Business Law and Ethics

This document discusses business law and ethics, including contract essentials, the court system in the UK, available remedies, and ethical corporate governance in relation to the Enron scandal and the Sabane-Oxley Act of 2002.

Business Law and Ethics

Table of Contents
INTRODUCTION.....................................................................................................................................3
PROJECT 1...............................................................................................................................................3
Define the Contract and Discuss its Essential Elements..........................................................................3
Explain Court System of UK and Advise Parties to Which Court they can Approach............................5
Advise Hilary Whether any Valid Contract Lies Between her and Other Parties that are Eleanor, Amy
and Olivia................................................................................................................................................5
Discuss Various Available Remedies Under the Contract Law...............................................................6
PROJECT 2...............................................................................................................................................6
Discuss this case in relation to ethical corporate governance and the Sabane-Oxley Act of 2002...........6
CONCLUSION..........................................................................................................................................9
REFERENCES........................................................................................................................................10

INTRODUCTION
Business law and ethics is defined as the law which ensures about the commercial
activity. On the other side, business ethics are defined as the way of performing business activity
in fair and ethical manner. It is necessary for any of the person that while conducting any of the
commercial transaction, business law and ethics must be considered as it plays the vital role. Any
of the entity fails to perform their part of work as per the requirement of law and ethics may have
to face serval penalty. Talking about the project, it has been divided into two section. The first
section will ensure that proper contract law and court procedure is used for resolving the case
study. At the same time second section will focus towards Enron Fraud Scandal where Sabane-
Oxley Act of 2002 will be also considered in it.
PROJECT 1
Define the Contract and Discuss its Essential Elements
The contract can be defined as “an agreement which is legally binding upon all the
contracting parties”. Contract law is such an important law which people use in the daily life.
The contract does not need to be in written form only, the contract can also be in the oral form
too. For entering into a contract it is necessary that there must be at least two contracting parties
who will form a contract. A contract is formed for the purpose of determining various rights and
duties of the contracting parties and terms and conditions of the agreement. Each contracting
party would be bound by the terms of the contract and if any of the party breaches that, that party
will be liable to pay the compensation to the sufferer party. The party who has suffered the loss
should prove in the court of law that there exists a valid contract between both the parties and the
loss suffered has been caused due to that breach only. To determine the fact whether valid
contract was existing between the parties the court will examine the fact whether all the
essentials of the valid contract are present or not. The essentials of a contract which should be
present in an agreement while making it a valid and binding contract are Offer, Acceptance,
Consideration and Intention to enter into legal Relationship. Offer can be defined “as
nothing but giving proposal or showing willingness regarding something to some other person”.
Offer must not be misunderstood as invitation to offer as both these things are different (Luetge,
Armbrüster and Müller, 2016). The invitation to offer is just a pre stage of offer. The Privy
Council has distinguished between these two in the landmark judgement of Harvey vs Facey

(1893) in which what happened was that a telegram was sent by the plaintiff making inquiry
regarding the lowest price of a property. The defendant quoted the lowest price and sent it
through telegram only. After this the plaintiff again sent an email stating that he agrees to
purchase the property on the lowest price quoted which was later rejected by the defendant. The
plaintiff approached the court stating that the defendant has breached the contract. In this the
Privy Council has stated that the telegram through which the lowest price was quoted was just an
invitation to offer and the offer has been made by the plaintiff which was later rejected by the
defendant, hence no contract lies between both the parties. The another landmark judgement is of
Fisher vs Bell (1961) in which the court has stated that all the items which are displayed in a
shop or showroom will be considered as invitation to offer and the person who will be willing to
purchase those items would be making the offer to the shopkeeper (Swanson and Frederick,
2016).
The next step in the formation of contract is Acceptance. The given offer must be
accepted to whom the offer has been made. This acceptance must be communicated and this
communication of acceptance must be through the prescribed mode (if any). Regarding the
revocation of acceptance, it can be revoked until it comes to the knowledge of the offeror
whereas there is an exception to this rule when the exception has been made by the postal
method. In this the acceptance cannot be revoked after it has been put in the mode of
transmission and both the parties becomes bound by the contract at this time only.
The next essential for a valid contract is presence of Consideration. Consideration is
nothing but something which contracting parties are exchanging at the time of formation of
contract. It can be in monetary terms or the both the parties doing certain promises with each
other in order to do or abstain from doing anything.
There must be an intention of the contracting parties regarding entering into a legal
relationship when forming the contract. Generally, when a contract has been made between a
father and son or husband and wife, this intention of entering into legal relationship lacks. The
landmark judgement upon this is Balfour vs Balfour in which there was an agreement between
the husband and wife (Mayer, 2017). The court in this case has stated that no legal intention was
there of either husband or wife that’s why no valid contract has been formed.

Explain Court System of UK and Advise Parties to Which Court they can Approach
In present scenario, any of the nation mainly focus towards their legal because it is the
only way through which peace can be maintained in the nation. In the similar form, English
Legal System has also taken some of the important decision so that they attain effective result. In
order to resolve any of the case, Judiciary system has been playing the key role which has been
classified into two parts Civil and Criminal. The detail explanation for this particular judiciary
system has mentioned below:
Civil Proceedings: It is among the important proceeding which is solved within the
premises of judiciary. The civil matters which are less complex in nature are solved here with the
help of judgement being given by the judges. In civil proceeding, there are different types of
court such as county court, magistrates court, high court, court of appeal and supreme court. The
maximum number of cases are solved through the process of county court.
Criminal Proceedings: The criminal proceedings is required in the situation where level
of crime is complex in nature and creates trouble for common public. There are different types of
court process under criminal proceedings through which case can be resolved. Some of the types
of criminal proceeding courts are, Magistrates court, crown court, court of appeal and House of
lords. Here, magistrate court takes the responsibility to resolve maximum number of cases
(McLean, 2017).
After analysing the case and understanding about the court procedure, it is necessary for
the disputed party to take the help of county court. This court can be beneficial for resolving the
case because it mainly deals with agreement related issues. In addition, if disputed party are
unable to resolve their dispute through county court then in that respective situation, they can
take the help of other court for finding the conclusion. But, applying to other court once decision
is obtained in county court, then it can take long procedure to resolve the dispute.
Advise Hilary Whether any Valid Contract Lies Between her and Other Parties that are Eleanor,
Amy and Olivia
Case 1: In this case the advertisement shown by Hilary will be considered as invitation to
offer. In the case of Partridge vs Carttinden it was stated by the court that generally,
advertisements should be considered as invitation to offer. Here in this case the offer has been
made by Eleanor on which Hilary has countered that offer due to which it remains ceased. Again

when the offer made by Hilary it was rejected by Eleanor, hence no contract lies between both
the parties.
Case 2: it is an exception to the general rule when the acceptance would have sent by the
postal method that the acceptance cannot be revoked after it has been put in the mode of
transmission and both the parties become bound by the terms of the contract when the acceptor
posts the later. By applying this principle to the facts it can be concluded that Amy cannot revoke
her acceptance as she has already posted her letter of acceptance. The another judgment upon
this is Entores vs Far Miles East Corporation (Thompson, 2017).
Case 3: In the given facts the notices put by Hilary will be considered as the invitation to
offer. Here the offer regarding the purchase of paintings has been made by Olivia which has been
rejected by Hilary, hence no contract lies between both the parties.
Discuss Various Available Remedies Under the Contract Law
Compensation: It is the most common remedy which is awarded by the court in the
breach of contract in the form of monetary damages. While awarding the compensation to the
sufferer party the court must see that the loss caused has been due to the breach of contract and
the loss was foreseeable.
Specific Performance: There can be certain situations where the compensation will not
be considered as the adequate remedy. In those cases, the court can order regarding the specific
performance of the contract.
Both of this area can be majorly considered by the court for declaring the result in the
given case scenario because providing benefits to innocent party is quite important in any of the
agreement related case.
PROJECT 2
Discuss this case in relation to ethical corporate governance and the Sabane-Oxley Act of 2002.
CASE SCENARIO: Enron Corporation – By the end of year 2001, it was found that
Enron’s reported financial condition was sustained by an institutionalised, systemic were major
accounting fraud was identified.

Ethical Corporate Governance: It is defined as the process which helps to ensure that
any of the entity is working the specified manner so that balance among economic and social
factors can be maintained. Any of the corporate sector, has to take number of business decision
but at the same time they are needed to make sure that in any of the circumstances they do not
create any of the issues for the public or for any of the sector. Ethical Corporate Governance
express that whenever any of the organisation uses the existing resources, they should use in
effective manner but they should also make sure that using those resource will not create any sort
of issue for the general public (Cortez, 2018). Ethical corporate governance is quite necessary
because it allows to take suitable decision as per the requirement of business circumstances
which simply means that corporate governance has a huge importance in accomplishing the
targets. At the same time, it is necessary that whenever any of the business activity is conducted
it must be conducted in an ethical manner and if organisation fails in this specific area the
number of penalties can be imposed.
Sabane-Oxley Act of 2002: In present scenario, any of the investor wants to invest their
capital in commercial activity so that effective results can be obtained. At the same time, there
are number of organisations which presents fraudulent data in front of the public which creates
huge problem for the issues. In order to bring control to all of this activity, Sabane-Oxley Act,
2002 has been commenced. This act helps to make sure that any of the organisation do not
present any of the fake information in front of any stakeholders. In any of the organisation, there
are number of accounting information has to be presented and that information should be in fair
manner. Here, it is necessary as per the act the proper audit done be done for the account which
has been prepared. The main purpose of conducting audit for accounting information is to ensure
that all of the information which has been prepared are true and fair in nature (Hall and et. al,
2018). In addition to this, the act has been commenced for the purpose of ensuring that any of the
corporate sector do not breaches the law and even it tries to identify about the scandal which has
been conducted by the business entity. Even there are other addition requirement of the law
which ensure that each and every record are maintained by the organisation performing the
commercial activity. If entity fails to comply with rules and regulation, then penalty can be
imposed.

In past years, there are number of organisations which has conducted scandal which has
created lots of problem for the stakeholders. The main reason behind the commencement of
Sabane-Oxley Act, 2002 has been Enron Corporation because they had conducted one of the
biggest scandals in corporate sector which is connected with fraudulent accounting statement. In
this particular case, the financial report and accounting statement which is has been presented by
the organisation were completely false in nature. The accounting statements which were
presented by the court were false in nature due to investors has to suffer from the losses of $74
billion. After this scandal, organisation was categorised under bankrupt as it was among top 10
biggest fraud related to corruption (MCLAUGHLIN, 2018). The scandal was quite bigger in
nature that even employees has to lost their job without receiving their salary. The defaulter in
the case (Jeffrey Skilling) was punished by sentence for 24 years.
Discussion of the case in terms of Corporate Governance and ethics
It is essential to understand that Corporate governance and ethics has a huge importance
for any of the entity and talking about the case, the management of the organisation was just
trying to increase their benefit. For the purpose of enhancing the profit by raising fund from
investor, false information was being presented by organisation which is completely against the
ethical value. The false information which were being presented by the organisation was helping
the entity to attract a greater number of investors towards the organisation. The corporate
governance suggest that entity should be able to present true and fair view on any of the
information about the organisation to their stakeholders. Here, it is the responsibility of higher
administration of corporation that they should be able to review each of the decision which has
been taken by the different departments of the organisation. But, looking at the scenario of the
case, management didn’t take the responsibility which increases the burden for them and resulted
in higher debt.
As per the ethical values, it was necessary for Enron Corporation that they most have
considered about their worker and staffs and other stakeholders before involving in any of the
scandals. The scandal was huge in nature that even organisation was unable to conduct any of the
business activity in future once it was providing that company was ethically wrong in performing
their business activity. There was a breach in each of the terms and condition which create
number of problems for many stakeholders (Bu, 2019). On the other side, corporate governance

discusses that business entity is only able to take those business decisions which are beneficial
for public as well as investors who plays necessary role in the organisation. The reason behind
all of this issue were higher level of risk-taking ability of the company.
Discussion of the case in terms of Sabane-Oxley Act, 2002.
The law was introduced just after looking at the scandal which was done by Enron
Corporation. The act says that the business activity which was conducted by the Enron
corporation was completely against the law and polices. As per the act it was necessary that
organisation must prepare proper accounting statement but Enron Corporation was unable to do
so. It was necessary that proper audit should be done but at the same time it was found that
Enron Corporation was never working according to law and lack of conducting audit gives
opportunity to management to conduct bigger scale of scandal (Madden, 2019). The main reason
behind the formation of accounting statement is to ensure that stakeholder can analyse about the
situation of a company through which they can take decision that whether entity is suitable for
their investment or not.
The commencement of law has defined the roles and responsibility of every accountant
within the company. Even responsibility of every auditor in the company has redefined but at the
same time, auditor of the company didn’t perform their duty as they didn’t try to show the
accurate picture of the entity(NOBLE, 2019). If similar form of problem will occur against then
auditor of the company will have to face number of problem as they will be also held liable for
the default.
CONCLUSION
From the above discussion in the report, it has been identified that business law is
essential for dealing with any of the commercial activity. Business law and ethical values can
contribute easily for conducting the business activity in a effective manner. In any of the
contract, there should be offer and acceptance along with valid terms and condition. Sabane-
Oxley Act 2002 is effective law in nature because it ensures that all of accounts and business
transactions are shown as per the requirement of law.

REFERENCES
Books & Journals
Luetge, C., Armbrüster, T. and Müller, J., 2016. Order ethics: Bridging the gap between
contractarianism and business ethics. Journal of Business Ethics, 136(4), pp.687-697.
Swanson, D. L. and Frederick, W. C., 2016. Denial and leadership in business ethics
education. Business ethics: New challenges for business schools and corporate leaders,
pp.222-240.
Mayer, D., 2017. The law and ethics of CEO social activism. JL Bus. & Ethics, 23, p.21.
McLean, S. ed., 2017. Medical law and ethics. Routledge.
Thompson, D. B., 2017. Teaching the Business Law and Ethics of Arbitration After
Concepcion. Journal of Legal Studies Education, 34(1), pp.63-88.
Cortez, N., 2018. The Evolving Law and Ethics of Digital Health. In Digital Health (pp. 249-
269). Springer, Cham.
Hall, M. A. and et. al, 2018. Health care law and ethics. Wolters Kluwer Law & Business.
MCLAUGHLIN, J., 2018. LAW, BUSINESS & ETHICS.
Bu, Q., 2019. Reassess the law and ethics of heritable genome editing interventions: Lessons for
China and the world. Issues L. & Med., 34, p.115.
Madden, T. M., 2019. Law and Strategy and Ethics. Geo. J. Legal Ethics, 32, p.181.
NOBLE, T., 2019. JOURNAL OF LAW, BUSINESS & ETHICS.