Business Law and Ethics: Contracts, Court System, and Enron Scandal

This assignment discusses the concepts of contract law, court system, and ethical corporate governance in relation to business law and ethics. It explores the Enron scandal and the Sarbanes Oxley Act of 2002. The assignment also provides an overview of the remedies available to parties in contract disputes.

BUSINESS LAW AND
ETHICS

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1 INDIVIDUAL ESSAY.....................................................................................................2
About contract law and blue prints of contract............................................................................2
Court system in relation to English legal system and suggestion for both parties......................3
Whether and Binding contracts exist between Hilary and others................................................4
Various remedies available to parties..........................................................................................5
TASK 2 INDIVIDUAL REPORT...................................................................................................6
Enron corporation case in relation to ethical corporate governance and Sabane Oxley act of
2002.............................................................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business law concentrates each and every aspects of doing and running a business, it
encompasses key laws related to a organization formations, kind of entity and their structure,
acquisitions, employment laws, mergers and shareholder rights. It is specific to nature of firms
whether it is partnership, public limited or private company. While business ethics is defined as
concept of the most accurate actions and practices of business potentially controversial concepts
including corporate governance, discrimination, and insider trades, fiduciary accountabilities and
corporate social responsibility.
The current assignment is divided into two tasks, first task will write an essay format and
second one is in form of report. Project one will explain contract law, all blue prints of a
contract, court system in context of English legal system and appropriate suggestions in regard to
Hilary and other party. Furthermore, project 2 will justify Enron’s case in relation to Sabane
Oxley Act of 2002 and ethical corporate governance.
TASK 1 INDIVIDUAL ESSAY
About contract law and blue prints of contract
Contract law or business law is an agreement developed between more than two private
parties developing mutual obligations enforceable by specific law. It governs legality of
documents made between two or more companies or parties when there is an exchange of
services, money, products or some sort planned to take place (Smits, 2017). In mostly all
businesses transactions, contracts are made; examples of such agreements in ventures include
purchase orders, bills of sale and employment agreements. Accordant to this regulation, a
contract made between parties or business organizations, in which there is a proper commitment
to do something in return for a benefit & gain, is legally binding. It is centre of several venture
managing and anyone entering into a agreement must that failing to abide by agreement, even by
fault, can outcome in serious issues. Such contract, even when terms of concord have been
developed. It provides clarity in business relationships, right of two or more parties and
agreements between them. It aids to avoid potential contract litigation and disputes.

Blue print of a contract of agreement defined as guide for making something, it is a
pattern or design that can be followed in systematic manner. Top authorities approve blueprints
as aims for particular release, and then generate a specific report of progress towards feature
completion for that release (Young and Tvedt, 2017). It includes appropriate direction and
information that guide an company to make a contract with well reputed firm. Get in writing,
keep it simple, deal with right entrepreneurs, determine each party correctly, gather information
about party with which a firm want to sign a deal, specify payment obligation and read all the
terms, all these things are guidelines that play role as blue prints in a business contract. It caters a
useful framework for creating contract or a business agreement. It helps of determine key points
and considerations to make contract effective. It also aids comprehend transaction process,
legality and other things that are essential to known before making a business contract.
Court system in relation to English legal system and suggestion for both parties
Court system or judicial system is also Judiciary system. Court has high power to make
decision and also enforce regulations, solve disputes (Pech and Alemanno, 2017). It consists of
different judge and other magistrates; they form bench or core of above system. Wales and
England has a common law legal system, which has been developed by subject matter heard in
previous cases and so is law developed by judges. The mode individual cases are managed and
handled through courts has always been a important part of work of court system. It analysed
that judicial system is made up of number of entities in addition to judiciary. UK is separated
into three self controlled legal or jurisdictions processes; such as England and Wales, Scotland
and Northern Ireland. English legal system has its own court system, Judges, laws and lawyers.
Daily running of courts of England & Wales is managed by tribunal’s services and her
majesty’s courts. It comprise with different types of laws, legal advices and other important acts
that help individual to solve their legal issues.
Hilary must treat Olivia in ethical manner; he should treat her like other consumers. They
need to follow pre-action rules. He must conduct ethical practices and treat everyone fairly
without making any kind of differences based on gender and other factors. It is really very
important for person to follow business ethics and laws which is really very essential as it help to
grow and obtain desired outcomes. Furthermore, in context of Olivia, when she treated unfairly
by Hilary, while visiting her art gallery for purchasing a painting. She feels very bad and at that

movement she must take action which is actually important. She should take specific court action
in relation to English legal system and that is due process function which helps a person to
protect their individual rights. Both parties should choose the right court actions and follow it
appropriately. Olivia can take another legal action against Hilary because she has not treated her
in good manners.
Whether and Binding contracts exist between Hilary and others
Binding contracts are legal documents or agreements between two or more unites,
which are enforceable by law (Przepiorka and Diekmann, 2020). It is not always in writing,
sometimes, verbal statements can legally design as a contract or offer, even when party never
proposed it as such. It can be created when all parties must approve and agree about an offer
made by one unit and accepted by other without making any complains. The key elements of
binding contract are offer, legal subject matter, competent parties, and the acceptance.
Hilary is counselled that no binding contract is present between herself and with Eleanor.
Hilary just advertise an offer and Eleanor reply in context of it, they both has not been make any
kind of commitment together. Hilary’s respond by return of post is not an approval, it’s a counter
offer because it efforts to discuss price up to 13,000. Counter offer terminated actual action,
therefore Eleanor’s offer no longer exists. According to this statement, when Hilary revert again
saying she cannot accept Elanor offer, it is not an acceptance, this is fresh offer which Elenor
then discards.
In regard to, it is considered that Hilary’s present an offer to Amy which is related to
office computer. Amy writes an acceptance letter, it can be said that when acceptance in form of
written or oral has been complete a binding contract comes into existence. Consequently, this is
not possible to revoke an receiving; any such efforts is breach of contract. An acceptance of
agreement, also called as an contract. It is a manifestation of assent to offer made by offeree in
manner required or invited by offer. In assumption, binding contract existed between Hilary and
Amy from instant acceptance of Amy regarding Hilary offer.
In case of Olivia, Hilary decided to have a art gallery or sale, the big notices which she
places on gallery windows are considered as promotions or advertisements. Olivia just waited

outside, she never make any commitment with Hilary to purchase a painting or not. So, it clearly
defined that there is not binding contract between both of them has been held.
Various remedies available to parties
In above discussion, Hilary meets with three different parties like Amy, Olivia and
Eleanor. Hilary meets with them, because of three different offers which are quite different from
each other. There are varied remedies accessible for all above parties which they needs to
understand and implement while making any kind of contract with other parties.
A agreement is officially binding contract that is developed by full weight of court or
judiciary (Kolvart, Poola and Rull, 2016). In event that either person to a contractual contract
fails to perform according to conditions and terms of contract, other part may take straight and
legal action. Part who fails to work is referred to as breaching unit. It can be said that right
remedy or compensation depends upon situations. Non breaching party can need to determine
that other one failed to work in order to be entitled to any form of remedy. Monetary damages,
Liquidation damages, rescission, and specific performance are different remedies available to
above parties which is quite beneficial and useful.
Monetary damages- A party who breached an agreed contract like Amy can be held
accountable for losses caused by breach (Ishikawa, 2016). Expectation and general damages as
well as consequential modifications can outcome from breach of an agreement. Common
damages refer to losses that happens because of contravene but that were an indirect cause. For
example, when an person accept and agree for a deal like Amy to be accepted and it never came,
general losses would include value of time and money Hilary paid for office computer.
Specific performance- This is another remedy available for all three parties, which they
should consider in ethical manner. In some cases, right remedy for contract breach is to correct
breach by pulling breaching party to accomplish term of contract. It is an right and most
appropriate remedy in conditions where monetary losses cannot possibly make non-breaching
party for overall losses.
Liquidation damages- some period, it is quite complex to identify how much a
individual was harmed by breach of contract. To consider this issue, some agreements contains

this remedy clauses. Significantly, these clauses or terms state that non breaching party can be
award a particular sum of money in case a data breach happens.
TASK 2 INDIVIDUAL REPORT
Enron corporation case in relation to ethical corporate governance and Sabane Oxley act of 2002
Ethical corporate governance refer to policies & procedures that organizations has in
area to manage and deal with problems about how it is conducts and administered daily ventures
(Salin and et.al., 2019). It is very essential to consider that organization exist key to develop a
specific service or item, which is utilized to make profit. It has much become a exhortation these
days, just about every firm thinks it’s a better idea and may even proclaim to consider it, but
what exactly is it, and how can individual know for assure that a organization is practise what it
preaches. However, that intent should be well balanced and managed with measures that assure a
firm pursues income without cross over line into realms of unethical nature. In earlier time many
firms may have exploited market positions to inhibit rivalry or even threaten local peoples;
ethical corporate governance exists to avoid this happening. Business governance term and
policy must also include usual ways of older members of a organization, for instance chief
executive officer, senior management and board of directors, who are often seen as effort from
general policies applied in firm.
Sarbanes Oxley Act of 2002, is a law passed by United State, congress on 30 July of that
ear to aid protects shareholders or investors from deceitful financial reporting by corporations
(Chu and Hsu, 2018). It mandates strict reforms to imposed tough new penalties and existing
securities regulations on lawbreakers. It came in revert to financial scandals in early 2000s
including publicly traded organizations such as Enron Corporation, WorldCom and Tyco
international Plc. High profile frauds shook stakeholders confidence in trustworthiness of
business financial statements and led many to require an overhaul of decades earlier regulatory
standards. This act also added new and different criminal penalties for violating securities
regulations. Enforcement and rules policies outlines in this act supplemented or amended
existing laws dealing and handling with securities exchange Act of 1934 and other regulations
enforced by exchange and securities commission.

Both above concepts are useful and beneficial in context of Enron Fraud Scandal. At
ending of 2001, it exposed that Enron’s reported monetary situation is constant substantially by
an systematic, institutionalized, & creatively designed accounting fraud, known as Enron
scandal. It has since become a well known instance of wilful corporate corruption & fraud. Lack
of truthfulness by administration about health and growth of organization, is the main cause of
Enron’s bankruptcy and fraud scandal. Senior executives believed firm had to be better at
everything it did and that Enron had to protect their business reputations and their compensation
as the most successful executives in their home town.
Enron became one of the 10 biggest organizations in USA. In following months, more
evidence emerged about fraudulent and weaknesses activity of corporate governance. However,
nations across the whole world have been disturbed and unsettled by shock of this function and
are now evaluating their own corporate governance systems. Enron to make their business more
successful and effective rather than before, they must consider all the policies and processes.
Investors can only worried with company earning and act as well as productivity, but bad
corporate governance can be reason of greater issues with organization. For instance, before
collapse of Enron, the firm and their associated traders are trusted to have artificially inflated
cost of energy in some US states, thus maximizing their profitability. Because of Fraud scandal,
Enron faced a lot of issues, which direct impact on its ventures and brand reputation within US
market place, which is not appropriate for them. By following procedures and policies of ethical
corporate governance company can deal with current issue in effective and ethical manner,
which is really very important for them. They should consider that their services are made for
increasing profit not for any kind of illegal actions. There are so many things will be improved
when organization consider ethical business practices and abide with business laws that help
them to handle overall situation.
Furthermore, it can be said that when company comply Sarbanes Oxley act 2002 and
implement their law within current business practices, make them more able to run long. It helps
to protect their staff and other stakeholders who are connected with them since for so long for
commercial purpose.
In context of case study, Enrons should comprehend and implement professional body
ethical guidance or standards which are quite beneficial for them. It encompass corporate and

personal values of action expected by experienced and knowledgeable individual. How utilize of
this knowledge must be govern when offering a service or item to public can be considered a
moral problem and is termed professional ethics. Organization should consider all the standards
that help them to conduct ethical business practices in effective manner. There should be a
healthy organizational culture in a firm. In Enron’s case, their business culture played essential
roles of their collapse. Senior executives believed that firm had to better at everything and
stakeholders of board, who were not included in this scandal, were over optimistic about
company operating situations. When there existed losses and failures in performance of
organization, what they did was hiding their losses in order to secure brand reputation instead of
attempting to do something to make it right.
Philosophy is wider and complex topic, encompassing an varied amount of sub-
disciplines. For instance, while moral philosophy is concerned with what’s appropriate,
epistemology concentrated on nature of knowledge. This philosophy is branch of philosophy that
contemplates what is wrong and right. It explores nature of morality and evaluates how
individual should live their lives and behave in relation to others.
Management information system (MIS) development caters reports to managers in a
company or custom formats which is most suitable for their specific utilize. It can help Enron by
providing appropriate approach and guidance. It analysed that Enron fraud scandal drew
attentions to corporate and accounting fraud as their shareholders lost 74 Billion in last four eras
leading up to their bankruptcy and its workers lost billions in pension advantages. It is one of the
biggest problems organization is facing and it highly impacted on its reputation in mind of
consumers as well as in market. The above statement clearly stated that Enros faced an ethical
accounting fraud scandal after utilizing mark to market financing to fake their income and
misused special purposes SPES or entities.
Organization can develop management information system and follow right approach that
aid to prevent its business from legal matters. System development life cycle is one of MIS
approach under which prototyping is procedure of developing an incomplete concept of further
full featured system, which can be utilized to let users have a first thought of accomplished
system or permit consumers to examine program.

Along with above approaches, psychological concepts and MIS development Approach
Company can consider acquisitions tactic as well, which includes finding a methodology for
acquiring of target firms that generates value for acquirer. Utilization of acquisition strategy can
keep Enron management from acquiring ventures for which there is no clear path or way to
achieving a profitable result. This approach is quite beneficial for company as it help them to
increase brand awareness, reputation and build strong relation with other brand.
CONCLUSION
From above analysis it has been concluded that Hilary and other stakeholders by
following business ethics, rules and laws are running their business in effective manner. Hilary
for three different cases given maintains a contract only with specific party, which is Amy
because she accepts her offer and then reject. Furthermore, it has been summarized that both
Eleanor & Olivia do not hold any type of business contract with Hilary since their cases include
a promotion and also a common offer to actual offer, which kill off agreement and terms of real
contract. It has been analysed that Hilary have contract with Amy. Moreover, it has been
identified that by following legal advises and MIS development Approach Company effectively
work in market for longer period and sustain as well. By complying with all legal requirements
firm conducting ethical practices which put positive impact on its ventures.

REFERENCES
Book and Journals
Chu, B. and Hsu, Y., 2018. Non-audit services and audit quality---the effect of Sarbanes-Oxley
Act. Asia Pacific Management Review. 23(3). pp.201-208.
Ishikawa, T., 2016. Restitution as a Second Chance for Investor-State Relations: Restitution and
Monetary Damages as Sequential Options. McGill J. Disp. Resol.. 3. p.154.
Kolvart, M., Poola, M. and Rull, A., 2016. Smart contracts. In The Future of Law and
etechnologies (pp. 133-147). Springer, Cham.
Pech, L. and Alemanno, A., 2017. Thinking justice outside the docket: A critical assessment of
the reform of the EU’s court system. Common Market Law Review. 54(1).
Przepiorka, W. and Diekmann, A., 2020. Binding contracts, non-binding promises and social
feedback in the intertemporal common-pool resource game. Games. 11(1). p.5.
Salin, A.S.A.P and et.al., 2019. The influence of a board’s ethical commitment on corporate
governance in enhancing a company’s corporate performance. Journal of Financial
Crime.
Smits, J.M. ed., 2017. Contract law: a comparative introduction. Edward Elgar Publishing.
Young, T.R. and Tvedt, M.W., 2017. The Risks and Benefits of Shortcuts: Models, Forms,
Guidelines and Existing-contract Examples. In Drafting Successful Access and Benefit-
sharing Contracts (pp. 364-388). Brill Nijhoff.