Cooperation l Safe working conditions

Legal Environment 16 Copyright 1999 Prentice Hall Publishing Company Bankruptcy l Chapter 7: Liquidation - most common type; business ceases to exist after bankruptcy proceeding is completed. l Chapter 11: Reorganization - company is protected from creditors' legal actions while formulating a "reorganization" plan. l Chapter 13: Individual debtors - less complex and less expensive.

Legal Environment 17 Copyright 1999 Prentice Hall Publishing Company Government Regulation l Trade Practices â Sherman Antitrust Act â Clayton Act â Federal Trade Commission Act â Robinson-Patman Act l Consumer Protection l Consumer Credit

Legal Environment 18 Copyright 1999 Prentice Hall Publishing Company Government Regulation l Environment â Clean Air Act â Clean Water Act â Resource Conservation and Recovery Act