Business and Law and Regulations

ELEMENTS OF A CONTRACT (b) for remunatory contracts, the cause ❖ l A clear intention to
is the service or benefit which is being create legal relations
1. CONSENT remunerated; and ❖ l Certainty in the terms
of the offer and
Contracts are generally perfected by (c) for contracts of pure beneficence, acceptance
mere consent, which is the reason why the cause is the mere liberality of the
there’s such a thing as oral contracts. benefactor. The moment the offeree communicates
It’s a meeting of the minds between the their acceptance, a legally binding
parties: there’s a definite offer by one These concepts may appear alien, but contract is formed, and both parties are
person and there’s an absolute since this is merely a brief discussion, obligated to fulfill their promises as
acceptance by another. suffice it to state that a “cause” is defined by the agreed terms.
technically different from a contract’s
2. SUBJECT MATTER object (or subject matter, as discussed Consideration is a promise,
above) or motive. performance, or forbearance bargained
A thing, right or service may be the by a promisor in exchange for their
object or subject matter of a contract. Offer- A proposal made by one party, promise. Consideration is the main
All things that are outside the expressing the terms of a potential element of a contract. Without
commerce of man (e.g., the moon, agreement, with the intention to be consideration by both parties, a
public properties) may not be the bound in a legally enforceable contract. contract cannot be enforceable.
object of a contract. Rights that are
transmissible (e.g., the right to possess Acceptance- A positive action or Legality is an involved warranty that
a real property) may be the subject of a statement by the offeree, agreeing an agreement or contract strictly
contract. Services, on the other hand, unconditionally to the terms of the follows the law of a particular
must not be contrary to law, morals, offer, creating a binding contract. jurisdiction.
good customs, public order of public
policy (e.g., services of an assassin or In the formation of every contract, BREACH OF CONTRACT
a prostitute). there must be an offer made by one
party and the acceptance of that offer What Constitutes a Breach of
3. CAUSE by the other party. The principle of Contract?
offer and acceptance ensures that
The cause varies according to the type there is: A contract case usually comes before a
of contracts: judge because one or both parties
❖ l A meeting of minds or claim that the contract was breached.
(a) for onerous contracts, the cause is a mutual agreement A breach of contract is a failure,
the promise of a thing or service by the (also known as without legal excuse, to perform any
other; consensus ad idem) promise that forms all or part of the
Business and Law and Regulations
contract. This includes failure to A breach is material if, as a result of Types of Business Entities
perform in a manner that meets the the breaching party’s failure to perform
standards of the industry or the some aspect of the contract, the other Sole Proprietorship
requirements of any express warranty party receives something substantially This is a business run by one individual
or implied warranty, including the different from what the contract for their own benefit. It is the simplest
implied warranty of merchantability. specified. For example, if the contract form of business organization.
specifies the sale of a box of tennis Proprietorships have no existence
When a party claims a breach of balls and the buyer receives a box of apart from the owners. The liabilities
contract, the judge must answer to the footballs, the breach is material. When associated with the business are the
following questions: a breach is material, the non-breaching personal liabilities of the owner, and
party is no longer required to perform the business terminates upon the
1. Did a contract exist? under the contract and has the proprietor's death. The proprietor
immediate right to all remedies for undertakes the risks of the business to
2. If so, what did the contract require of
breach of the entire contract. the extent of their assets, whether
each of the parties?
used in the business or personally
A breach is minor if, even though the owned.
3. Was the contract modified at any
breaching party failed to perform some
point? Partnerships
aspect of the contract, the other party
still receives the item or service A general partnership is an agreement,
4. Did the claimed breach of contract
specified in the contract. For example, expressed or implied, between two or
occur?
unless the contract specifically more persons who join together to
5. If so, was the breach material to the provides that “time is of the essence” carry on a business venture for profit.
contract? (i.e. deadlines are firm) or gives a Each partner contributes money,
specific delivery date of goods, a property, labor, or skill; each shares in
6. Does the breaching party have a reasonable delay by one of the parties the profits and losses of the business;
legal defense to enforcement of the may be considered only a minor and each has unlimited personal
contract? breach of the contract. When a breach liability for the debts of the business.
is minor, the non-breaching party is still Limited Liability Company (LLC)
7. What damages were caused by the required to perform under the contract, An LLC is a hybrid between a
breach? but may recover damages resulting partnership and a corporation.
from the breach. For example, when a Members of an LLC have operational
seller’s delay in delivering goods is a flexibility and income benefits similar to
minor breach of contract, the buyer
A breach of contract can be material or a partnership but also have limited
must still pay for the goods but may
minor. liability exposure. While this seems
recover any damages caused by the very similar to a limited partnership,
delay.
Business and Law and Regulations
there are significant legal and statutory complies with the legal ○ Appoint an initial board
differences. Consultation with an requirements in the of directors. The board
attorney to determine the best entity is jurisdiction where you oversees the
recommended. are incorporating. corporation's
2. Registered Agent: management and major
Corporation ○ Designate a registered decisions.
A corporation is a legal entity, agent, who is a person 6. Issue Stock:
operating under state law, whose or entity responsible for ○ If applicable, determine
scope of activity and name are receiving legal the initial stock structure
restricted by its charter. Articles of documents and official and issue stock to
incorporation must be filed with the correspondence on shareholders.
behalf of the 7. Obtain Necessary Permits
state to establish a corporation.
corporation. and Licenses:
Stockholders' are protected from
3. Articles of Incorporation: ○ Ensure that you obtain
liability and those stockholders who are
○ Prepare and file articles any required business
also employees may be able to take of incorporation with the licenses or permits to
advantage of some tax-free benefits, relevant government operate legally in your
such as health insurance. There is authority. This jurisdiction.
double taxation with a C corporation, document outlines 8. Tax ID Number (EIN):
first through taxes on profits and essential details about ○ Obtain an Employer
second on taxes on stockholder the corporation, such as Identification Number
dividends (as capital gains). its name, purpose, (EIN) from the tax
registered agent, initial authorities. This is
directors, and stock necessary for tax
structure. reporting and other
FORMULATION OF CORPORATION 4. Bylaws: business-related
○ Draft and adopt transactions.
The term "corporation formulation" corporate bylaws. 9. Bank Account:
typically involves the steps and Bylaws are internal rules ○ Open a business bank
that govern the account in the name of
procedures associated with creating a
corporation's the corporation.
corporation as a legal entity. Here is a
operations, including 10. Compliance:
general overview of the process: procedures for ○ Understand and comply
meetings, decision- with ongoing legal and
1. Choose a Business Name:
making, and other regulatory requirements,
○ Select a unique and
internal matters. including filing annual
suitable name for your
5. Board of Directors: reports, holding regular
corporation. Ensure that
meetings, and
the chosen name
Business and Law and Regulations
maintaining proper Liability is the legal responsibility for employment. It was written and made
records. debts or obligations. In the context of possible by President Ferdinand
business, liability refers to the extent to Marcos in 1974 as Presidential Decree
Single Corporation/One Person which the owners of a business are No. 442. This law specifies the rules
Corporation personally responsible for the debts regarding employment in the country,
and obligations of the business. which include hiring practices, work
Top of Form A One Person conditions, benefits, working hours,
Corporation (OPC) is a business entity There are two main types of liability: and termination.
with just one stockholder. This single
❖ · Limited liability: This The Labor Code is written in a way that
stockholder is also the sole
means that the personal assets benefits laborers. It sets provisions to
incorporator, director, and president of
of the owners of a business are protect the welfare of the workers
the company.
protected from the debts and against unjust and discriminatory
This single stockholder’s liability is obligations of the business. practices. The Department of Labor
limited to the extent of their assets, This is the most common type and Employment (DOLE) is the
combining the best of both worlds of liability for businesses, and it government agency responsible for
between a sole proprietorship and a is typically provided by promulgating the labor code’s
limited liability company. corporations and limited liability advocacies.
companies (LLCs).
An OPC’s company name will have the ❖ · Unlimited liability: This What does the Employment Law
suffix “OPC” either below or at the end means that the personal assets include?
of its corporate name. Favorably, OPC of the owners of a business are
does not need a minimum capital stock not protected from the debts The employment laws in the
except where specified by law. and obligations of the business. Philippines specify regulations on
This is the type of liability that is every aspect of employment in the
LIABILITY AND BUSINESS typically associated with sole country. Particularly, the labor code
proprietorships and general covers the following areas:
STRUCTURE
partnerships.
★ Offices and Government
Liability and business structure are two agencies responsible for regulating
employment laws
closely related concepts that are Employment Act and Labor Laws in
essential for understanding the legal the Philippines ★ Training policies for employees
and special workers
and financial implications of starting
The Philippines Labor Code is the law
and running a business. governing all things related to
Business and Law and Regulations
★ Work conditions – working Employment contracts in the Filipino retirees will be given a ½
hours, holidays, and leaves Philippines must abide by the minimum month’s pay for every year of service.
standard set by the Labor Code of the Additionally, retirement pay will include
★ Work conditions for employees Philippines. It usually includes the employee compensations such as :
in special groups – minors, house following information:
helpers, homeworkers, and night ★ 13th-month pay (½ of pay for
workers ★ Employee’s details (name, each year served),
address, contact number, etc.)
★ Health, Safety, and Social ★ service incentive leave (cash
Welfare benefits ★ Job position equivalent for five days), and

★ Unfair Labor Practices ★ Job description ★ 15 days’ worth of salary (based

on the salary rate at the time of
★ Post-employment – Termination ★ Remuneration and Employee retirement)
and Retirement benefits
Penalties
Who is covered by the Employment ★ Length and condition of
Law? probationary period, if any Book seven of the Labor Code of the
Philippines highlights the penal
The Labor Code of the Philippines ★ Periods of notice regulations for unmet labor
applies to all workers in the country. requirements. Generally, unlawful labor
According to Article 6, all the rights and ★ Code of conduct practices shall be sanctioned with a
benefits indicated in the code shall fine of PHP 1,000- PHP 10,000 or
apply to all workers, whether they ★ Employee grievance
imprisonment of not more than three
belong to an agricultural or non- mechanism
years or both.
agricultural sector.
★ Company policies
THE PHILIPPINE LABOR CODE:
Employment Contract Working Conditions and Rest
Retirement
Periods
An employment contract is a signed
Filipino employees who are of 60 years
document that formalizes the Regular Work Hours
or more (up to 65 years of age) shall
agreement between the employer and
be retired from their services. However,
the employee. It specifies the terms ❖ Work Period - Up to 8
government employees and those
and conditions of their rights and hours a day
working in the retail, service, and
responsibilities. ❖ Meal Time - At least 1-
agricultural sectors are exempted from
this ruling. hour time-off
Business and Law and Regulations
❖ Night Shift Differential - Weekly Rest Days ü Service Charges - All service
For each hour of work charges collected by hotels,
done between 10:00 PM ü Day Off - At least 1 rest day restaurants, and similar
and 6:00 AM after every 6 consecutive businesses should be
❖ Overtime Work - Work workdays shared as follows:
done beyond 8 hours in
a day warrant additional o Work during rest day o 85% for all
pay is subject to additional covered
❖ Undertime Work Not pay employees,
Offset by Overtime equally divided
Work - Employers who Holidays, Leaves, and Service
offer leaves to make up Charges o 15% for
for overtime work should management
still pay overtime wages ü Holiday Pay - Paid with daily
wage except in retail and Employment Contract- is an
These apply to all employees except: service establishments with agreement that covers the working
less than 10 workers relationship between a company and
o Managerial workers - an employee. It allows both parties to
manage the o Work on a holiday is clearly understand their obligations and
company or a subject to additional pay the terms of employment.
department and
his/her staff ü Service Incentive Leave - More specifically, an employment
Every year, employees who contract can include:
o Field personnel - rendered at least 1 year of
regularly work away service are entitled to 5 days of ● Salary or wages: Contracts will
from the office paid leaves itemize the salary, wage, or
whose work hours commission that has been
o Doesn't apply to agreed upon.
can't be determined
companies with ● Schedule: In some cases, an
o Results-based less than 10 employment contract will
officers - paid per employees or include the days and hours an
finished task, those exempted employee is expected to work.
regardless of the by DOLE due to ● Duration of employment: An
number of hours their financial employment contract will
worked condition specify the length of time the
Business and Law and Regulations
employee agrees to work for Every employee linked with the ❖ · No offensive Activities
the company. company is allocated specific ❖ · Working Safely
● General responsibilities: responsibilities to accomplish daily,
Contracts can list the various weekly, or monthly. This responsibility
duties and tasks a worker will defines the precise path that needs to
be expected to fulfill while be followed by an employee daily. Complaints about the offenses
employed. Employees get paid by working committed in the Labor Act must be
● Benefits: Employee benefits are successfully on such duties. Defining filed within three years after their
forms of payment that commitments also helps the occurrence. For unfair labor practices,
employers give to their staff in organization avoid chaos or confusion complaints must be filed within a year.
addition to their normal pay or among employees regarding what
TERMINATION PAY VS SEVERANCE
income.These benefits may needs to be done. This clarity indeed
PAY
include group insurance also helps the company in achieving its
(health, dental, life, etc.), goals faster than expected. Termination pay is, quite simply, pay
retirement benefits, education that is given in place of required notice
loans, other loans (house loans, Employee Rights In The Workplace:
of termination. Normally, an employee
vehicle loans, etc), sick leaves, who is terminated without cause is
vacations, and flexible ❖ · Break Time
❖ · Fixed Working Hours entitled to either a statutory period of
alternative arrangements. notice during which they continue
❖ · Safe and Healthy Work
Environment working and receiving pay and
Other Contract- means a separate
❖ · Medical Claim Facility benefits, or they are entitled to pay in
agreement or contract between a
❖ · Paid Leaves place of said notice.
person, firm or corporation and the
Minister for specific work undertaken ❖ · Right to ask unfair
Severance pay is considered an
on the Property during the term of this termination
earned benefit for long-serving
Contract. employees. Severance pay
Employee Responsibilities In The
Workplace: “compensates an employee for loss of
Employee Rights:
seniority and the value of firm-specific
❖ · Team Player skills, and recognizes his or her long
It is defined as the predefined rights or
❖ · Aiming to achieve a services.
privileges of an employee associated
with the organization. It aims at common goal
❖ · Attending orientation TRADEMARK, PATENT, OR
receiving fair treatment from
process and other meetings COPYRIGHT
employers.
❖ · Hiring Manager
Trademark
Employee Responsibilities: Responsibilities
Business and Law and Regulations
- A word, phrase, design, or a government and enforce your licensor can also grant licenses
combination that identifies your ownership rights. to other parties.
goods or services, distinguishes
them from the goods or services of Beyond registration and enforcement, Infringement- Is the unauthorized use of
others, and indicates the source of you can protect certain types of another person's IP, his can happen in
your goods or services. intellectual property by: a number of ways, such as:

Patent ❖ · Documenting your ❖ •Copying a copyrighted work

discoveries without permission.
- Technical inventions, such as ❖ · Using digital rights ❖ •Using a trademark without
chemical compositions like management permission.
pharmaceutical drugs, mechanical ❖ · Opting for strong ❖ •Making, using, or selling a
processes like complex machinery, nondisclosure agreements patented invention without
or machine designs that are new, ❖ · Creating strong access permission.
unique, and usable in some type of credentials
industry.
Licensing and Infringement
Copyright Tips for avoiding infringement
Licensing-is the process of granting
- Artistic, literary, or someone permission to use another ❖ •Be aware of the Intellectual
intellectually created works, such person's intellectual property in Property rights of others.
as novels, music, movies, software exchange for a fee. IP can include ❖ •Do not copy or use someone
code, photographs, and paintings copyrights, trademarks, patents, and else's IP without permission.
that are original and exist in a trade secrets. ❖ •If you are unsure whether you
tangible medium, such as paper, have the right to use someone
canvas, film, or digital format. There are two main types of licenses: else's IP, consult with an
attorney.
Protecting intellectual property

Protecting your intellectual property is a ● •Exclusive licenses- The

means to secure an economic licensor grants the licensee the
advantage for your business and make exclusive right to use the IP in a
sure you can defend your unique ideas, particular territory or for a
products, and services. The best way to particular purpose.
protect IP is to register it with the ● •Non-exclusive licenses- The
licensor grants the licensee the
right to use the IP, but the