The government establishes rules and regulations that stipulate how owners maintain a conducive business environment. Every business owner must regularly analyze government laws. Salinas et al. (2019) indicate that regulatory awareness affects business decision making and productivity either positively or negatively. Billy must understand that these laws are intended to protect the business and its stakeholders, define unethical behavior and provide a means of solving disputes. Maintaining business success is contingent on compliance with law. Failing to recognize the necessity of laws and regulations can lead to increased legal problems (Salinas et al., 2019). Further, legal issues may risk heavy fines, lawsuits, work disruption and business shutdown (Salinas et al., 2019). Based on previous analysis, Billy Wildermon’s rafting business is facing several legal issues, which need immediate intervention. These issues include contract issues, business tort issues, agency issues, environmental issues, HR issues, and intellectual property issues.
Contract Issues
Contracts are legally binding documents that play a vital role in ensuring business transactions follow set guidelines (Valbrune et al., 2019). Contracts constitute two important aspects including the offer made and the acceptance of terms (Valbrune et al., 2019). Acceptance means that one is bound by the contractual requirements within the period transactions are designated to occur. Additionally, contracts serve as proof of details to prove the existence of a mutual agreement between two parties (Valbrune et al., 2019). During hiring, Billy must draft a contract that indicates the duties, compensation terms, benefits outline and workplace conduct. This prevents misunderstandings from arising because every employee is aware of what the employer expects during the period of employment (Valbrune et al., 2019). It is recommended that Billy upholds his end of the contract by complying with wage and benefits payment among other requirements included in the contract. Further, contracts provide security and assurance when making transactions with new partners (Valbrune et al., 2019). Billy must always emphasize on quality of products and include a liability claim for any substandard products supplied.
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Business Tort Issues
Tort law defines justice for wrongdoers for damage or harm caused to another party. Tort litigation seeks to provide redress for damages caused and often involves financial restitution rather than incarceration as found in criminal proceedings (Valbrune et al., 2019). For example, the business creates a recreational package promising full weekend coverage for all activities offered at $2500. About 50 clients pay for the package through a tourist agent. However, upon arrival they find that most of the rafts are not functional while tents are infested by bed bugs. The clients demand a refund from the tourist agent who already paid the amount to Billy. The tourist agent has a right to seek legal intervention due to a breach of trust (Valbrune et al., 2019). Intentional torts refers to situations where harm occurs because of a purposeful act, while negligence entails failing to uphold a reasonable standard of care (Valbrune et al., 2019).To prevent costly lawsuits, Billy must understand both intentional torts and negligence.
Agency Issues
The corporative company type separated the functions of ownership and management, creating the roles of the agent and principal. The agency problem arises from conflicts of interest between the manager (the agent) and the shareholders (the principal) (Boshkoska, 2015). The latter appoints the manager to act in their best interests by maximizing business profits. Notably, agency issues result from a variety of conflicts but the most prevalent is the moral hazard (Boshkoska, 2015). In this case, the agency acts differently to prevent a situation in which the organization is potentially exposed to the risk (Boshkoska, 2015). For instance, Billy might request managers to introduce a new package that will increase profits but requires a large loan amount to finance purchase of equipment. The managers may disagree with this action since it would place their jobs at risk if it were to fail (Boshkoska, 2015). Another situation is employees making decisions in their interest such as demanding more funds for boat fuel than necessary. It is recommended that Billy establish trust and loyalty with employees.
Environmental Issues
Due to an increase in river rafting activities, Billy decides to expand his business to offer camping packages. This choice could negatively impact the forests along the river Colorado. Environmental issues include deterioration of campsite vegetation, soil, river sand and water (Jennings, 2015). Granted, these human effects may be insignificant in initial years but gradually increase in ensuing years. The Clean Water Act (CWA) safeguards the water that flows through American parks thereby sustaining vegetation and animals (Jennings, 2015). Billy must analyze all parts of the CWA to identify ways in which his camping plan may breach EPA regulations (Jennings, 2015). It is recommended that all visitors must undergo a short orientation program on protecting resources and pollution. Also, Billy should review any chemicals used in cleaning recreational equipment and identify efficient disposal methods.
Human Resource Issues
Compliance is an important area that HR controls. Rodriguez et al. (2017) contend that regulation plays a vital role in addressing demands between economic concerns such as productivity and social concerns including worker rights and equality (Bright, et al., n.d.). The needs of employees are gaining increased consideration and thus HR professionals need to acquaint themselves with the current legal issues (Bright, et al., n.d.). Billy’s river rafting company employs three river rafting guides. One of these employees is a veteran who served in the navy for more than a decade. If the company were to terminate his contract on grounds of being an ex-veteran, it would lead to a violation of the Jobs for Veterans Act of 2002. It prevents companies from discriminating veterans when making decisions on hiring, benefits, job roles, layoff and promotions (Rodriguez et al., 2017). Moreover, HR must ensure that the organization hires legitimate American citizens by verifying their records on the employers' section of the E-verify website.
Intellectual Property Issues
The Intellectual Property Rights (IPR) refers to rights that protect creations, ideas and inventions through patents, trademarks and copyrights. The Patent Act of 1952 covers patents and copyrights while the Trademark Act of 1946 protects trademarks. According to Ash (2014), the US protects a fourth kind of intellectual property referred to as “trade secrets”. These constitute “all types of financial, business, scientific, technical, economic or engineering information” that the owner protects from the public (Ash, 2014). An example is the special recipe for Coke soda from Coca-Cola (Ash, 2014). An applicable example, in this case, is Billy’s business using rafting pictures uploaded on competitor sites to advertise his business. Therefore, Billy is recommended to familiarize himself with Colorado IP rights and federal IP rights. If he wishes to protect his intellectual property, he should file for protection in the US government. Ash (2014) emphasizes that intellectual rights are integral to the US economy considering the DOC reports the value of stolen intellectual property to range between $200 and $250 million annually.
Conclusion
Most business owners perceive regulation in business as a constraint to business and addition of unnecessary costs. However, complying with regulations offers performance effects and protects business owners from costly lawsuits, penalties and company closure. Also, compliance increases safety and streamlines operations by ensuring employees work in a conducive working environment. Adhering to rules and regulations builds public trust leading to better consumer relations. In smaller organizations, compliance is the role of the owner compared to larger organizations, which have a legal department. Therefore, Billy should exercise caution when analyzing each of these issues as they relate to his business. To this end, adhering to each of the identified legal issues will offer consistency and enhance values, ethics and code of conduct.
References
Ash, C. R. (2014). Protecting Intellectual Property and the Nation’s Economic Security. Landslide , 6(5). https://www.americanbar.org/groups/intellectual_property_law/ publications/landslide/2013-14/may-june/protecting-intellectual-property-nations-economic-security/#:~:text=Article%20I%20of%20the%20U.S.,that%20main taining%20the%20rights%20of
Boshkoska, M. (2015). The Agency Problem: Measures for Its Overcoming. International Journal of Business and Management , 10(1), 204-208. https://doi.org/10.5539/ ijbm.v10n1p204
Bright, D., Cortes, A., Gardner, D., Hartmann, E., Lambert, J., & Leduc, L. (n.d.). Principles of Management. OpenStax . https://opentextbc.ca/principlesofmanagementopenstax/chapter/human-resource-management-and-compliance/
Jennings, M. (2015). Cengage Advantage Books: Foundations of the Legal Environment of Business (5th ed.). Cengage Learning.
Rodriguez, J., Johnstone, S., & Procter, S. (2017). Regulation of work and employment: advances, tensions and future directions in research in international and comparative HRM. The International Journal of Human Resource Management , 28(21), 2957-2982. https://doi.org/10.1080/09585192.2017.1416555
Salinas, A., Ortiz, C., & Muffatto, M. (2019). Business regulation, rule of law and formal entrepreneurship: evidence from developing countries. Journal of Entrepreneurship, 8(2), 254-271. https://doi.org/10.1108/JEPP-03-2019-0019
Valbrune, M., Assis, R. D., Cardell, S., Taylor, T., Sappleton, N., & Phillips, K. M. (2019, September 27). Business Law I Essentials. OpenStax . https://openstax.org/books/business-law-i-essentials/pages/preface
