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Laws 310 Week 7

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You Decide: Code of Ethics
Sharita Gibson
10/12/2015
DeVry University LAW310 |

Introduction
Code of Ethics determines how individuals, particularly employees, should act in accordance to agreements set with the company they work for. Code of Ethics espouse that employees’ actions are always for the protection of the interests of the employers and the clients above one’s own interests. Thus, they are expected to constantly act with respect and integrity and maintain professional competence in all that they do. In the case against John Anderson, the employee in question, it is clear that he violated certain codes of conduct and ethics when dealing with clients while still employed with Gloria Smithson’s company.

International Widgets’ Code of Ethics
The International Widgets’ Code of Ethics sums up eight characteristics or competencies that employees are expected to follow as, Confidentiality, Ethics, Duty of Care, Conflict of Interest, Intellectual Property and Moral Rights, Quality Assurance, Professional Conduct, and Equality and Discrimination. Of the eight codes of ethics, John violated at least four codes. This includes Confidentiality, Ethics, Conflict of Interest, and Professional Conduct.
Confidentiality states that the company, including its employees is expected to maintain “the highest degree of integrity in all … dealings with potential, current, and past clients, both in terms of normal commercial confidentiality and the protection of all personal information received in the course of providing the business services concerned”. John violated the confidentiality clause by agreeing to provide the competitor with the names and contact numbers of International Widgets’ customers. By doing so, he compromised the clients’ information which has been entrusted to International Widgets’ use only and thus, should stay within the company only.
The company believes in maintaining strong Ethics. Its principle lies in conducting business honestly and respectably with all clients and suppliers. Therefore, the company also expects the same from both clients and suppliers. However, by releasing the names of the company’s clients and suppliers, John did not display admirable traits for betraying the company’s, the clients’, and the suppliers’ trust. His actions did not consider what would be the effect to the company as the company could lose its ongoing clients to competitors.
International Widgets also expects its employees to remain loyal to the company, thus, employees’ actions and decisions must always be for the good of the company. Therefore, employees should be professional when dealing with clients and refrain from entering into partnerships or agreements with the company’s direct competitors. This is called Conflict of Interest. By providing the competitor with International Widgets’ list of customers and receiving monetary reward or bonus for it, John is guilty of conflict of interest because he is still a salaried employee of International Widgets. His action is inconsistent with the company’s expectation and drive towards an honest and respectable working relationship and conditions within the company.
John’s conduct falls below the expected and required conduct for an International Widgets’ employee, thus, his Professional Conduct may be put in question because he did not conduct business in an honest and professional manner. His integrity as an individual is also doubtful because what he did to the company and to the clients.

Legal Avenues
In practice, International Widgets requires its employees to sign a handbook where the company’s rules and regulations, including the Code of Ethics, are detailed. This is to ensure that each one has read the rules and commit to abiding by the company regulations. In the case of John, if he did sign the handbook, then he is liable to the company. Thus, International Widgets could sue him for breach of contract and disclosure of confidential matters, among others. For compromising the company’s clients’ information and as a result, losing vital clients to competition, International Widgets has every right to pursue legal action against John. However, the company cannot sue the competitor because it is not under contract with International Widget unlike John.
Fiduciary Relationship
Fiduciary relationship is an employer and employee relationship wherein one party places the trust and confidence in another party in relation to a transaction or management of another party’s general affairs (Cheeseman, 2015, p. 439). It is thus expected that the party or the fiduciary is “subject[ed] to exacting expectations of faithful service. Fiduciaries [,as in the case of John,] are expected only to pursue the interests of beneficiaries when executing a fiduciary mandate. To that end, the duty of loyalty strictly forbids conflicts of interest and conflicts of duty, on pain of powerful remedies that strip fiduciaries of any gains realized in breach” (Miller, 2013, p. 972).
Agents pertain to individuals who have the capacity to understand what the role entails. As an Agent, he or she acts on behalf of the principal or the company owner. Therefore, any contract that an Agent enters into on behalf of the company is a contract between the company and the other party, not of the Agent. This role and relationship allows the company to authorize the Agent to carry out the company’s duties in certain cases as long as the acts are carried out in a legal manner. With this relationship, it is understood that the Agent’s obligation of loyalty is to the company and thus, he or she will carry out instructions as set by management and therefore is subject to the control of the company. The Agent should not intentionally act against the commands of the company or carelessly act in behalf of the company. He or she should carry out the duties with appropriate care and diligence and should only act within the scope of authority as delegated to him or her and not engage in activities that would damage the company’s reputation. Additionally, the Agent is expected not to pursue actions that would advance his personal interests or take personal advantage of his or her role despite opportunities the role brings with it (Schuler, 2002). This includes not acquiring any material benefit from competitors, clients, or suppliers in order to gain favor.
As an employee of International Widgets, John’s responsibility is for the company and not to himself. The company entrusted John with vital information that should have stayed with the company only. In this capacity, he is an agent of International Widgets considering his role and position in the company. Even if there is no formal letter or paper that states the fiduciary relationship between John and International Widgets, the fact that the company hired John as an employee already establishes a fiduciary relationship between them, starting with the issue on loyalty (Alces, 2015, p. 357). As an Agent of the company, John is not fulfilling his role properly because his actions are more for personal gain rather than for the interest of the company. He falsely represents the company by providing the competitor with the company’s customer information. In doing so, he receives 1% of the customer’s first sales order and in turn, International Widgets loses a client. What makes this even more unethical is John is still employed with the company and receives full compensation monthly.
Actions International Widgets Could Take
As the aggrieved party, International Widgets should file a case against John after conducting a thorough investigation of the events that transpired. This is just to give John due process of the law and to give him the opportunity to explain himself. After the investigation, Gloria should consider terminating John from employment and even filing a case against him. International Widgets should hold him liable to his actions and behavior in order to dissuade other employees from doing the same thing and most importantly, to allow the company the justice that it deserves. The company should also consider placing an advertisement in leading newspapers announcing that the said employee is no longer connected with International Widgets and thus, any transactions or partnerships entered into with the ex-employee under the guise of doing business with International Widgets may constitute and lead to legal actions against the transacting parties.
For fiduciary relationships to be successful, both employer and employee must understand each other’s’ roles and responsibilities towards each other. The company must ensure that employees have a good understanding of loyalty, respect, and diligence at work. In addition, the International Widgets must guarantee that the employee is clear about his or her position and that he or she must act in accordance to what the company instructs and in the interest of the employers.

References
Alces, K. A. (2015). The fiduciary gap. The Journal of Corporation Law (40:2) 352-402. Retrieved from http://eds.a.ebscohost.com.proxy.devry.edu/eds/pdfviewer/pdfviewer?sid=d05f3498-df73-48f2-b5c1-d36773d66956%40sessionmgr4004&vid=2&hid=4213
Cheeseman, H. R. (2015). Contemporary business law. (8th ed). Upper Saddle River, NJ: Pearson.
Miller, P. (2013). Justifying fiduciary duties. McGill Law Journal – Revue de droit de McGill. Retrieved from http://eds.a.ebscohost.com.proxy.devry.edu/eds/pdfviewer/pdfviewer?sid=dfbe8912-6bef-4548-bb93-00f3baf2b64e%40sessionmgr4003&vid=2&hid=4213
Schuler, D. (2002). Principal-agent relationship. Retrieved from http://www.ruf.rice.edu/~schuler/principal-agent.html…...

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