Business Law with UCC Applications,13e

Chapter 1

Ethics, Social Responsibility, and the Law

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

1-2

Learning Objectives

1. Define law and morality.

2. Distinguish among natural law, positive law, and negative rights theory

3. Explain ethical relativism.

4. Describe social contract theory.

5. Outline the steps in applying utilitarianism.

6. Define rational ethics.

1-3

Learning Objectives (cont.)

7. Explain the dual nature of ethics in government.

8. Outline the arguments supporting social responsibility.

9. Explore the need for law in our society.

10.Clarify how the law and ethics are usually in harmony with one another.

1-4

The Law and Morality

• The Law – consists of rules of conduct established by the

government of a society to maintain harmony, stability, and justice

1-5

Question?

What defines the legal rights and duties of the people?

A. Ethics

B. Values

C. Morals

D. Law

1-6

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

1-7

Question?

What are values that govern a society’s attitude toward right and wrong?

A. Morals

B. Ethics

C. Societal values

D. Law

1-8

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

1-9

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

1-10

Question?

Which theory says that human intuition will always give rise to positive moral laws?

A. Natural law

B. Positive law

C. Law of humanity

D. Law of peoples

1-11

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

1-12

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

1-13

Positive Law Theory

• Law of Peoples – human intuition will always give rise to

positive moral laws that are global in scope– common to everyone

1-14

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.

1-15

Question?

Which ethical theory calls for the greatest good for the greatest number?

A. Totalitarianism

B. Utilitarianism

C. Unilateralism

D. Multiplicity

1-16

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

1-17

Question?

Which ethical theory calls for individuals to give up certain freedoms?

A. Ethical relativism

B. Social contract theory

C. Situational ethics

D. Utilitarianism

1-18

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

1-19

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

1-20

Ethical Theories

• Utilitarianism – the morality of an action is determined by its

ultimate effects– Greatest good for the greatest number

1-21

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

1-22

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 1. to protect its own existence and

2. to protect the lives, health, and wellbeing of its own citizens.

1-23

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.

1-24

Ethic of Responsibility

• 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.

1-25

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

1-26

Reasons for Social Responsibility

• Corporation offers limited liability to owners

• Corporation is considered an artificially created person

• Corporation can own property and bring lawsuits

1-27

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

1-28

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

1-29

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