1. Business Administration
Unit 2 – Forms of Business Ownership & The Law
Chapter 7
Legal Aspects of Business

2. Text Book
Page 165
Legal Limits for a Taxi Business

3. Controversial Issue
Should a federal law be passed that would prevent all organizations that collect information about individuals from selling of sharing that information with anyone else without their written consent?
3-5 reasons for yes
3-5 reasons for no

4. Monopoly One company provides product/service without competition
Can control supply & price
Prices are usually high

5. Monopoly Gvt. approved monopolies Regulates prices & policies
Natural gas company

6. Monopoly Deregulation Monopolies eliminated or weakened
Commercial airfare, phone company, railroads, Peco
Resulted in lower prices & better service

7. Deregulation Research
Use the Internet to research the following questions
What industry was deregulated in PA within the past 15 years?
In what way was is deregulated?
Why was it deregulated?
Was it successful?
What does the future hold for this industry?

8. Fair Competition Gvt. agencies & laws promoting fair competition
Sherman Act
Clayton Act
Robinson-Patman Act
Wheeler-Lea Act

9. Sherman Act 1890 – discourages monopolies
Outlaws business agreements between competitors
Setting selling prices

10. Clayton Act
1914
Forbids acquiring ownership of another company to create a monopoly
Outlaws contracts make you buy one item to get another
Microsoft forced computer mfgs. buying Windows O.S. to also buy I.E.

11. Robinson-Patman Act 1936 Price discrimination
Different prices to different customers
Unless sold as different quality or quantity

12. Wheeler-Lea Act 1938 Forbids unfair or deceptive acts/practices
False advertising
Misleading important info
Failure to reveal facts
Drugs, medical devices, cosmetics, food

13. Federal Agencies FTC FAA FCC Federal Trade Commission
See pg Fig. 7-1
FAA
Federal Aviation Admin.
FCC
Federal Communications Comm.

14. Federal Agencies FDA NRC SEC Food & Drug Admin.
Nuclear Regulatory Comm.
SEC
Securities & Exchange Comm.

15. Bankruptcy Legal process Selling of assets to pay debt
Excess debt forgiven
Bad credit rating – 10 years
Can’t declare again – 6 years

16. PA Bankruptcy Research
Use the following website to answer the questions below:
What are the steps/requirements for filing for bankruptcy in PA?
What property can you protect from creditors when you file bankruptcy in Pennsylvania?
Explain Pennsylvania Debt Consolidation as an Alternative to Bankruptcy
Explain the difference between Chapter 7 and Chapter 13 bankruptcy
7 and 13 Advantages and Disadvantages

17. Patents
Inventor has sole right to make, use, & sell invention or process for 20 years
Inventor can license to others
Temporary monopoly
Encourages mfg. to invest $ in R&D
Digital cameras, synthetic tissue, insulin

18. Copyright
Author has sole right to reproduce, publish & sell literary or artistic work for life + 70 years
Author can permit others to copy
Protects CD games & music, video & audio tapes & computer software

19. Trademarks Distinguishing name, symbol, or special mark
Owner only person legally allowed to use

20. Trademarks Symbols Company or product name Nike “swoosh”
McDonald’s “golden arches”
Company or product name
Sony “Walkman”
“Game Boy”

21. Trademarks Rights continue indefinitely unless: Mark is abandoned OR
Loses significance by becoming generic
Escalator, linoleum, zipper

22. Internet Trademark sites Handout www.uspto.gov/
Handout
Obtaining a Patent

23. Public Protection FDA regulates
Impure, improperly labeled, falsely guaranteed & drugs unhealthful foods & cosmetics
Extensive drug testing
Costs escalate
Drives up insurance costs

24. Public Protection Non-Food Labels on possible dangerous items
Health warning on cigarettes
Prohibits sale under 18

25. Public Protection Consumer Product Safety Act Warranty Act
Sets safety standards
Recalls, repairs or halts sale
Warranty Act
Specifies action taken if defective product

26. Controversial Issue (debate)
Should the federal government substantially raise the so-called “sin taxes” on tobacco products and alcoholic beverages to increase federal revenues and to discourage the use of these products?
3-5 Reasons for yes
3-5 Reasons for no
8 volunteers to debate this issue??

27. Text Book Page 174 – Ethical Issues Ethics & Internet Advertising
Answer ?’s 2 & 3
Check if done
Review in class

28. Information Information Liability
Responsibility for physical or economic injury arising from incorrect or wrongful use of data
Similar to product liability

29. Information Electronic Communications Privacy Act
Crime to view, use, or change data (unauthorized)
privacy

30. Information Cookies Files of info about web sites visited
Stored on own computer
Track interests & preferences for marketing
Invasion of privacy???

31. State & Local Regs Interstate Commerce Intrastate Commerce
Operations & transactions that cross state lines
Intrastate Commerce
Business transacted w/in state
Large businesses
Subject to fed, state & local laws

32. Licensing Limits & controls certain types of businesses Inspections
Dirty restaurant inspected – loses license

33. Public Franchise
Contract permits use of public property for private profit
Taxi service, cable TV

34. Bld. Codes & Zoning Building Codes Zoning
Local gvt. Control physical features of structures
Height, sq. ft., type of materials
Zoning
What areas used for
Homes or businesses

35. Taxes Used to fund new & on-going programs Regulate business activity
Economic growth by lowering taxes
High taxes on alcohol & tobacco
Discourage use

36. Proportional Tax Flat Tax Rate remains same regardless of cost of item
Real estate tax
State income tax of 6%

37. Progressive Tax Based on ability to pay Combined proprtl. & prgrssv.
Federal income tax
Income up, taxes increase
Combined proprtl. & prgrssv.
Flat tax of 5% on incomes up to $20,000; 6% on incomes over $20,000

38. Regressive Tax Actual tax rate decreases as taxable amount increases
Sales tax!
Lower income pays a larger proportion of income in taxes
Applies to purchases instead of income
PA – no sales tax on food/clothing

39. Income Tax Tax on profits of business Earnings of individuals
Net profit
Earnings of individuals
Based on salary & other income after deductions
Income tax is largest revenue source for Fed. Gvt.

40. Sales Tax Tax on retail price of goods/services when sold Excise tax
Retailers collect
Excise tax
Applies to selected items, higher or additional rate
Cigarettes & gasoline

41. Sales Tax Main source of most states revenue Internet sales tax
Yes or no???

42. Property Tax Tax - material goods owned Real Property
Main revenue of local gvts.
Real Property
Real estate – land & bldgs.
Personal Property
Movable possessions
Furniture, equipment

43. Property Tax Assessed valuation Value of property per tax official
Tax rate of $2.80 per $100 of property with:
Assessed valuation of $180,000 = $5,040 tax bill

44. Taxes-Business Decisions
Determine accounting method
How to pay management
Where to locate new business
Move existing business

45. Taxes Evaluation Answer the following questions in your own words.
Explain the differences between proportional, progressive & regressive taxes and provide examples of each.
Explain property tax, what qualifies and how is it determined?
Why are taxes an important issue in starting a business?

46. Text Book Group work – 3-4 students Pages 187-190 Case 7-1 - ?’s 1-3
Check if done
Review in class

47. Work Book Pgs. 57-58 – Study Guide Pgs. 60-63 Turn in
Don’t do 7-D #4, 7-F & 7-H
Check if done
Review in class

48. Test
Unit 2 – next class meeting
Chapters 5-6-7

49. End of Chapter 7