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Activity 1: The Legal Environment of Business and Contracts

All established business entities are expected to follow a certain set of rules and regulations based on the laws that have been further created for the sake of protecting the entities as well as the stakeholders of the business itself and the people that are affected by it. The said business-related laws include the rules with which the company is required to give protection to those belonging to it including its properties, its employees and its major stakeholders.

Business Laws and Regulations TOPICS SPECIFICALLY FOR YOU

All the different laws that are created to assist business entities in its aim of existing within the industry for as long as it could, have different impacts on different established businesses. This especially concerns the scale of the business as to whether they are small scale or large scale. The complete application of the business industries of the said set of rules within their operations in a constant manner shall certainly identify their long existence within the business society. The different factors that make up the said laws shall be separately discussed within the paragraphs that follow.

The elements of business law:

  • Tort

A tort is known as a non-criminal act that is noted by law as breech of contract that actually injures a property or a person or group of people. This particular element of business law draws the demarcation line between the process by which anybody who is a part of the company is held liable for the actions that he himself has implied upon the different operations of the company with which he is a member of.

When this particular element of law has not been properly acknowledged, several consequences need to be considered by the one who has primarily been involved in the process of disregarding the said law. Two primary results could be expected. First is the compensatory damage award whereas the one who was not able to acknowledge the said law shall be required to pay for the damages that has been induced by the said person or company involved within the case. On the other hand, the punitive damage award could be given on the one who has been affected by the damage as he, she or a company could be able to address the punishment directly to the one who has committed the damage.

Although there are two choices of punishment, the law usually implies that the compensatory damage award be applied on most cases concerning tort. This is primarily because it is less trouble causing when it comes to solving the case since the agreement sorely depends on the amount of money that needs to be paid by the accused to be able to make amends with the damage that has been done.

  • Intentional tort

An intentional tort is a process by which a person or a company directly and have carefully planned to damage a certain property or a particular individual. This case involves more direct impact upon the victims of the case. The two different approach of this case based on communication procedures are called slander [for spoken damage] or libel for technologically based intentional damage of reputation that is implied upon the victim.

  • Negligence and Product Liability

This is the failure of major role players in the business to imply careful steps necessary to protect others from the reasonable risks of injury that might be caused by the operational activities posted by the business organization itself.

This is a particular case which involves the problem of the product that is produced by the company that may imply danger on its employees or even on the people within the community that it particularly serves. This happens when the substances that are used to produce certain products are hazardous to the heath of either the employees or the people living within the vicinity of the establishment of a particular business entity. Cases of this particular issue involve businesses that produce products that are based from chemical elements that later on become toxic waste when the excess of the production is deployed.

  • Contract and its Elements

Contracts are written evidences upon the promises that had been exchanged between two parties particularly involving business transactions and appointments. The lawful act of putting everything into writing has actually given birth to the existence of contracts within the business industries. This has been actually established to assist those that are involved in the agreement to have an ample protection for their own interests as major role part takers of the said contract. To particularly define the essentiality of contracts in different business activities, the discussion on the different elements that make up contracts would help in the clarification of the issue:

The elements:

  • The offer must be made: The proposal of the agreement must be clearly made by one party of the appointment whereas the proposal has been primarily made in a verbal request.
  • The offer must be accepted: For a contract to exist, it is certain that the one that the appointment have been proposed to accepts the proposal. This could occur in either verbal, written or action-based acceptance of the said business or appointment proposal.
  • Both parties are expected to give consideration: this is the exchange of value between the two parties involved within agreement. Without the values that are exchanged between the parties, there is no existing contract. The values could be of monetary-based or service based. It could also be of good-will basis that one of the parties would receive in exchange of another particular value.
  • Both parties are expected to give genuine assent: voluntary agreement on the terms of the contract must be existent on both parties of the contract. There must be no existing fraudulent details found on the said contract arrangement that may cause problems on both parties later on.
  • Both parties must be competent: every contract must involve people who are of the right age, the right sanity for the contract to become valid and acceptable within the standards of the law.
  • The contract must not involve any illegal act: to be able to gain the support of the government in protecting particular assets of the contract, it is necessary that the agreement does not incur any illegalities.
  • The contract must be in proper form: several contracts are accepted in form of verbal exchange of promises or even action-based agreements, however, when it comes to contracts that are particularly protected by the law, it is certain that the parties write the agreements that they form. Through this, if in case anything goes wrong, the court will have a valid basis on the decisions that they are to make to give solutions to the said problems.

Although there are numerous elements that make up a particular contract, it need not be long in writing. All the elements listed above could be noted in one particular simple contract that is presented in a simple format so long as everything that need to be noted are carefully evident within the writing.

The validity of the laws of business as presented herein is made possible by the enforcing power of the law that controls and regulates the implementation of the different elemental procedures of making the regulations more effective on the part of the business entities as well as with their stakeholders.

To make this implementation possible, the US legal system takes in the responsibility of making the necessary actions needed. To know how it particularly works, it is necessary to understand how the hierarchy of governmental positioning and responsibility is further commenced by the administration of justice. The diagram that follows shall illustrate the process in picture-form.



  1. Explain if Dave has a valid contract with ACME Corporation.

Technically, since Peter did not receive Dave’s agreement on the proposal, the completion of the contract is not valid therefore making the contract agreed by Dave, yet was not received by Peter a void transaction.

  1. Explain if Mike has a valid contract with ACME Corporation.

The agreement was more likely based on verbal proposal and acceptance on the two parties, the values of exchange were also determined, however, the fact that Mike did not tell Peter that he was under age [which he might not have known to have of utmost importance to the company], the contract is also void.

  1. Does ACME Corporation owe any money to Mike’s grandmother?

Technically, since the agreement was not pursued to completion, the ACME do not owe anything to the grandmother of Mike as they both agreed that the payment shall be made when the disposal of the toxic waste has been done by Mike, which was not completed.

  1. Could Mike be held liable for the tort of negligence?

Yes, he was not careful enough thinking that what he was disposing was something that is highly destructive. Hence, making him liable for his acts and thus must face the consequences of his mistakes.

  1. The citizens of Local City want to sue for the damage done to Lake Beautiful. Who should they sue? Which court would have jurisdiction if the citizens bring a suit? Is there a federal law that could hold ACME Corporation liable for the damage done to Lake Beautiful?

The local city could first bring the case to the agency that is handling the maintenance of the park [Public utility agency]. They are supposed to sue Mike for his negligence of the fact that he was not responsible enough to consider the job that he is supposed to complete. However, the ACME corporation could also be held liable for the case because of the fact that they allowed an under age [even without their knowledge] to drive a truck carrying loads of toxic waste.


Mescon, Michael. (1997). Business Today Ninth Edition. Prentice Hall.

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