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

2. 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

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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

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