Business Law and Social Responsibility: Legal Forms, Contracts, Ethics and CSR
Domain 9 tests the legal shell of the business and its responsibilities beyond profit. Typical items ask you to choose a legal form with reasons, identify the elements or breach of a contract, or evaluate a CSR claim critically.
Legal forms (Spain)
- Empresario individual (autónomo): no minimum capital, unlimited personal liability, taxed under IRPF.
- Sociedad Limitada (SL): minimum capital €3,000, liability limited to contributions, taxed under Impuesto sobre Sociedades (general rate 25%, reduced rates for small entities). The SL de formación sucesiva allows less capital with restrictions on dividends.
- Sociedad Anónima (SA): capital €60,000, at least 25% paid up at incorporation, shares freely transferable - suited to large projects.
- Sociedad laboral, cooperativa, comunidad de bienes: social-economy or shared-ownership alternatives.
- Selection criteria: liability, capital, number of partners, taxation, formalities, financing needs.
Contracts
- Elements: consent, object and cause; capacity of the parties; absence of vitiating factors (error, fraud, duress).
- Nullity vs voidability; breach and remedies (specific performance, termination, damages).
- Consumer protection: warranties, right of withdrawal in distance selling; employment contracts have their own rules.
Ethics, sustainability and CSR
- Triple bottom line: economic, social, environmental. Stakeholder theory; ESG criteria.
- Instruments: codes of conduct, ISO 26000 guidance, UN Global Compact, SDGs, sustainability reports.
- CSR must be verifiable; greenwashing is an unsubstantiated environmental claim used as marketing.
- Circular economy and CSR can be a source of competitive advantage, not only a cost.
Worked example
Two graduates with €8,000 must choose between autónomo and SL. Autónomo is cheap and fast, but liability is unlimited, so personal assets answer for business debts. An SL limits liability to the €3,000 contribution and allows shares to be split, but adds notary, registry and accounting costs and taxes profits at the corporate rate before dividends. Reasoning: with a low-risk service and modest turnover, autónomo is proportionate; if they will sign supplier contracts and hire staff, the SL's liability shield justifies the cost.
Traps
- Confusing the €3,000 SL minimum with the €60,000 SA minimum.
- Believing an SL or SLNE limits liability less than it does, or that the autónomo does.
- Equating CSR with charitable donation.
- Accepting environmental claims without evidence (greenwashing).