1. ACTG 6100 Week Three: Ethics, Contracts

2. Law and Ethics In some cases, law sets the moral minimum Sometimes, the law does not address the ethical problems that a businessperson faces. Lack of self-regulation may lead to greater regulation by government. Law and ethics sometimes conflict with one another.

3. Business Ethics Ethics is the study of what constitutes right or wrong behavior. Business ethics is not a separate discipline; it is the application of ethics to the business world

4. Approaches to Ethical Reasoning The Deontological Approach incorporates the Categorical Imperative, and the Principle of Rights. It is focused on whether the action is itself ethical. Utilitarianism is focused on the consequences of an action, rather than the action. The phrase “The Greatest Good for the Greatest Number” is frequently used in connection with Utilitarianism.

5. Contracts The contract is the agreement, although contract may also describe the document that is evidence of that agreement. Contracts promote Predictability Stability Certainty If businesses could not enforce contracts, they would not know how to plan.

6. Types of Contracts Unilateral vs. Bilateral: does the offer allow for a promise to perform, or is performance itself necessary? Executory vs. Executed: have all obligations been fulfilled? Expressed vs Implied in fact: are the obligations of the parties expressed verbally or in writing, or are they implied from the parties’ conduct?

7. Types of Contracts Void, Voidable, Unenforceable: A void contract is not a contract at all; neither party can enforce it. A voidable contract is one that can be enforced by one party but not the other; for example one entered into with a minor. An unenforceable contract is one which cannot be enforced because of a legal defense; for example an oral agreement that falls within the statute of frauds.

8. Contracts Common Law Contracts Real Estate Services Uniform Commercial Code Goods – Tangible, movable

9. Elements of a contract Offer Acceptance Consideration Legality Capacity Mutual Assent

10. Elements – Mutual Assent Offer The communication must evidence an intent to be bound by the terms. The terms must be reasonably definite. Termination of Offer: Revocation before acceptance. Rejection/Counteroffer Acceptance “Mirror Image Rule” Specified method and manner, or reasonable. “Mailbox Rule”

11. Other Elements of a Contract Consideration  Legally sufficient  Bargained for  Courts do inquire into adequacy Capacity  Competency  Minority Legality  Must not violate the law  Or public policy

12. The Statute of Frauds Must be in writing: Real Estate One Year Debt of another Executor for an estate Consideration of marriage Goods - $500 or more

13. The Statute of Frauds May be more than one writing Not necessarily prepared to satisfy the statute Essential terms Signed by the party to be charged