LAW 525 Lecture 1: Law 525- Ch01
12 Feb 2016
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Document Summary
The law of the marketplace pertains to how business-consumer market transaction processes are structured and framed by law. Contract law: agreements that create rights and obligations between parties that can be enforced by law. Tort law: tort generally consists of a failure to fulfill a private obligation imposed by law. Relying solely upon contract and tort law may be inadequate. Government may create legislation and regulations to protect consumers from market failures. Market failure: occurs when goods and services are not distributed efficiently. Market failures occur when a firm or group of market players act together to block others from selling or offering their services. Negative externalities and information failures occur when unacknowledged costs are assumed during consumer"s purchase or when consumer"s are unaware of hazards and risks that result due to consumption of said product/service. Government may intervene by: requiring standards of safety, ban products, prohibit misleading sales practice, limit ability to sell, impose liability to manufacturer/retailers.
