Chapter 1

People in Business
Commercial Business
 Is a profit making business.

 Eg. Dunnes Stores.

Non Commercial Business
 Is a non profit making organisation.

 Eg. Charities, Barnardos.

 Eg. State Agency, Fás.

 Entrepreneurs

Investors Supplier

Employer
Stakeholders Producer
In Business
Employee

Service Provider
Consumer

Government
 Entrepreneur
 A person that spots a gap in the market,
takes the initiative to set up a business,
brings the factors of production together,
and takes the risk of a profit or loss.
 Eg. Bill Gates-Microsoft
Richard Branson-Virgin…
 Steps taken by entrepreneurs
 Conduct market research
 Produce pototypes (samples)
 Compile feasibility studies (cp, sp)
 Select a viable (profitable) product
 Obtain finance
 Select a location
 Select a business structure eg. sole trader
Investor
 Are people who provide funding for a
business.
 They expect a return on their money.
 The higher the risk the higher the
return expected.
 Eg. shareholders, banks, gov….
 Types of Investors
Type Security Reward

Bank Assets Interest

Shareholder Part ownership Dividend

Government Advisors Jobs

Supplier eg. Dairy Farmer

 Provides raw materials needed for

producers.
 They compete for contracts.
 They offer inducements-discounts
-credit
-promp delivery
-free delivery
 Producer eg. Glanbia

 Turns raw materials into finished products.

 Eg. Glanbia turns milk into yoghurt.
 They enter into contracts with suppliers.
 They try to make a profit by keeping costs
low and prices competitive.
Outsourcing
 Is when large producers contract other
procucers to make their product under
licence.
 Eg. Nike.
 Service Providers
 Are people or organisation that provide
support services to the public or businesses.
 Financial Institution:Loans, current a/c…….
 Insurance Co.:Protection against losses……..
 Solicitor:Legal advice…
 Transport:Dilivery of goods in and out..
 See page 5!
 Employer
 Is a person or organisation who hires people
to work in return for a wage.
 They have responsibilities such as:
 Provide suitable working conditions.
 Pay a fair wage and deduct PAYE & PRSI.
 The costs of being an employer include,
wages, PRSI, insurance & facilities.
Employee
 Recruited by business to produce and sell the
goods and services.
 Employees want good pay and working
conditions and to be treated fairly
 In return, responsibility to do a fair days work
for a fair days pay
 Many employees join trade unions which are
organisations representing the interests of
employees by speaking and negotiating on
their behalf with employers.
Government
 Refers to local and national authorities that
set out the rules and regulations by which
businesses must operate.
 The government wants businesses to pay
their fair share of taxes and to obey the law.
 Changes in government laws or taxes can
affect how a business is run and profits
earned.
 Interest Groups (2003 Q 1.)

 Are groups that wish to influence the

political decision making process but are
not part of the accepted political structure
of a country.
 They put pressure on the government or
EU to accept their position on an issue.
 Examples
 ICTU: Irish Congress of Trade Unions
 IBEC: Irish Business & Employers
Confederation
 CAI: Consumer Association of Ireland
 ICMSA: Irish Creamery Milk Suppliers
Associaltion
 IFA: Irish Farmers Association
 LVA: Licenced Vintners Association
 ITAA: Irish Travel Agents Association
 SIMI: Socity of Irish Motor Industry
 Role of Interest Groups
 Lobbying
 Applying pressure to the government to
make a certain decision.

 Boycotting
 Ignoring a company or shop.
 Picketing
 Holding a peaceful demonstration/protest.

 Negative advertising
 Ringing Joe Duffy,
 Articles in the news papers,
 Press conferences.
Costs of negative advertising
 Loss of sales & profits.
 Increased security.
 Advertising to counteract the negative
publicity.
 PR costs.
 Cooperative Relationship
 When stakeholders work together to
achieve a common goal.
 They act in a manner of mutual benefit.
 This produces better results than working
alone or against each other.
 Cooperation within a business
 Employees work in teams
 Employers & employees agree on wages
and work conditions.
 Producers listen to feedback from their
customers.
 Investors give funding to entrepreneurs
who keep them informed and rewarded.
 Cooperation between
businesses
 Two companies may form a
strategic alliance.
 They will share skills, ideas, costs and
profits.
 Eg. Ford & Mazda
 2004 Q 1.
 Competitive Relationship
 When stakeholders pursue different aims.
 They work against each other.
 Competition can take place within or
between business.
Competition within business
 Employees compete with other
employees for promotion.
 This may increase productivity but
 can also cause conflict & stress.
 Competition between
businesses
 Two producers/service providers may
compete on prices.
 Eg. Aerlingus & Ryanair.
 Consumers benefit from low prices.
 But it could cause job losses.
 Dependent Relationship
 Some stakeholders need each other to be
successful.
 They cannot achieve their goals on their
own.
 They rely on the other party to provide
them with what they need.
 Eg.
 Consumers need producer’s products.
 Producers need consumers money.

Eg.
 Entrepreneurs need investors money.
 Investors need entrepreneur’s ideas & div.
 Dynamic Relationship
 Relationships between stakeholders in
business are constantly changing.
 Sometimes they are cooperative.
 Sometimes they are competitive.
 Eg.
 Ford & Mazda are rivals.
 However,

in 1990 the formed a strategic alliance

to share the cost of developing a new car,
in a time of recession.
 Exam Questions
 Short  Long
 2010
 2010  2009 Q 1 (a), (b)
 2007 Q 8  2008 Q 1 (a)
 2006 Q 1 (a)
 2006 Q 1  2005 Q 1 (a)
 2000 Q 1  2004 Q 1 (a)
 2003 Q 1 (a)
 2002 Q 1 (a), (b)
 2001 Q 1(a)
 1999 Q 1 (a)
Law of Contract
 What is a contract?
 It is a legaly binding agreement,
between two or more people,
that is enforcable by law.
 If one person breaks the agreement a
judge can order them to pay
compensation.

 Or force them to carry out the contract as

originally planned.
 Elements of a legally binding
contract (2006, 2003)

 1. Agreement  5. Consent
 2. Intention  6. Legality of form
 3. Consideration  7. Legality of purpose
 4. Capacity
 1. Agreement (offer & acceptance) (2008)

 There must be a valid offer and

 a valid acceptance of that offer.

 They both must be clear, complete &

unconditional.
 They can be in writing eg. purchase of land.
 They can be oral eg. auction.
 They can be implied eg. checkout.
 An offer is terminated if there is
a counter offer,
a rejectoin of the offer or
a revocation
(person making the offer backs out).
 Invitation to Treat (2008)

 Advertisements, price tags or shop displays

are not legal offers.
 They are an invitation to treat.
 If a price is wrong it can be corrected.
 It does not have to be sold at the mistaken
price.
 2008 SQ 2.
 Distinguish between an offer and an
invitation to treat.
 An offer is a promise by the person making
the offer to be bound by the contract.
 Whereas
 An invitaion to treat is only inviting a person
to make an offer that does not have to be
accepted.
2. Intention
 In order for a contract there must be a
willingness and knowledge on both
sides to enter into a contract.
Eg.
 “Social/personal arrangement”
 Two people arrange to go out for
dinner.
 If one does not turn up can the other
one sue?
 No.
 There was not intention to contract.
 “Business arrangement”
 A supplier agrees to supply goods at a
certain price and date to a buyer.
 The goods don’t turn up.
 Can the buyer sue?
 Yes
 Ther was an intnetion to contract.
 3. Consideration (2007)

 There must be some sort of exchange.

 It need not reflect the full monetary value
of the item.
 But it must have some measurable value.
Eg.
 Mary buys a car from Tom for €5,000.
 Mary gets the car.
 Tom gets the money.
 4. Capacity
 To be legally able to enter into a contract
you must be:
 Over 18
 Sober
 Not mentally ill
 Not bankrupt
…….
Not acting “ultra vires”
This means not acting outside the
objectives of the company.

 Not “diplomatically immune”

Eg. An ambassador to a country is not
subject to the laws of th land.
 5. Consent
 The contract must be made voluntarily.
 It must not be made under duress
(pressure).
 Both parties must agree to what is in the
contract.
 6. Legality of form
 The way the contract is drawn must suit the
purpose.
 Auction = Verbal contract
 Hire Purchase agreement = Written contract
 House purchase = Written contract
 Shopping = Implied contract
 7. Legality of prupose
 Legally binding contracts must be for
legal transactions.
 Agreements to commit a crime will not be
upheld in court.
 Eg.
 A judge will not award compensation to a
bank robber whose getaway driver did not
turn up for work!!
 How can a contract be terminated? (2005)

1. Performance
 Both parties carry out their side of the

contract.
 Eg.

 Builder builds a house;

 The owner pays the builder.

 …..
2. Agreement
 Both parties agree to end the contract.

 Eg.

 An engaged couple both agree to break

up.
….
3. Frustration
 Events make it impossible to carry out

the contract.
 Eg.

 Death or lunacy.
….
4. Breach
 If one person breaks the contract the

other person has the right to end it.

 Eg.

 If a builder only half builds a house

 The owner does not agree to pay

anything.
 Remedies for breach of contract (RDS)
(2007, 1999)

1. Rescind
 Abandon the contract.

2. Damages
 The injured party can sue for compo.

3. Specific performance
 The courts can order the original contract to

be carried out. Eg. Finish building a house.

 Condition
 Is fundamental to a contract.
 If broken the contract is void.
 Damages may be sought by the injured
party.
 Eg. Land sold subject to planning
permission.
 Warranty
 Is not fundamental to a contract.
 If broken damages may be sought by the
injured party.
 But the contract will not end.
 Eg. A 5 year parts warranty on a car.
 Express Terms
 Are clearly stated.
 Eg. 12 monthly payments @ 10% APR.

ImpliedTerms
 Are inferred from conduct or behaviour.
 Eg. Standing at a checkout.
 Exam Questions - Short
 2009 Q 8. Consideration + 2 other
elements of a contract
 2008 Q 2. Offer v ITT
 2007 Q 5. Consideration
 2005 Q 1. Capacity
 2000 Q 1.
 Exam Questions - Long
 2007 Q 1. Specific Performance
 2006 Q 1. Elements of a valid contract
 2005 Q 1. Termination of contract
 2003 Q 1. Elements of a valid contract
 2001 Q 1. Contract v Inv to treat
 1999 Q 1. Remedies for breach of
contract