Business Law and Ethics: Contract Law, Corporate Governance, and Enron

This assignment comprises two parts: an essay on contract law and an individual report on corporate governance. The essay defines contract law, outlines the elements of a contract, and examines the English court system, advising on court actions based on a case scenario involving advertising and sales. It also assesses the existence of binding contracts and available remedies. The second part is a report analyzing the Enron scandal, discussing corporate governance, the Sarbanes-Oxley Act of 2002, and the scandal's implications. The report explores the financial fraud and ethical failures that led to Enron's collapse, providing insights into legal and ethical responsibilities within business organizations.

Business Law and Ethics

Table of Contents
MAIN BODY...................................................................................................................................3
PROJECT-1(ESSAY)......................................................................................................................3
Introduction of Essay..................................................................................................................3
Following question is to be answered .............................................................................................4
Define contract law and describe all the blue prints of a contract..............................................4
Explain the court system in relation to the English legal system and advise the parties above
which court action to pursue.......................................................................................................4
Advise Hilary as to whether binding contracts exist between herself and each of the following
people: Eleanor, Amy and Olivia................................................................................................5
Explain and discuss the various remedies available to the parties..............................................6
Conclusion of essay.....................................................................................................................6
PROJECT 2(INDIVIDUAL REPORT)...........................................................................................7
Introduction of report..................................................................................................................7
CORPORATE GOVERNANCE................................................................................................8
SARBANES-OXLEY ACT OF 2002.........................................................................................9
Conclusion of Individual Report...............................................................................................10
CONCLUSION..............................................................................................................................10
REFRENCES ................................................................................................................................11

INTRODUCTION
Business laws are the laws that is related to forming of business organization within an
country. These laws are focused over providing concrete framework that makes organizations to
be formed within the laws that has been defined by the government of a country. Such laws helps
in providing legality to all process and activities that has to be performed by business
organizations. Such laws help in providing certain guidelines and rules that has been able to
make stability in an organization. Ethics consists of those rules and regulation which provides
discipline with order at workplace. These steps bound to be followed by an organization in order
to solve disputes and eradicate factors that has been disturbing environment of workplace.
Contract law, corporate governance and SOX Act 2002 has to be covered. First part is in essay
form and second part based over making individual report on a case study of Enron scandal.
MAIN BODY
PROJECT-1(ESSAY)
Introduction of Essay
The following essay consists of case scenario that is based on contract law. These laws
are there for making an agreement turned into valid contract. Laws has been formed to make
transactions related to money to be made possible between parties willing to come into contract.
Scope of such laws are wider as they cover various aspects related to business organizations and
nature is dynamic due to its impact over relationship exiting between parties. Essay a case
scenario is been given and questions based on it is required to answer (Boatright, 2017).
Case scenario: In this case Hilary advertising over printing press and is specialized in it.
They charge £15,000 for advertising. Further an offer was made to by Eleanor to Hilary for
printing press of £10,000. Regarding this post was written to her which she replied that £10,000
offer is acceptable to her. Suddenly her mind changed and she send a fax stating to ignore letter.
Hillary putted summer sale in her gallery with a long notice stating that painting by Trumpeter is
to be sold for £1 to customer coming first to her gallery. Olivia in order to get the painting waited
outside the shop for two days. As the sale commenced it was told by Hilary that painting is not
for sale now.

Following question is to be answered
Define contract law and describe all the blue prints of a contract
Contract laws are the laws that has been helping in providing legality over agreements
that has been formed between parties. Such laws has been helping in developing of strong
relationship among parties willing to come into contract. An contract can be in written an oral
form or implied and expressed. Rules and regulations with duties has been defined under
contract law which parties are bound to follow (Brenkert, 2019). All these things are completely
dependent upon situation that has lead to formation of contract. In other words contract laws
makes parties willing to come into contract bound with legal obligations mentioned under the
law. A contract can take place regarding exchange of goods, services or promise that has to be
made between parties. For providing justification over contract law an statement is given that
states “ an agreement can be a contract but a contract cannot be considered as an agreement”.
Contract is considered to be valid only when all elements are presented in it these
elements are offer, acceptance, consideration and legality. Offer means presenting an idea top
form a contract to another party and acceptance is accepting the offer that has been made. Then
comes consideration that means discussing all rules related to contract. End legality is there
which makes legal contract in eyes of law.
In the following scenario it can be seen that invitation to treat has been formed which
means only invitation to create an offer is done. In offer an idea is presented.
Explain the court system in relation to the English legal system and advise the parties above
which court action to pursue
Legal system is having laws that has been formed to deal with various kinds of problems
existing in a country. These are being formed for covering of various kinds of wrong and crime
that has been happening within an country. For making sure that laws are applied in effective
manner judicial system has been formed. Judicial system gives power to various courts as per its
jurisdiction. Supreme court has been considered to be highest court of appeal and then comes
High Court under which Queen's bench takes matter that is related to crime, Court of appeals that
takes matters of civil nature and family division which takes issues related to marriage and
divorce. After this comes Bounty courts that are responsible to take look at cases in first instance.

Still legal system of UK is very rigid in nature and is required to create flexibility within it for
making laws as per modern laws which are in existence.
From the above scenario it can be observed that contract law is being considered to be
main aspect that has been marked out under it. Such law falls under civil law and requires
jurisdiction of civil courts only. Firstly subordinate courts can be used for getting aggrieved
judgement and then Court of Appeal division to deal with civil cases under high holds
jurisdiction upon proceedings to be held in court.
Advise Hilary as to whether binding contracts exist between herself and each of the following
people: Eleanor, Amy and Olivia
Binding of a contract is that kind of agreement that exists only when an valid contract is
formed between an organization or individual. In this legality of the contract should exists with
the intention to create legal obligation. Case law regarding this is explained as Partridge v
Crittenden in this case court held that defendant's conviction should be quashed. As the
advertisement was an invitation to treat (Ciocchetti, 2016). Also literal rule has bee seek over to
provide validity to an contract. Further scenario has been explained as follows:
Contract between Hilary and Eleanor -
In this purchase of printing press £10,000 has to be sold. An counter offer was made to
sell the printing press for £13,000. Eleanor did not responded to the offer made to him. Thai
makes clear that no acceptance is there and making an counter offer has made first offer to be
null void. Due to absence of acceptance obligation to be a binding contract becomes null void
between the parties.
Contract between Hilary and Amy -
Here the contract between Hilary and Amy is not binding because the mail rejecting the
offer was received first, even though Amy sent the acceptance first, the fact that rejection was
received first, there is no binding contract.
Contract between Hilary and Olivia -
Under this scenario grand summer sale has been put up by Hillary at her art gallery and
notice has been put regarding sale of famous painting by Trumpeter for £1. Olivia was waiting
since two days for sale to start. As the sale started Hilary told that painting is not for sale now. It
cane be observed that no biding contract exist between parties.

Explain and discuss the various remedies available to the parties
In law of contract breach takes place in the form of breach of contract. Remedies like
damages, repudiation, specific performance is there to make breach of contract to be stopped.
Further they are explained as follows:
Damages: In this money is the rewards that has been given in the form of compensation
to the party that has filed suit for claims. Such claims are being granted only after breach has
been proved.
Repudiation: These are the remedies that is being given over the breach that has taken
place at the time of commencing contract. Under it condition is seen before granting the claim.
These are been given under various situations mentioned under law of contract.
Rescission Equitable remedy is available through direction judge. This has been there for
seeking over parties when they are in pre-contractual condition. This makes rescission available
to gain results through vitiating factor (Haidt and Trevino, 2017).
Specific performance: This is considered to be an order that is being passed by the court
and under it only required parties has to perform contractual obligation that existed. The Court
seeks over the obligation and performance with reluctance of parties. Circumstances is required
to be observed by court.
The above scenario these remedies are not applicable in a manner that no contract has
taken place which bound any of parties into an legal obligation. Elements necessary to form an
contract not present but only invitation to treat that cannot be considered as a contract.
Conclusion of essay
From the above essay it can be concluded that contract laws to be that kind of laws which
exists in order to form valid agreements between parties. Further in this essay definition of
contract with elements like offer, acceptance, consideration and legality has been explained. Also
binding contract, invitation to treat has been explained. End of essay remedies has been covered
that are applied in contract.

PROJECT 2(INDIVIDUAL REPORT)
Introduction of report
In this report a case study has been given that is based on Enron Scandal. Corporate
governance is explained in relation to case study. SOX Act 2002 is being covered and its impact
over case has been explained.
CASE SCENARIO This case study is based over Enron scandal that has been made publicized
in October 2001. In this Enron has been a bankrupted corporation which has its base in America,
Huston, Texas and in this, de facto dissolution of Arthur Andersenalso took place which is one of
the leading audit company. It is considered to be one of the largest bankruptcy reorganization
within American history at that time. It is considered to be one of the biggest failure within the
history of world (Jaeger, 2016).
The organization was formed in the year 1985 by Kenneth Lay when the merger of
Huston Gas and Inter North took place. After various years Jeffrey Skilling was hired and was
assigned with a task of developing staff of executive. It has been hiding billions of dollars within
the debt due to failed project and still showing the accounts of the company with profits. They
showed partnerships with big firms to hide their losses and liabilities. He used it for defrauding
the accounting system, special purpose is required to be hired with entities over poor financing
through reporting. Enron's board of directors and audit committee used high-risk accounting
practices and pressured Arthur Andersen to ignore the issues. Chief officer Andrew Fastow and
other executive misleader the investors and creditors Enron shareholders is required to file suit of
forty billion dollar. The share has been reduced to less than a dollar by the end November 2001.
U.S Securities and Exchange Commission began the investigation and rivals like Huston
Competitor Dynegy offered the purchase of organization at very low rate. This deal failed on
December 2, 2001, Enron filed for bankruptcy under the code of United states bankruptcy code.
As Enron holds 63.4 billion assets that makes this scandal one of the biggest bankruptcy in US.
In this case Arthur Anderson was found guilty over destroying important documents that
could have been proven very important in investigation that was conducted by SEC. Many other
executives were also found guilty for defrauding the accounts. Till the time judgement was
passed by Supreme Court of US, the organization lost majority of its customer base which lead

over ceasing operations. Enron's employees and shareholders has received limited return in
lawsuits, despite of losing billion over stock prices (Harper, 2019).
After this scandal various kinds of loopholes has been analysed and it was found that
such kind of Fraud has been increasing at very large scale. This made urge of forming a new
regulations that would be able to control such frauds. One piece of legislation which was enacted
was the Sarbanes Oxely Act 2002. This act consists of various kinds of penalties, rule and
principals that marked for defrauding the accounts. It also brought into action a penalty for an
attempt to defraud shareholders and protect them from any fraud accounting system. The act also
increased the accountability of auditing firms to remain unbiased and independent to their clients
(Key, Azab and Clark, 2019).
CORPORATE GOVERNANCE
Corporate governance is considered to be that kind of rules and regulations that has been
used by controlling, managing and regulating various activities that is related to business and
management. Both internal and external factors that has been impacting interest that has been
invested by shareholders of an organization. Also this government has been seeking over
managing of regulations and management related activities. This is one of the most dynamic
factor that has to be covered by investors. If good corporate governance is there then it is going
to be helpful in dealing with various scandals like Enron and various other scandals which has
made problem to emerge like morality is loss and more willingness of getting involved in
fraudulent activities has increased. If management has been given lot of powers then ethical code
of conduct is not followed which makes interest of shareholders to be disturbed within corporate
management. Conflict of interest has been helping in resulting for allowing of chief financial
officer to create his interest. This is going to make organization's debts and liabilities to increase
which impacts profit generation.
Understanding Corporate Governance
This governance has been refereed as those kinds of rules, control, policies and resolution
that has been helping in providing direction to management in corporate world. Board of
directors holds responsibility to make investors stay an keep on investing over various projects of
an organization. Directions is required to be given to investors that shows integrity within
business. These directions leads over making an organization work with efficiency and discipline
helps in dealing with problems that has been taking place in an organization. Corporate

governance is making promotion of various investment schemes by generating trust within
shareholders that makes investment from there side possible with appropriate amount needed to
accomplish task within an organization (Mahoney, 2016). For making communication possible
in an organization in appropriate manner corporate governance is required. Cooperate
governance increases communication skills by making organization work with coordination.
SARBANES-OXLEY ACT OF 2002
This act is also known as Public Company Accounting Reform and Investor Protection
Act and 'Corporate and Auditing Accountability, Responsibility and Transparency Act'. This act
was introduce as a federal law that has been making public boards, management with accounting
firm. Various provisions is involved in it that is applicable within an organization and impacts
mechanism followed in it with positiveness. Bill of this kind was made in order control the
scandal. Under this act Board of Directors to keep check over any fraudulent activity, add
penalties for misconduct and also create regulations to be complied by Securities and Exchange
Commission as to how companies have to comply with law. There are many reasons for the
enactment of this act such as auditor's conflict of interest, boardroom failures etc.
Understanding the Sarbanes-Oxley (SOX) Act
Policies that has been formed under the act with rules is related to deal with various
provisions that has made amendment of this act. Laws that has been existing regarding to deal
with frauds through amendment and supplement. Existence of law is required because earlier
acts only deals various rules and regulation. This has been dealing with basic rules and
regulations that has been proving base to the act these principles are as follows:
 Corporate responsibility
 Increased criminal punishment
 Accounting regulation
 New protections
Sarbanes-Oxley Act 2002 this is considered to be very complex and lengthy legislation in
this three important provisions which has impacted acts framework and has made it a concrete
law. These sections is explained further as follows:
Section 302 of the SOX Act of 2002

In this section the senior corporate officer has been personally given certification in
writing under which organizations financial statement with discloser requirement and fairly
being presented in all kind of material aspects over operations and financial condition of issues.
Officer has been signed over financial statements that is known over inaccurate subject that can
be subject to criminal penalties and prison terms.
Section 802 of the SOX Act of 2002
This contains rules that has been affecting record keeping and first deal with destruction
and facilitation of records. Second strictly defines retention form period of storing records. Then
comes third rule that is there to be given for specific business with organization to include
electronic communication (West and Buckby, 2020).
The above case study it can be marked out that cooperate governance is that kind of
governance that has been helping an organization in making its management functions in smooth
manner. SOX Act 2002 this act come after fraud has started increasing in order to control them.
Corporate governance in this case is applicable because this is related to management functions
and if good corporate governance would have been followed then ethical code of conduct would
have not been broken. SOX Act 2002 has come into existence late but if this would have been
there then factors would have been easily identified and scandal would have not been done.
Conclusion of Individual Report
This report is based over an case study that has been dealing with an scandal that has
taken place in America. Further such report has been covering corporate governance that helps in
smooth functioning of management. Then SOX Act 2002 has been covered that was formed to
deal with such frauds though it come into existence when fraud started increases.
CONCLUSION
From the above file it can be marked out that business laws and ethics are that kind of
elements that is related makes an organizations working possible and also maintains discipline
with order. This file is divided into two parts in which first part contains contract law that is
related to making agreements legal in nature. Then corporate governance and SOX ACT 2002
has been covered through a case study.

REFRENCES
Books and journals
Boatright, J.R., 2017. Ethics and corporate governance: Justifying the role of shareholder. The
Blackwell guide to business ethics. pp.38-60.
Brenkert, G.G., 2019. Mind the gap! The challenges and limits of (Global) business
ethics. Journal of Business Ethics. 155(4). pp.917-930.
Ciocchetti, C., 2016. Employment Law & Ethics: 7 Things You Need to Know About Age
Discrimination (Presentation Slides). Available at SSRN 2732980.
Haidt, J. and Trevino, L., 2017. Make business ethics a cumulative science. Nature Human
Behaviour. 1(2). pp.1-2.
Jaeger, T., 2016. Tax Incentives Under State Aid Law: A Competition Law Perspective. In State
Aid Law and Business Taxation (pp. 39-57). Springer, Berlin, Heidelberg.
Key, T.M., Azab, C. and Clark, T., 2019. Embedded ethics: How complex systems and structures
guide ethical outcomes. Business Horizons. 62(3). pp.327-336.
Mahoney, K., 2016. 9 Climate change challenges in law and ethics. The Common Good and
Ecological Integrity: Human Rights and the Support of Life. p.107.
West, A. and Buckby, S., 2020. Ethics education in the qualification of professional accountants:
insights from Australia and New Zealand. Journal of Business Ethics.164(1). pp.61-80.