Unit : 5

Legal Environment for the Tourism Entrepreneurship

• The legal environment of business refers to

the code of conduct that defines the legal
boundaries for business activity.
• It defines what entrepreneurs can do and
cannot do.
• Entrepreneur must comply with legal
provisions in force.
• Legal environment consists of laws, rules,
regulations and ruling of the courts of law.
 Legal environment consists of:
1. General business legislation: Sole, partner of company and
also covers contract, leases, bankruptcy and property law.
2. Labor legislation: covers employment, child labor, trade
union etc.
3. Financial legislation: covers taxation, foreign exchange,
foreign investment etc.
4. Social legislation: covers consumer protection, product
safety, environment protection, standardization. Etc.
5. Intellectual property rights legislation: related with patents,
trademarks, copyright, trade secrets, licensing etc.
 Concept of Intellectual property
• Intellectual property (IP) refers to creations of the
mind, such as inventions; literary and artistic works;
designs; and symbols, names and images used in
commerce.

• IP is protected in law by, for example, patents,

copyright and trademarks, which enable people to earn
recognition or financial benefit from what they invent
or create. By striking the right balance between the
interests of innovators and the wider public interest,
the IP system aims to foster an environment in which
creativity and innovation can flourish.
 Types of Intellectual property

Patent:
• A patent is a form of
intellectual property. A patent
gives its owner the right to
exclude others from making,
using, selling, and importing
an invention for a limited
period of time, usually twenty
years.
• It gives and inventor exclusive
rights to an invention.
Government grants protection
from making, using or selling
similar invention by other.
Three types of Patent:
1. Utility patent: concerned with process, for
example film developing.
2. Design Patent: concerned with articles of
manufacture e.g: Nike shoes design.
3. Plant patent: concerned new plants and
machinery.
 Steps in Patent registration
It is done by filling patent application form to concerned government agency. To
receive a patent, given steps need to be followed:

a) Establish the inventor’s novelty: Invention should not be known, used or

described in print. Inventor should be the first to develop or invent the idea.
b) Document the device: verify the date on which the idea of invention was
conceived. This will be based on disclosure document filed with the patent
office.
c) Search existing patents: This is done to find the invention is new or not. Online
search is done.
d) Study search results: The result of search of existing patents should be studied to
determine that the invention is new.
e) Submit patent application: The formal application describing invention should be
files with appropriate government authority. Lawyers are also hired to complete
patent application.
f) Receive patent: The inventor receives patent if the application is approved after
patent examination.
Trademark
 Trademark
• A trademark is a word, phrase, symbol, and/or design
that identifies and distinguishes the source of the
goods of one party from those of others.
• A service mark is a word, phrase, symbol, and/or
design that identifies and distinguishes the source of a
service rather than goods.
• Some examples include: brand names, slogans, and
logos. The term "trademark" is often used in a general
sense to refer to both trademarks and service marks.
• The right of use can be licensed or sold to others.
 Steps in trademark registration
• Registration of the trade marks is done by
filing an application form to appropriate
government authority. However, it should be
unique. It should not ne a copy of trademark
currently in use. Search of existing trademarks
should not be done before filing a application.
• The entrepreneur loses exclusive right to a
trademark if it becomes a generic name. For
example: Glucose, Thermos, Aspirin etc.
 Copyright
• A copyright protects original
works of authorship including
literary, dramatic, musical, and
artistic works, such as poetry,
novels, movies, songs,
computer software, and
architecture. The duration of
copyright protection depends
on several factors. For works
created by an individual,
protection lasts for the life of
the author, plus 70 years.
• Registration: The authors and
originators get automatic
copyright. Formal registration
is also possible.
 Trade secrets
• A trade secret is a formula, practice, process,
design, instrument, pattern, commercial method,
or compilation of information not generally
known or reasonably ascertainable by others by
which a business can obtain an economic
advantage over competitors or customers.
• The information or process is a trade secret if:
– It is not known by competitors
– The owner has taken reasonable steps to protect it.
– The business would lose advantage if it is obtained by
competitors.
 Types of trade secrets
• It can Be:
– Customer list
– Research and development
– Plans and programs
– Pricing information
– Marketing techniques
– Compilations
– Formulas etc.
 Product safety and liability
• Product safety refers to responsibility to meet
any legal specification regarding a new
product.
• Product liability is the area of law in which
manufacturers, distributors, suppliers,
retailers, and others who make products
available to the public are held responsible for
the injuries those products cause.
 Product safety and liability
• Injury or death resulting from product defects create
product liability. Claim for product liability can be for:
a) Negligence: It involves negligence in the way a product is
presented to a client. It can be due to false advertisement,
deficient labels and other labels.
b) Warranty: If the product does not perform as stated or the
advertisement overstates the benefits of a product.
c) Strict Liability: This arises if the product was defective
before its receipt.
d) Misrepresentation: This arises when advertising labels or
other information misrepresent facts concerning quality
of the product.
 Licensing
• A Licensing agreement is an arrangement
whereby a licensor grants the right to
intangible property to another entity for a
specified period, and in return, the licensor
receives a royalty fee from the licensee.
Intangible property includes patents,
inventions, formulas, processes, designs,
copyrights, and trademarks.
Types of Licensing
 Insurance
• Insurance is a contract, represented by a
policy, in which an individual or entity receives
financial protection or reimbursement against
losses from an insurance company. The
company pools clients' risks to make
payments more affordable for the insured.
 Types of insurance
1. Property insurance:
Whether a business owns or leases its space, property insurance
is a must. This insurance covers equipment, signage,
inventory and furniture in the event of a fire, storm or theft.
However, mass-destruction events like floods and earthquakes
are generally not covered under standard property insurance
policies.
2. Worker’s Compensation:
This will cover medical treatment, disability and death benefits in
the event an employee is injured or dies as a result of his work
with that business. Even if employees are performing seemingly
low-risk work, slip-and-fall injuries or medical conditions could
result in a pricey claim.
 Types of insurance
3. Life Insurance:
It provides financial security to human lives in
case of death or for a fixed term.
4. Health: It covers health care expenses of
employees.
5. Casualty: Covers liability resulting from body
injury.
 Contracts
• A contract is a legally-binding agreement
which recognizes and governs the rights and
duties of the parties to the agreement. A
contract is legally enforceable because it
meets the requirements and approval of the
law. An agreement typically involves the
exchange of goods, services, money, or
promises of any of those.
 Rules for contract
• Offer: An offer is the beginning of a contract. ...
• Acceptance: An offer can be accepted in writing, in
person or over the phone.
• Consideration: Consideration is something of value that
the parties are contracting to exchange.
• Competence/Capacity
• Mutual Consent
• Legality
• Expiry and renew
• Writing