Formation of Contractual Relationships and Enron Fraud Project

This project delves into two key areas of business law and ethics. The first part focuses on the formation of contractual relationships, exploring essential elements like mutual interest, valid agreements, and the legal framework in the UK. It examines the British court system and addresses remedies for breach of contract, including monetary damages, specific performance, rescission, and liquidation damages. The second part analyzes the Enron fraud scandal, highlighting ethical conflicts and the company's collapse. It discusses misleading practices, financial reporting issues, and the role of Arthur Andersen, offering insights into the consequences of unethical behavior in business. The project provides a comprehensive overview of these critical business law and ethics topics.

Business Law and Ethics

PROJECT 1
Formation of Contractual Relationships
A contract law is between two mentally sound parties who intentionally signed an agreement
and also accepts all terms and conditions between them. In everyday life; each person while
purchasing, selling and rendering a services; knowingly and unknowingly comes under certain
contract which is legally bondable by law. For instance; if a person purchases some product
from shop; he’s legally agree with terms and conditions of the item and the manufacturing
company is also answerable if that customer face any health issues; because company is assuring
that the product which they are selling is safe from health perspective.
Legitimate problems involving contracts often arise when a collection fails to comply with the
legal obligation it has accepted to undertake. When a collection violates an agreement by
neglecting to withdraw, the other party can often file a lawsuit for pecuniary harms or, in some
restricted cases, may request that the court approve the other party to continue as guaranteed.
Likewise, contracts can be the result of good negotiations when they are not clearly concluded.
Meetings that abuse provisions can file lawsuits for their understanding and for a court to resolve
a dispute. Furthermore, at the point when an association consents to an arrangement and
accordingly leaves the business or can't satisfy its responsibilities, the other party may need to
look for lawful activity in an overall court or stop to get a rebate.
Blueprint

Both parties have mutual interest: Individuals or groups who want to deal with each other should
agree on common objective without any force or coercion.
Agreed on valid agreement: Valid defines as achievable or feasible by both parties.
Above 18 years: Below 18 year called as minor and above 18 year known as major; additional to
this both party should also have sound mind while placing contract with each other.
All terms and conditions should be agreed: Each contract have list of terms and conditions;
which has to be follow by both parties. These terms and conditions should be clear to both
contractors mutually.
Signing of contract: Last step is to sign a contract by both parties with certain validity of the
contract.
British court system:
The United Kingdom (United Kingdom) has three distinct legal frameworks: one for England
and Wales, Scotland and Northern Ireland. This reflects his convincing views. The relevant
answers below govern the valid agreement of England and Wales, however, referring to a
number of pieces from the United Kingdom, where applicable.
The United Kingdom has an unwritten premise as there is no single table sketching out the
advantages of individual occupants and how government ought to be included. The British
constitution accommodates an assortment of sources, some of which are created (e.g. intentions)
and others (e.g. confirmed displays) unwritten (see Major legal sources).
The constitution is unitary because the Westminster parliament is the authority responsible for
making laws. Since 1999, the will has been exchanging forces from the Westminster Parliament
to the Cardiff (Wales) and Belfast (Northern Ireland) meetings and to the Scottish Parliament in
Edinburgh. However, other legislatures, such as inverted meetings or nearby experts, assert their
legislative authority from the powers conferred by Parliament in Westminster.
There are various kinds of cases settled in certain courts: for instance, all criminal cases start in
an official courtroom; however the most indicted criminal cases are brought (or alluded) to
Crown Court. Crown Court applications go to the High Court, and perhaps the Court of Appeal
or even the High Court.
Judges attempt common cases to a great extent, yet they can go to region court. Once more,
offers go to the High Court and afterward to the Court of Appeal, however to various pieces of
those courts.

The legitimate system that governs extractive activities is found within a larger set of rules that
govern state society and monetary establishments. Well-designed legitimate engineering should
provide rules on how state institutions are organized; how organizations obtain and track
licenses; the financial conditions for the management of indemnities between entities and the
State; ecological management; links between extractive activities and neighbourhood networks;
the conduct of dynamic public authorities in the region; distribution and accountability of public
data; and how the legislator controls income from common goods. At the stage where
organizations begin to participate in a country, they should ensure that they are consistent with or
monitor all principles in a nation's legitimate structure.
The UK doesn't have a bound together lawful system: England and Wales have a third, the
remainder of Scotland and Northern Ireland. There are unique cases for this state; for example in
movement law, the zone of asylum and migration courts covers the entire of the UK, and in
labour law the business courts have a different arrangement for England, Wales and Scotland ,
yet Northern Ireland doesn't. Also, the Military Judicial Service has workplaces in each one of
those blamed for offenses against military law in the UK.
The UK Supreme Court is the most fascinating court to concede with regards to practically all
cases in England and Wales. Preceding the Constitutional Reform Act 2005, the House of Lords
held this office. The Supreme Court is additionally the most noteworthy excusal request, an
ongoing activity by the Private Council Award Committee. The High Court has a body and
various courts in England and Wales, and a head is assigned by the Chief Justice of the United
Kingdom.
The Court of Appeal, England and Wales, part of the Supreme Courts of England and Wales and
the highest court under the UK Supreme Court, which provided for the legal elements of the
House of Lords in 2009. The Court of Appeal petitioner based in London at the Royal Courts of
Justice. The court is made up of various female charm rulers and judges, chief master of
leadership, ace role, heads of the three Supreme Court divisions (Chancery, Family and Queen's
Bench) and a few other ex officio people who attend low maintenance building. Three people
from a court regularly choose a case, but some options may be decided by just two judges.
The Supreme Court of Justice is capable of both as a general court of first instance, and as a
court of criminal and re-assessment for sub-court cases. There are three divisions: Bench the

Queen, the Chancellor and the divisions of the Household. High Court divisions are not separate
departments, but require to some extent individual procedures and practices that are appropriate
to their purpose. Although specific categories of cases are named for each department according
to their subject matter, each department may work in the High Court area. However, there may
be a cost penalty for initiating proceedings in an inappropriate department.
The Crown Court is a single investigative criminal court that also manages a limited number of
common activities both on the first instance and on request. It was established by the 1971
Courts Act. It included badges on which Supreme Court judges occasionally travelled around the
country and quarterly meetings that were sometimes district courts. The Old Bailey is the casual
name of London's most well known criminal court, as of now part of the Crown Court. The
official name is "Expression of the Criminal Court". The Crown Court likewise hears inquiries
from the courts.
The Crown Court is the fundamental court in England and Wales that has the zone to arraign
cases and when it does, it is the principle court on the grounds that a court can't. The Bench
Queen organization is levelled out. The principle court is a division of the High Court and the
Crown Court rather than different positions he looks for, in particular. alia internment, offered by
official courtrooms and different chambers.
Advice
All the parties above cannot sue any case against each other as their no legal contract signed
between them. Also, there’s no legal agreement which can be converted into contract; additional
to this both parties haven’t mutually agreed on common event.
There’s no binding contracts exist between Hilary and Eleanor, Amy and Olivia; because no
legal written evidence is there which can proof that all parties have mutual interest and agreed
for some event.
Remedies
Monetary damages: The party who entered into the agreement may be held responsible for the
misdeeds caused by the breach. Going through an agreement can lead to general damage or
desire and great damage. Common harm or desire refers to the misfortune caused directly by
those who entered. Many damage report mishaps that occurred as a result of the intrusion,
however, which was an inverted cause.

Specific performance: From time to time, the appropriate solution to a breach of contract is to
deal with the breach by forcing the party to enter into the details of the settlement. Achieving
special care is an appropriate precaution in situations where money-related damage in any way,
form or form could not do the whole part without breaking for misfortune.
Rescission: Rescission allows the non-breaching party to be largely detached from the execution
promises. The downturn in the economy is a solution to a breakdown of the agreement as it
makes it clear that the meeting has been weakened by its responsibilities due to the other party's
disappointment.
Liquidation damages: From time to time, it is difficult to determine the extent to which a
person has been harmed by a breach of contract. To solve this problem, there are exchange
damage conditions in some agreements. Basically, these provisions state that a specific meeting
will be issued in the event of a breach. These conditions will be maintained for as long as is
reasonable. From time to time, it is difficult to determine the extent to which a person has been
harmed by a breach of contract. To solve this problem, there are exchange damage conditions in
some agreements. Basically, these provisions state that a specific meeting will be issued in the
event of a breach. These conditions will be maintained for as long as is reasonable.

PROJECT 2
Enron Fraud scandal
Ethical conflict and turbulence in Enron Fraud scandal.
While Enron declared bankruptcy and collapsed 10 years later, the effects it had on ethical
principles have never gone away. It ended up taking Enron 16 years to switch from about $10
billion in assets to over $65 billion in assets, but that ended up taking twenty-four times to just
go bankrupt. On 2 December 2001, Enron, was ranked 7 largest on the Fortune 500 as well
as ranked 6 largest energy generating company all over the world, was filed for insolvency
security in the principal bankruptcy situation in the US to that point.The inventory of the
corporation that once peaked at $90 US was bottom to less than $1 United States November
2001. For the hundreds of businesses and shareholders, this was a huge failure.
Misleading of people interest
Employees have lost their work and savings, and taxpayers have spent billions. Enron
continued to suffer many such massive losses and started to bleed rapidly and reached fantastic
profit margins by oversimplifying profits and hiding obligations. Tax figures for 1998, 1999, and
2000, for instance, were $40 billion, $60 billion and $101 billion, respectively. In addition to
suppressing the annual report, Enron rarely discussed the threats it would reveal to creditors.On
the other side, Enron executives released via the media large revenue guidance and incentivized
buyers to invest Enron trade and commerce.They also recommended that their worker to invest
in company pensions in stock or share options offered by Enron. For five years, Arthur
Andersen, Enron's audit company, enabled Enron cover those frauds. Any time experts or staff of
Enron voiced their concerns regarding Enron's financial position; Enron sought to keep them
silent and then dismissed them. Furthermore, they tried to extort top director. The executives
often pushed prices up and placed substantial amounts of money with their own hands by share
trading. The CFO Andrew Fastow, was eventually ousted, and the financial services authority
(SEC) started examining the business. The SEC noticed off-the-books companies and overstated
sales in late November for only a month, by so the company's capital was reduced to far less than

$1 US. Only, Enron applied for bankruptcy proceedings on 2 December 2001 and investors have
spent $billion.
Factors contributed to unethical behaviours
Enron was indeed a tough and condescending firm that had highlighted competitors and
financial objectives. For instance, this has a review system that needed that each year 20 % of all
staff members be evaluated below for regulations but instead motivated to leave the job. While
Enron wished that this ranking program would have motivated workers to work hard, the scheme
has ultimately caused more damage to Enron than advantages.Employees have been questioned
on their willingness to steal. The ones who never lied in such a setting were seen as strange.
They overlooked the ethical rules and concentrated instead on reaching their financial target.
After some employees actually cheated on about their projects, only other key to beating these
individuals was to lie more.
Theories and professional body ethical guidance and advice.
As per the opinion of Eremy Bentham and John Stuart Mill asserted throughout the
Utilitarian hypothesis that "agreement of ethical issues necessitates an adjusting exertion wherein
humans reduce the affects resulting from a judgment, while biggest benefit" (Jennings, 2009).In
this hypothesis, when making decisions, member of Enron should take into account the interests
of all the persons involved by their judgment and select the actions that can enhance the level.
They can only offer the best thing and as an ethical dilemma defending their specific interests
with a projected damage to all creditors, or only defending the interest of certain customers by
giving up their own quick profit.The solution is clear as per the Utilitarian Doctrine. The
philosophies of Categorical Imperative and Immanuel Kant claimed a principle "users can't use
someone in a manner that can offer them a one-side advantage".
First, managers should think cautiously regarding their company culture so because society
of corporations will affect the judgment of both workers and employers so if faced with ethical
dilemmas. Enron's system brought other negative effects, as stated in the third chapter, which led
to its corruption which bankruptcy. Enron seemed to have competitive positions and strict
requirements for assessing performance. In addition to this, Enron concentrated upon its own
investment needs. If Enron gave its staff more employment securities, there'd be less job
dishonesty. Additionally, if managers worried for the needs of their workers and other creditors,
they might not make too many choices.

So businesses must create a stronger corporate culture and need to develop and implement a
strong framework for morality in everyday operation. There are far from enough just having
codes of ethics. Enron have a very well-written code of conduct but there were so numerous
dishonest activities. So businesses should write an ethics code and interact it to all staff. When
company have an ethical guideline, they will make an attempt to obey and don't turn their ethical
policy into any fraud misleading. Alternatively, in a person's view, corporations can make ethical
practices good judgement.
Third, business ethics various theories have to be learned by firms, since they're the logical
justification in all circumstances. For instance, the effects Enron decisions as well as the
aspirations of affiliated companies are highlighted in those theoretical frameworks. These ethics
as well as models offer excellent directions to manage the needs of all the people concerned, so
they can enable other staff member to make the best choices while confronting ethical dilemmas.
Business executives must have a great understanding of business ethics which means that they
might know what to do after they face ethical dilemmas.Businesses should also evaluate that
they have a good business philosophy, if they have the well-written code of ethics and still obey
the law, and if managers and staff have adequate awareness of corporate ethics to prevent
another Enron.
Use of appropriate MIS development and acquisition approach
An accounting information system (AIS) is a structure used by a company to collect, store,
monitor, process, retrieve and communicate its financial information in order to be likely to be
used by accountants, experts, industry experts, financial managers (CFO), auditors, regulators
and service offices.
Custom accountants work top-down with AIS to ensure the highest level of accuracy in currency
exchanges and record keeping, as well as balance sheet information is actually accessible for
those who honestly need to have access to everything and at the same time. keeps information
safe and secure.
An accounting information system is a way of keeping track of all accounting and commercial
transactions for an organization. Accounting data frames are mainly made up of six essential
categories: individuals, methods and management, information, programming, basis for data
innovation and internal controls. Below is a detailed analysis of each part.

AIS must have a database structure to store data, such as the organized query language (SQL),
which is the coding language typically used for databases. SQL allows you to analyze and
retrieve information in AIS for detailed purposes. Similarly, AIS requires different information
screens for the different types of user framework and information sharing, as well as different
performance configurations to address the problems of different clients and different types of
data.
The information contained in AIS is the set of budget data relevant to the strategic approach of
the association. All commercial information that affects the organisation's accounts should go to
AIS.
The type of information that is remembered for AIS is based on industry opinion, but may
include:
 Sales orders
 Customer billing statements
 Sales analysis reports
 Purchase requisitions
 Vendor invoices
 Check registers
 General ledger
 Inventory data
 Payroll information
 Timekeeping
 Tax information
The information can be used to retrieve book announcements and ready-to-maintain budget
reports, including records of mature sales plans, discounts or depreciation, seed capital and
explanations of profits and disadvantages. Having all this information in one place - in AIS -
encourages companies to continue with dynamic details, analysis, analysis, review and exercises.
For information to be valuable, it must be concise, accurate and relevant.
On the other hand, examples of data that would not be included in AIS include memos, letters,
presentations and handbooks. These documents may have a strong connection to the company's
finances, but, with the exception of ordinary footnotes, they do not actually form part of the
company's financial records.

REFERENCES
Books and Journals