The paper 'Business Law and Ethical Issues' is a great example of a Business Case Study. The company develops a new drug expected to significantly reduce rheumatism disease after conducting several tests. However, one scientist is concerned that some of the drug’ s side effects have not been tested. As such, the company pays a number of scientists to conduct research on the effects the result of which are kept confidential by the board and the scientists as well. Consequently, the board authorizes the commencement of the drug’ s production despite their knowledge that the research has indicated that the side effects do occur though they are statistically small.
In so doing, the directors keep the information confidential as they know the drug’ s production will significantly increase profits thus making the shareholders happy. The issue The issue is whether ethical principles are applied in deciding to keep the information confidential and continue with the production of the drug despite having knowledge of the side effects of the drug no matter how small they are. Was it ethical for the board of directors and hence the company to place profits and hence shareholders’ interests before the need to safeguard the health of the customers who might take the drug and thus suffer from its side effects? The rule Both the common law and the Australian competition and consumer act of 2010 encourage businesses to ensure that they conduct business in an ethical manner.
Section 20 to 24 of the Australian competition and consumer act of 2010 prohibit businesses including companies from engaging in unconscionable conduct. In this regard, unconscionable conduct refers to acts that are so harsh that they go against good conscience.
In determining whether the company has engaged in an unconscionable act and hence unethically, the court would rely on some principles including the extent to which the supplier unreasonably failed to disclose to the customer; Any intended conduct of the supplier that might affect the interests of the customer and Any risks to the customer arising from the supplier’ s intended conduct The conduct of the bank in the case in Vital Finance Corporation Pty Ltd v Taylor (1991) ATPR digest 46-080, the court held that the bank had acted unconscionably in dealing with the customer since they knew the customer would not be able to pay yet it went ahead to led to the customer and also increased repayment rates to the effect that the customer was unable to repay.
As such, the transaction was set aside. On the other hand, the company directors have a duty to act with care and diligence and to act in good faith while avoiding conflict of interest and acting in the best interest of the company while considering the interest of others as was held in James Hardie case and the case of JT International SA v Commonwealth (2012) HCA 30.
In both cases, the companies were found of ignoring customers’ interests (related to health) in their conduct in a bid to increase profits and by hiding vital information from the customer that would have influenced their buying decisions in the interest of their health.