1) EWOFL has a contract to supply organically-cultivated mangoes and other tropical fruits to Mayflower Plc, a leading supermarket chain.

BUSINESS LAW AND ETHICS (LLB)

LAW4004-B

MAIN COURSEWORK ASSIGNMENT 2018-19

 

Please submit your assignment electronically through Canvas under the Assignments tab. Failure to submit, including late submissions without an authorised extension, will be considered as non-submission and you will receive a mark of zero. Following submission your assignment will be checked for plagiarism using Turnitin.  Further details on how to submit electronically can be found on Canvas under the Assignments tab. 

Assessment Criteria:

 

You will be assessed on your fulfilment of the module learning outcomes according to your ability to:

 

1)    Describe legal institutions, rules and principles as they apply in a business context;

2)    Apply legal and business knowledge to solve legal and business related problems;

3)    Work effectively as a member of a group;

4)    Communicate effectively in writing;

5)    Reflect on your own learning;

6)    Act as an ethical professional who is aware of the cultural and social contexts of business and law and is responsive to changing environments.

The Case Study

 

 

East West Organic Food Limited (EWOFL) supplies organically produced food, drink, and clothing to retailers and restaurants throughout the UK. EWOFL sources its products from national and international producers who comply with EU and UK regulations for organic certification. The company, based in Leeds, employs over 150 staff to carry out its purchasing, sales, marketing and supply operations.

 

EWOFL is very profitable and enjoys an excellent reputation for high quality products and for its commitment to sustainability and diversity. The company’s success is based on providing premium products at competitive prices without compromising its principles. EWOFL’s website celebrates the company’s role as a standard-bearer for ethical business and social responsibility. It places equivalent value on the interests of its shareholders, employees, customers, suppliers, and connected stakeholders, stating that:

 

 ‘While commercial success is essential for any business, for EWOFL the bottom line is about ethics as well as economics, about fairness as well as finance’.

 

You are employed as the head of EWOFL’s in-house legal department. Your job is to provide legal guidance to the company in relation to its general activities – covering regulatory compliance, employment, and contractual matters – and in relation to any disputes which may arise. Your role requires you not only to advise the board of directors and management on legal issues but to take into account ethical issues, wherever the latter might be seen as an important consideration and, in particular, where they might affect EWOFL’s reputation and commercial relationships.

 

You find your job fascinating and fulfilling. Legal issues and ethical issues constantly arise. The company regards legal compliance as a fundamental requirement. Compliance is usually straightforward but complex legal questions can crop up. Legal disputes are generally harder to resolve, as the outcome of litigation is frequently uncertain and the pros and cons of litigation, as opposed to alternative forms of dispute resolution, are often difficult to gauge. You have to know when to rely on your own legal and commercial expertise and when to seek specialist legal advice from outside. Ethical dilemmas can be relatively straightforward, given EWOFL’s ethos. However, they can often prove immensely tricky as there is rarely, if ever, a single right answer.

 

In the first few months of 2019 you have to deal with a wide range of matters that have legal, ethical, and commercial implications. The four most serious matters are set out below:

 

1)            EWOFL has a contract to supply organically-cultivated mangoes and other tropical fruits to Mayflower Plc, a leading supermarket chain. The contract is valuable in itself and part of a series of supply contracts with Mayflower which account for a significant part of EWOFL’s business. The contract stipulates that the mangoes will be certified as organic under the regulations of the country of origin and satisfy EU regulations on organic labelling.

 

Alison has recently replaced David as EWOFL’s senior overseas buyer. David retired in December. Alison has spent the first few weeks in her new role travelling round EWOFL’s overseas suppliers and producers and exploring possible additions and alternatives. While in India she has been to see Zest, EWOFL’s Indian supplier of organic mangoes, and the farmer producers that supply Zest. On her visits to the farms she tested the soil, trees, and fruit to ensure that the mangoes are produced without synthetic pesticides or fertilisers. She also discussed crop varieties, crop forecasts, and profitability with the farmers. On her visit to Zest she checked on certification compliance, packaging and labelling, and discussed quality control, costs, and other contractual matters with Zest’s owner, Sunny.

 

The tests have been satisfactory and Alison is pleased with the quality of the mangoes being produced. However, by the end of her visit, she has serious concerns about the following aspects of the relationship with Zest:

 

Although the mangoes have the required organic certification, the certification process is highly bureaucratic, inconvenient and prolonged. Sunny cuts through this

red tape by paying the agricultural officers what he calls a ‘facilitation fee’. These officers are civil servants and not well paid. Such unofficial opportunities to supplement their income are tacitly approved by their managers.

 

Sunny assured Alison that these payments are culturally normal and, in any case, do not affect the cost to EWOFL. It is the farmers who fund the payments through an agreed deduction from their invoices to Zest. Sunny explains that he makes a further small deduction from each invoice by way of a ‘gratuity’ which he has always shared with David and will now share with Alison. According to Sunny the farmers are only too happy to agree to this as it gives them the security of knowing that Zest will be loyal to them rather than look elsewhere.

 

For her part, Alison knows that the farmers’ profit-margin leaves the smaller producers close to subsistence level and with little scope to invest in improvements or develop their business. The farmers told her that the deductions imposed by Zest are something they have to put up with as the price of staying on their farms, where their families have been for generations. Without the guaranteed income from Zest they would probably have to sell their land to one of the large, corporate farming companies. On the other hand, without the deductions they would earn enough to improve their operations and circumstances and invest for the future with confidence.

 

On her return to EWOFL’s UK office Alison tells you what has happened and what she has discovered. She has no concerns about the quality of the mangoes or their organic credentials but she is very concerned about the payments to the local Indian officials and the deductions from the payments due to the farmers.

 

Explore and analyse the legal and ethical issues facing EWOFL in the light of Alison’s discoveries.