Business Law and Ethics
This domain tests the legal framework within which businesses trade and the ethical standards expected beyond strict legality. Expect questions on contract essentials, consumer protection and the difference between lawful and ethical conduct.
Core rules
- A valid contract needs offer, acceptance, consideration, intention to create legal relations, capacity and legality of purpose, given freely.
- An offer is a definite promise; a price tag or advertisement is usually an invitation to treat, not an offer.
- Consideration is what each party gives; it must have value but need not be adequate or in money.
- Breach gives remedies: damages, specific performance, rescission.
- Sale of goods law implies that goods are of merchantable quality and fit for purpose. Consumers in Malawi are protected by the Malawi Bureau of Standards (quality) and the Competition and Fair Trading Commission (unfair trading and misleading claims).
- Ethics covers codes of conduct, corporate social responsibility, fair treatment of workers, environmental care, whistleblowing and refusal of corruption under the Corrupt Practices Act.
Worked example
A shop sells a phone that fails after one week. The buyer has a receipt, which evidences the contract. Reasoning: the phone is not of merchantable quality or fit for purpose, so the seller must repair, replace or refund. If refused, the buyer reports the matter to the Competition and Fair Trading Commission. The conduct may be lawful under a strict reading of the receipt but is still unethical because it misleads and harms the customer.
Traps that cost marks
- Calling a displayed price an offer instead of an invitation to treat.
- Requiring consideration to be a fair or money amount.
- Treating everything legal as ethical, or everything unethical as illegal.
- Forgetting that minors generally lack capacity to bind themselves to a contract.