1. © 2005 West Legal Studies in Business A Division of Thomson Learning Chapter 1 The Legal Environment

2. © 2005 West Legal Studies in Business A Division of Thomson Learning 2 What is the Uniform Commercial Code?What is the Uniform Commercial Code? What is the common law tradition?What is the common law tradition? What is a precedent? When might a court depart from precedent?What is a precedent? When might a court depart from precedent? What is the difference between remedies at law and remedies in equity?What is the difference between remedies at law and remedies in equity? What are some of the important differences between criminal law and civil law?What are some of the important differences between criminal law and civil law? Learning Objectives

3. © 2005 West Legal Studies in Business A Division of Thomson Learning 3 The Nature of Law The Natural Law TraditionThe Natural Law Tradition –Oldest and most significant view of law. –Government and legal system should reflect universal moral and ethical principles. –These principles are inherent in human nature. –They can be discovered through right reason. –Basis for natural rights.

4. © 2005 West Legal Studies in Business A Division of Thomson Learning 4 Nature of Law Legal Positivism (or Positive Law)Legal Positivism (or Positive Law) –Applies only to citizens of that nation or society. –No higher law than the nation’s highest governing body or court. –Laws must be obeyed regardless of whether they are just or unjust. –No view of “natural” rights. –Morality of a law is irrelevant.

5. © 2005 West Legal Studies in Business A Division of Thomson Learning 5 Nature of Law The Historical SchoolThe Historical School –Emphasizes the evolutionary process of law. –Concentrates on the origin and history of legal system. –Looks to the past to determine laws for present. –Law derives legitimacy from precedent.

6. © 2005 West Legal Studies in Business A Division of Thomson Learning 6 Nature of Law Legal RealismLegal Realism –View of law started in 1920’s. –Law must be viewed within the social context. –Judges should take economic and social realities into account. –Sociological jurisprudence tends to be activistic, e.g., civil rights decisions. –Do not feel bound by past decisions.

7. © 2005 West Legal Studies in Business A Division of Thomson Learning 7 Business Activities and the Legal Environment Knowledge of “black letter” law is not enough.Knowledge of “black letter” law is not enough. Many different laws affect a single business transaction.Many different laws affect a single business transaction. Ethics and business decision making.Ethics and business decision making. –Ethics: what constitutes right or wrong behavior.

8. © 2005 West Legal Studies in Business A Division of Thomson Learning 8 Sources of American Law Constitutional LawConstitutional Law –Found in text and cases arising from federal and state constitutions. –U.S. Constitution is the supreme law of the land. Statutory LawStatutory Law –Laws enacted by federal and state legislatures. –Local ordinances. –Uniform Laws (e.g.,Uniform Commercial Code).

9. © 2005 West Legal Studies in Business A Division of Thomson Learning 9 Sources of American Law Administrative LawAdministrative Law –Rulemaking--Rules, orders and decisions of administrative agencies, federal, state and local. –Administrative agencies can be independent regulatory agency such as the Food and Drug Administration. –Adjudication--agencies make rules, then investigate and enforce the rules in administrative hearings.

10. © 2005 West Legal Studies in Business A Division of Thomson Learning 10 The Common Law Tradition Early English Courts of LawEarly English Courts of Law –King’s courts started after Norman conquest of 1066. –Established the common law—body of general legal principles applied throughout the English empire. –King’s courts used precedent to build the common law.

11. © 2005 West Legal Studies in Business A Division of Thomson Learning 11 The Common Law Tradition Stare DecisisStare Decisis –Practice of deciding new cases based on precedent. –A higher court’s decision based on certain facts and law, is a binding authority on lower courts. –Helps courts stay efficient.

12. © 2005 West Legal Studies in Business A Division of Thomson Learning 12 The Common Law Tradition Remedies: Law vs. EquityRemedies: Law vs. Equity –Remedy: means to enforce a right or compensate for injury to that right. –Remedy at Law: in king’s courts, remedies were restricted to damages in either money or property. –Equitable Remedy: based on justice and fair dealing a chancery court does what is right. –Today, legal and equitable remedies are found in the same court.

13. © 2005 West Legal Studies in Business A Division of Thomson Learning 13 Sources of American Law Case Law and Common Law DoctrinesCase Law and Common Law Doctrines –Much of the common law is still used today. –Common law governs all areas not specifically covered by statutory or constitutional law. –Restatements of the Law: modern compilations of common law principles found, e.g., in contracts, torts, property and agency.

14. © 2005 West Legal Studies in Business A Division of Thomson Learning 14 Classifications of Law Substantive vs. Procedural LawSubstantive vs. Procedural Law –Substantive: laws that define and regulate rights and duties. –Procedural: laws that establish methods for enforcing and protecting rights. Civil Law and Criminal LawCivil Law and Criminal Law –Civil: private rights and duties between persons and government. –Criminal: public wrongs against society.

15. © 2005 West Legal Studies in Business A Division of Thomson Learning 15 Classifications of Law National and International LawNational and International Law –National: laws of a particular nation. –Civil vs. Common Law: Civil law countries based on Roman code (e.g., Latin America). –International: body of written and unwritten laws observed by nations when dealing with each other. Cyberlaw: governs internet transactions.Cyberlaw: governs internet transactions.

16. © 2005 West Legal Studies in Business A Division of Thomson Learning 16 Appendix Finding Statutory Law.Finding Statutory Law. –United States Code (USC). –State Statutes. Finding Administrative Law.Finding Administrative Law. –Code of Federal Regulations (CFR). Finding Case Law (Case Citations).Finding Case Law (Case Citations). –Supreme Court Cases at Findlaw.com. Supreme Court Cases Supreme Court Cases –Federal Court Cases at Findlaw.com. Federal Court Cases Federal Court Cases –State Court Cases at Findlaw.com. State Court Cases State Court Cases

17. © 2005 West Legal Studies in Business A Division of Thomson Learning 17 AppendixAppendix Reading & Understanding Case LawReading & Understanding Case Law –Legal cases are identified by a “legal citation” (or a “cite”) as the example below: EMG Recordings, Inc. v. Sinnot, 300 F. Supp.2d 993 (E.D. Ca. 2004). Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined.

18. © 2005 West Legal Studies in Business A Division of Thomson Learning 18 Appendix Reading & Understanding Case LawReading & Understanding Case Law –Legal cases are identified by a “legal citation” (or a “cite”) as the example below: EMG Recordings, Inc. v. Sinnot, 300 F. Supp.2d 993 (E.D. Ca. 2004). This is a federal court case from the Eastern District of California, found in Volume 300, Page 993 of the Federal Supplement 2d. This case was decided in 2004.