I’m taking a PGPBM course in Indian Institute of Management Trichy(IIMT). Its already 4th term in the course and so far the learning curve is really steep. In almost all the courses so far there is a moment of revelation that elevates my understanding of world better. Likewise, after the first 4 sessions of the business law here are 5 things that I have learnt. These are possibly 5 myths busted. Or at least my misunderstandings are cleared after the session.
Before going to the myths, I will explain the pedagogy used in the curriculum. As a pre-read for the class we had to go through a semi fictitious case on a contractual conundrum. The essence of the case is there were 5 characters and a situation. We were asked to analyze who could have violated the law. Surprising no one in the class was able to identify all the legal violations in the case. I could not reveal much about the case here at least until I get a permission from the case owners. However here are some interesting learning from the case. All these are relevant to the business law. I’m not a lawyer, so do take these revelations with a pinch of salt. Some of these are also explained in the book Winning Legally (Bagley, 2005), which is a reference book in the course.
1. Contract law does not require a contract to be in writing necessarily
Even a oral agreement could become a contract. Until the class I always thought only written agreement forms a contract. The interesting aspect is the law requires only 2 things for a contract. Firstly, there is an agreement; Secondly, its enforceable by law (Singh, 2018). As long as something fits these criteria then it becomes a contract. The problem with oral agreements is most of them are not enforceable by law. In many case during a legal standoff one could easily disagree on the actual agreement. This makes the oral agreement difficult to be enforceable by law. However, if there is a situation where one could have an agreement and if its enforceable by law, then a oral agreement is as good as a written statement. My key learning here is watch What You say, and be extra cautious.
2. Managers assume fiduciary roles and has duties
Key managerial persons are bound by some rules which may not be obvious for some trivially informed. My understanding of law is mostly through movies and newspaper articles until this course. Violations like insider trading and tip-off are regularly discussed scenarios in movies and newspaper articles. However, these are major violations. The law defines something called a fiduciary role. A manager may assume a fiduciary role at some point of time and he is bound to maintain the trade secrets of the company thought he has not explicitly committed to it in a paper. Lack of rigor in this role may easily lead one to cross the boundary of the legalities.
3. A trade secret that is uttered in public and not patented is risky
You have an eighteen-month period to get a patent if You have revealed an invention in public. Trade secrets and patents are always a trade-off. One would risk letting of a cash cow in public revelations of know-hows of a technology. One could choose not to patent something, thereby not revealing the secrets. This would avoid a competitions doing a copycat of products and selling it cheap without investing in R&D. However, given the advancement of technology reverse engineering of products seem to be much easier for competitors. Except very advanced scientific companies (Intel, ARM etc…) others would only reap advantages in patenting. For companies who are niche players in a market, trade secrets work well.
For others patenting should be done with due diligence before taking a product to the market.
4. Patent thickets and bracketing
Say I have a patent for a car that could fly. But during the patent application I painted the car black and obtained the patent. My competitor could just do patents for a red flying car, a blue flying car a green car and car of every known color. This may still not let my competitor to produce and market flying cars since the flying technology is patented by me. Neither would I be able to create Red, or Blue cars; since my competitor is owing the patent on such a trivial issue. Though this is a trivial and a hypothetical situation, this gives the essence of chain of patents. One could be pound wise and penny foolish in filing huge patents. The penny foolishness may be the one that stops one from expanding the business.
Essentially what one should do is patent in smallest possible units and all possible methods to produce a flying car. In this situation, even if one loses a patent on the red car, one will be able to produce a yellow or a silvery, steely, white colored car.
5. Meeting of minds
This was one of the best revelations from the book Winning Legally (Bagley, 2005). The first time I read the explanation of this I was just amazed. After this I took a special respect of law as a profession. This is one of the clauses that enable that the law is also fair and ethical. Say, just because something is put in paper or agreed, it cannot be enforced unless there is a meeting of the minds. This is a provision provided in the contract law to ensure that parties involved in the contract do not take advantages of each other.
This means it does not matter, whether You have a better understating of the particular technical situation than other party involved in a contract. The onus is on You to ensure that You clearly explain Your understanding before entering the contract.
If You took advantage of other party due to Your better understanding of a situation, the contract that You thought, you had may just be void, since there is no meeting of mind. The bottom line, to some extent ethics could be enforced by law. At least in the contract law, meeting of the minds ensure that unfair contracts are not enforced in a court of law.
I thought lawyers are Vogons of Vogosphere (Adams, n.d.), just bothered about paperwork. Meeting of minds ensures lawyers remain human beings.
I will write more about these topics as the course progress.
References
1. Bagley, C. (2005). Winning legally. Boston: Harvard Business School Press.
2. Adams, D. (n.d.). The Hitchhiker’s Guide to the Galaxy.
3. Singh, A. (2018). Business Law. 11th ed. Eastern Book Company, pp.1-4.
Business Management 