CHAPTER 1 The Legal and International Foundations

© 2007 by West Legal Studies in Business / A Division of Thomson Learning

CHAPTER 1CHAPTER 1

The Legal and The Legal and International FoundationsInternational Foundations

THE LEGAL ENVIRONMENT TODAYMiller • Cross 5th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning

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The Nature of LawThe 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.


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Natural Law TraditionNatural 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.


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Legal PositivismLegal 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.


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Legal RealismLegal 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.


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Business ActivitiesBusiness 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?


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Sources of American Sources of American LawLaw

Constitutional Law Statutory Law

Case Law andCommon Law Doctrines

Administrative Law


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Sources of American Sources of American LawLaw

• 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.


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Constitutional LawConstitutional 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.


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Statutory LawStatutory 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.


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Administrative LawAdministrative 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.


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Case Law and Common Case Law and Common Law DoctrinesLaw 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.


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The Common Law The Common Law TraditionTradition

• 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.


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Stare DecisisStare 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.


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Equitable Remedies Equitable Remedies and Courts of Equityand 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.


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Equitable Remedies Equitable Remedies and Courts of Equityand Courts of Equity


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Classifications of LawClassifications 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.


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Civil Law and Civil Law and Criminal LawCriminal 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.


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National andNational and International Law 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?


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National LawNational Law

• Definition: law that pertains to a particular nation.

• Most nations today have either a common law system or a civil law system.


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Common Law SystemCommon 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.


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CyberlawCyberlaw

• 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.


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Civil vs. Common Civil vs. Common Law Law

of Nationsof Nations


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Civil Law SystemCivil 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.


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International LawInternational 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.


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Appendix: Finding and Appendix: Finding and Analyzing the LawAnalyzing 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.).


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• 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 Appendix: Finding and Analyzing the LawAnalyzing the Law


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State Court DecisionsState 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.


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State Court DecisionsState Court Decisions


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Federal Court Federal Court DecisionsDecisions

• 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.)


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Reading and Reading and Understanding Case Understanding Case

LawLaw• 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.


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Case Titles and Case Titles and TerminologyTerminology

• Plaintiffs and Defendants.

• Appellants and Appellees.

• Judges and Justices.

• Decisions and Opinions.

• Abbreviations.


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Diagramming Case Diagramming Case ProblemsProblems

• 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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Example Case Example Case Citations:Citations:

State Courts 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).


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Example Case Citations: Example Case Citations: Federal CourtsFederal 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).

Documents

CHAPTER 1 The Legal and International Foundations