Business Law and Ethics
Business law and ethics
This domain tests the legal rules that frame business transactions and the ethical standards expected beyond strict legality. Questions often present a scenario and ask whether a business acted lawfully and ethically.
Core rules and concepts
- A valid contract normally needs offer, acceptance, consideration, intention to create legal relations and capacity. Terms may be express or implied; misrepresentation can make a contract voidable.
- Consumer law requires goods to be of satisfactory quality, fit for purpose and as described; misleading advertising and unfair terms are prohibited. Product safety and labelling rules apply.
- Employment law covers written particulars, minimum wage, working time, health and safety, equality and protection from unfair dismissal. Competition law prohibits anti-competitive agreements and abuse of dominance.
- Intellectual property: copyright, patents, trade marks and design rights protect different creations. Data protection limits how personal data is collected, stored and shared.
- Ethics goes beyond compliance. A code of conduct, whistleblowing channel and ethical supply-chain audit help, but ethics is judged by behaviour under pressure, not by statements.
Worked example
A café advertises "free-range eggs" but buys caged eggs. It has breached consumer protection law by misleading customers and may face contract claims from customers who relied on the description. Ethically, it has deceived stakeholders and damaged trust even if it argues the price was low. A supplier audit and honest labelling would address the root cause. Reasoning: legality sets a minimum; ethical analysis asks who is harmed, whether the practice is transparent and whether it would survive public scrutiny.
Traps that cost marks
Do not treat every unethical act as illegal. Do not say a contract is valid without consideration. Do not confuse patents (inventions) with trade marks (brand identity). Do not assume a code of ethics guarantees ethical behaviour. Do not ignore remedies: compensation, replacement, injunction or reputation loss.