THE ETHICAL BASIS OF

LAW AND BUSINESS

C

MANAGEMENT
09/15/2022
 Give your own definition of Law

Explain what the ‘the rule of law’ is

Quick
Explain what is property

Identify a legal system

check! Explain the jurisprudence (case law) in the common law

system
Recognize the elements of common law and civil law

By now you should Understand their differences

be able to…
Understand the classifications of the law

And understand how the law is enforced

 LET'S TEST IT!
Which of the following are correct?
1. The civil law system works on precedent
2. ‘Rule of law’ and ‘law’ are the same
3. Custom is what has always been done
4. Custom can change the law
5. Custom is the mother of the law False or true
6. The courts are where the law is applied
7. The courts are where the law is made
8. Property is the right to exclude myself from
property of others
Good job!

At the moment there

are no right or wrong
answers
 LET'S CONTINUE WITH THE ETHICAL
FOUNDATION OF LAW AND BUSINESS
 Set of values that guide behavior?*

Yes, but also…

What is
ethics? Systematic statement of right and wrong together
with a philosophical system that both justifies and
necessitates rules of conduct

* That is also the definition of morality

 ETHICAL SYSTEMS

FORMALISM CONSEQUENTIALISM
Four sources of ethical values for
business decision making

• Legal regulation

• Professional codes of ethics

• Codes of ethics from business organizations

• Individual values.
Let's look at Theranos Case
an example
 Theranos was founded in 2003 by E.
H.

E.H. claimed to have invented a

Theranos machine that could process
Case hundreds of tests from just a few
drops of blood
The final consumers of the blood
tests would not need intermediaries
to interpret the results, it would be
instantaneous
But nevertheless

…That technology does not exist

• E. H. sold her technology to private investors

• In 2014 it was revealed that the ‘technology’ was unreliable
• The suspicion that E. H. committed fraud began
• In court it was found that the results were fabricated
U.S. Securities and Exchange Commission

• The Securities and Exchange Commission oversees securities exchanges, securities

brokers and dealers, investment advisors, and mutual funds in an effort to promote fair
dealing, the disclosure of important market information, and to prevent fraud.

• The U.S. Security and Exchange Commission charged E. H. with fraud

Other sources

• https://www.bbc.com/news/business-58336998

• https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al

• https://www.nytimes.com/2022/01/03/technology/elizabeth-holmes-guilty.html
HOMEWORK
C

THERANOS case
 Homework

Write an essay in which you explain the

importance of business ethics through the
following guiding question

How could the violation of the law

have been prevented through a
correct application of professional
ethics in the Theranos case?
O. Lee Reed, Peter Shedd, Jere Morehead, Marisa Pagnattaro - The Legal and
Regulatory Environment of Business-McGraw-Hill_Irwin
26-39 p.p.