BUS2150 Module 4 - Key Concepts in Criminal Law and Tort Law
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Nexford University**We aren't endorsed by this school
Course
BUS 2150
Subject
Law
Date
Dec 18, 2024
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29
Uploaded by JudgeAnteater2924
Section 1 of 5IntroductionModule 4Key Concepts in Criminal Law and Tort LawWelcome to Module 4, Key Concepts in Criminal Law and Tort Law. Torts and crimes are two of the major areas of law that business professionals should study. Breaking the law can involve simple activities such as driving over the posted speed limit, or it can be much more seriousand cause harm or even the death of the victim. Torts are wrongdoings thatharm a person or their property, but do not rise to the level of criminal activity. It is important for everyone to understand the basics of criminal and tort law in order to avoid causing harm to others. It is also important tounderstand how crimes and torts occur in business settings so business professionals can avoid causing harm to employees, clients, stockholders, and the communities they serve. No one goes to their place of employmentexpecting to witness criminal or tortious activity, but the fact of the matter is that both types of wrongdoings occur in the business world more than we may like to admit. Some wrongdoings in society, such as violent crimes, are very apparent. We read about them in the news and at times even see them play out live on our televisions. Business wrongdoings however can be much harder to detect. Sometimes they involve elaborate schemes and long periods of time to play out. Wrongdoings in business usually cause monetary harm rather than physical harm, but that does not make them any less wrong. In this module we will explore the basics of crimes and torts and then apply those concepts to business applications.
Consider the following guiding question for this module, and review the introduction.Why is an understanding ofcriminal and tort issues bothin general and in businesssettings imperative to besuccessful in today’s globalbusiness world?Listen to the module introduction, and follow along with the text below.A lot of what the law is designed to do is to correct wrongdoings that take place in our lives. In the last module, we looked at contracts and concludedthat when a breach occurs, that is a wrongdoing by one party for which theaggrieved (harmed) party can look to the Court for relief. In this module, we will explore different types of wrongdoings that involve harm to a person and/or their property.There are many ways that wrongdoings occur in our daily life and in daily business operations. These are called white-collar crimes and business torts. In recent years, technology, especially an increased reliance on all things “cyber” has brought about the development of new types of crimes and torts based on the use or misuse of technology. We will focus on business related crimes and torts and well as their cyber counterparts in thethird section of this module. In the first two sections of this module, we will define and discuss crimes and torts in general, as a basic understanding of those concepts is necessary before trying to understand how they apply to business situations.The law is designed to provide us with a minimum level of what is acceptable behavior. When one’s actions fall below that minimum level,
the law recognizes that behavior as some sort of wrongdoing. The law has a limited number of ways to punish wrongdoings, depending upon the severity of the action and the intent of the party engaging in the activity. Inthis module, you will learn what remedies the law has for wrongdoings against a person and/or their property. ContinuedAbout the assignmentsIn this module, you will have one graded assignment.bulletRecognizing Actionable Business Crimes and TortsIn addition to this assignment, you will have many resources and practice opportunities. While these practice opportunities are not graded, we suggest that you use them to help reinforce the module information and to help you prepare for your graded assignment. The work you do in this module will help you build toward this important course competencies:bulletApply the legal environment to domestic and international business scenarios.bulletAnalyze organizational scenarios involving legal issues such as contract law, employment law and intellectual property law and apply appropriate legal concepts to specific fact patterns.
You will achieve these competencies by building essential skills. Continueto learn how your assignment will prepare you for success in this course.ContinuedWhat’s next?Now that you have a sense of what you’re going to accomplish by the end of Module 4 and how it connects to thebigger picture of your skill-building and course success, let’s get started with the first topic in this module.Section 2 - Introduction to Criminal LawSection 2 of 5Introduction to Criminal LawCrimesare wrongdoings that have a negative impact on society. Think about homicide, which is the taking of another person’s life. When a homicide occurs, of course, the person killed is the victim. However, the victim was someone’s child, friend, neighbor, coworker, employee, mother, father, sibling, aunt, grandfather, etc. Society is said to be victim when a crime occurs because everyone is worse off for the crime having occurred.Because the crime is a wrongdoing against society, society will bring suit against the suspected wrongdoer. In a criminal case, we usually see a representative of the state, such as an attorney general or state prosecutor, bring suit on behalf of the public (called the people in legal speak), so a typical case would be something like State of Florida v. John Smith. Whenyou see State of, County of, or United States versus a defendant, that is a pretty good sign that you are looking at a criminal case.There are two basic levels of crimes in the US legal system: misdemeanorsand felonies. A misdemeanor is a crime that can carry a punishment of up to and including one year of imprisonment. A felony is a crime that can carry a punishment of more than one year of imprisonment. Depending on the crime involved, in addition to prison time, felonies may also carry
other punishments such as the inability of the convicted person to vote or enter certain careers in law enforcement or those involving the handling ofmoney. In the US system, the highest crimes are called capital offenses. Capital offenses are murders that involve extenuating, particularly heinousactions such as kidnapping, rape and mutilation.Review ResourceReview the following resources to learn more:This resource defines felonies and misdemeanorsRead ArticleWhat's the Difference Between a Misdemeanor vs. Felony?Click for resourceThis resource shows which states currently have a capital punishment statuteRead articleStates and Capital PunishmentClick for resourceContinuedGenerally, crimes are punishable by fine, imprisonment, or a combination of the two. However, in several US state jurisdictions, capital offenses can be punishable by death. In very limited circumstances, the death penalty is a potential punishment for capital offenses under US federal law. One suchsituation is when a defendant causes murders because of the detonation of a bomb. The Boston Marathon bombing of 2013 is a recent example of USfederal law allowing a convicted defendant to be sentenced to the death penalty. The penalties for being convicted of a crime are serious. The imposition ofthe death penalty or even imprisonment involves denying an individual their freedom, a right that is guaranteed under the US Constitution.
Because of this, there is a very high burden placed on the state to prove their case against the defendant if the state is going to take that person’s freedom away. The state must prove every element of the crime “beyond areasonable doubt” before a defendant can be found guilty in the eyes of thelaw and sentenced to prison. Beyond a reasonable doubt is a concept that is interpreted by courts, but simply stated it means that if all the known facts are presented to a judge or jury of the defendant’s peers, the only reasonable conclusion they can come to is that the defendant perpetrated the crime. Beyond a reasonable doubt means that if there is any other reasonable explanation for how the crime occurred, the defendant must be found not guilty. This is controversial because many would argue that such a high burden of proof means that some guilty people may walk free on technicalities or if the state does not have sufficient evidence for ALL elements of the crime. This is true; there are people who commit crimes and are not convicted by the legal system. It also means that there are people who are innocent but have been convicted and are in prison. The system is not perfect, but overall, it is effective. Let’s take a look at what we are talking about when we say elements of a crime. There are two elements that are common to all crimes. bulletThe first is mens rea, a Latin term for the guilty mind.bulletThe second is actus reus, Latin for the guilty action.The state needs to prove that the defendant had the requisite guilty mind and committed an action that society deems to be a crime. Merely telling someone that you would like to rob a bank is not a criminal action and does not show that you have an evil intention to do so.
A simple example is when someone points a loaded gun at another person and pulls the trigger. The gun discharges and the person the gun is pointed at is shot and killed. A legal argument that mens rea and actus reus is as follows: If a person of sound mind picks up a gun, loads it, points it at another person, and pulls the trigger, he or she must have intended the consequences that normally follow from such action. In other words, theshooter must have intended to cause grave bodily harm or death in the situation because rational people know that such actions usually cause death or serious injury and that shooting someone unjustifiably is a crime.Review ResourcePlease review the article, Elements Of A Crime: Mens Rea And Actus Reus.● After review, what are your thoughts about why mens rea and actus reus must occur at the same time in order for the elements to be fulfilled?Read Article
Elements Of A Crime: Mens Rea And Actus ReusClick for resourceContinuedOnce it can be proven that mens rea and actus reus exist, now the prosecution can move on to proving the specific elements of the crime involved. Each crime has its own set of elements that must be proved. A good example of this is burglary, which is the intentional breaking and entering of the home or business of another with the intention of committing a felony therein. Each element, including the breaking and entering of the home or business of another person, and the intention of committing a felony inside (usually the theft of valuables such as jewelry, cash, or electronics), must be proven if the defendant is to be found guilty of the crime.Crimes come in a variety of forms, and most people are familiar with someof the most common. This is probably because we hear about crimes on television, in the news, on the radio, and in motion pictures. Criminal activity is interesting to people in general. In US markets and abroad, television shows and movies based on criminal activity are popular with audiences and present lucrative advertising opportunities for business. Violent crimes such as robbery, homicide, and kidnapping are popular topics for viewers. In recent years, more business crimes, known widely aswhite-collar crimes such as identity theft, the hacking of business systems, and cyber harassment, have become more mainstream. These will be discussed in more detail in the third topic of this module.Note: In case you are wondering about crimes that take place by using technology, we have not forgotten those topics! In Module 5 we will explore how criminals have learned to use the technological advances suchas the internet and smart phones to perpetrate crimes in today’s technology-driven world. You will learn about such crimes as cyber stalking, identity theft, and cyber theft of business trade secrets.Practice Activities
We are going to wrap up this first topic with a two-part practice activity. Please complete the following:● Part 1: Review this list of crimes that are considered to be violent crimes in the United States: Defining the Different Types of Violent Crime. Choose three of them to research in your home country and find the legal definition of them. Write down your findings in a paragraph about each citing how the definition in your country is similar or dissimilar to the US definition as well as which country’s definition you feel is the most comprehensive and why. ● Part 2: Now that you have learned a bit about how criminal law isviewed in the US, it is time to see how other countries punish criminal activity. Using three different crimes from the resource above, research how the crimes are punished in the US, China, and Brazil. ○ How does punishment differ in these three countries?ContinuedThank you for completing the activityWhat’s next?We all hope to never be the victim of a crime. Most people break the law at some time. Every time you drive over the speed limit, you are committing a crime, but most people go through life and career without witnessing and being involved in serious crimes. That does not however mean that our lives are void of all wrongdoing. In fact, non-criminal wrongdoings are something that individuals and businesses can be involved in quite frequently. As you learned in Module 3, a breach of contract is a type of business wrongdoing that is punishable under the law. Continuing on with that theme, in this module we will explore how the law handles wrongdoings against a person and/or their property. Section 3 - Categories of Tort LawCategories of Tort Law
When a wrongdoing against a person or their property does not rise to the level of a crime, the legal term for this is a tort. Torts are civil infractions where a person and/or their property is harmed by the actions of another. Unlike crimes, the best resolution for the harm inflicted does not involve the imprisonment of the perpetrator. Crimes are wrongs against society, but torts are wrongs against an individual or individuals, not society as a whole. Because of this, you will see court cases with captions such as James Smith v. Susan Jones or John Brown v. Ford Motor Company, which are indicative of a civil (non-criminal) actions.In a tort situation, the person who is harmed deserves to be made whole. This means they are entitled to be put into the situation they were in beforethe harmful action took place, and the person who should make them whole is the person who is responsible for the harm.In modern society, many times we have insurance to pay for non-criminal mishaps that cause harm to others. We have auto insurance for accidents, homeowners’ insurance to pay if a guest trips and falls in our yard, and business insurance to pay in the event of an error or omission in our business dealings. Some people say that torts are not a big deal because wehave insurance to pay when harm occurs. This, however, is a dangerous stance to take because it can lead to unreasonable risk taking, higher insurance premiums for all, and risk of cancellation of insurance coverage for repeat claims. There are four main categories of torts that business owners should be aware of: bulletTorts against persons bulletTorts against property bulletStrict liability
bulletNegligenceSince torts are far more commonly seen in business than crimes, we will explore each of the four categories in just a moment so you have some basic knowledge of them.It is important to understand that torts are not punishable by imprisoning the wrongdoer because they lack the two elements common to all crimes, namely mens rea and actus reus. In a tort situation, the perpetrator does NOT intend to cause grave bodily harm or death to the victim and does notcarry out a criminal action. The usual punishment for torts is monetary damages because in most situations the harm that is caused can be remedied by the payment of money. If someone causes damage to the frontdoor of your store, money will fix the door. If someone says false things about your business that causes you to lose customers, that loss of revenue can be compensated by a monetary payment. In instances where money will not cure the problem, the court can order equitable restitution such as prohibiting the offending party from engaging in the kind of action that is causing you harm. This source is a good reference to get some more definitional information about torts: TortBecause the punishment for a tort does not involve taking freedom away from the perpetrator, the burden of proof to prevail in a tort action is much lower than in a criminal action. In tort actions, the plaintiff (many times called the petitioner in civil cases) need only prove the elements of the tort“by a preponderance of the evidence.” This basically means that the person claiming the harm must only prove that it is more likely than not that the person they are suing (respondent/defendant) caused the harm. Think of it as having to show that there is at least a 50.01% chance that therespondent caused the harm.Numbered divider 1
Category 1: Torts Against PersonsLet’s begin our further examination of the five main categories of torts with torts against persons. Select each tab to learn more.Assault is when a person is placed in apprehension that they are about the be immediately battered. A simple example would be a bully putting a fist near your face and telling you that you better leave NOW or he is going to hit you.Battery is the actual harmful or offensive touching of another person. If the bully hits you, it is battery.Both assault and battery can rise to the level of a crime IF the intention of the bully is to cause grave bodily harm or kill you when they threaten you and hit you.Review this video that discusses the difference between tortious assault and battery versus criminal assault and battery. Pay attention to how fine the line can be between being liable for monetary damages as a tort and being guilty of a crime and facing imprisonment. Remember, a major key to the difference is intention!ASSAULT AND BATTERYAssault is when a person is placed in apprehension that they are about the be immediately battered. A simple example would be a bully putting a fist near your face and telling you that you better leave NOW or he is going to hit you.Battery is the actual harmful or offensive touching of another person. If the bully hits you, it is battery.
Both assault and battery can rise to the level of a crime IF the intention of the bully is to cause grave bodily harm or kill you when they threaten you and hit you.Review this video that discusses the difference between tortious assault and battery versus criminal assault and battery. Pay attention to how fine the line can be between being liable for monetary damages as a tort and being guilty of a crime and facing imprisonment. Remember, a major key to the difference is intention!FALSE IMPRISONMENTIf you are kept in an area against your will with no reasonable means of egress, that can be false imprisonment. Where we often see these types of claims in business is when a suspected shoplifter is detained by store security. In this case, if the detention is short-lived and only until the police are called to come in, then something known as the shopkeeper’s privilege provides an exception. However, it isnot proper for store security to take your wallet and car keys and lock you in an office for a long period of time just because they suspect you were shoplifting.INTENTIONAL INFLICTION OF EMOTIONAL DISTRESSThis tort is when a person does something to cause extreme emotional distress to the victim. The stress is not just merely hurting someone’s feelings but must be actions that society in general would regard as being outrageous. Usually the victim needs to prove a physical manifestation of the distress, not just hurt feelings. Review this short video on IIED. ● After reviewing it, can you come up with a scenario that you believe would win incourt given that it is so hard to prove that conduct was outrageous? ● What types of actions in your workplace could you imagine rising to the level of awinnable IIED case?
DEFAMATIONDefamation is when false information about you is communicated to third parties whounderstand the information, and it causes them to change their thinking about you. Slander is spoken defamation and libel is written. For instance, if a competing business writes an article in the local newspaper stating that your company has been fined several times in the past year for non-compliance with government safety regulations, but that is false, that could be a case for libel. Third parties, namely the readers of the newspaper, may read the article and stop purchasing your company’s products because of your competitor’s false allegations. However, if the information istrue and your company was fined several times, then there is no actionable claim for libel.Review the following video about defamation then think of a time you can recall in a business setting where you believe that you or someone you worked with were defamed. ● What were the circumstances? ● Did you know at the time that the false statements could be cause for a legal action?INVASION OF PRIVACYEven when something is true, it may be information that should not be divulged. When it is, there may be a claim for invasion of privacy. There are several types of invasion of privacy, but for business purposes the most important to know is appropriation. If you use the voice or likeness of someone for your own monetary gain, especially someone who is well-known and used to being paid for their endorsement, without getting permission and/or paying for the endorsement, it may beappropriation. For instance, putting the face of a world-famous soccer player in an ad for your restaurant stating that the player eats your food whenever he is in town without first contacting the player’s agent and arranging for the endorsement is appropriation. The following video is about Walmart posting customer pictures on their website. Consider the argument the attorney makes about it being a case of appropriation.
● After watching the video, what are your thoughts: is it appropriation or not?Category 2: Torts Against PropertyLet’s move on to torts against property. Select each tab to learn more.TRESPASS TO LANDIf you are intentionally on land that you know does not belong to you and is not publicproperty, then you are committing a trespass to land. You do not need to be harming the land. Your mere presence is enough because it interferes with the rightful owner’s ability to fully use their property.Review the following resource for a definition of trespass to land: Trespass to LandTRESPASS TO CHATTELSThis is trespass to someone’s personal property. For instance, if you see your neighbor’s garage door open and you go in and take their lawn mower to mow your lawn, that is a trespass. So long as you intend to just borrow it and bring it back, it is not theft. The trespass occurs because the rightful owner of the mower is deprived of being able to use it themselves because you are using it.Review the following resource for a definition of trespass to chattels: Trespass to Chattels
CONVERSIONWhen you have something that does not belong to you, either by accident or you borrow it and somewhere along the way you decide to keep it for yourself, that is conversion. It is not theft because you did not intend to keep it when you took it, but instead it becomes the tort of conversion when you decide to keep it. So if you mow your lawn with the neighbor’s borrowed lawn mower, but while mowing you think, “Hey—this is a great mower,” and you put it in your own garage and lock it up when you are done mowing, that is conversion.Review the following resource for a definition of conversion: Conversion - The Basic TortCategory 3: Strict LiabilityIn many instances when a tort occurs, there may be extenuating circumstances that are a defense to liability. For example, say you are driving down the road and a ball comes bouncing out in front of you, and achild runs into the street after the ball. To avoid hitting the child, you swerve and hit my fence and rose garden instead, causing damage. Your defense to my lawsuit is that you chose the least harm possible in the situation because it was certainly preferable for you to hit my fence and flowers than the child. You will probably still be liable for the cost to repair my fence and garden, but in this case, your insurance will most likely cover the costs. If you intentionally ran into my fence and flowers because you do not like me, your insurance would not cover the act and you would be personally liable for the damage and maybe even a crime, depending on the circumstances and your intentions.In some situations, there are no defenses that can be raised when a tort occurs. These are called strict liability torts. If you are in control or should have been in control of the “thing” that causes the harm, then you are strictly liable for the damage caused. Select each tab to learn more.
FARM / DOMESTIC ANIMALSIf you have farm animals or pets that cause harm to a person or their property, you are strictly liable for any damage they cause. If your cows get loose and ruin my garden, it doesn’t make a difference how they got loose; you are responsible for any damage they cause. If your dog bites my child, you will most likely be responsible for the dog’s actions unless the child was on your property and agitating the dog on purpose.WILD ANIMALSIf you own a wild animal like a lion, tiger, bear, or chimpanzee and the animal harms a person or their property, you are strictly liable. It does not make a difference if you can get 50 people to say this is the nicest tiger they have ever known!INHERENTLY DANGEROUS ACTIVITIESActivities that cannot be made safe, no matter how many reasonable precautions aretaken, are considered inherently dangerous activities. Transporting large amounts of flammable substances, detonating explosives, or lighting fireworks are good examples.PRODUCT LIABILITYWhen a company puts a product out into the marketplace for sale, there is an expectation that the product is fit for the purpose for which it was created. As such, manufacturers and sellers are responsible when something goes wrong with a product.Liability can arise from a manufacturing defect that causes harm, a defect in the design of a product that proves to be dangerous to the public, or a failure to warn consumers about a potentially dangerous fact regarding the product.Here are some examples of potential liability for a failure to warn:
● An electric hair dryer packaged without sufficient warnings about the dangers of using it near water● A cold medicine sold over the counter (without a prescription from a doctor) that does not include on its label a warning that it may cause dangerous side effects if taken in combination with another commonly taken drug such as aspirin● A garden weed killer spray that is sold without adequate instructions for safe handling and useStop and thinkThink about the products the company you work for sells (or some that were sold be a previous company your worked for).● Can you recall any instances where there were inadequate warnings given to consumers? ● If you cannot recall an example from any employment situation, can you ever recall a product you purchased that you thought lacked proper warnings?ContinuedNumbered divider 4Category 4: NegligenceIn the first three categories of torts, we see a common thread: intention. You intentionally hit someone, you intentionally use their picture in your restaurant ad, you intentionally keep your neighbor’s lawn mower, or you intentionally have a tiger as a pet. Now, let’s turn to the last category of torts, which is different because the perpetrator’s actions are unintentional.By a wide margin, the most common form of tort that we encounter in both personal and professional scenarios is negligence. Negligence is an unintentional tort. Most people do not get up in the morning and leave their homes thinking, “OK, today I will commit a tort because I will be
negligent.” Usually, negligence occurs because we take our eye off the ball, we lose focus, or we just are not paying attention when we should be. Negligence occurs when our lack of diligence unintentionally causes harm.Here’s a simple example: You are in the drive-through line at a fast food restaurant. You pull up, place your order and pull around to pay. There are several cars in front of you and you reach over to open your purse to get some money, but you forgot to put the car in park. Your foot slips off the brake and you roll forward hitting the car in front of you causing damage. A successful claim of negligence must prove all four elements of the tort. Select each tab to learn more.DUTYEvery day, when undertaking any action, each of us has a duty to act as a reasonable and prudent person would under the circumstances. This applies to everything we do, including driving a car, pushing a grocery cart around the store, walking our dog, throwing a baseball in the park, or waiting in line at the fast food counter. BREACHHopefully, you remember from Module 3 that a breach is a broken promise. When a person’s actions fall below that which would be considered reasonable and prudent under the circumstances, we say that person has breached their duty.CAUSATIONIn order to be liable for negligence, the harmed party needs to prove that the person they are claiming was negligent is the cause of the harm. Actual cause is what the law calls “but for” cause. But for my neighbor not attending to his backyard BBQ grill properly, my fence would not have caught on fire! We also need to look at proximate cause. Proximate cause is foreseeable cause. In other words, is the harm that that occurred the type of harm we would expect to see because my neighbor was negligent?
● In this case we would ask the question---if a person does not pay attention to their BBQ grill, is It foreseeable that could cause the neighbor’s fence to catch on fire?The answer is yes. If the grill is left unattended, we could argue that it is foreseeable that one of the harms that could reasonably occur is for a flame or spark to catch my fence on fire.DAMAGESEven if we have the other elements present, we must have damage in order to sustain anegligence claim. If I come out and see the grill is unattended and I go into my neighbor’s yard and shut it off, my fence doesn’t catch fire. Was the neighbor acting negligently? Yes, he left the grill unattended, which was a breach of his duty, but no harm occurred. If there is no harm, there is no damage to compensate me for and therefore no cause of legal action.As we have alluded to in every module of this class, technological advances are playing a role in how rules, regulations, and laws are changing in business. Unfortunately, some have found ways to use the internet in particular to perpetrates torts as well. In Module 5, which covers emerging technologies and legal concepts, you will be introduced to cyber torts such as cyber defamation, theft of software, negligent use of a computer, and invasion of privacy.What’s next?With a basic understanding of criminal and tort actions, we can now turn to applying them to the business world in a way that will be more meaningful for you. Most torts and crimes that occur in business involve monetary harm to a business, itsemployees or customers.
Section 4 of 5Criminal and Tort Law in Business ApplicationsOne usually associates criminal activity with violent crimes such as robbery and murder. These types of crimes involve physical harm to a victim. These are the type of crimes we regularly hear about on the evening news.When crimes occur in a business setting, they may go undetected and are not always as well publicized. Business crimes are generally known as white-collar crimes, referring to them happening in a setting where people wear white shirts and business suits. White-collar crimes are crimes that typically harm a person or an organization monetarily rather than physically. Criminal activity such as fraud, bribery, money laundering, forgery, embezzlement, and extortion may be familiar terms to business professionals in today’s world. Let’s examine these one by one; select each tab to learn more. FRAUDThe intentional misrepresentation of material facts by one party to gain some sort of advantage over another party is fraud. As with other crimes, proving fraud starts with proving an evil intention to do something that is deemed criminal by the legal system. In business fraud, one party misrepresents information that is critical to a business decision such that the party receiving the fraudulent information changes their position to their detriment, and that change benefits the party supplying the fraudulent information. For example: Company A sells cars to Company B’s business for the salespeople to drive. Company B tells Company A that they need cars that get good gas mileage, at least 30 miles per gallon. Company A’s salesperson is trying to sell as many Model F cars as possible this month because she and her dealership are trying to win a sales contest. Model F is a good car, but the salesperson knows it only gets 28 miles per gallon. To make the sale, she tells her customer at Company B that Model F is their best choice, and she sells Company B ten Model F cars. This is a potentially fraudulent transaction because the salesperson knew that Company B requires cars that get 30 miles per gallon, and she knows Model F will not do that, but she tells Company B that the car is the best for them. Company B is harmed by relying on the
salesperson’s statements, and the salesperson and her dealership gain because those 10sales helped them win the sales contest.BRIBERYBribery is an interesting business crime because it has an ethical component to it as well. While bribery is not legal in the US and many other countries, it is common practice in several countries. Bribery is the giving of something of value that “buys” influence or an action from another person. In some countries, although it is not openly encouraged, it is an acceptable practice to ensure that a business deal gets done. Bribery is common practice in Cambodia, Yemen, Ukraine, Morocco, Pakistan and the Democratic Republic of the Congo.Review the following article and think about how bribery is viewed in your home country: 20 Countries Where Bribery In Business Is Common PracticeMONEY LAUNDERINGThis is the practice of trying to make it appear that large amounts of money originating from criminal activity such as drug trafficking or the funding of terrorist activities is actually coming from a legitimate source. Over the past few years, almost everyone in the US has received an email from someone purporting to be an African prince that requests help safeguarding a large amount of money in a US bank account in exchange for a percentage of the deposit. In a business setting, even small businesses, especially those that complete a lot of cash transactions, need to be aware of the source of the cash that comes into the business. Businesses are now much more careful when it comes to taking in large sums of cashHere’s a real-life example that I, your humble curriculum writer, recently encountered that brought the concept of money-laundering to life for me. I own a home near the beach that I have rented out in the summer season for some years. At times, a guest will pay me in cash. Last summer I had to be out of town, so I asked my stepson to take the rental money to my bank and deposit it. Some was in checks and some was incash. The bank was happy to deposit the checks but would not accept the cash for deposit. I called the bank to inquire why they refused to accept US dollars at a US-based bank, from a US citizen, to deposit into my US account. I was informed that their new policy was to allow only the owner of the account to make large cash deposits. A third party can deposit checks but not cash. The bank’s answer was surprising, but simple. They need to know the source of the cash to avoid any
potential money laundering issues. If an account holder makes a large cash deposit, the bank knows who they are, their name, social security number, address, birthdate, etc. If a stranger comes in to deposit cash into an account, the bank knows nothing about that person and cannot trace the money back to them if there is a problem.Review the following resources about money laundering. As a manager or business owner, think about what steps you could take to educate your employees to recognize potential money laundering issues in your business.● How Money Laundering Could Affect Your Business● Money Laundering● A Beginner's Guide To Laundering Money FORGERY
Forgery is the intentional copying or altering of a document that has legal significance for the forger’s gain. Many times, the forged item is a check, where the forger signs the account holder’s name. That is a classic example of forgery, but in business, it could also be making an unauthorized change to a contract that does not involve changing a signature. It could be falsifying a purchase order or an invoice. Forgery could also be filing a false claim for insurance proceeds or benefits. Any alteration made to a legal document that is intended to defraud is considered a forgery.EMBEZZLEMENTEmbezzlement is a white-collar crime that is a breach of trust. Embezzlement involvestaking company money or property that is entrusted to you and not doing the right thing with it. For example, imagine you work at a business and one of your duties is tomake bank deposits each Friday. Instead of depositing the entire amount each week, you take $100 cash and put it into your pocket. That is embezzlement because your employer trusts you to deposit company funds, but you are keeping some for yourself.The following short video presents a very unfortunate embezzlement situation with an international twist. While you are reviewing it, think about how many legal issues arise out of this one situation. Consider the topics you’ve been learning so far in this class and in this module: jurisdiction, duties of an employee to an employer, forgery, money laundering and embezzlement. EXTORTIONExtortion is obtaining money or property through intimidation force or threat of violence against the victim. Although at first glance it may seem like a crime that would affect individuals rather than businesses, this is not always the case. Review these two articles on business extortion:● Extortion has closed 5,000 businesses in Coatzacoalcos in recent years● Extortion Should Not Be a Cost of Doing Business
Consider the following questions:● Could my business be a target for extortion?● As a manager, what is my role in ensuring my employees are prepared if they are approached by someone trying to extort money or property from our company?Common Business TortsYou should become familiar with some common business torts. Select each tab to learn more.TORTIOUS INTERFERENCE If you remember back to Module 3, we said that every person over the age of 18 whois mentally competent is free to enter into legal contracts. The same concept applies to businesses. All legally operating businesses have a right to contract with each other. If a person or a business is in the process of creating a contract or other business dealings with each other, then no other person or business should interfere with the pending transaction. When an individual or business tries to persuade a party to a contract to break their promises or change their plans, it can be tortious interference. THEFT OF TRADE SECRETSWhen a person working for a company offers trade secrets from their current employer to another or a company uses nefarious means to gain access to another company’s trade secrets, the actions are considered tortious. TRADE LIBEL
Defamation occurs when false information is transmitted to third parties who understand the information and it causes them to think or act negatively toward the company that is being defamed. Libel is written defamation; therefore, trade libel is writing false information about a company with the hope and expectation that third parties reading it will react in a negative manner or change their thoughts about a competing company. FRAUDULENT MISPRESENTATIONMisrepresentation happens in business. When a representative of a company gives an opinion about their goods or services or talks about a product’s attributes, they may not get all of the facts correct every time. Technically that is misrepresentation. If a salesperson tells you that you will have the best sleep of your life if you buy their mattress, that is an opinion or what we call “puffing.” Every company wants potential customers to think highly of their products, and it is the job of a salesperson to help a customer understand why they should purchase product “X” over the competition’s product “Y”. However, when a company representative makes knowingly false claimsabout what a product can do just to get you to purchase the product, that can cross the line into fraudulent misrepresentation and becomes an actionable tort.RESTRAINT OF TRADEOne of the tenets of US business is that business is conducted in an open and free market economy. Restraining the ability of a business to function and trade within the marketplace is not acceptable. You can learn more at the website, Restraint of Trade.COMMERCIAL DISPARAGEMENTThink of this as defamation ONLY for businesses. Regular defamation claims can be brought by any individual, but commercial disparagement claims can only be brought by commercial entities. You can learn more at the website, Commercial Disparagement.
Assignment Submission: Recognizing Actionable Business Crimes and TortsThis module has introduced you to the basics of criminal and civil wrongdoings. It is important to understand that both crimes and torts are found in business applications so you as a professional can recognize themin scenarios and avoid committing them or being a victim of themYou are now ready to start your graded assignment for this module. This assignment will help you recognize common business crimes and torts in ahypothetical scenario so that you can see how torts and crimes can arise from every day business transactions.To access your assignment and the specific instructions, please return to your course in NexLE.When you have submitted your worksheet for grading, pleasereturn to your module to continue learning.
What’s next?You have reached the end of your learning for new concepts in this module. Next you will review a summary of this module and preview what you’ll encounter in the next module.Section 5 - Module wrap-upModule wrap-upBefore you continue, please select the following box to acknowledge the completion of your graded Recognizing Actionable Business Crimes and Torts assignment. Then select “Continue” to move on to the next part of your module..I have completed and submitted my graded Recognizing Actionable Business Crimes and Torts assignment, and am ready to learn more!ContinuedCongratulations on completing Module 4! Wrongdoings are commonplace in our lives. Although we hope to avoid asmany of them as possible, they occur in our personal lives and in our careers. As a business professional, manager, owner or employee, it is vitalto know the basics about the types of crimes and torts that occur in business settings. This module introduced you to the legal concept of crimes and torts and explained the more common forms that you may encounter.As technology becomes more pervasive in all forms of business transactions, new types of crimes and torts are emerging. In most cases, these crimes and torts are perpetrated through the use of the internet. Business professionals in today’s global workplace need to be diligent to avoid, recognize, contain and counteract such wrongdoings. Now that you have a basic understanding of the history and background of torts and crimes, we can move on to looking at emerging issues in business law that involve the use of technology for malevolent purposes in the next module. Let’s get started with Module 5!
You have now completed this module. Check to make sure you have completed all requiredassignments for this module.