1. Government’s Role In Domestic Business
Business Essentials

2. Chapter Objectives
After completing this chapter, students will be able to:
Name four ways in which government regulates business.
Name aspects of the government’s role in society and items the national government provides.
Explain how a government can stimulate or restrict economic activities.

3. How Government is Funded
Collect taxes to help run the nation, state, county, city, or town.
Property taxes, Income taxes, Sales taxes, Vehicle taxes, Capital Gains taxes, etc.
Taxes don’t always cover the expenses.
Most U.S. Citizens pay the equivalent of 4 months worth of income in taxes each year. Essentially means you’re working 4 months for free.

4. How Government Regulates Business
One of the most important roles of the government is to foster economic success (help businesses make money).
However, it also tries to aid in the quality of life of its citizens.
Governments must help ensure its people are not abused by businesses
To fulfill these duties, local, state, and federal governments pass laws to promote and regulate business

5. Difference Between Interstate and Intrastate Commerce
Federal Government oversees Interstate Commerce which is business that takes place between states
State Government oversees Intrastate Commerce which is business that takes place within a state

6. Government Protecting Business
Laws govern the working of the economy. These laws regulate the production process and protect competition, business agreements, and creative properties.
Companies that break the law can be fined, sued, or forced to close.
People who don’t follow the rules also face penalties

7. Government Protecting Competition
The U.S. Government passes antitrust laws to promote domestic competition.
Antitrust laws allow the federal government to break up monopolies, regulate them, or take control of them.
A Monopoly occurs when one company controls an industry or is the only one to offer a product or service.
Companies can form a monopoly by establishing a Trust – meaning a group of companies that band together to form a monopoly and cut out competition

8. Who Enforces Antitrust Laws?
The Federal Trade Commission (FTC) enforces antitrust laws.
Lets look at the other side of the coin – obviously this video is a parody but it does cause one to think.

9. Partner Activity
Using key the search words “violated antitrust laws.”
Look through the returned search links and summarize an antitrust case in the bottom section of your notes.
Be prepared to present your findings to the class.
15 minutes

10. Government Protecting Business Agreements
One of the most basic ways government protects business is by enforcing Contracts.
A Contract is a legally enforceable agreement between two or more parties. It can be written, verbal, or even formed over a handshake.
When one party fails to live up to the terms of the contract a Breach of Contract has occurred.
It is always easier to prove a breach of contract has occurred when there is a written agreement.

11. Government Protecting Creative Properties
Laws also protect the right to own creative properties.
Creative properties, items such as inventions and art, can be protected with a copyright, a patent, or a trademark.

12. Creative Properties
A Copyright gives artists the legal right to own their creations.
I.E. If you own a copyright to a song, others who want to use your song and/or lyrics must get your permission beforehand.
Copyrights usually last until 70 years after the owner’s death.

13. Creative Properties
A Patent is a legal grant for the sole right to own an invention.
No one can copy a patented product or process without permission for 20 years after the inventor filed his/her application with the US Patent and Trademark Office
A Trademark is a name, a symbol, or a characteristic that identifies a product.
Trademarks are protected from being copied if they’re registered appropriately with the government.
Only the owner of the trademark can legally use it (i.e )

14. Partner Activity
Using research a case involving copyright, patent, and/or trademark infringements (violations).
Look through the returned search links and summarize an court case on a separate sheet of notebook paper.
Be prepared to present your findings to the class.
15 minutes

15. Regulating The Production Process
The government also enacts laws that regulate the amount of waste that factories can discharge into the environment.
Worker protection laws impose safety requirements and work procedures and regulate minimum wage.
The Food and Drug Administration (FDA) regulates the manufacture and sale of drugs in the US. When things go bad…

16. Discussion Questions
Why does our government want businesses to succeed?
How is competition a form of consumer protection?
Does Microsoft have a monopoly?

17. Government’s Role in Society
The Government provides:
Key goods and services to the public
Incentives to businesses and people
Jobs and distribution of income for Americans

18. Providing Goods and Services
The Government is the largest provider of services in the country.
The government provides services to the public as a whole for the good of the society (i.e. National Defense).
Public goods and services are items provided by gov’t and paid for by taxes.
The cost of providing public goods and services are high.
Taxes and other forms of revenue can’t always cover expenses. Must find money somewhere!

19. Privatization of Public Goods or Services
Privatization occurs when a business offers a public good or service.
In most cases, the gov’t receives money from the company giving them the legal “rights” to provide the good or service (remember Chicago’s Skyway).
Sometimes, this can lead to problems due to the “profit motive” of businesses.
Privatizing Road Video - 4 min

20. Other Government Roles
Transfer Payments
Unemployment, Social Security, and Veteran’s Benefits are all transfer payment by the government to improve quality of life and ensure people have money when they need it most.
This has its pitfalls as many individuals abuse this system. This strains the economy and handcuffs those dependent on the transfer payments.
Welfare Fraud Case 1 Video
Welfare Fraud Case 2 Video

21. Other Government Roles
Employment
The gov’t is the largest employer in the U.S. (roughly 3 million employed).
Teachers, firefighters, mayors, congress, etc. are all public workers.
Consuming Goods and Services
Largest consumer of goods and services.
The gov’t must buy goods and services just as other business must do.

22. Other Government Roles… Supporting Businesses
Small Business Administration (SBA)
Agency that encourages development of small businesses. Offers loans, training, and other resources to small businesses.
Subsidies
Money (grants) given to producers or consumers to encourage certain economical behaviors. Helps businesses be more competitive internationally and is usually given to industries considered to benefit the public (agriculture).

23. Other Government Roles… Providing Tax Incentives
Gov’t may offer tax incentives to encourage or discourage a business activity.
A tax incentive is a temporary reduction or even elimination of a tax.
A tax break is a special tax benefit given to promote specific economic or social objectives (new house credit).
Tax deductions are given to encourage things like charitable donations.
Michigan Lithium Batteries Tax Incentive Video – 4 Min

24. Other Government Roles… Providing Tax Incentives
The gov’t may also try to discourage certain behaviors.
For example, taxes on cigarettes have increased dramatically in hopes that people will stop smoking.
Smoking increases health risks which drains our economy of unnecessary resources.

25. Partner Activity
Using key the search words “offers tax incentives.”
Look through the returned search links and summarize a case on a separate sheet of notebook paper.
Be prepared to present your findings to the class.
15 minutes

26. Contract Law

27. Contracts: Nature and Terminology
Promise is a declaration that something will or will not happen in the future.
What is a Contract?
Contract is an agreement (based on a promise) that can be enforced in court.

28. Elements of a Contract Agreement (Offer and Acceptance). Consideration
Offer and Acceptance create Genuine Agreement which is referred to as a “meeting of the minds.”
Consideration
The exchange of things in value (what is being exchanged).
Contractual Capacity
The legal ability to enter into a contract
Legality
Parties cannot enforce contracts that involve illegal acts.

29. In This Case
The Delgados agreed to buy and Oaknoll, Inc., agreed to sell one lot from among the 200 in a large suburban subdivision. Using their credit card, the Delgados paid $1,000 as a down payment and were given a receipt. The lots shown on the preliminary subdivision plan were of various sizes, shapes, and prices, but no particular lot was specified in the agreement. Because of this, an essential term was missing, and therefore no contract arose.

30. Characteristics of a Contract
Valid, Void, and Unenforceable
Valid – “legally good” and binding contract exists
Void – has no “legal effect” due to an absence of one or more of the elements of a contract
Unenforceable – court will not uphold contract generally because of some rule of law, such as the statute of limitations.

31. Characteristics of a Contract
Express or Implied
An express contract is stated in words and may be either oral or written.
An implied contract comes about from actions of the parties.

32. Breach of Contract
A breach of contract occurs when one party fails to perform the duties set out in the terms of the agreement.
Most contracts are usually breached after the performance date.

33. What Happens After Breach?
When a contract is breached, the injured party has a choice of remedies.
A remedy is a legal means of enforcing a right or correcting a wrong.
Two remedies we’ll consider:
Money Damages
Equitable Remedies

34. Money Damages
If you suffer a loss as the injured party, you may sue for money damages resulting from the breach.
The money damages should, by law, place you in the position you would have been in if the contract had been carried out.
If you seek “punitive” damages, you’re seeking damages in excess of the loss to punish the defendant for their wrongful act.

35. Equitable Remedies Two equitable remedies:
Specific Performance: ask the court to order the other party to do specifically what he or she originally agreed to do.
Injunction: ask the court to is an order that prevents a party from an act of some sort.

36. Partner Activity
Using key the search words “breached contract.”
Look through the returned search links and summarize a case on a separate sheet of notebook paper.
Be prepared to present your findings to the class.
15 minutes

37. BRHS Business Education Department
Business Law Basics
BRHS Business Education Department

38. Business Activities and the Legal Environment
Law regulates many different areas of business.
Many different laws may affect a single business transaction.
Two types of Law:
Tort Law
Criminal Law

39. Basis of Tort Law
Doing business today involves risks, both legal and financial.
A tort is a civil injury designed to provide compensation for injury to a legally protected, tangible or intangible, interest.
There are intentional and unintentional (negligence) torts.

40. Unintentional Tort Law
Injury caused by a person’s carelessness is known as Negligence
Person does not intend the consequences of the act or believes they will occur.
Defendant owes duty to protect Plaintiff from foreseeable risks that Defendant knew or should have known about.
Courts use reasonable person standard (jury) to determine whether duty exists. 40

41. Unintentional Tort Law
Strict Liability
Some activities are so dangerous the law will apply neither the principles of negligence nor the rules of intentional torts to them. This is called Strict Liability and the defendant is guilty regardless of intent or non-intent.
I.E. using explosives, keeping wild animals, storing highly flammable liquids.

42. Unintentional Tort Law
Strict Liability – Product Liability
In recent years, the doctrine of strict liability has been applied to product liability cases. When people are injured from defects in products that they bought in the marketplace, the firm manufacturing the products is liable for injuries, regardless of fault.
Manufacturers, sellers, and suppliers of goods can all be held responsible.

43. BRHS Business Education
Environmental Law
BRHS Business Education

44. Structural Overview of Environmental Law

45. Targets of Environmental Laws: Who or what gets regulated?
Products
Pollutants
Industrial Facilities
Individuals
Land Uses
Products. Legislation targeted at products can be broad like the Toxic Substances Control Act (TSCA), which regulates any chemical substance or mixture. Or, legislation can be more specific like the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), which only governs pesticide chemicals.
Pollutants. Virtually every pollutant resulting from industrial, commercial, or domestic activities fall within the scope of a federal environmental statute.
Industrial Facilities. Federal regulation targeted at industrial facilities is the most popular and perhaps the easiest form of regulation to enforce because facilities are fewer in number than individuals. For example, the EPA can more easily impose requirements for emissions reductions against car manufacturers rather than individual car owners.
Government Agencies. Governmental entities may be regulated if they own certain kinds of facilities that are part of the pollution problem, e.g. public water supply systems.
Individuals. Regulation of individual conduct is less popular than regulation of facilities for both political and practical reasons.
Land Uses. While most private land use decisions are regulated only at the local level, some of the federal environmental laws contain provisions that effect land use decisions. The Clean Water Act, for example, requires individuals to obtain permits before dredge and fill operations are conducted on wetlands.

46. Federal Environmental Statutes
Clean Air Act
To control air pollution by instituting point source controls and establishing maximum pollutant levels for the ambient air.
Clean Water Act
The stated objective of the Clean Water Act is to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters. Why should you care?

47. Federal Environmental Statutes Cont…
Resource Conservation and Recovery Act (RCRA)
To provide a “cradle to grave” framework for managing solid and hazardous waste from generation to final disposal.
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
To provide a mechanism to clean up contaminated sites and hold potentially responsible parties accountable for clean up costs.

48. Federal Environmental Statutes Cont…
Federal Insecticide, Fungicide, and Rodenticide Act
To protect the public health and environment against the misuse of pesticides.
Toxic Substance Control Act (TSCA)
To regulate toxic chemicals and mixtures that present an “unreasonable risk of injury to health or the environment.”

49. Ecuador versus Cheveron/Texaco
Chevron vs Ecuador Video - 40 min