DOCUMENT RESUME

ED 373 228 CE 067 062

TITLE Legal Issues. Unit 12. Level 2. Instructor Guide.PACE: Program for Acquiring Competence inEntrepreneurship. Third Edition. Research &Development Series No. 302-12.

INSTITUTION Ohio State Univ., Columbus. Center on Education andTraining for Employment.

PUB DATE 94

NOTE 31p.; For the complete set, i.e., 21 units, each doneat three levels, see CE 067 029-092. Supported by theInternational Consortium for EntrepreneurshipEducation, the Coleman Foundation, and the Center forEntrepreneurial Leadership Inc.

AVAILABLE FROM Center on Education and Training for Employment, 1900Kenny Road, Columbus, OH 43210-1090 (order no.RD302-12 IG, instructor guide $4.50; RD302-12 M,student module, $3; student module sets, level1--RD301M, level 2--RD302M, level 3--RD303M, $45each; instructor guide sets, level 1--RD301G, level2--RD302G, level 3--RD303G, $75 each; 3 levels andresource guide, RD300G, $175).

PUB TYPE Guides Classroom Use Teaching Guides (For.L.Licher) (052) Guides Classroom UseInstructional Materials (For Learner) (051)

EDRS PRICE MF01/PCO2 Plus Postage.DESCRIPTORS Behavioral Objectives; Business Administration;

*Business Education; Business Skills; Civil Law;*Competency Baseu Education; Compliance (Legal);*Contracts; *Entrepreneurship; Learning Activities;Legal Problems; * Legal Responsibility; PostsecondaryEducation; Secondary Education; Small Businesses;Teaching Guides

IDENTIFIERS *Business Law; *Program for Acquiring CompetenceEntrepreneurship

ABSTRACTThis instructor guide for a unit on legal issues in

the PACE (Program for Acquiring Competence in Entrepreneurship)curriculum includes the full text of the student module and lessonplans, instructional suggestions, and other teacher resources. Thecompetencies that are incorporated into this module are at Level 2 oflearning--planning for a business in one's future. Included in theinstructor's guide are the following: unit objectives, guidelines forusing PACE, lists of teaching suggestions for each unitobjective/subobjective, model assessment responses, and overview ofthe three 1,vels of the PACE program. The following materials arecontained in the student's guide: activities to be completed inpreparation for the unit, unit objectives, student reading materials,individual and group learning activities, case study, discussionquestions, assessment questions, and references. Among the topicsdiscussed in the unit are the following: classification of governmentregulations, five essential components of a contract, major types ofcontracts used by entrepreneurs, methods of protecting a businessidea, and liability issues for a potential business. (KC)

UNIT 12LEVEL 2

PACETHIRD EDITION

I CENTER 0.1 EDUCATIONAND TRAP ° FOR EMPLOYMENT

Program for AcquiringCompetence inEntrepreneurship

R,,,an.1 r Dri cloprucul hemp Vin. N17.12

Objectives:

Classify government regulations according to whomthey are designed to protect.

Identify the regulations that affect your business idea.

Explain the five essential components of a contract.

Identify the major types of contracts used by entrepre-neurs.

Explain the methods of protecting your business idea.

\a Examine liability issues for your potential business.

r\U 3 DEPARTMENT OF EDUCATION

Office of Educahonal Research and Improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

Nv3NOch)s document has been reproduced as

(:3 'Mewed Iron., the person or orgamtahonnnginahngMinor changes have been made to improvereproduchnn nuahly

Unit 12

Legal IssuesLevel 2

HOW TO USE PACE

Use the objectives as a pretest. If a studentis able to meet the objectives, ask him orher to read and respond to the assessmentquestions in the back of the module.

Duplicate the glossary from the ResourceGuide to use as a handout.

Use the teaching outlines provided in theInstructor Guide for assi^tance in focusingyour teaching delivery The left side ofeach outline page lists objectives with thecorresponding headings (margin questions)from the unit. Space is provided for you toadd your own suggestions. Try to increasestudent involvement in as many ways aspossibl,' to foster an interactive learningprocess.

When your students are ready to do theActivities, assist them in selecting thosethat you feel would be the most beneficialto their growth in entrepreneurship.

Assess your students on the unit contentwhen they indicate they are ready. Youmay choose written or verbal assessmentsaccording to the situation. Model re-sponses are provided for each module ofeach unit. While these are suggestedresponses, others may be equally valid.

"PERMISSION TO REPRODUCE THISMATERIAL HAS BEEN GRANTED BY

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-) Pfents of new or opinions slated )0 this documen) do not necessarily epresen1 officialOE RI Pos)Iton or policy TO THE EDUCATIONAL RESOURCES

INFORMATION CENTER (ERIC)

2 BEST COPY AVAILABLE

Objectives Teaching Suggestions

1. CLASSIFY GOVERNMENTREGULATIONS ACCORDINGTO WHOM THEY AREDESIGNED TO PROTECT

Why are government rules andregulations important?

How can federal regulations beclassified?

2. IDENTIFY THE REGULATIONSTHAT AFFECT YOURBUSINESS IDEA

How does the law protect competi-tion?...employees?...consumers?...environment?...business people?

What is a contract?

What are the five essential com-ponents of a contract?

What is consideration?

Invite an attorney with experience in business law as a guestspeaker. Have them address the class on the topics of the pur-pose and source of regulations, and the impact of regulations onsmall business.

Ask the guest speaker to discuss the main classifications ofgovernment regulations regarding small business.

Once again, ask the guest speaker to comment on the businesslaws and the entities they are designed to protect.

In advance, ask the guest speaker if it would be possible to bringa few examples of contracts ranging from simple to complex.Make transparencies for the simpler contracts.

Using the sample contracts mentioned above have the guestspeaker highlight the five essential components of a contract.

Divide the class into small groups to design role-plays of peoplereaching a type of agreement. Each group should choose therole-players and as a group write the dialogue. Reconvene theclass for and allow each group to present their role-plays.

Encourage the class to offer examples of consideration. Noteth it examples on the chalkboard or overhead.

Objectives Teaching Suggestions

What is contractual capacity?

What does legality of purposemean?

What is mutuality of consent?

3. IDENTIFY THE MAJOR TYPESOF CONTRACTS USED BY THEENTREPRENEUR

What are the most common typesof contracts?

4. EXAMINE THE METHODS OFPROTECTING YOUR BUSINESSIDEA

How can business ideas bc. pro-tected?

Create other examples of contractual capacity and share them

with the class.

Task the class with learning the terms related to legal purpose.To do this suggest they write the terms on index cards including

definitions and examples.

Explain the relationship between mutuality of consent and fraud

and misrepresentation.

The following sections will outline lease contracts and salescontracts. Discuss the basic types of leases and sales contractsas described in the text.

Divide the class into small groups. Each group should brain-storm ideas about a new business or product. Choosing theirbest idea each group should design a trademark or service mark.

As always encourage creativity.

MODEL ASSESSMENT RESPONSES

1. Laws and regulations are an important part of the business world. They are the rules by which all businessmust operate. Government regulations are issued to promote competition and to protect either selected

groups or society as a whole. Some of the more important sources of these business regulations are: the

Federal Trade Commission, the Equal Employment Opportunity Commission, the Occupational Safety and

Health Administration, and the Environmental Protection Agency.

2. Laws that protect and foster fair competition are known as antitrust laws.The thre?, major federal lawspassed to protect competition are the Sherman Act, the Clayton Act, and the Robinson-Patman Act. Compe-tition is protected by making it against the law to engage in unfair business practices (e.g., Price fixing).

The Sherman Act relates to restraint of trade and monopolies. The Clayton Act was designed to strengthen

the Sherman Act and specifically prohibits four types of unfair business acts: (1) Price discrimination,

4

3.

(2) exclusive and tying contracts, (3) intercorporate stockholding, and (4) interlocking directorates. TheRobinson-Patrnan Act was again designed to build on and strengthen the Sherman and Clayton Acts in re-gards to price discrimination.

The laws that protect the rights of the employee are the Occupational Safety and Health Act (OSHA), theFair Labor Standards Act, Workers Compensation, Unemployment compensation laws, the Social SecurityAct, the Employee Retirement income Security Act of 1974, the Americans with Disabilities Act (ADA), theAge Discrimination Act, the Equal Pay Act, and the Equal Employment Act. This of course should onlybe regarded as a partial list.

4. The purpose of the Federal Equal Credit Opportunity Act is to ensure that consumers are not denied creditfor reasons of sex, marital status, age, race, religion, or national origin.

5. A lease is a special contract that establishes a relationship between a property owner and a tenant. A tenant(lessee) has possession of the real property of the property owner (lessor). The payment given to the lessorby the lessee is called rent. The four major types of leases are: (1) tenancy for years, (2) tenancy frommonth to month, (3) periodic tenancy, and (4) tenancy at will.

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Program for AcquiringCompetence inEntrepreneurship

Incorporates the needed competencies for creating and operating a small husiness at three levels of learning. with experiences andoutcomes Flee( iming ptocressisele mole ad anced.

Lesel I I 'nderstanding the etcatton and operation 01 a business.I (-yet 2 Planning lot husines, in your IninicLeNd 3 Starting and managing \ our own business

Sell-contained Student Modules include: specific obiectiers. questions supporting the objectives. complete content In form of answersto the questions. case studies. midis idual ices. group activates. module assessment references. Instructor Guides include the lull text()I each student module and lesson plans. instructional suggestions. and other resources. PAcE,Third Edition, Resource Guide includesteaching strategies. icIcrenLcs,, clussun of tains, and a dire, tor \ ell entrepreneurship assistance orpnitation,..

I 'T. WrOlination on PA('I-. or to order, contact the Publications Department at the('enter on 1..)nicat ion and Training for 1:mplo item. 1900 Kenny Road. Columbus, Ohio 43210-1090

(614 )1();,. 13.1. (SUM X-IS .1515

Support for PACE, Third Edition pros ided in whole or in pal :

International Consortium for Entrepreneurship Educationand

International Enterprise AcademyCenter on Education and Training for Employment

The Ohio State University

The Coleman Foundation

Center for Entrepreneurial Leadership Inc.Ewing Marion Kauffman Foundation

LegalIssues

UNIT 12LEVEL 2

Your Potentialas an

Entrepreneur

Nature ofSmall Business

BusinessOpportunities

Global MarketsThe

Business Plan

N....Help for

theEntrepreneur

Types ofOwnership

MarketingAnalysis

LocationPricing

StrategyFinancing

the Business

BusinessManagement

HumanResources

Promotion Selling

RecordKeeping

FinancialAnalysis

CustomerCredit

RiskManagement

Operations

Program for Acquiring,h Competence in

Entrepreneurship

CENTER ON EDUCATIONAND TRAINING FOR EMPLOYMENT

COLLEGE OF EDUCATIONTHE OHIO STATE UNIVERSITY 0

Research & Development Series No. 302-12

LEGAL. ISSUES

BEFORE YOU BEGIN . . .

1. Consult the Resource Guide for instructions

2. Read What are the Objectives for this Unityou can meet these objectives now, consult

if this is your first PACE unit.

on the following page. If you thinkyour instructor.

3. These objectives were met at Level 1:

Discuss how laws affect the small business operation.

Discuss the importance of government rules and regulations.

Define the term "contract" and discuss its importance.

Identify the components of a contract.

Define patents, copyrights, and trademarks.

4. Look for these business terms as you read this unit. If you need help with themeanings, ask your instructor for a copy of the PACE Glossary contained in theResource Guide.

BaileeBailment ContractBailorCommercial paperEnvironmental Protection AgencyEqual Employment Opportunity

CommissionExclusive and tying contractsExculpatory clauseFederal Trade CommissionIntent to contractIntercorporate stockholdingInterlocking directorate

I

Copyright © 1994, Center on Education and Training for Employment,The Ohio State University. All rights reserved.

Interstate commerceLeaseLegal purposeLetter of creditOccupational Safety and Health

AdministrationPenalty clausePreexisting obligationPrice discriminationPrice fixingSmall Business AdministrationWarranty

LEGAL ISSUES

WHAT ARE THE OBJECTIVES FOR THIS UNIT

Upon completion of this unit you will be able to

classify government regulations according to whom they are designed toprotect,

identify the regulations that affect your business idea,

explain the five essential components of a contract,

identify the major types of contracts used by entrepreneurs, and

explain the methods of protecting your business idea.

WHAT IS THIS UNIT ABOUT?

Laws and regulations are an important partof the business world. They are the rules bywhich all businesses must operate. Lawsand regulations help make the businessworld fair and orderly.

Shop owners know that when they acceptpayment by credit card, they will get paid.Consumers know that if a product has war-ranties, the manufacturer has to honor thosewarranties. Employees know that if theywork employers will pay them. Why doshop owners, consumers, and employee'sknow these things? Because there are lawsthat govern each of these areas.

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This unit is designed to help you understandhow legal issues affect small businesses.When you complete this unit you will under-stand how laws affect small business. Youwill not be a legal expert, but you will knowhow to identify a legal issue. When youidentify a legal issue that affects your busi-ness, you should get professional help fromlawyers, accountants, or governmental agen-cies.

Two other PACE units will help you under-stand and deal with legal issues. They arePACE Unit 7, Types of Ownership andPACE Unit 6, Help for the Entrepreneur.These units, along with this unit, prepareyou to understand and deal with the legalissues faced by small business entrepreneurs.

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WHY ARE GOVERNMENTRULES AND REGULATIONSIMPORTANT?

Most business laws were originally passedto protect our economic system and the peo-ple who use it. As the business world grew,more laws were passed. In our country to-day, business laws are always being updated.The growth and complexity of our economyhave also encouraged new laws. These lawsfunction to ensure a healthy business envir-onment.

Oftentimes, entrepreneurs feel overwhelmedby these protective laws. However, somebasic understanding of them is important.Your firm will be able to comply with thelaws if you plan to learn about rules,regulations, and tax laws. Awareness of theregulations with which your business mustcomply will help you to establish ways tobetter meet your personal responsibility as

an entrepreneur. As you learn more aboutgovernment rules and regulations, you willdiscover that certain types of records arevery important for your firm. It will be yourresponsibility to make sure your firm keepsaccurate records and complies with the fed-eral, state, and local regulations.

Purpose of Regulations. Even though gov-ernment laws may increase the work ofsmall business owners, they exist to promoteand protect a healthy society. You mayoften think that the time you spend fillingout forms and staying up to date on lawsconcerning your firm could be better used inoperating your business. However, everybusiness depends on a healthy society for itssuccess. Attempts by the government toprotect the interest of all citizens alsoprotects you.

Government regulations have been issued topromote competition, and to protect variousgroups or society as a whole. For example,there are laws that ban business monopolies,

establish fair employment practices (espe-cially as they pertain to women, minorities,and handicapped persons), set standards forpure food and drugs, and regulate pollutionof the environment.

Source of Regulations. Regulations pertain-ing to small business operations are made atthe federal, state, and local levels. Federallegislation is passed by the U.S. Congress.Agencies are established by the laws to helpenforce the regulations. Approximately 90regulatory agencies exist. Some of the keyagencies are:

the Federal Trade Commission,

the Equal Employment OpportunityCommission,

o the Occupational Safety and Health Ad-ministration, and

the Environmental Protection Agency.

Impact on Small Business. Governmentregulations are written to achieve desirableeconomic and social goals. Preserving faircompetition and giving equal opportunity tominorities and disadvantaged persons are im-portant goals of business regulations. Oursociety as a whole and small business in par-ticular receive benefits from governmentlaws. The Small Business Administration isa government agency that provides manyvaluable services to the owners of smallbusinesses in our nation.

Government regulations also are a source ofproblems for small businesses. They createa burden of extra paperwork an6 cost. Many

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owners of new small businesses are sur-prised at the large number of governmentreports and forms they must complete.Many estimates of the costs of governmentregulations to small businesses have beenmade and they amount to billions of dollarsa year.

Government regulations also affect the plansand daily operations of a small business.The government influences basic manage-ment decisions, such as these:

What lines of business to enter?

What products can be produced?

Which investments can be financed?

Under what conditions can products beproduced?

Where can products be made?

How can products be marketed?

What prices can be charged?

What profit can be kept?

Federal, state, and local laws influence andcontrol certain business practices. Whateveryour business is, government officials andother professionals, such as lawyers, accoun-tants, and bankers should be contacted.They can determine the specific effect themany regulations may have on the opera-tions of your business.

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HOW CAN FEDERALREGULATIONS BECLASSIFIED?

Government regulations can be classifiedaccording to the entities they are intended toprotect. We will look at five differentgroups: (1) competition, (2) employees,(3) consumers, (4) the environment, and(5) business people. The federal governmentregulates business among states. State gov-ernments regulate within their own bound-aries. Local governments are concernedwith business operations within county ormunicipal boundaries.

HOW DOES THELAW PROTECTCOMPETITION?

Competition is the cornerstone of the Amer-ican free enterprise economy. Over theyears, laws have been made to maintain theconditions necessary for fair competition.These laws are known as antitrust laws.Three of the major federal laws passed toprotect competition among businesses in-clude the Sherman Act, the Clayton Act, andthe Robinson-Patman Act. Competition isprotected by making it against tht law forbusinesses to use unfair business practices,such as price fixing.

A. The Sherman Act was passed to preventbusinesses from restraining trade andmonopolizing markets. The act has twomajor sections regarding unfair competi-tion. Under section one. every contract,business organization, or conspiracy de-

signed to restrict trade or commerce isillegal. Whereas section one is directedat business organizations or their activi-ties, section two is directed at individ-uals. This section makes it illegal tomonopolize products or industries.

B. The Clayton Act was designed tostrengthen the Sherman Act. The Clay-ton Act specifically prohibits four typesof business acts, which if practiced, tendto lessen competition or create a monop-oly. Firstly, price discrimination,whereas states charge different prices fordifferent buyers, is illegal unless thedifferent prices are set to meet competi-tion. Secondly, exclusive and tying con-tracts are illegal. Exclusive contractsrequire a customer to agree not to sellthe products of the supplier's competi-tors. Tied contracts occur when a cus-tomer must sign a contract for two dif-ferent products to obtain one of the pro-ducts. A third prohibited practice isintercorporate stockholding. A corpora-tion cannot own stock of another corpo-ration if it results in reduced competition.The fourth practice prohibited by theClayton Act is interlocking directorates.A person cannot serve on the board ofdirectors of two or more competing com-panies if this would reduce competition.

C. The Robinson-Patman Act was passedto strengthen the Clayton Act regardingprice discrimination. The aim of theRobinson-Patman Act was to equalizeprices to all customers if the costs ofproviding the goods are similar. Morespecifically, the act prohibits: (1) pricediscounts unless there are differences incosts, (2) selling private and regularbrands of an identical product at dif-ferent prices, and (3) giving unequal

advertising or sales promotion allow-ances to different buyers. An importantaspect of this act is that the burden ofproof rests with the seller of the product.

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The Occupational Safely and Health Act(OW A) is a federal law. It was written tohelp ensure that the workplace is safe. Prac-tically every worker, other than domestic and

HOW DOES THELAW PROTECTEMPLOYEES?

Many government regulations exist for thepurpose of protecting employees. The fed-eral government has enacted many importantemployee protection laws. State and localgovernments have enacted additional provi-sions of their own.

Employees enjoy a great deal of protection.Laws have been passed that deal with every-thing from workplace safety to minimumwage requirement. Let's look at some of themajor laws designed to protect employees.

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household workers and miners, is covered bythis law. Many states have adopted lawssimilar to the provisions of OSHA to helpprotect workers.

The Fair Labor Standards Act is a federallaw. It provides for minimum 'wages, maxi-mum hours, overtime pay, equal pay andchild labor limitations. The law affectsalmost every business. Specific informationon how it may affect your business can beobtained from your nearest office of Wageand Hour Administration, U.S. Departmentof Labor.

Employees are protected from economic lossby several laws. Every state has WorkersCompensation laws that protect employeeswhen they suffer a work related injury orillness. These laws vary from state to state.They provide for the payment of an injured

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workers' medic bills and compensation forwages lost due to a work related injury. Theemployer must pay for workers compensa-tion coverage. This coverage is boughteither from the state or private insurancecompanies. Requirements vary but employ-ers are required to buy coverage.

Unemployment compensation laws help pro-tect employees from financial loss when theyare unable to find work. This is a systemjointly run by the federal and state govern-ments. Employers must pay unemploymenttaxes which go to support this program.

The federal Social Security Act protectsemployees and their families when theyretire, are disabled, or die. In addition,health care benefit:, (Medicare) are madeavailable to persons 65 and older and tosome people under C5 who are disabled.Employers and employees pay a tax to sup-port the Social Security system. It is theemployers responsibility to make sure thistax is collected and paid. There are over1,000 Social Security offices throughout theUnites States that can provide information tosmall business owners regarding this law.

The Employee Retirement Income SecurityAct of 1974 (ERISA) is a federal law. Itprovides rules that govern pension plans andother benefit plans.

Employees are protected against discrimina-tion on the job due to a handicap by theRehabilitation Act of 1973 and the Ameri-cans with Disabilities Act (ADA). Theselaws are designed to give people with handi-caps a fair chance to get a job. The ADAwas passed in 1990. It has a comprehensiveset of rules governing employment practicesthat affect people with handicapping condi-tions. These rules pertain to employers with

15 or more employees. In addition, theADA deals with breaking down the barriersthese people face in public accommodations,transportation, state and local services andtelecommunications. Every small businessowner should become familiar with thisimportant law.

Employees are protected against unfair em-ployment practices by a variety of laws. Asmentioned above, the ADA prohibits dis-crimination based on handicap. The CivilRights Act of 1964 prohibits discriminationbased on race, religion, age, or sex. TheEqual Pay Act, the Age Discrimination inEmployment Act, the Equal Employment Act,and various state lawsall govern fair em-ployment practices. Small business ownersshould become familiar with the require-ments of these laws if they have employees.State labor offices are a good resource forfinding out the exact rules and regulationsthat apply to your business regarding fairlabor practices.

HOW DOES THELAW PROTECTCONSUMERS?

Some federal laws are aimed at protectingconsumers. These include the following:

Federal Equal Credit Opportunity Act

Fair Credit Billing Act

Fair Credit Reporting Act

Consumer Credit Protection Act

Pure Food and Drug Act

Federal Food, Drug, and Cosmetic Act

Fair Packaging and Labelization Act

Textile Fiber Products Identification Act

Magnusen-Moss Warranty Act

A major consumer complaint has been thedifficulty of understanding various termssurrounding the borrowing of money. Lawshave provided credit protection to customers.The Consumer Credit Protection Act is com-monly called the Truth-in-Lending Act. Ifyou give credit to your customers, you willbe affected by this law. This law is intendedto clear up the meaning of credit terms. Itrequires that lenders provide borrowers withexplanations of credit terms. Then the bor-rower will know exactly what credit willcost. The consumer will be able to comparevarious credit terms. The law also providesthat lenders tell the truth when lendingmoney or extending credit. They must statetheir credit terms and interest costs in easilyunderstood words.

A second law, the Federal Equal Credit Op-portunity Act, is designed to ensure that con-sumers are not denied credit for reasons ofsex, marital status, age, race, religion, ornational origin. A third law, the Fair CreditBilling Act is designed to ensure that a con-sumer's credit report will contain only accu-rate, relevant, and recent information. Theinformation must be kept confidential unlessrequested for an appropriate reason by theproper party. Consumer credit problemshave just recently been addressed by govern-ment legislation.

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A concern that has had government attentionfor many years is the mislabeling and sale ofhazardous products. The Food and DrugAdministration (FDA) is a federal agencywithin the Department of Health and HumanServices. It protects consumers by enforcinglaws and regulations that prohibit distribu-tion of impure or misbranded foods, drugs,and medical devices. Cosmetics and veteri-nary products are also covered by thisagency.

The Pure Food and Drug Act forbids "adult-eration and misbranding" of foods and drugssold in interstate commerce. The FederalFood, Drug, and Cosmetic Act added cos-metic and therapeutic devices to the FDA'sjurisdiction. The Act also changed thedefinition of misbranded foods. The defi-nition of improper labeling was broadened toinclude any "false and misleading" label.

The Fair Packaging and Labelization Actintends to prevent unfair or deceptivepackaging or labeling of certain consumergoods.

Truth-in-Fabric legislation has also beenenacted for consumer protection. The Tex-tile Fiber Products Identification Act re-quires information labeling and advertisingof textile fiber products. Retailers orwholesalers who sell or advertise textileproducts share with the manufacturer theresponsibility for seeing that the fibercontent of goods is properly labeled andadvertised. For example, this federal lawapplies to persons advertising clothing orhousehold fabric products in newspapershaving interstate commerce, regardless ofwhether or not goods are actually marketedacross state lines. Therefore, the vastmajority of retailers handling textiles have

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definite responsibilities under this labelinglaw.

Another area of consumer concern deals withproduct warranties. The Magnusen-MossWarranty Act sets standards for businessesoffering warranties. The basic provision ofthe Act requires that warranties be written inlanguage that is understandable.

material and the disposal of hazardous wastesuch as petroleum based products and toxicsubstances is highly regulated, at the federaland state levels. More and more communi-ties are regulating what goes into landfillsand what must be recycled.

It is very important for every business ownerto know and understand the environmentallaws that affect their business. Your stateenvironmental protection agency is a good

HOW DOES THELAW PROTECT THEENVIRONMENT?

Concern for the environment has resulted inthe passing of many anti-pollution laws.These laws are aimed at preventing people,particularly business people, from pollutingour natural resources.

There are federal and state laws that prohibitpolluting waterways and the air. Noise pol-lution is regulated. Handling hazardous

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resource for information on complying withenvironmental laws.

HOW DOES THELAW PROTECTBUSINESS PEOPLE?

Several laws exist simply to protect theinterests of business people. The UniformCommercial Code has been adopted in largepart by almost every state. It is the basiclaw of business. It provides for one set of

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raPPPPPIN,..

rules governing business transactions.Things such as contracts, sales, agencies,bank deposits, sale of accounts, letters ofcredit, commercial papers, collections andbank transfers are covered. Having uniformrules allows business people to standardizeroutine transactions. This makes doingbusiness more efficient and predictable.

Laws governing patents, trademarks andcopyrights help business people protect theirideas and inventions. These laws will bediscussed in detail later in this unit.

How do you know which laws apply toyou?

There are many laws that affect businessowners. It may seem like it would be im-possible to comply with all these laws. It ischallenging, but with the right professionalhelp it is possible.

Many of the laws deal with taxes. Accoun-tants are a good source of help for comply-ing with these laws. Accountants can helpyou set up your books and keep track ofwhen, how much, and to whom you mustpay taxes. Tax laws change so often that it

is wise to find a good accountant to helpyou with tax issues.

A good business lawyer can help you with avariety of legal issues. They are particularlyuseful for answering questions correctly.They can help you develop business prac-tices that comply with the law.

As noted above, there are many governmentagencies that help small business owners.The Small Business Administration is anexcellent resource for entrepreneurs. Agen-cies such as the Environmental ProtectionAgency can help with specific areas of thelaw.

Mentors are a good source of advice. Theycan help you recognize legal issues. Findinga mentor that is familiar with the type ofbusiness you are in can be a great help.They are familiar with legal issues fromtheir business. They may also be able todirect you to other sources of help.

You can help yourself by taking a businesslaw course. Doing so will help you to iden-tify legal issues and get help when neces-sary. Even though you are not a legal

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expert, you know the most about how youdo business. The more knowledge you have,the better you will be at spotting potentiallegal trouble and taking steps to prevent it.

WHAT IS A CONTRACT?

Almost all of the day-to-day transactionsthat are done in business involve contracts.Se llinb goods and services, buying goodsand services, and using creditall involvecontracts. Making good enforceable con-tracts is essential for the success of abusiness enterprise.

A contract is a legally enforceable agreementbetween two or more people. These peopleare called parties to the contract. If anyparty to a contract does not do what waspromised, he or she can be sued in a courtof law for breaking the contract. Whensmall business owners enter into a contract,they have rights and obligations. They havethe right to expect the other party to do whatwas promised. They also have the obliga-tion to fulfill their part of the bargain bydoing what they promised to do.

Small business owners are faced with manyopportunities to enter into contracts withcustomers and suppliers. For example, Maryruns a computer repair business. A customerleaves Mary a broken computer. Maryagrees to fix it for $150. The customeragrees to pay Mary $150 to fix it. An oralcontract has been made between Mary andher customer. Later that day Mary agrees tobuy a $10,000 computer tester from a suppli-er. Mary and the supplier sign a five pagewritten agreement that contains all the termsof their contract. Mary has entered into a

written contract to purchase the computertester.

Mary's oral contract and her written contractare both legally enforceable agreements.Most contracts do not have to be in writingin order to be enforceable legally. However,putting an agreement into writing makes iteasier for the parties to prove what theiragreement was if there is a problem. Oralcontracts can be enforced but it is harder toprove what the agreement was than if theparties had written it down.

Written contracts and oral contracts bothcontain five basic elements. These elementsare often called the five essentials of a con-tract. Knowing these requirements helpsentrepreneurs use this knowledge to makegood contracts and avoid contract problems.

WHAT ARE THEFIVE ESSENTIALCOMPONENTS OFA CONTRACT?

The five essential components of a contractare as follows:

Agreement,

Consideration,

Capacity,

Legality, and

Mutuality of consent.

In order for a contract to be enforceable itmust have all five elements. The next fewsections of this unit discuss these items withan emphasis on the key concepts that a small

business owner should understand about eachitem.

WHAT IS AGREEMENT?

The first and most important element of acontract is agreement. For agreement toexist, there must be a reasonably definiteunderstanding between the parties. Theunderstanding is sometimes referred to as ameeting of the minds of the parties. Agree-ment occurs under the following conditions:

1. An offer is made. An offer is a proposalthat expresses a desire to enter into alegally binding agreement.

2. The offer is followed by acceptance.Acceptance occurs when the party towhom an offer has been made agrees tothe proposal.

3. The offer and the acceptance create areasonably definite understanding be-tween the parties who are involved in thecontract.

Some of the most important ingredients foragreement are intent to contract and reason-able definiteness. Let's take a closer look atthese two items.

Intent to contract. Sometimes when peopletalk business they do so in exploratoryterms. This involves the parties asking ques-tions and giving answers without promisingto do anything. This results in no agreementand no contract. For a contract to exist, theparties involved must intend to contract.This means that all parties must be willing

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to enter into a contract and to meet the termsof the contract. The following example willhelp you learn more about intent to contract.

Mary, the owner of the computer repair busi-ness we discussed earlier, was shopping forsome spare parts to carry in inventory. Shecalled a supplier that she buys most of herparts from. Listen to the telephone conver-sation between Mary and the supplier.

Mary: "Good morning. I am interested inpurchasing memory chips and circuit boards.I would like to know your price for theseitems. They are items 257 and 695 in yourcatalog."

Supplier: "The price for a box of 25memory chips is $1,000 and the price forcircuit boards is $50 each."

Mary: "Those prices are too high. They arenot worth that much. I would not pay morethan $850 for chips and $45 for circuitboards. Also, I would expect good creditterms if I bought 5 boxes of chips and 50

circuit boards."

The supplier laughed and they hung up. Thenext day the supplier delivers a shipment ofmerchandise to Mary. Five boxes of 25memory chips (item 257) and 50 circuitboards (item 695) were included in the ship-ment. They were priced $850 for the chipsand $45 each for the circuit boards. Marysent them back to the supplier.

Can Mary return the shipment? Yes! In

this particular example, Mary and the sup-plier were talking in exploratory terms.They did not reach an agreement. Therewas no agreement and no contract.

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Reasonable definiteness. In order for anagreement to exist, the offer has to be rea-sonably definite. This means that the termshave to be specific enough to determinewhen the parties to the contract have livedup to their promises. The following exam-ples will help you understand what is meantby reasonable definiteness.

A supplier offers to sell parts to Mary for$10,000. Credit terms are to be arranged.At first, Mary agrees. Later, she decides toback out.

Can Mary back out? In this particularexample, she is able to do this. Why? Thesupplier's offer lacks reasonable definite-ness. The statement "with credit terms to bearranged" is too vague. Let's take a look atanother example.

A supplier offers to sell merchandise toMary. The supplier will deliver the mer-chandise on the first day of the month.Credit terms are 2/10, net 60 (2 percentdiscount if paid in 10 days; otherwise the netamount due in 60 days). Mary agrees andthe merchandise is delivered on the first dayof the month.

In this example, the offer was reasonablydefinite. The terms are specific. A court oflaw can determine when the parties to thecontract have lived up to their promises.There is a contract and Mary cannot backout of it.

Review what you have learned so far. Twoitemsintent to contract and reasonable def-initeness are necessary for agreement. Inaddition, there must be an offer followedby an acceptance. The offer and the accep-tance must create a reasonable definite

understanding between the parties involvedin the contract.

WHAT IS CONSIDERM1ON?

Consideration is something of value ex-changed between the parties to a contract.Many times consideration is money orgoods. However, it can also be as simple asexchanging a promise for a promise. Forexample, Mary promises to fix Bill's compu-ter and Bill promises to pay Mary $40 perhour for the time she spends working to fixit. The parties' promises are consideredvaluable consideration.

An area that often causes problems involvespreexisting obligations. If a person promisesto do something that he or she already is re-quired to do, then it is a preexisting obliga-tion. A promise to perform a preexisting ob-ligation is not valuable consideration anddoes not support the creation of a contract.In order to get a better understanding ofpreexisting obligations let's review anexample.

Mary's business was robbed. Mary offereda $100 reward for information leading to thearrest of the person who robbed her shop.

Two local police detectives later suppliedinformation that lead to the arrest of therobber. Can the detectives collect the $100reward? Since the detectives were under apreexisting obligation as a paid police officerto catch the robber, they cannot collect areward. Even though Mary offered a rewardand they accepted her offer, there is no con-sideration and no contract.

WHAT IS CONTRACTUALCAPACITY?

Contractual capacity is another element ofa legally enforceable contract. All parties toa contract must be competent to understandand make legally binding agreement. Per-sons who are minors, mentally ili or intoxi-cated by drugs or liquor generally do nothave the capacity to enter into a contract.They lack contractual capacity.

Generally, the most common capacity issuethe small business owner will face involvesminors. Minors are defined by most statesas anyone under the age of 18. In a fewstates minors are anyone under the age of21. Most contracts entered into by a minorare voidable by the minor. In other words,minors can refuse to fulfill their end of thebargain without being in violation of thecontract.

This can cause big problems for small busi-ness owners. Suppose Mary sells sparecomputer parts to a minor for $100. Theminor gets the parts but decides not to paythe $100. The minor can return the partseven though they are used and worth muchless and not pay the $100. The minor hasvoided the contract. In most states Marygets back the used parts and no money eventhough the parts have been used. In fact aminor can even void a contract if they liedabout their age in most cases.

Intoxicated and insane persons can also voida contract. They must show that they wereunable to understand the terms of the con-tract when it was made. If they prove that,they can void the contract.

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WHAT DOES LEGALITYOF PURPOSE MEAN?

Courts will only enforce contracts that havea legal purpose. If the purpose of the con-tract is illegal or against public policy, thecontract is void and unenforceable. If onlya portion of a contract involves illegal pur-poses, then the illegal portion is void andonly the remainder of the contract is en-forceable.

There are several illegal purposes that smallbusiness owners should be aware of. Con-tracts involving gambling or lotteries are aproblem. Many times gambling or lottery-type promotions may be illegal or highlyregulated by state law. Before entering intoa contract involving gambling, a businessattorney should be consulted regarding itslegality.

Another area of concern involves contractsthat call for interest to be paid. There arestate laws that set the maximum interest ratewhich may be charged when extendingcredit. Charging more than the allowed rateis called usury and is illegal. The portion ofany contract which charges an illegal interestrate will not be enforceable.

Exculpatory clauses are another problemarea. Exculpatory clauses are provisions ina contract that release a party from liabilityfor its negligent acts. A common example isfound on parking lot contracts which saythat the owner of the parking lot is not re-sponsible for any damage to your car. If thelot owner is negligent in running her lot,most courts will not enforce the clause stat-ing she is not liable. It is a good idea toseek the advice of a lawyer anytime you

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want to use a exculpatory clause in a con-tract. Exculpatory clauses in contracts aregenerally not legal. In most instances, thecourts are unwilling to enforce such provi-sions.

This is especially true with the bailment con-tract. Courts will not usually enforce anexculpatory clause in a bailment contract.Typically, the bailment contract has two par-ties: a bailor and a bailee. The bailor givesthe bailee something to hold or protect. Forexample, a customer enters a restaurant andchecks a coat. The customer is a bailor andthe restaurant is the bailee. Under generalbailment law, the bailee is liable for anydamages to, or loss of, property that resultsfrom bailee negligence. A bailee may at-tempt to escape this liability through use ofan exculpatory clause. For instance, a res-taurant owner might post a sign, "Not re-sponsible for lost or stolen garments." Re-cently, the courts have not allowed the baileeto escape liability so easily. If the coat islost, the restaurant owner is responsible ifthe act was a result of negligence. As longas the bailor can show that the loss occurredthrough negligence on the party of thebailee, the bailor can recover damages.

Finally, penalty clauses in contract are gen-erally against public policy and are unen-forceable. Penalty clauses usually call forthe party who breaks a contract to pay avery large sum of money as damages. If theamount of the payment is very high and isunreasonable, courts will declare it to be apenalty. They will not enforce the penaltyclause.

Anytime a small business owner feels that acontract might involve an illegal purpose,they should seek the advice of an attorneybefore signing the contract.

WHAT IS MUTUALITYOF CONSENT?

The parties to a contract must have mutual-ity of consent. This means they must haveknown what deal they were making and free-ly entered into it. This element is missing ifthere is fraud, misrepresentation, duress, ormistake involved in the agreement.

Fraud and misrepresentation involve tellingsomeone untrue facts in order to get them toenter into a contract. If the untrue facts area significant p4..1 of the bargain, the contractcan be voided by the party who was misled.In addition, the party who was misled cansue for money damages.

Sometimes a contract can be set aside by thecourts when a mistake has been made by oneof the parties. This occurs when either orboth parties to the contract were mistakenabout an important fact. It may occur whenone party to the contract was mistaken andcan show that the other party knew, or couldhave known about the mistake at the timethe contract was made. It may also occurwhen both parties are mistaken about animportant fact in the contract.

For example, for several days, Mrs. Silverhas been admiring an antique vase in Mr.Evans' antique shop. Mrs. Silver phonesMr. Evans and makes arrangements to pur-chase the vase. The purchase price is$1,000. Mr. Evans agrees to deliver thevase to Mrs. Silver.

When Mr. Evans tries to locate the vase, hefinds that it is missing. He asks one of theemployees about the vase. The employee

informs Mr. Evans that the vase was brokenby another employee just yesterday.

In this case, both parties to the contract weremistaken about an important fact. NeitherMrs. Silver or Mr. Evans knew that the vasewas broken when they made their agreement.Therefore, the parties are excused from per-forming the contract.

The examples given in the discussion of thefive essentials of contracts demonstrate thateach element is very important. All five ele-ments must be present in order to have agood enforceable contract. Failure to in-clude any one of the elements can make acontract unenforceable.

Unenforceable contracts can be very expen-sive. They often cause expensive lawsuits.They also can result in poor customer ser-vice and bad relations with sualiers.Nothing can ruin a business faster than theproblems bad contracts can cause. Knowingand understanding the five essential elementsof contracts is crucial to running a successfulbusiness.

WHAT ARE THE MOSTCOMMON TYPES OFCONTRACTS?

The two most common types of contractsare lease contracts and sales contracts.

As you start your business, you will prob-ably lease the site for the business ratherthan buy it. For this reason, it is importantfor you to become acquainted with leasesand their terms.

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WHAT IS A LEASE?

A lease is a special contract that establishesa relationship between a property owner anda tenant. A tenant (lessee) has possession ofthe real property of the property owner (les-

sor). Rent is the payment given by the ten-ant to the property owner. Many states havelaws or statutes regarding these leases. Insome states, if the leasing period is longerthan 1 year, the lease contract must bewritten to be enforceable.

WHAT TYPE OF LEASESARE AVAILABLE?

There are various types of leases that abusiness can sign. Selecting the "right"lease depends on the circumstances, type ofbusiness, and common leasing practiceswithin the industry. There are four types ofleases.

1. Tenancy for years. The site is leasedfor a definite period of time. The leasecan last any fixed amount of time, 6months, 1 year, 5 years, or more.

2. Tenancy from month to month. Thesite is leased month to month, and rent isdue each month.

3. Periodic tenancy. The site is leased foran indefinite period of time with rent dueat specified intervals.

4. Tenancy at will. The site is leased foran indefinite period of time. The leasecan be continued or can be terminated onshort notice by either party.

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WHAT SHOULD ALEASE INCLUDE?

LEASETenancy for years

Tenancy frommonth to month

Periodic TenancyTenancy at Will

Since a lease is a legal document, it is im-portant that certain precautions be observedbefore the lease is signed. It is a good ideato have a lawyer review the lease before yousign it. Examine the property thoroughly tomake sure that it suits the purpose for whichit is used. Make sure that the signatures areproperly witnessed. Examine the lease thor-oughly to make sure that it contains thefollowing:

No narrow restrictions on merchandisethat may be sold or on services that maybe provided.

Statements of the duration of the lease,the amount of rent, the date on which therent is to be paid, and the penalty forlate and for nonpayment.

Arrangements for subleasing, subletting,and assignment to another merchant.

Provisions in case of fire or other dam-age that makes the premises unusable.

Provisions regarding obligations concern-ing major and minor repairs.

Options and renewal arrangements

WHY LEASE EQUIPMENT?

Often businesses lease more than the firm'spremise. Even though leasing rates areusually higher than rates charged for pur-chasing the equipment on credit, many smallfirms lease equipment. Manufacturers veryoften lease machine tools and heavy equip-ment including trucks. It is not uncommonto find service, wholesale, retail, andmanufacturing inns leasing data processing

equipment, photocopying equipment, andcompany cars.

Leasing has some very definite advantagesbecause it

does not tie-up capital since there is littledown payment required in most cases.

eliminates the need for some type of in-surance protection.

may provide a tax savings. Lease pay-ments are deductible business expensesunder many circumstances.

eliminates possession of outdated equip-ment and so forth. (When new modelsbecome available, the lease agreementcan provide for the lessee to exchangethe old equipment for the new models.)

saves on maintenance costs since thesecosts are many times included in theterms of the lease.

WHAT ARE SALESCONTRACTS?

As a small business owner, you will dealwith a variety of sales contracts. Thesecontracts may involve sales to customers oritems that you intend to purchase. You mayeven work with a sales contract in order topurchase your own small business.

If you decide to purchase an existing smallbusiness, you will need to develop a salescontract. You may want to have yotr law-

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yer draw up the agreement. This will helpto ensure that it covers all essential pointsand that the agreement is understood by allparties.

If you purchase an existing business, youwill want to have the following items cover-ed in the agreement:

A description of what is being sold

The purchase price

The method of payment

A statement of how adjustments (such asinventory sold, rent, payroll, and insur-ance premiums) will be handled at thetime of closing

Buyer's assumption of contracts and lia-bilities

Seller's warranties (such as warrantyprotection for the buyer against falsestatements of the seller, inaccurate finan-cial data, or undisclosed liabilities)

Seller's obligation and assumption ofrisk pending closing

The covenant of the seller not to com-pete with the business

The time, place, and procedures of clos-ing

The buyer of the business will want to takepossession of the business as soon as possi-ble after signing the contract. This will keep

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the seller from derleting the inventory orfrom creating ill will for the buyer as thebusiness is taken over.

HOW CAN BUSINESSIDEAS BE PROTECTED?

In the process of doing business, small busi-ness owners many times have an opportunityto originate a new idea for a product or pro-cess. If so, they may wish to take steps toprotect their idea through patents, trade-marks, service marks, or copyrights. Let'stake a closer look at these items and seehow they can be used to protect businessideas.

If an item is invented in the process ofoperating a business, it may qualify for apatent. Patents may be obtained on newproducts, industrial or technical processes,machines, designs, or other items involved inthe process of doing business. A patent pro-vides the exclusive rights to the inventor tomake, use, or sell the invention for a periodof years. On new devices, it is a l7-yearperiod.

In order to qualify for a patent, an inventionmust be new and unique. It cannot simplybe a reworked version of an existing idea.If entrepreneurs invent a new and uniqueproduct or process, they should investigateprotecting their invention by getting itpatented. The process of getting a patent isvery detailed and time consuming. Most in-ventors find it useful to hire a patent at-torney or registered patent agent to helpthem through the process.

A trademark is a word, name, symbol, de-vice (design), or a combination of theseitems that is used to identify a product.When a trademark is registered, that trade-mark is protected against use by others for aperiod of 20 years. The trademark is adevice pointing directly to the origin orownership of merchandise to which it is ap-plied. The trademark is legally reserved tothe exclusive use of the owner as maker orseller of the product. The "Golden Arches"symbol used by McDonald's restaurants is agood example of a trademark. No one elseis allowed to use the "Golden Arches" be-cause it is a registered trademark ofMcDonald's.

Like a trademark, a service mark is a word(or words), design (or designs), or combina-tions of word(s) and design(s) used to adver-tise services. A service mark helps custom-ers to distinguish the services of one firmfrom those of another. These marks areused to advertise banking, real estate, motel,and other services. Through such advertis-ing, prospective customers become aware ofa firms services. When they see the servicemark, they associate it with a particular levelof quality.

Printed material such as literary and artis-tic work is protected through copyrights.Copyrights are effective for the life of theauthor plus an additional fifty years. Smallbusiness owners may desire to copyrightmaterial used in advertising. For example,catalogs, brochures, or instruction sheetsregarding products and services can becopyrighted.

ACTIVITIES B.

The following activities are designed to helpyou apply what you have learned in thisunit.

INDIVIDUAL ACTIVITIES

A.

Test your understanding of the legal termsdiscussed in this unit. Match terms corre-sponding to the following definitions:

a.

b.

c.

d.

e.

f.

g.

h.

i.

DEFINITION

Legally enforceable agreement betweentwo or more parties.Proposal that expresses a desire to enterinto a legally binding agreement.Occurs when the party to whom an offerhas been made agrees to the proposal.Involves the parties asking questions andgiving answers without promising to doanything.Means that the terms have to be specificto determine when the parties, have livedup to their promises.Occurs when a person promises to dosomething that she/he already is requiredto do.A party's competency to understand andenter into a legally binding contract.Provision in a contract that releases aparty from liability from its negligentcontract.Involves providing someone with falseinformation in order to get them to enterinto a contract.Legal protection of literary and artisticwork.

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Consult news publications such as BusinessWeek, Wall Street Journal, New York Times,Fortune, or Forbes which are available atyour local library. Identify articles thatpresent business activities associated withlegal issues presented in this unit. Developa written summary of one or two articles toidentify the legal issue the article deals with.Try to use the legal terms introduced in thisunit.

H

TERM

Exculpatory Clause

Reasonable Definiteness

Contract

Fraud

Offer

Preexisting Obligation

Copyright

Acceptance

Contractual Capacity

Exploratory Terms

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GROUP ACTIVITIES

A.

Work in teams of four to six. Each teamwill discuss a legislation presented in thisunit and develop an imaginary business situ-ation pertaining to each law or regulation.Each team may use flip charts to record theirfindings and then share them with the otherteams.

B.

Continue working in teams. Each team willconsider a legislation regarding protection ofemployee's rights. The teams should consultthe local library to research the assignedlegislation. Next, each team will develop aone-page summary on the law or regulationthey have researched. Finally, the teamsshould share their findings in a classdiscussion.

CASE STUDY

Ralph Zellman wants to start a furniturerefinishing business. Several of his friendsare antique dealers that need the services ofa good furniture refinisher. He thinks hecould make a good living doing work forthem and the general public.

DISCUSSION QUESTIONS

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Ralph has started to develop a business planfor his furniture refinishing business. Ralphis concerned about the chemicals that heuses in the business. Many of the chemicalsare toxic. Ralph wonders what type of lawsmight govern his use of these chemicals.

1. Which government agencies might be involved in regulating hazardous substances?

2. Of the five groups that government regulations are designed to protect, which might beaffected by laws dealing with hazardous substances? Why?

3. What should Ralph do to find out what laws he needs to comply with regard to the use ofthe refinishing chemicals?

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ASSESSMENT

Read the following questions to check your knowledge of the topics presented in this unit.When you feel prepared, ask your instructor to assess your competency on them.

1. Explain the purpose of government regulations and laws regarding business. List some ofthe more important agencies that issue the legislation.

2. List and briefly explain the laws that protect competition.

3. List legislation issued to protect the employee's rights and explain.

4. What is the purpose of the Equal Credit Opportunity Act?

5. Define the concept of lease and list the four types of leases.

REFERENCES

Adams P. The Complete Legal Guide for Starting your Business. New York, NY: John Wiley& Sons, 1982.

Buchholtz, R. Business Environment and Public Policy. Englewood Cliffs, NJ: Prentice Hall,1986.

McAdams, T. Law, Business and Society. Homewood, IL: Irwin, 1992.

Scarbough, N., and Zimmerer, T. Effective Small Business Management. Columbus, OH:Merrill Publishing, 1991.

Siropolis, N. Small Business Management. Boston, MA: Houghton Mifflin Company, 1990.

Sturdivant, ;. Business and Society Managerial Approach. Homewood, IL: Irwin, 1981.

U.S. Small Business Administration. Introduction to Patents. Management Aid No. 6.005.Washington, DC: U.S. Government Printing Office, 1988.

U.S. Small Business Administration. Selecting The Legal Structure for your Business. GeneralManagement Aid No. MP 25. Washington, DC: U.S. Government Printing Office, 1988.

Level 2

PACE

Unit 1. Your Potential as An Entrepreneur

Unit 2. The Nature of the Small Business

Unit 3. Business Opportunities

Unit 4. Global Markets

Unit 5. The Business Plan

Unit 6. Help for the Entrepreneur

Unit 7. Types of Ownership

Unit 8. Marketing Analysis

Unit 9. Location

Unit 10. Pricing Strategy

Unit 11. Financing the Business

1:::> Unit 12. Legal Issues

Unit 13. Business Management

Unit 14. Human Resources

Unit 15. Promotion

Unit 16. Selling

Unit 17. Record Keeping

Unit 18. Financial Analysis

Unit 19. Customer Credit

Unit 20. Risk Management

Unit 21. Operations

Resource Guide

Instructor's Guide

Units on the above entrepreneurship topics are available at the following levels:

Level 1 helps you understand the creation and operation of a businessLevel 2 prepares you to plan for a business in your futureLevel 3 guides you in starting and managing your own business