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© 2004 West Legal Studies in BusinessA Division of Thomson Learning 1

Chapter 1Chapter 1Business and Its Business and Its

Legal EnvironmentLegal Environment


§1: §1: Schools of Schools of Jurisprudential Thought Jurisprudential Thought

At a minimum, law consists of enforceable At a minimum, law consists of enforceable rules governing relationships among persons rules governing relationships among persons and between persons and society. and between persons and society.

There are several different “schools” of law:There are several different “schools” of law: Natural Law. Natural Law. Positivist view.Positivist view. Historical view.Historical view. Legal Realism view.Legal Realism view.


The Natural Law SchoolThe Natural Law School

Assumes that law, rights and ethics are based Assumes that law, rights and ethics are based on universal moral principals inherent in nature on universal moral principals inherent in nature discoverable through the human reason. discoverable through the human reason.

The oldest view of jurisprudence dating back to The oldest view of jurisprudence dating back to Aristotle. Aristotle.

The Declaration of Independence assumes “the The Declaration of Independence assumes “the Laws of Nature.” Laws of Nature.”


Natural Law Natural Law Rev. Martin Luther King, Jr.Rev. Martin Luther King, Jr.

Letter from the Birmingham Jail,Letter from the Birmingham Jail, April 16, April 16, 1963 “[T]here are two types of laws: just and 1963 “[T]here are two types of laws: just and unjust laws. . . . A just law is a man-made code unjust laws. . . . A just law is a man-made code that squares with the moral law . . . . An unjust that squares with the moral law . . . . An unjust law is a code that is out of harmony with the law is a code that is out of harmony with the moral law. . . . An unjust law is a human law moral law. . . . An unjust law is a human law that is not rooted in eternal and natural law.”that is not rooted in eternal and natural law.”


The Positivist School The Positivist School

Law is the supreme will of the State that applies Law is the supreme will of the State that applies only to the citizens of that nation at that time. only to the citizens of that nation at that time.

Law, and therefore rights and ethics, are not Law, and therefore rights and ethics, are not universal. The morality of a law, or whether the universal. The morality of a law, or whether the law is “bad or good”, is irrelevant. law is “bad or good”, is irrelevant.


The Historical SchoolThe Historical School

Emphasizes the evolutionary process of law.Emphasizes the evolutionary process of law.Concentrates on the origin and history of the Concentrates on the origin and history of the

legal system.legal system.Law derives its legitimacy from the principles Law derives its legitimacy from the principles

and standards that have proved historically and standards that have proved historically workable.workable.


Legal Realism Legal Realism

Jurisprudence that holds law is not simply a Jurisprudence that holds law is not simply a result of the written law, but a product of the result of the written law, but a product of the views of judicial decision makers, as well as views of judicial decision makers, as well as social, economic, and contextual influences.social, economic, and contextual influences.

Law is a tool to promote social justice.Law is a tool to promote social justice.


§ 2: Business Activities and § 2: Business Activities and the Legal Environmentthe Legal Environment

Law regulates many different areas of business.Law regulates many different areas of business.Study of business law also involves a Study of business law also involves a

knowledge of ethics in decision-making.knowledge of ethics in decision-making.Many different laws may affect a single Many different laws may affect a single

business transaction.business transaction.


§3: §3: Sources of American Law Sources of American Law

U.SU.S. and . and StateState Constitutions. Constitutions.Statutory Law--Statutory Law--federalfederal and and statestate statutes. statutes.

Uniform Commercial Code.Uniform Commercial Code. Restatements of the Law.Restatements of the Law.

Administrative Law.Administrative Law.Case Law and Common Law Doctrines.Case Law and Common Law Doctrines.

http://supreme.findlaw.com/constitution/

http://www.findlaw.com/11stategov/indexconst.html

http://www4.law.cornell.edu/uscode/

http://www.findlaw.com/11stategov/indexcode.html


§ 4: § 4: The Common Law Tradition The Common Law Tradition

American law is based largely on English American law is based largely on English Common Law originating in medieval England.Common Law originating in medieval England.

The common law was based largely on The common law was based largely on traditions, social customs, rules and cases traditions, social customs, rules and cases developed over hundreds of years after the developed over hundreds of years after the Norman conquest in 1066.Norman conquest in 1066.


Early English CourtsEarly English Courts

At common law, there were two separate At common law, there were two separate court systems with two different types of court systems with two different types of remedies:remedies: COURTS OF LAW (monetary relief).COURTS OF LAW (monetary relief). COURTS OF EQUITY (non-monetary COURTS OF EQUITY (non-monetary

relief), based on “notions of justice and fair relief), based on “notions of justice and fair dealing.” dealing.”


Courts of LawCourts of Law

Also called “king’s courts” where judges were Also called “king’s courts” where judges were appointed by the king.appointed by the king.

Remedies limited to those provided at law, i.e., Remedies limited to those provided at law, i.e., land, chattel, money.land, chattel, money.

Judges resolved disputes by application of rules Judges resolved disputes by application of rules of law to the facts of the case before the court. of law to the facts of the case before the court.


Courts of Equity Courts of Equity

Equitable relief was sometimes available in Equitable relief was sometimes available in instances where a strict application of the law to instances where a strict application of the law to the facts of the case compelled a result that was the facts of the case compelled a result that was legal but unjust.legal but unjust.

Equitable maxims.Equitable maxims.


Legal and Equitable Legal and Equitable Remedies Today Remedies Today

Today federal and state courts of general Today federal and state courts of general jurisdiction have consolidated remedies at law jurisdiction have consolidated remedies at law and remedies at equity. and remedies at equity.

Generally, the same court can fashion a remedy Generally, the same court can fashion a remedy that includes both damages and equitable or that includes both damages and equitable or injunctive relief.injunctive relief.


The Doctrine ofThe Doctrine of Stare Decisis Stare Decisis

Stare decisisStare decisis is a Latin phrase meaning “to is a Latin phrase meaning “to stand on decided cases”. stand on decided cases”. Makes the law stable and predictable.Makes the law stable and predictable. Increases judicial efficiency by relieving courts of Increases judicial efficiency by relieving courts of

having to reinvent legal principles for each case having to reinvent legal principles for each case brought before them.brought before them.

Stare decisisStare decisis is “judge made law” based on is “judge made law” based on precedent.precedent.


Case Precedents and Case Precedents and Case Reporters Case Reporters

Precedents are judicial decisions that give rise Precedents are judicial decisions that give rise to legal principles that can be applied in future to legal principles that can be applied in future cases based upon similar facts.cases based upon similar facts.

Precedents and other forms of positive law, Precedents and other forms of positive law, such as statutes, constitutions, and regulations such as statutes, constitutions, and regulations are referred to as binding authorities and must are referred to as binding authorities and must be followed.be followed.

Today, cases are published or ‘reported’ in Today, cases are published or ‘reported’ in books called reporters (see Appendix).books called reporters (see Appendix).


Departure from PrecedentDeparture from Precedent

In cases of “first impression” where there is no In cases of “first impression” where there is no precedent, the court may refer to positive law, precedent, the court may refer to positive law, public policy, and widely held social values in public policy, and widely held social values in order to craft the best new precedent.order to craft the best new precedent.


Stare DecisisStare Decisis and and Legal ReasoningLegal Reasoning

Method used by judges to reach a decision.Method used by judges to reach a decision.Many courts and attorneys frame decisions and Many courts and attorneys frame decisions and

briefs using the IRAC format: Issue, Rule, briefs using the IRAC format: Issue, Rule, Application (Analysis) and Conclusion.Application (Analysis) and Conclusion. What are the key facts and issues?What are the key facts and issues? What rules or laws apply?What rules or laws apply? How do the rules of law apply to these facts?How do the rules of law apply to these facts?


Forms of Legal Reasoning Forms of Legal Reasoning Deductive Reasoning: Makes use of Deductive Reasoning: Makes use of

syllogism, a type of logical relationship syllogism, a type of logical relationship involving a major premise and a minor involving a major premise and a minor premisepremise

Linear Reasoning: Proceeds from point to Linear Reasoning: Proceeds from point to point, with the final point being the point, with the final point being the conclusionconclusion

Reasoning by Analogy: Analysis that Reasoning by Analogy: Analysis that compares facts of present case with facts of compares facts of present case with facts of similar previously-decided cases. similar previously-decided cases.


§ 5: The Common Law Today§ 5: The Common Law Today

Common law today governs transactions not Common law today governs transactions not covered by statutory law.covered by statutory law.

Restatements of the Law:Restatements of the Law: By the American Law Institute,By the American Law Institute, Summarize the common law of most states.Summarize the common law of most states.


§6: §6: Classifications of LawClassifications of Law

Every type of law will be either:Every type of law will be either: Civil or Criminal (and either),Civil or Criminal (and either), Substantive or Procedural (and either), Substantive or Procedural (and either), Public or Private.Public or Private.

““Cyberlaw” is traditional law applied in the Cyberlaw” is traditional law applied in the online forums.online forums.


Civil vs. Criminal LawCivil vs. Criminal Law

Civil law defines the rights between Civil law defines the rights between individuals or individuals and governments.individuals or individuals and governments.

Criminal law defines an individual’s Criminal law defines an individual’s obligations to society as a whole.obligations to society as a whole.


Substantive vs. Procedural Substantive vs. Procedural

Substantive law defines or creates the rights Substantive law defines or creates the rights and obligations of persons and governments.and obligations of persons and governments.

Procedural law provides the steps one must Procedural law provides the steps one must follow in order to avail oneself of one’s legal follow in order to avail oneself of one’s legal rights or enforce another’s legal obligations.rights or enforce another’s legal obligations.


Law on the WebLaw on the Web

Findlaw.comFindlaw.com.. Legal Information Institute at Cornell Law School.Legal Information Institute at Cornell Law School. Library of Congress. Library of Congress. Villanova’s Center for Information Law and Policy.Villanova’s Center for Information Law and Policy. Virtual Law Library at Indiana U.Virtual Law Library at Indiana U.

Legal Research Exercises on the Web.Legal Research Exercises on the Web.

http://www.findlaw.com/


Appendix:Appendix: Finding Primary Finding Primary Sources of LawSources of Law

Finding Statutory Law.Finding Statutory Law. United States Code (USC).United States Code (USC). State Statutes (Texas).State Statutes (Texas).

Finding Administrative Law.Finding Administrative Law. Code of Federal Regulations (CFR).Code of Federal Regulations (CFR).

Finding Case Law. Finding Case Law. Supreme Court Cases at Findlaw.com.Supreme Court Cases at Findlaw.com. Federal Court Cases at Findlaw.com.Federal Court Cases at Findlaw.com. State Court Cases at Findlaw.com.State Court Cases at Findlaw.com.


How to How to Read & Read & Understand Case LawUnderstand Case Law

Legal cases are identified by a “legal citation” Legal cases are identified by a “legal citation” (or a “cite”) as the example below:(or a “cite”) as the example below:

Toyota Motor Manufacturing, Kentucky, Toyota Motor Manufacturing, Kentucky, Inc.,Inc., 534 U.S. 184 (2002). 534 U.S. 184 (2002).

Title: First Party is Plaintiff, second party is Defendant. The parties are

either italicized or underlined.


How to Read & How to Read & Understand Case Law Understand Case Law [2][2]

Legal cases are identified by a “legal citation” Legal cases are identified by a “legal citation” (or a “cite”) as the example below:(or a “cite”) as the example below:

Toyota Motor Manufacturing, Kentucky, Toyota Motor Manufacturing, Kentucky, Inc.,Inc., 534 U.S. 184534 U.S. 184 (2002). (2002).

This is a U.S. Supreme Court Case found in volume 534, page 184 of the U.S. Supreme Court reporter.

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Documents

case law

rules of law

human law

statutory law

written law

law stable

administrative law

english common law