1. Chapter 1: Law and Legal Reasoning
Business Law
Text and Cases
The First Course
Fourteenth Edition
Miller
Chapter 1: Law and Legal Reasoning

2. §1: Business Activities and the Legal Environment (1 of 2)
Laws and regulations affect virtually all business activities.
Knowledge of “black-letter” law and what conduct leads to liability not enough - business now assumes an ethical dimension.
Many different laws may affect a single business transaction.  2

3. Business Activities and the Legal Environment (2 of 2)3

4. §2: Sources of American Law (1 of 3)
Primary sources of law are those that establish the law such as constitutions, statutes, and regulations.
Secondary sources of law summarize and clarify the primary sources of law. 4

5. Sources of American Law (2 of 3)
Constitutional Law.
Statutory Law.
Ordinances.
Uniform Laws (NCCUSL).
Uniform Commercial Code. 5

6. Sources of American Law (3 of 3)
Administrative Law.
Federal Agencies.
State and Local Agencies.
Case Law and Common Law Doctrines. 6

7. §3: The Common Law Tradition (1 of 5)
American law is based largely on English common law, which was a body of general rules that applied throughout the entire English realm. 7

8. The Common Law Tradition (2 of 5)
With English common law, there were two separate court systems:
Courts of law granted limited kinds of (monetary) remedies such as land, items of value, and money.
Courts of equity awarded non-monetary relief (remedies in equity) such as specific performance, injunctions, and rescissions. 8

9. The Common Law Tradition (3 of 5)9

10. The Common Law Tradition (4 of 5)
Though the courts of law and equity have merged in the most of the U.S., they still recognize legal remedies and equitable remedies.
A party can request both legal and equitable remedies in the same action, and the trial court judge may grant either or both forms of relief. 10

11. The Common Law Tradition (5 of 5)11

12. The Common Law Tradition: Stare Decisis (1 of 6)
Stare Decisis (“stand on decided cases”) is a common law doctrine under which judges must follow the precedents established in prior decisions.
It helps the courts be more efficient and makes the law more stable and predictable. 12

13. The Common Law Tradition: Stare Decisis (2 of 6)
Stare decisis has two aspects:
A court should not overturn its own precedents unless there is a compelling reason to do so.
Decisions made by a higher court are binding on lower courts. 13

14. The Common Law Tradition: Stare Decisis (3 of 6)
Binding Authority: Any source of law a court must follow when deciding a case.
Includes constitutions, statutes, and regulations.
Controlling precedent: A binding authority that requires a court to follow prior court decisions in its jurisdiction. 14

15. The Common Law Tradition: Stare Decisis (4 of 6)
Persuasive Authority: Any primary or secondary source of law that a court may consult for guidance but that is not binding on the court.
Sources include precedents from other jurisdictions; issues of fairness, social values, and customs; and unpublished opinions. 15

16. The Common Law Tradition: Stare Decisis (5 of 6)
Pervasive authority is used in cases of first impression, or those that have no precedent.
A prior judicial decision is a binding precedent only when the subsequent court is applying the same law as the prior court. 16

17. The Common Law Tradition: Stare Decisis (6 of 6)
The highest court in a jurisdiction can depart from precedent if it decides that:
The precedent is incorrect, or
The technological or social changes have rendered the precedent inapplicable. 17

18. The Common Law Tradition: Stare Decisis & Legal Reasoning (1 of 3)
IRAC Method: The legal reasoning process that is used to decide cases regardless of length and complexity.
IRAC is an acronym for Issue, Rule, Application, and Conclusion. 18

19. The Common Law Tradition: Stare Decisis & Legal Reasoning (2 of 3)
1. Issue—What are the key facts and issues?
2. Rule—What rule of law applies to the case?
3. Application—How does the rule of law apply to the particular facts and circumstances of this case?
4. Conclusion—What conclusion should be drawn? 19

20. The Common Law Tradition: Stare Decisis & Legal Reasoning (3 of 3)
There is no one “right” answer to most legal questions.
Good arguments can be made to support either side of the controversy.
Judges have personal beliefs that can affect decisions.
Outcomes to lawsuits cannot be predicted with certainty. 20

21. The Common Law Tradition: The Common Law Today (1 of 3)
Common law governs transactions not covered by statutory law.
Courts interpret statutes and regulations.
Judges interpret and apply the law but do not make laws. 21

22. The Common Law Tradition: The Common Law Today (2 of 3)
Restatements of the Law: Compilations that generally summarize the common law rules followed by most states.
The American Law Institute (ALI) publishes the Restatements.
Restatements cover the areas of contracts, torts, agency, trusts, property, restitution, security, judgments, and conflict of laws. 22

23. The Common Law Tradition: The Common Law Today (3 of 3)
The Restatements are secondary sources of law and are an important source of legal analysis and opinion.
Many Restatements are now in their second, third, or fourth editions. 23

24. §4: Schools of Legal Thought
Natural Law School
Positivist School
Historical School
Legal Realism 24

25. Schools of Legal Thought: The Natural Law School
Assumes a higher, or universal, law exists that applies to all human beings and that written laws should reflect the principles inherent in natural law. 25

26. Schools of Legal Thought: The Positivist School
States that there is no law higher than the laws created by a national government.
Laws must be obeyed to prevent anarchy even if they are unjust.
Legal positivism is the basis for positive—or national—law. 26

27. Schools of Legal Thought: The Historical School
Emphasizes the evolutionary process of law.
Concentrates on the history and origins of the legal system.
Law derives its legitimacy and authority from standards that have withstood the test of time. 27

28. Schools of Legal Thought: Legal Realism & Sociological School
Based on the idea that law is shaped by social forces and needs.
Judges must account for economic and social realities when deciding cases.
Legal Realism influenced the growth of the Sociological School, which views law as a tool to promote social justice. 28

29. §5: Classifications of Law
Every type of law will be either:
Substantive or Procedural.
Civil or Criminal. 29

30. Classifications of Law: Substantive vs. Procedural
Substantive law consists of all laws that define, describe, regulate, and create legal rights and obligations.
Procedural law consists of all laws that that outline the methods of enforcing the rights established by substantive law. 30

31. Classifications of Law: Civil vs. Criminal (1 of 2)
Civil law spells out the rights and duties that exist between persons and between persons and their governments, as well as the relief available when a person’s rights are violated. 31

32. Classifications of Law: Civil vs. Criminal (2 of 2)
Criminal law is concerned with wrongs committed against the public as a whole.
Criminal acts are defined and prohibited by local, state, or federal government statutes. 32

33. Classifications of Law: Cyberlaw
Refers to all laws governing electronic communications and transactions—particularly those conducted via the internet.
Applies to just about all legal issues, including copyright, contracts, banking, etc. 33

34. §6: How to Find Primary Sources of Law (1 of 4)
Citation: A reference to a publication in which a legal authority can be found. 
Uncodified statutes passed by Congress are reported in United States Statutes at Large. Uncodified state statutes are collected in similar state publications. 34

35. How to Find Primary Sources of Law (2 of 4)
Most laws are referenced by their codified form—or the form in which they appear in the federal and state codes—and are compiled by subject.
Codified statutes passed by Congress are reported in the United States Code. 35

36. How to Find Primary Sources of Law (3 of 4)
Codified statutes passed by a state legislature are typically reported by subject in that state’s code. 36

37. How to Find Primary Sources of Law (4 of 4)
Rules and regulations from federal administrative agencies appear first in the Federal Register (published daily). These are eventually incorporated into the Code of Federal Regulations (C.F.R.). 37

38. How to Find Primary Sources of Law: Case Law (1 of 9)
Two types of courts in the U.S.: federal courts and state courts.  
Trial courts are those in which evidence is presented and testimony is given.
Trial court decisions can be appealed to a higher court, typically an appellate court (intermediate court of appeals). 38

39. How to Find Primary Sources of Law: Case Law (2 of 9)
Appellate court decisions may be appealed to an even higher court, such as a state supreme court or the U.S. Supreme Court. 39

40. How to Find Primary Sources of Law: Case Law (3 of 9)
State trial court decisions are typically filed in the office of the clerk of the court and are available for public inspection.
Written decisions of the appellate courts are available in print and online. 40

41. How to Find Primary Sources of Law: Case Law (4 of 9)
The official reported appellate decisions are published in volumes called reports or reporters that are published by each state.
Unofficial reports are published by nongovernment entities. 41

42. How to Find Primary Sources of Law: Case Law (5 of 9)
Regional Reporters: State court opinions appear in regional units of the West’s National Reporter System.
Many states use the National Reporter System instead of their own state reporters because it reports cases more quickly and distributes them more widely. 42

43. How to Find Primary Sources of Law: Case Law (6 of 9)
Federal district (trial) court decisions are published unofficially in the Federal Supplement (“F. Supp.” or “F. Supp. 2d”).
Opinions from the circuit courts of appeals are reported unofficially in the Federal Reporter (F., F.2d, or F.3d). 43

44. How to Find Primary Sources of Law: Case Law (7 of 9)
The Bankruptcy Reporter (“Bankr” or “B.R.”) reports bankruptcy decisions from all federal courts.
All opinions of the U.S. Supreme Court are published in United States Reports (“U.S.”) by the federal government. 44

45. How to Find Primary Sources of Law: Case Law (8 of 9)
Unofficial reports of Supreme Court decisions can be found in the Supreme Court Reporter (“S. Ct.”) and the United States Reports: Lawyers Edition (“L. Ed.” & “L. Ed. 2d”). 45

46. How to Find Primary Sources of Law: Case Law (9 of 9)
Many court opinions that are not yet published or intended for publication are accessible through Thomson Reuters Westlaw®.
Federal appellate court decisions that are designated as unpublished may appear in the Federal Appendix (Fed. Appx.) of the National Reporter System. 46

47. §7: How to Read & Understand Case Law (1 of 2)
Legal cases are identified by a “legal citation” (or a “cite”) as the sample below: Rosa and Raymond Parks Institute for Self Development v. Target Corporation, 812 F.3d 824 (2016).
Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined. 47

48. How to Read & Understand Case Law (2 of 2)
Legal cases are identified by a “legal citation” (or a “cite”) as the sample below: Rosa and Raymond Parks Institute for Self Development v. Target Corporation, 812 F.3d 824 (2016).
This is a federal court case in It is published in volume 812 of the Federal Reporter Third Series beginning on page 824. 48

49. How to Read & Understand Case Law: Selected Case Titles & Terminology (1 of 4)
Plaintiff/Petitioner: The party who initiates a lawsuit.
Defendant/Respondent: The party against whom the lawsuit is brought.
Appellant/Petitioner: The party who takes an appeal from one court to another.  
Appellee/Respondent: The party against whom an appeal is taken.
Damages: A monetary award sought as a remedy for a breach of contract or a tortious act. 49

50. How to Read & Understand Case Law: Selected Case Titles & Terminology (2 of 4)
Statute of limitations: A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced.
Judge/Justice: The terms judge and justice are usually synonymous and represent two designations given to judges in various courts. 50

51. How to Read & Understand Case Law: Selected Case Titles & Terminology (3 of 4)
Opinion: The court’s reasons for its decision, the rules of law that apply, and the judgment.
Unanimous Opinion: An opinion that represents the view of all the judges who heard a case.
Majority Opinion: A court opinion that represents the views of the majority (more than half) of the judges or justices deciding the case.  51

52. How to Read & Understand Case Law: Selected Case Titles & Terminology (4 of 4)
Concurring Opinion: A court opinion by one or more judges who agree with the majority opinion but not the legal reasoning behind the opinion.  
Dissenting Opinion: An opinion by one or more judges who disagree with the majority’s opinion.
Plurality Opinion: An opinion that has the support of the largest number of judges, but less than a majority of them. 
Per Curiam Opinion: A unanimous opinion that does not indicate which judge wrote it.  52