© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Chapter 1: The Legal Environment

2 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives What are the four primary sources of law in the United States? What is the common law tradition? What is a precedent? When might a court depart from precedent? What is the difference between remedies at law and remedies in equity? What are some of the important differences between civil law and criminal law?

3 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Business Activities and the Legal Environment Knowledge of “black letter” law is not enough. Many different laws affect a single business transaction. Ethics and business decision making. –Ethics: what constitutes right or wrong behavior.

4 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 1-1

5 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Sources of American Law Constitutional Law. –Found in text and cases arising from federal and state constitutions. –U.S. Constitution is the supreme law of the land. Statutory Law. –Laws enacted by federal and state legislatures. –Local ordinances. –Uniform Laws (e.g.,Uniform Commercial Code).

6 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Sources of American Law Administrative 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.

7 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Common Law Tradition Early English Courts of Law. –King’s courts started after Norman conquest of –Established the common law—body of general legal principles applied throughout the English empire. –King’s courts used precedent to build the common law.

8 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Stare Decisis Stare 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.

9 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Equitable Remedies and Courts of 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: specific performance, injunction, rescission. Plaintiffs (injured party initiating the lawsuit), Defendants (allegedly caused injury).

10 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 1-3

11 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The 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. Natural Law Tradition

12 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Legal Positivism 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.

13 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Historical School The 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.

14 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Legal Realism Legal 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.

15 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Classifications of Law Substantive 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 Law. –Civil: private rights and duties between persons and government. –Criminal: public wrongs against society.

16 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Classifications of Law National 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.

17 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Comparison of Legal Systems

18 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Appendix Finding Statutory Law. –United States Code (USC). –State Statutes. Finding Administrative Law. –Code of Federal Regulations (CFR). Finding Case Law (Case Citations).

19 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 1A-1

20 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Appendix Reading & Understanding Case Law –Legal cases are identified by a “legal citation” (or a “cite”) as the example below: Doe 1 v. AOL, LLC., 552 F.3d 1077 (Ninth Circuit, 2009). Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined.

21 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Appendix Reading & Understanding Case Law –Legal cases are identified by a “legal citation” (or a “cite”) as the example below: Doe 1 v. AOL, LLC., 552 F.3d 1077 (Ninth Circuit, 2009). The case is found in Volume 552, page 1077, of the Federal 3 rd Supplement.

22 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Appendix Reading & Understanding Case Law –Legal cases are identified by a “legal citation” (or a “cite”) as the example below: Doe 1 v. AOL, LLC., 552 F.3d 1077 (Ninth Circuit, 2009). The case was decided in 2009 by the Ninth Circuit, U.S. Court of Appeals