Teaching Ethics in Business Law Courses
Keith William Diener
Stockton University
Introduction
This chapter explains how business law courses are ideal venues for engaging students in ethical dialogue. Business law courses provide students with foundational knowledge including how the legal system works, how the law impacts people in their personal and professional lives, and the consequences of not complying with legal mandates. The proliferation of statutes, regulations, and codes through the 20th and 21st centuries, along with the increasing complexities spurring from them, result in a business environment laden with increasing liability risks. Educating students to properly manage legal risks is an important component of teaching responsible management. It is equally vital that students understand that ethical action often involves much more than complying with legal mandates. To ensure that ethical decisions are not made solely by determining legality, ethics should be integrated into any study of business law and the legal environment.
Business law is a broad and inclusive discipline spanning the spectrum of laws relevant to business practitioners. Business law courses provide students with an introductory overview of the legal regime underlying business transactions including such topics as contracts, torts, agency, employment law, business crimes, and business organizations. An introductory business law course covers primarily the domestic law of the country where it is taught. Accordingly, there are expected variations in subject matter across nations, with particular differences among common law, civil law, and Islamic law countries. In the globalized economy, it is increasingly important for students to understand the laws, cultures, and customs of their own and other countries.
The rest of this chapter proceeds as follows. The section titled “Ethical Issues in Business Law” addresses key ethical issues in business law that impact practitioners on a cross-cultural basis. The section titled “A Strategy for Teaching Ethics in Business Law Courses” is a strategy for integrating ethics into business law courses. A third section titled “Advice for Instructors” is advice for instructors. This is followed by a section titled “Developing Versus Developed Country Perspectives” which considers developing and developed country perspectives. A brief summary follows and then sample student exercises that may be used to incorporate ethics into business law courses.
Ethical Issues in Business Law
Throughout much of recorded history, legal theory is intimately connected to ethical theory. In the 13th century, St. Thomas Aquinas developed his classical natural law theory that considered man-made law in the context of natural law (ethical) principles.1 In contemporary times, natural law theory has evolved to include community-based views, but the underlying maxim of classical and contemporary natural law theories remains the same. That is, there is a connection, or overlap, between morality and (at least some) standards of man-made law. In most cases, the validity of man-made law depends on whether or not the content of a specific man-made law conforms to morality. According to natural law views, if a specific man-made law does conform to morality, then it is generally deemed valid. If it does not, it is not believed to be valid.2
A variety of theories regarding the connection between law and ethics are available today. Two predominant contemporary views of the relationship between law and ethics are: (1) the evolutionary view and (2) the posited view. The evolutionary view contends that legal norms shift along with the morality of the community.3 As the culture and morals of a jurisdiction change, so do the laws change to reflect these cultural and moral shifts. For example, in the United States, segregated public schools were legal through the early 20th century, but by the mid-20th century, as the morality of the people changed, so did the law.4 Thus, in 1954, the U.S. Supreme Court ended public school segregation, finding it a violation of the equal protection clause of the U.S. Constitution.5 Similarly, in 2015, due to changes in the morality of the people, the U.S. Supreme Court required that homosexual marriages be recognized as legal marriages by the states.6 The evolutionary view explains these changes to law by appeal to corresponding changes to morality.
The posited view contends that law is posited by lawmakers with requisite authority.7 Posited law does sometimes contain moral language and principles, which are interpreted by decision-making authorities, but it is not necessary that the content of law reflect morality. According to this view, laws do not necessarily reflect the morality of the culture at a given point in time and history. Once posited, the laws remain in force until they are repealed, superseded, or overruled by other laws. As to the legal changes regarding segregated schools and homosexual marriage in the United States, the posited view regards these changes as instances of new posited law superseding old posited law. Although this new posited law may at times cohere with contemporary moral standards, at other times, it does not. According to the posited view, the relationship between law and ethics may be displayed as overlapping circles.8
Figure 11.1 The relationship between Law and Ethics9
As shown in Figure 11.1, law and ethics overlap insofar as some areas are concerned, but do not overlap in other areas. The scope of the areas of overlap between law and ethics is perennially a topic for debate. According to the posited view, law and ethics are not necessarily connected, but sometimes there are identities between the two. In other words, sometimes law and morality are the same but at other times they are not. Regardless of which jurisprudential theory one adopts (and there are multiple variations of both the posited and evolutionary views, as well as a variety of other views), it is rarely disputed that there is an intimate relationship between law and ethics.
The rest of this section discusses laws that impact business practitioners, with a focus on those laws that are intimately connected to morality, including: anti-bribery laws, anti-discrimination laws, good faith requirements, human rights laws, corporations law, and other laws involving cultural and societal morality.
Anti-Bribery Laws
Bribery poses particularly complicated questions of both law and ethics. In the vast majority of countries, there are legal prohibitions against bribery although the punishments for taking a bribe and offering a bribe vary significantly across jurisdictions.10 For many years, the United States had the most stringent extra-territorial anti-bribery laws, that is, until the United Kingdom (UK) promulgated its anti-bribery act in 2010.11 The UK Bribery Act also has an extra-territorial reach that is even more stringent than the U.S. Foreign Corrupt Practices Act (“FCPA”).12 Both acts prohibit the bribery of foreign public officials, but the UK definition of bribery is even broader than that of the United States. The UK law prohibits acts such as “grease” or “facilitation” payments that are (under the proper circumstances) permitted under the FCPA, the UK act applies to any public or private person (whereas the FCPA only applies to foreign public officials), and it applies to the offering or accepting of a bribe (whereas the FCPA applies only to persons offering bribes).13 This creates tricky questions of which legal standard applies for companies that have locations in both the United States and UK, and do business internationally. In addition to these prohibitions against bribing foreign public officials, the United States and UK also maintain statutory and common law prohibitions against domestic bribery (bribery of their own country’s officials), and many U.S. states have anti-commercial bribery statutes.14
Although bribery is illegal in most countries it is still practiced within many countries. Business ethicists Thomas Donaldson and Thomas Dun-fee argue that bribery is not usually even an authentic norm within most countries despite that it is often practiced.15 They cite cases where bribery led to harsh punishments even in countries where bribery is regularly practiced and, in some cases, execution was the result of accepting a bribe.16 Most contend that bribery is both unethical and illegal. Never-theless, the current practice in many countries wherein one cannot effectively do business without paying a bribe, leads to many legal and ethical quandaries.17
Good Faith Requirements in Contract Law
The question of “good faith” in contract interpretation and performance arises in domestic and international contexts. Absent limited exceptions, the United Nations Convention on Contracts for the International Sale of Goods (CISG) applies to the formation, interpretation, and enforcement of international contracts for the sale of goods between buyers and sellers in different countries, when both parties reside in countries that have adopted the CISG, or when the rules of private international law lead to the application of the law of a contracting country.18 Thus, the CISG is often the default governing document for international sales contracts involving a buyer or seller in both (or sometimes just one) of the 83 countries that are party to the CISG.19 The contracting parties can opt out of the convention, and opt into another body of law, if they affirmatively choose to do so at the time of contract formation.20 Article 7 of the CISG provides that “In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.”21 When disputes arise as to the application or meaning of the CISG, the requirement of good faith in interpretation is to be utilized. This requirement perennially leads to questions of the motivations of individuals, a question which, in turn, leads to inferences of actions and circumstances. Determinations of the sincerity of motivations are rarely easily made.
In the United States (along with many other countries, such as France, Germany, and Australia),22 there is an implied obligation of good faith, but this implied obligation extends not to interpretation, but instead to the performance of contractual obligations. All parties to a contract have an obligation to act in good faith in their attempts to complete their obligations under a contract. Both the Restatement of U.S. contract law23 and the Uniform Commercial Code (UCC)24 impose obligations of good faith. The Restatement and UCC provide that good faith applies to both the performance and enforcement of contracts.25 Regardless of whether the good faith obligation applies to interpretation, performance, or enforcement, the motivations of individuals, whether they are internally acting in good or bad faith, correspond to questions of whether actions are ethical because one intends to do the right thing or because the consequences are good. Consequentialist theories, such as utilitarianism, hold that the ethical action is a function of the consequences achieved.26 Most deontological theories, on the other hand, require that one act upon duties, and regardless of the consequences, if one comports one’s behavior with moral duties, then one has acted ethically.27 The good faith requirement imposes an internal duty on contracting parties—one that cannot be perceived directly but can only be gleaned from the actions and circumstances surrounding the contract.
Anti-Discrimination Legislation
Employment discrimination is pervasive across time and location. However, there is significant diversity of norms as to the treatment of minorities in different cultures. In order to combat certain types of employment discrimination, the U.S. federal government legislated Title VII to the Civil Rights Acts of 1964, which makes it illegal to discriminate against individuals in employment on the basis of race, sex, color, religion, and national origin.28 Other federal laws make it illegal to discriminate in employment on the basis of disability, genetic information, age, pregnancy, and other protected classes.29 Title VII extends to U.S.-owned and operated businesses in other countries with 15 or more employees.30 Consequently, in countries within which women or religions or social classes (such as sex or race) are treated subserviently, there is significant risk of discrimination for U.S.-owned and operated businesses, and thus liability risk.31
What is common practice in one country may be considered discriminatory in another country. Some may consider the United States to be “legislating morality” across national boundaries by prohibiting discrimination in the hiring, firing, and terms and conditions of employment. Yet many forget that the Civil Rights Act of 1964 was created because of gross discrimination occurring in the United States prior to this time, much of which arose alongside the long history of slavery and female subservience in the country.32 The Act was largely a response to cultural shifts, which allowed minorities more rights than they previously had. Although minorities were given more rights, prior to Title VII, there was not an adequate mechanism for enforcing those rights. The United States has come far from its own Constitutional roots, which held that a slave was to be counted as only three-fifths of a full person.33 The ethical issues pertaining to discrimination may also include questions of respect for human dignity and persons regardless of their superficial immutable characteristics.
Human Rights Treaties
Human rights are incorporated into a variety of legal and ethical instruments. The Universal Declaration of Human Rights (Declaration) was adopted by the United Nations in 1948 largely in response to the genocide and related atrocities of the Nazi party during World War II.34 It aimed to declare to the world that such atrocities are beneath the standards of humanity, and that all human beings have rights, including rights to life, liberty, and to be free from torture.35 Subsequently, many regions of the world began discussing regional human rights treaties. Regional human rights treaties were thereafter enacted for Europe,36 America,37 and Africa.38 These treaties apply solely to their stated regions, have independent enforcement mechanisms, and often include rights similar to those embodied in the Declaration.39
Many ethicists and philosophers consider human rights, their ethical origin, and their prioritization. Henry Shue40 and Patricia Werhane,41 for example, are two leading human rights theorists. They both distinguish between types of rights to attempt to provide a system for prioritizing the various rights. Shue distinguishes between basic and nonbasic rights, whereas Werhane distinguishes between primary and secondary rights. Shue’s and Werhane’s distinctions are so similar that we shall consider them together. Basic or primary rights, such as the right to life, trump the nonbasic or secondary rights, such as the right to monetary income. Basic or primary rights are those things that are essential to the enjoyment of other rights, without which life would be unlivable or intolerable. Nonbasic or secondary rights are the other rights, which are not essential, but each person is still entitled to. If one sincerely thinks about what rights are absolutely necessary to living a tolerable life, the list of basic or primary rights is relatively small, including the right to be free from torture and the right to subsistence.42 When rights come into conflict, such as when certain rights of different groups will be affected by an action, any basic or primary rights, such as the primary right to life, take precedence over nonbasic or secondary rights, such as the right to holidays with pay.43
The Law Governing Corporations
In contemporary times, corporations are attaining increasingly large amounts of power and accumulating massive amounts of wealth. However, this was not always the case. Historically, corporations or their predecessors, joint stock companies, were limited in their permissible purposes, and were viewed skeptically due to scandals and fraud surrounding many such investments.44 In some early cases, investors would provide money for a joint stock company, and the collectors of the money would steal, run off, and disappear with the investors’ money.45 Prior to television and Internet, it was frequently difficult to thereafter locate the fraudsters who took the money and ran. Owing to circumstances such as this, the UK made corporations illegal under its Bubble Act of 1720.46 This Act criminalized the creation of a corporation until its repeal in 1825.47 Nevertheless, in the United States, during this time period and beyond, corporations developed from limited public purpose entities to general entities with broad and flexible purposes.48 Traditionally, even in the United States, corporations were created only by permission of state and only when needed to achieve some public purpose, such as building bridges.49 Over time, however, corporations evolved from entities that were required to serve a limited public purpose to entities that could be formed for any legal purpose, including the purpose of the pursuit of profit.
The question of the purpose of corporations today continues to be debated. In the 1930s, Columbia professor Berle and Harvard professor Dodd debated the question of whether corporate powers were to be exercised for the benefit of only the stockholders or the community more broadly.50 This historic discussion in the Harvard Law Review is repeated by different commentators, at different times throughout history. Most recently, it arises again in the form of the “shareholder-stakeholder” debate wherein shareholder theorists typically contend that the corporation must give primacy to stockholder desires, whereas stakeholder theorists contend that primacy should be given to stakeholders, including employees, communities, stockholders, and others that may affect or be affected by the firm.51 Over the past century, the laws have shifted in over half of the U.S. states to allow corporations to consider stakeholders (“corporate constituents”) in their decision making.52
Other Laws Involving Cultural and Societal Morality
In recent years, many difficult legal decisions have been made, which address issues that would traditionally be considered immoral. Courts have also struggled with complex issues pertaining to the just distribution of limited resources. As we progress further into the 21st century, more and more decisions that address humanity’s traditional morality and the ethics of resource allocation will inevitably come to the forefront. In the last decades, many countries have made controversial decisions about the legality of euthanasia and physician assisted suicide (PAS),53 marijuana and other drug legalization,54 homosexual rights and marriage,55 the death penalty,56 and the provision of health care resources to citizens.57 All of these decisions have had a direct impact on businesses, individuals, and the moral culture of society and the world. The complexities of the relationship between law and ethics continue today, with each impacting the other in ways not fully perceivable to finite human minds.
A Strategy for Teaching Ethics in Business Law Courses
Pedagogically, ethics should be introduced as a thematic topic and integrated into all major aspects of the business law course. Proposed methods for this pedagogical process are outlined in the following paragraphs.58
Ethics as a Thematic Topic
One of the first subjects an instructor should discuss with the students is ethics. As a general rule, the instructor should spend at least one or two classes introducing the students to ethical theory, definitions of key concepts, and how to apply ethical theories to hypothetical business situations. It is useful to begin the study of ethics by using thought exploration exercises, such as the Trolley Problem59 (and its various iterations) to elicit student thinking about questions that have no incontrovertible right or wrong answer. Exercise 1 may be used during this introductory phase of the course to help the students explore how ethics plays a role in their personal and professional lives.
When introducing the topic of ethics in a business law course, the discussion should generally be limited to major theories and the most prominent theorists. These theories include fundamentalism, virtue ethics, deontology, utilitarianism, and distributive justice, as portrayed by prominent theorists, such as Aristotle,60 John Stuart Mill,61 Immanuel Kant,62 and John Rawls.63 An instructor has the discretion to introduce those ethical theories the instructor deems most important, but, at a minimum, these core concepts and theories should be introduced. Although most students are quite capable of memorizing the basics of each theory, many students struggle with the application of the theories. For example, a student has little trouble remembering that utilitarianism involves the “greatest good for the greatest number,” but when asked to apply utilitarianism to a given scenario, the student may have difficulties articulating how the student reached the conclusion that “action X” will result in the greatest good for the greatest number. Business students are particularly prone to jump directly to conclusions without explaining or being able to articulate their reasoning processes. To combat this common deficiency, Exercise 2, and other similar hypotheticals, may be introduced during the early phases of the class and utilized throughout the semester. The aim of these exercises is to aid students with making independent ethical decisions, and to understand and utilize the theories and concepts. Hypotheticals are aimed at helping students provide more comprehensive explanations for their decisions.
Once the students have applied the theories in the first few classes, the instructor should repeatedly return to questions of ethics and provide students ample opportunities to practice applying those theories. By requiring the students to continuously practice not only legal application, but also ethical application, they begin to think in terms not only of complying with the law, but also in terms of ethics. They are trained to ask not only “Is this legal?” but also to ask “Is this ethical?” and by doing so, they are better prepared to address the difficult situations they will inevitably face in business settings.
Integrating Ethics in Major Aspects of the Course
An instructor should integrate ethics into business law courses by incorporating ethics into classroom discussions, classroom activities, and through reading, written, and oral assignments. In an idyllic classroom, the instructor and students engage in a semester-long dialogue regarding the relationship between ethics and law, and the broader societal impact of law on business and culture. Having introduced the ethical theories and how to apply them early in the course, the instructor should recurrently return to questions of ethics.
When analyzing a breach of contract case, for example, an instructor may wish to discuss how breaches of legal contracts differ from promises. The similarities and differences between promise-keeping (as a moral norm) and abiding by the terms of legal contracts, may be discussed.64 Hypothetical exercises, such as Exercise 2, may be used throughout the semester to provide students with recurrent opportunities to think about ethics and apply ethical theory to situations they may face in the business environment. The relationship between law and ethics should consistently be raised in the context of cases, problems, and as it relates to the various fields of law (e.g., torts, property, crimes).
An instructor should utilize classroom activities to give students the opportunity to explore law and ethics by doing. It is generally agreed, that participatory teaching methods, such as group discussion, practice, and teaching others, lead to better student retention of the material.65 There are a variety of group activities, such as Exercise 3, that instructors could utilize to capture the legal and ethical dimensions of business within carefully crafted and designed activities.
Finally, an instructor should incorporate ethics into the reading, written, and oral assignments. Most introductory business law textbooks include only one chapter specifically addressing business ethics. This chapter can be supplemented by strategic choices of case studies with ethics implications. The classic case of Dodge v. Ford,66 for example, makes for a great discussion about the duties to shareholders. The more recent case of Revlon, Inc. v. MacAndrews & Forbes Holdings67 also fits that discussion. By assigning case studies with ethical content or implications, students are constantly engaging the material from both legal and ethical perspectives.
Case studies go hand-in-hand with written case brief assignments. Case briefs are short summaries of legal cases intended to help students separate essential from nonessential information and to distinguish among the elements of a case, including facts, issues, outcomes, and reasoning. Exercise 4 is an example of the added comments section to a case brief assignment. The comments section provides students with the opportunity to reflect upon the cases they read from an ethical vantage point.
Written and oral assignments should also incorporate ethics. Exercise 5, the final group project, entails both a written component (an essay) and an oral component (an oral presentation). The key to successfully utilizing this assignment is to strategically select essay and presentation topics with both legal and ethical content. By incorporating ethical issues into the final group project, the instructor has both introduced ethics as a thematic topic at the beginning of the course, and finished the course with the study of both law and ethics.
Advice for Instructors
This section provides three points of advice for instructors seeking to integrate the study of ethics into business law courses. The first is to embrace virtue, but not infallibility. It is those mistakes that we make in life that give us wisdom and the ability to speak from experience as to the value of embracing virtues and principles that guide our actions in life. Sharing with the students (appropriate and selective) mistakes of the past and how the instructor learned from those mistakes will likely create a more open and honest environment, as well as humanize the instructor.
The second is to constantly reinforce that legal compliance is not to be conflated into ethical action. The instructor may wish to stress the fact that just because the law permits certain actions does not mean that those actions should be taken (even if such actions are potentially profitable). In support of this point, the leading views of shareholder theory restrict profit seeking by both legal and ethical concerns.68 Students should be taught that law and ethics have commonalities, but that ethics may prohibit something that the law may condone.
Finally, flipping the classroom can lead to excellent results. Flipping the classroom involves requiring the students to do reading and listen to recordings of the lectures outside of the classroom sessions. There is more time for problem-solving exercises and activities during the classroom meetings when the lecturing is done outside of the classroom sessions. Flipping the classroom can lead to excellent results as long as the students are doing their work outside of the classroom and the class size is small enough to manage the interactive in-class sessions.69
These points in mind, there is no single “right” way to teach ethics in a business law course. Every semester and group of students is different. Experiment and see what works best for each class.
Developing Versus Developed Country Perspectives
Businesses in developing countries and businesses in developed countries should be particularly cognizant of the legal, cultural, and ethical differences of the other.
Developing Country Perspectives
The legal, cultural, and moral differences between developing countries and developed countries should always be considered. From a developing country perspective, ignorance of the differences among developed countries could lead to legal liability and loss of clientele. Businesses in developing countries that contract with U.S. and UK businesses must be particularly cognizant of the extraterritorial reach of laws governing these countries. Businesses in developing countries should also be aware of the societal pressures that sometimes lead to businesses in developed countries to stop contracting with companies that do not conform to their ethical ideals. When U.S. or UK companies are contracting with businesses in developing countries that permit child labor or maintain terrible working conditions, once these items are publicized, often the U.S. or UK company is pressured into ending business relationships with these businesses. Or, in some cases, the pressure may extend to force the businesses to change their operating procedures to conform to the expectations of Western morality (an often expensive and time-consuming endeavor).
Developed Country Perspectives
Businesses from developed countries that seek to transact business in developing countries should be particularly cognizant of infrastructural, cultural, ethical, and legal differences. Often, developing countries have a much slower legal process that is backlogged with cases, making it difficult to enforce the terms of a contract or pursue other legal remedies. For this reason, international contracts frequently include arbitration clauses, which require disputes between parties to be resolved in binding arbitration instead of through the domestic courts of a given nation.70 The lack of infrastructure in certain regions of some developing countries can also make it difficult for technology-reliant businesspeople to adapt. Gender and racial roles in some countries may be anathema to liberalized Western societies that espouse equal rights. Developed countries should be particularly sensitive to the differing legal, cultural, and moral viewpoints of developing countries.
Whether a business comes from a developed or developing country, abiding by certain norms will aid in growing a successful international business. These norms include honesty, integrity, and fair dealing. Regardless of the locus of business transaction, honest and fair business people with integrity are better equipped to grow their businesses on an international scale.
Summary
Although intimately related, ethical action and complying with the law are not always identical. Complying with the law generally sets the minimum societal expectations upon an individual, but merely because one legally can do something does not imply that one ethically should do it. There are many instances of legal decisions and mandates that diverge from our ethical intuitions. Thus, ethical analysis of legal decisions and mandates is a prime technique for communicating the distinction between law and ethics to students. By both addressing ethics as a thematic topic and by integrating it into the classroom by use of hypotheticals, exercises, and assignments, the students will understand the differences between and similarities of law and ethics. An understanding of this distinction will better equip students to face difficult business decisions by asking not only the legal question, “Can we legally do this?” but also the ethics question, “Is this the right thing to do?” On both domestic and international levels, questions of ethics permeate law and business transactions. By understanding and acknowledging cultural, ethical, and legal differences within and among countries, students will gain awareness and an understanding of the broader transactional landscape.
Suggested Exercises and Projects
Exercise 1: The Notecard Activity
Sample Student Assignment
On one side of a notecard write the following:
One ethical issue you have faced in school or work;
What that ethical issue was and how you chose to address it; and
Why you chose to address the issue the way you did (what were your reasons for choosing the action you chose).
On the other side of a notecard write the following:
One ethical issue you have faced in your personal life (outside school or work);
What that ethical issue was and how you chose to address it; and
Why you chose to address the issue the way you did (what were your reasons for choosing the action you chose).
Tips for Instructor
The notecard activity involves handing out a 3×5 notecard to each student, and asking students to write ethics issues on the notecard (a larger notecard or slip of paper could work in lieu of the 3×5 notecard). The instructor should ask the students not to write their names on the notecards, so that they remain anonymous and feel as though they can be completely open without fear of negative repercussions.
The instructor may wish to emphasize the need to explore and provide a full explanation of the reasons for the action the student took when faced with each ethical quandary (step 3 of the assignment).
After reviewing the notecard submissions, in subsequent classes, the instructor may wish to discuss the ethics issues the students wrote about with the entire class. The exercise is anonymous so the instructor need not worry about embarrassing the student-authors.
Exercise 2: Written Hypotheticals
Sample Student Assignment
You work for a hospital as a hiring manager. You are tasked with hiring a new front-desk receptionist for your hospital. The committee narrows the candidate pool down to three finalists. One is an Asian woman, and two are white men. You review the three candidates’ resumes and determine that the Asian woman is the best qualified for the position. She has more education, more experience, and better references than the other two candidates. You bring the Asian woman in for an interview during which she uses very simplistic English, and has trouble understanding your questions during the interview. You are concerned that patients and others entering the hospital, and calling the hospital, will have trouble communicating with her. You also interview the other two candidates and their English is acceptable. You are also concerned that if you don’t hire the Asian woman, given her better qualifications, that you may face a discrimination lawsuit. What should you do? What are your legal and ethical concerns?
Tips for Instructor
The instructor may wish to put the hypothetical on a power point slide for the entire class to see, to write it on the board, or to distribute several hypotheticals to the students as a handout.
When instructing the students, the instructor may desire to emphasize the application of certain ethics theories. For example, the instructor could ask the student what a utilitarian would say is the right thing to do and why? The instructor may also desire to inquire into how a deontologist would answer the question differently?
Even if a student poses an answer that is not entirely accurate, a wrong answer is a great starting point for a class discussion.
Exercise 3: Business Organizations In-Class Activity
Sample Student Assignment
Break up into groups of four to five students per group.
As a group, develop a new business concept, name, and slogan.
Develop a normative core for your new business concept by filling in these blanks:
The company ought to be governed (blank)...
Managers ought to act to (blank)...
The foundational principles of this company are (blank)...
Determine the type of legal entity you will form (e.g., LLC, LLP, Corporation).
Discuss the legal requirements and risks of forming this company.
Develop a corporate initiative in line with your normative core
Identify the stakeholders and how this initiative will impact stakeholders
Discuss the legal risks (e.g., contract, tort, agency) associated with this initiative.
Tips for Instructor
The students are first required to develop a new business concept, which can be any type of business, so long as it is creative and appropriate for classroom discussion (anything goes from restaurants to new technology development). Along with the concept, students should develop a name and slogan for their company.
Once the concept is developed, students are asked to develop a “normative core” for their business. The term “normative core” comes from the stakeholder theory of R. Edward Freeman,71 and involves propositions regarding the core values of a company. Ask the students to develop such core principles by filling in the blanks of sentences such as the following (these sentences borrow from Freeman):72
The company ought to be governed (blank)...
Managers ought to act to (blank)...
The foundational principles of this company are (blank)...
The students fill in the blanks with phrases such as “the promotion of environmental stewardship” or “green energy” or even “by principles of equal rights for women,” or any variety of other social ends.
The instructor may desire to assign each group of students two different types of business entities to consider (e.g., one group may consider a C-Corporation versus a Sole Proprietorship, and another group may consider a Limited Liability Company versus a General Partnership). A variation on the previous assignment is to require the students to choose one of the two types of entities as the type of entity for their company, and to provide three reasons for choosing the entity type they choose over the other. Once they have chosen their entity type, the students should outline the steps required to form that entity under law, and what additional business steps they need to take to start doing business.
The final step of this project is for the students to develop an initiative, such as a marketing campaign or recruitment strategy, that accords with their normative core, and to discuss how it will impact stakeholders and what legal risks (such as tort, contract, agency, and employment risks) may be involved in their initiative. This business organizations project gets students thinking about entrepreneurship and how values can be incorporated into business development and strategy.
Exercise 4: Case Briefs and Hybrid Case Briefs
Sample Student Assignment
(This is to be added to your typical case brief assignment.)73
At the end of your case brief, please include a paragraph titled “comments.” The comments section gives you the opportunity to provide your perspective on the case, including analysis of the ethical implications of the case. The comments section gives you a voice to analyze and discuss the case. You may (but need not) choose to analyze whether the majority opinion in the case was “right” or “wrong” or whether you agree with the decision and why. The comments section provides you an opportunity to engage in thoughtful and critical analysis and the opportunity to practice making value judgments and applying and explaining ethical theories and perspectives.
Tips for Instructor
The students may be assigned multiple (take-home) case brief exercises that involve summarizing legal cases, and breaking the summaries up into relevant parts (e.g., facts, issue, outcome, and reasoning). Generally, briefs are limited to two double-spaced pages, including the section for comments at the end of the brief.
An instructor may wish instead to incorporate hybrid case briefs. These assignments require a one-page ethical analysis of the assigned case (on the page following the traditional case brief assignment). Hybrid case briefs allow students to first, understand and distinguish the elements of the legal case, and, second, to analyze the case from an ethical perspective. Hybrid case briefs provide students more space than traditional case briefs for ethical reflection. Whereas the comments section gives the students a paragraph to analyze the case, the hybrid case brief gives the students a page (or more) to do so.
Exercise 5: Final Projects
Sample Student Assignment
Research the U.S. Supreme Court case, Citizens United v. FEC (2010), and explain its ruling. Was the court’s majority decision the right one? Was the dissent correct? Explain the ruling and why you agree or disagree with the majority and dissent. Analyze from legal, ethical, and business perspectives.
Tips for Instructor
The final group project involves both an essay and oral presentation. It requires analysis of both legal and ethical perspectives regarding key issues in business law. The instructor should give essay and presentation format and length instructions along with the question (e.g., a 20-page paper, double spaced, Times New Roman font, etc.; a 30-minute presentation with a power point, etc.).
At the beginning of the semester, the instructor may wish to assign students to groups for their final project (these need not be the same groups that are used for in-class activities), and the instructor may wish to assign each group a different topic for the final project.
The integration of ethics into this final project comes from strategically choosing final project topics that involve legal and ethical dimensions. For example, having students analyze and critique the famous U.S. Supreme Court case Citizens United v. FEC (which allows corporations to spend money on independent political expenditures),74 involves a variety of broader social issues that are ripe for ethical analysis. By analyzing the business, legal, and ethical implications of Citizens United, and by devising arguments supporting or against the opinion, the students are again given the opportunity to practice both legal and ethical analysis in their final projects.
3 Dworkin (1986); Diener (2006, 19–37).
4 Plessy v. Ferguson, 163 U.S. 537 (1896).
5 Brown v. Board of Education of Topeka, 347 U.S. 483 (1954).
6 Obergefell v. Hodges, 135 S.Ct. 2584 (2015).
7 Hart (1997); Diener (2006, 12–18, 38–42).
9 Figure 11.1 is adapted from Mann and Roberts (2010, 4). However, where Mann and Roberts (2010) utilize a similar diagram to display the relationship between law and morals, I use it here to display the relationship between law and ethics.
10 Donaldson and Dunfee (1999, 45–63).
11 Foreign Corrupt Practices Act of 1977 (FCPA), 15 USC. § 78dd-1, et seq.
12 United Kingdom Bribery Act of 2010 (2010 Chapter 23).
13 Gauci and Fisher-Bristows (2011).
14 The Model Penal Code (MPC), for example, has provisions for both bribery (§240.1), and commercial bribery (§224.8). The UK Bribery Act of 2010 prohibits domestic and foreign bribery.
15 Donaldson and Dunfee (1999, 45–63).
16 Donaldson and Dunfee (1999, 55).
17 Donaldson and Dunfee (1999, 53).
18 CISG, Article 1. Some countries, including the United States, have filed a reservation to Article 1(1)(b), stating that they will not apply the Convention the rules of private international law would otherwise lead to the application of the CISG.
19 UNCITRAL (n.d.) (83 members are party as of August 2015).
20 CISG, Article 6 provides that “The parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions.”
21 CISG, Article 7; Diener (2008, 4–5).
23 Restatement (2d.) of Contracts §205 provides that “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”
24 UCC §1–304 provides that “Every contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement.” Furthermore, UCC §1-201(20) defines good faith as “(20) ‘Good faith,’ except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.”
28 Title VII to the Civil Rights Act of 1964, 42 USC. 2000e-2(a), et seq.
29 The protections arise from such acts as: The American With Disabilities Act, The Age Discrimination in Employment Act, the Equal Pay Act, the Reha-bilitation Act, the Genetic Information Nondiscrimination Act, the Pregnancy Discrimination Act, and the Civil Rights Act of 1991 (some of which were intended to amend Title VII).
30 Title VII to the Civil Rights Act of 1964, 42 USC. 2000e(b) (as amended by the Civil Rights Act of 1991); EEOC Guidance (1993).
31 Title VII to the Civil Rights Act of 1964, 42 USC. 2000e, et seq.; Diener (2013, 30–50).
32 Title VII to the Civil Rights Act of 1964, 42 USC. 2000e, et seq.
33 US Constitution, Art.1, §2, ¶3 (as originally enacted).
34 Universal Declaration of Human Rights (UDHR), Preamble.
35 UDHR, Articles 3 and 5.
36 European Convention on Human Rights (1953).
37 American Convention on Human Rights (1969).
38 African Charter on Human and Peoples Rights (1986).
43 Shue (1996, 19); Werhane (1985); Fort (2014, 125–127).
48 Mallor (2010, 1008–9); Smith (1998).
51 Smith (2003); Hasnas (2013, 47–57).
53 Gonzales v. Oregon, 546 U.S. 243 (2006).
55 Obergefell v. Hodges, 135 S.Ct. 2584 (2015).
56 Furman v. Georgia, 408 U.S. 238 (1972); Gregg v. Georgia, 428 U.S. 153 (1976).
57 National Federation of Independent Business v. Sebellius, 132 S.Ct. 2566 (2012).
58 The exercises referenced in this section are outlined in detail at the end of this chapter.
65 The Learning Pyramid (n.d.).
66 Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919).
67 Revlon, Inc. v. MacAndrews and Forbes Holdings, 506 A.2d 173 (Del. 1986).
68 Friedman (1970); Hayek (1967, 300–12).
73 Case brief assignments are fairly standard in many business law textbooks. For an example of a case brief assignment, see Miller (2014, A1-A2) (Appendix A, 1–2).
74 Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
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