Business Law with UCC Applications,13e Ethics, Social Responsibility, and the Law Chapter 1 McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Define law and morality. Distinguish among natural law, positive law, and negative rights theory Explain ethical relativism. Describe social contract theory. Outline the steps in applying utilitarianism. Define rational ethics.

Learning Objectives (cont.) Explain the dual nature of ethics in government. Outline the arguments supporting social responsibility. Explore the need for law in our society. Clarify how the law and ethics are usually in harmony with one another.

The Law and Morality The Law consists of rules of conduct established by the government of a society to maintain harmony, stability, and justice

Question? What defines the legal rights and duties of the people? Ethics Values Morals Law The correct answer is “D” – see next slide.

The Law and Morality The Law defines the legal rights and duties of the people provides a way to protect the people by enforcing these rights and duties a means of civil management Teaching Tips The use of fetal tissue for medical treatment is at the center of a fiery debate. Discuss the topic in class. Then ask the students to analyze it from a viewpoint of subjective ethics.

Question? What are values that govern a society’s attitude toward right and wrong? Morals Ethics Societal values Law The correct answer is “A” – morals. See next slide.

The Law and Morality Morals values that govern a society’s attitude toward right and wrong and toward good and evil serves as a guide for those bodies that make, interpret, and enforce the law

Values and Ethics Ethics the attempt to develop a means of determining what fundamental values ought to be and for formulating and applying rules that enforce those values Background Information The tendency to complicate moral decision making is nothing new. In her essay, “The Moral Life,” Bonnie Kent, a professor of philosophy at the University of California, Irvine, reminds us that even medieval philosophers tended to complicate the rules of moral judgment.

Question? Which theory says that human intuition will always give rise to positive moral laws? Natural law Positive law Law of humanity Law of peoples The correct answer is “D” – law of peoples. See slide 1-13.

Natural Law Theory Natural law sees law as originating from some objective, superior force that stands outside the everyday experience of most people exists an unbreakable link joining morality to the law inn a fundamental way

Positive Law Theory Positive Law legal theory that says that the law originates from an outside source that has emerged from within society social institutions

Positive Law Theory Law of Peoples human intuition will always give rise to positive moral laws that are global in scope common to everyone

Negative Rights Theory “Rights" are a human invention designed to help people escape moral law. “Rights" themselves do not create the escape from responsibility that they permit. Rather, these so-called rights give people an escape clause when they are caught doing something shameful.

Question? Which ethical theory calls for the greatest good for the greatest number? Totalitarianism Utilitarianism Unilateralism Multiplicity The correct answer is “B” – utilitarianism. See slide 1-#.

Ethical Theories Ethical relativism there are no objective or absolute standards of right and wrong standards change from circumstance to circumstance also called subjective ethics Teaching Tips Discuss examples from recent events that involve moral atrocities committed by individuals whose moral code should have forbidden such actions. Ask the following question: What brings about dishonorable actions, such as the shameful treatment of Arab prisoners at Abu Ghraib prison in Iraq during Gulf War II?

Question? Which ethical theory calls for individuals to give up certain freedoms? Ethical relativism Social contract theory Situational ethics Utilitarianism The correct answer is “B” – social contract theory. See slide 1-19.

Ethical Theories Situational ethics argues that each of us can judge a person’s ethical decisions only by initially placing ourselves in the other person’s situation encourages people to look at others with tolerance and patience Teaching Tips Discuss examples of social systems from which ethical systems appear absent or in which they seem highly flawed. Ask students to address the following questions: What brings about atrocities such as Saddam Hussein’s use of poison gas at Halabja; the genocide in Rwanda, the war crimes of former Yugoslav president Slobodan Milosevic; the invasion of Kuwait by Saddam Hussein’s military forces; the beheadings carried out by terrorists in Iraq, and the war crimes of Radovan Karadzic, former Bosnian Serb president? How do individuals victimized by such horrors respond to a lack of morality in their society or government? How do individuals act morally amid such widespread corruption or lawlessness?

Ethical Theories Social contract theory holds that right and wrong are measured by the obligations imposed on each individual by an implied agreement among all individuals within a particular social system people must give up certain freedoms Teaching Tips Consider using the following films to generate discussion about ethics and the application of ethical theories: Crash (starring Sandra Bullock and Matt Dillon), Babel (Cate Blanchett), Bobby (Emilio Estevez, Anthony Hopkins, and Martin Sheen), The Good Shepherd (Matt Damon and Robert DeNiro), Hoax (Richard Gere), Hollywoodland (Ben Affleck and Diane Lane), The Pursuit of Happyness (Will Smith), The Queen (Helen Mirren), and Syriana (George Clooney). Create a list of study questions for each film to make sure students focus on relevant issues.

Ethical Theories Utilitarianism the morality of an action is determined by its ultimate effects Greatest good for the greatest number

Ethical Theories Rational ethics ethical values can be determined by a proper application of human reason Should establish universal rules of behavior that apply to all people at all times Also called objective ethics

Ethics and the Government The government of a nation-state has two objectives that simultaneously justify its power and enable the proper exercise of that power to protect its own existence and to protect the lives, health, and wellbeing of its own citizens.

Ethic of Ultimate Ends Ethic of ultimate ends asserts that the action itself is right or wrong in and of itself, regardless of the consequences of the action. often referred to as the ethic of benevolence. an individual must do the right thing because it is right in and of itself.

Ethic of Responsibility demands that the moral actor, in this case a national leader, consider his responsibilities to those people who depend on that leader for protection, safety, and sometimes even for their very lives.

Social Responsibility in the Business Sector The traditional view of corporate culture says that privately owned corporations are created solely to make a profit for their shareholders The foremost job of any manager is to maximize profits

Reasons for Social Responsibility Corporation offers limited liability to owners Corporation is considered an artificially created person Corporation can own property and bring lawsuits Teaching Tips Explain to students that communication between an attorney and a client is strictly confidential. There is one exception: When a client confides in his or her lawyer that he or she is about to commit a crime, the attorney has a legal duty to disclose this information to the police. Lead the class in a discussion of how serious a crime would have to be before the attorney has an ethical duty to act. Would the attorney–client privilege benefit proportionately if this exception were not in place?

Reasons for Social Responsibility Because corporations have these rights they owe an obligation to the public to act responsibly Decisions of corporate managers should not be narrowly focused on profits Accepting social responsibility is in the long-term interest of the corporation

Efforts to Promote Social Responsibility Statutes now permit managers to consider factors other than profit in making decisions Economic well-being of the nation, the state, and the local community Interests of employees, consumers, and suppliers The betterment of the environment, the economy, and the overall social structure

The Relationship Between Law and Ethics The law is needed because, although people know better, they do not always follow ethical principles Ethical principles can tell us what is right, but cannot stop us from doing wrong The law can punish us if we choose to do wrong