1. © 2007 by West Legal Studies in Business / A Division of Thomson Learning CHAPTER 1 The Legal and International Foundations

2. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 2 The Nature of Law Law is a body of enforceable rules governing relationships among individuals and between individuals and their society. Three important schools of legal thought: –Natural law tradition. –Legal positivism. –Legal realism.

3. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 3 Natural Law Tradition One of the oldest and most significant schools of legal thought. Those who believe in natural law hold there is a universal law applicable to all human beings and that this law is of a higher order than positive, or conventional law.

4. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 4 Legal Positivism A school of legal thought centered on the assumption that there is no law higher than the laws created by the government. Laws must be obeyed, even if they are unjust, to prevent anarchy.

5. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 5 Legal Realism A popular school of legal thought during the 1920s and 1930s. Legal realists generally advocated a less abstract and more realistic approach to the law, an approach that would take into account customary practices and the circumstances in which transactions take place. The school left a lasting imprint on American jurisprudence.

6. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 6 Business Activities The law impacts every-day business transactions. Many different laws may affect a single business transaction. Ethics and the legal environment. –What is the relationship? –What is the relationship between ethics and profits?

7. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 7 Sources of American Law Constitutional LawStatutory Law Case Law and Common Law Doctrines Administrative Law

8. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 8 Sources of American Law Which source of law takes priority in the following situations, and why? –A federal statute conflicts with the U.S. Constitution. –A federal statute conflicts with a state constitution. –A state statute conflicts with the common law of that state. –A state constitutional amendment conflicts with the U.S. Constitution. –A federal administrative regulation conflicts with a state constitution.

9. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 9 Constitutional Law The law as expressed in the U.S. Constitution and the various state constitutions. The U.S. Constitution is the supreme law of the land. State constitutions are supreme within state borders to the extent that they do not violate the U.S. Constitution or a federal law.

10. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 10 Statutory Law Laws or ordinances created by federal, state, and local legislatures and governing bodies. None of these laws can violate the U.S. Constitution or the relevant state constitutions. Uniform laws, when adopted by a state legislature, become statutory law in that state.

11. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 11 Administrative Law The rules, orders, regulations, and decisions of federal, state, or local government administrative agencies. Federal administrative agencies are created by enabling legislation enacted by the U.S. Congress. Agency functions include: –Rulemaking. –Investigation and enforcement. –Adjudication.

12. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 12 Case Law and Common Law Doctrines Judge-made law, including interpretations of constitutional provisions, of statutes enacted by legislatures, and of regulations created by administrative agencies. The common law, the doctrines and principles embodied in case law, governs all areas not covered by statutory law or agency regulations issued to implement various statutes.

13. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 13 The Common Law Tradition The Common Law originated in medieval England with the creation of the king’s courts, or curia regis, and the development of a body of rules that were applied throughout the land.

14. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 14 Stare Decisis A doctrine under which judges “stand on decided cases,” or follow the rule of precedent, in deciding cases. Stare decisis is the cornerstone of the common law tradition.

15. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 15 Equitable Remedies and Courts of Equity Remedies at law: –Money, property, land or something else of value. Remedies in equity: –Remedies that are granted when the remedies at law are unavailable or inadequate. Equitable Principles and Maxims.

16. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 16 Equitable Remedies and Courts of Equity

17. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 17 Classifications of Law The law may be broken down according to several classification systems, such as: –Substantive vs. Procedural law. –Civil vs. Criminal law. –Federal vs. State law. –National vs. International law. –Private vs. Public law.

18. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 18 Civil Law and Criminal Law Civil law spells out rights and duties and relief available for injury to private parties. –Usually the remedy is money damages. Criminal is injury to the society as a whole. –Remedy is usually prison and/or fines.

19. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 19 National and International Law Increasingly, U.S. businesses are engaging in transactions that extend beyond our national borders. National law vs. International law. –What’s the difference? –Key difference is that national law can be enforced by government authorities. What government can enforce international law?

20. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 20 National Law Definition: law that pertains to a particular nation. Most nations today have either a common law system or a civil law system.

21. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 21 Common Law System Generally, those countries that were once colonies of Great Britain retained their English common law heritage after they achieved their independence. The doctrine of stare decisis is the cornerstone of the common law tradition.

22. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 22Cyberlaw Refers to the body of law that governs internet based transactions. Not a new law, but new applications of law. Internet Jurisdiction and the Internet. –Minimum contacts requirement. –Issues in international jurisdiction.

23. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 23 Civil vs. Common Law of Nations

24. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 24 Civil Law System A legal system stemming from Roman “code law,” in which the primary source of law is a statutory code—an ordered grouping of legal principles enacted into law by a legislature or governing body. Precedents are not binding in a civil law system because they do not follow the doctrine of stare decisis.

25. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 25 International Law A body of written and unwritten laws observed by independent nations and governing the acts of individuals as well as governments. Sources of international law include: –National laws. –Customs. –Treaties. –International organizations and conferences.

26. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 26 Appendix: Finding and Analyzing the Law Federal statutes –Are found in the United States Code (U.S.C.). State statutes –Are found in state statutes or codes such as: 13 Pennsylvania consolidated statutes section 1101. California Commercial Code Section 1101. Federal regulations –Are compiled in the Code of Federal regulations (C.F.R.).

27. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 27 In order to understand how to find case law, one must first understand the basic organizational structure of the court system. In the U.S. there are two types of courts: –Federal courts. –State courts. Both systems consist of trial courts, appellate (reviewing) courts, and supreme courts. Appendix: Finding and Analyzing the Law

28. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 28 State Court Decisions Most state trial court decisions are not published. Written decisions of appellate, or reviewing, courts are published in volumes called reports or reporters. The most commonly used reporters are those of the national reporter system, which divides the states into geographic areas.

29. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 29 State Court Decisions

30. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 30 Federal Court Decisions Federal district court decisions are published in the federal supplement (F. Supp.). Federal circuit courts of appeals decisions are published in the federal reporter (F., F.2d, or F.3d). United States Supreme Court decisions are published in one of three sources: –United States reports (U.S.) –Supreme Court reporter (S.Ct.) –Lawyer’s edition of the Supreme Court reports (L.Ed.)

31. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 31 Reading and Understanding Case Law Case law is critical to decision making in the business context because businesses must operate within the boundaries established by law. The first step in analyzing any case is to carefully read the facts to identify each party. –Beware! Although at the trial level, the plaintiff is usually listed first (Adams v. Jones), it is often impossible to distinguish the plaintiff from the defendant in the title of a reported appellate court decision.

32. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 32 Case Titles and Terminology Plaintiffs and Defendants. Appellants and Appellees. Judges and Justices. Decisions and Opinions. Abbreviations.

33. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 33 Diagramming Case Problems You may find it helpful to diagram the facts of a case or problem using symbols and arrows to show who is suing whom. Common symbols include: –to represent the plaintiff. –to represent the defendant.

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37. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 37 Example Case Citations: State Courts 256 Neb. 170, 589 N.W.2d 318 (1999). 75 Cal. App. 4th, 89 Cal. Rptr.2d 146 (1999). 85 N.Y.2d 549, 650 N.E.2d 829, 626 N.Y.S.2d 982 (1995). 236 Ga.App. 582, 512 S.E.2d 27 (1999).

38. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 38 Example Case Citations: Federal Courts 189 U.S. 420, 119 S.Ct. 1961, 144 L.Ed.2d 319 (1999). 177 F.3d 114 (2d Cir. 1999). 38 F.Supp. 2d 1233 (D.Colo. 1999).