Law and Ethics in Business

Legal Memorandum

Legal Issues

The company faces both legal issues related to tort law and criminal law. A tort refers to a civil breach in which one party can sue another for damages. In the company scenario, the legal issues related to tort law that the company faces are negligence and product liability. The company’s product caused the customer an injury, where he had his arm amputated. It means the equipment was faulty, which could have been caused by the company’s negligence. Such tort issues are handled through the process of civil litigation. It involves the case being presented at a trial, and plaintiffs seek compensation for damages caused by the defendants. Criminal charges and penalties are not considered when solving tort disputes.

Legal issues related to criminal law are defined as crimes that attract a punishment according to actual laws and statutes. In this scenario, the legal issue related to criminal law that the company faces is insider trading. It is defined as a crime of opportunity taken under a moment of weakness (Henning, 2015). In this case, Steve and Victor purchase shares at the expense of the public’s weakness. It is taken as an illegal practice under the law because they had confidential information about the shares. In court, handling criminal issues starts with an investigation, arrest, charging of a crime, initial hearing or arraignment, trial, and finally sentencing. However, even after conviction, the defendant can file an appeal.


The use of technology unearths several legal issues, most of them pertaining to the use of data, creative works, evidence, and inventions. The major legal issues that businesses should be aware of are privacy, copyright, patent, and evidence gathering. An example of a copyright case happened between Vanilla Ice, two artists, David Bowie and Freddie Mercury. The duo accused Ice of using their song without stating any copyright rights in his video. The case was solved privately, and the duo was compensated (Ellison, 2018). Such issues could be handled better in the future by educating people in the creative works on how the copyright law works and the penalties it attracts if it is violated.

Ethical Issues

The major ethical issue the company is experiencing is a data breach. Although it is not legally documented, the company is responsible for protecting customers’ personal and sensitive information. The hacking of the database means that there is not enough protection or security, and the company should look at it from an ethical perspective. For example, customers’ sensitive data such as names and phone numbers were stolen, which can be used against them by unethical persons. The company further extended the issue by not disclosing it to the customers. It would be ethical, forgetting about tarnishing the company’s name, to inform those whose details had been stolen to keep them focused on protecting themselves.

To follow up after the data breach, the company could make an effort to contain the breach and assess the issue. Assessing the issue should evaluate the risks and harms that could have affected the customers. To safeguard customers; information in the future, the company, could educate its employees on security issues, update its security procedures, remote monitoring, and allow data encryption.

Ethical tests and theories have different perspectives on what is right and wrong. The major strength of using them to identify potential gaps in its ethical practices is that they provide rules that the company would base its behaviors upon. For example, if an act is considered wrong, then the company would rule it out because it is universally wrong. Another strength is that they would help the company benefit the majority of its stakeholders depending on what is perceived as right by most people. However, the weakness is that using the ethical tests and theories would result in the company doing what it feels is wrong but right to the public. The company has its own values, and hence, it might be forced to forego them if what the society believes is right differs from its values.


Corporate responsibility aims at upholding and maintaining accountability to customers, employees, communities, and shareholders. Some of the best corporate responsibility practices the company can consider are setting measurable goals, engaging its stakeholders, human rights responsibility, philanthropic responsibility, and environmental sustainability. These practices would help prevent ethical and legal issues from occurring in the future in different ways. Firstly, engaging stakeholders such as customers would help it avoid legal security and data breach issues. Secondly, human rights responsibility would avoid legal and ethical issues such as exploiting employees and customers. Lastly, environmental sustainability would help the company take an ethical step of conserving the planet.

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The company has an ethical obligation that an ethical theory should inform. I would recommend the deontological ethical theory to help it adapt to future operations. The theory states that making ethical decisions depends on moral duties and obligations (Benlahcene et al., 2018). What the company believes is its duties will drive it in making decisions in different circumstances. It is a good approach for the company because each company has its own values and what it believes is its duty. For this company, it has values, mission, and vision that drives its operations. The theory will allow it to exercise the values in its future operations as what it believes is moral and its duty. For example, if the company has a duty to make life easier through its equipment, then it should be ethical and ensure it achieves the duty. The theory is essential as it will allow the company to act in a manner it feels is right and ethical.


Benlahcene, A., Zainuddin, R. B., Syakiran, N., & Ismail, A. B. (2018). A narrative review of ethics theories: Teleological & deontological Ethics. Journal of Humanities and Social Science (IOSR-JHSS), 23(1), 31-32.

Ellison, K. (2018, April 26). Five famous copyright infringement cases (what you can learn). 99designs.

Henning, P. J. (2015). What’s So Bad About Insider Trading Law?. The Business Lawyer, 70(3), 751-776.