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Slide 1: The Legal and Constitutional Environment of Business Opening Class Session 1/12/2009 Roland Cyr CPCU- Instructor
Slide 2: Course Introduction  The law is a set of general rules,  That, in applying these general rules, a judge cannot always fit a case to suit a rule, so must fit (or find) a rule to suit the case, reasons for the decision.  That, in fitting (or finding) a rule, a judge must also supply  The tension in the law between the need for stability and the need for change is one of the first major concepts introduced in this chapter. The answer to the question, “What is the law?,” includes how jurists have answered it, how common law courts originated, and the rationale for the doctrine of stare decisis.
Slide 3: Business Law  The second major concept in the chapter/course involves the distinctions among today’s sources of law and distinctions in its different classifications. The sources include the Federal constitution and Federal laws, State constitutions and statutes (including the UCC), local ordinances, administrative agency regulations, and case law. The classifications include substantive and procedural, national and international, public and private, civil and criminal, and law and equity. These sources and categories provide a framework on which to hang the mass of principles known as the law.
Slide 4: Business Law  The third and final concept which will be introduced concerns some of the limits placed on the government by the U.S. Constitution. Many people assume that a government acts from a vague position of strength and can enact any regulation it deems necessary or desirable. This chapter, and course emphasizes a different perspective from which to view the law: Action taken by the government must come from authority and this authority can not be exceeded.
Slide 5: Business Law  Most students think the keys to success in the classroom lie in taking and memorizing lecture notes, as well as reading a textbook and committing it to memory. Yet in order to truly learn from a course in business law, one needs to be able to think critically about the American legal system.  Critical thinking techniques, in addition to being applicable to legal arguments, are also important to virtually all disciplines.  Critical thinking involves making judgments and decisions based on information from different sources.
Slide 6: Business Law  Critical Thinking  Critical thinking involves the capacity to distinguish beliefs from knowledge, and facts from judgment. Someone skilled in critical thinking is able to analyze, criticize, and express ideas. He or she can also draw factual or judgmental conclusions based on inferences drawn from objective knowledge or personal beliefs. When a critical thinker draws a judgmental conclusion that is based in whole or in part on a personal belief, he or she should understand the extent to which this belief has influenced his or her judgment.
Slide 7: Business Law  All of the above is a fancy way of saying that a person should find good reasons to reject or support a legal argument:  The critical thinker first defines the problem, then examines the evidence, and always analyzes the assumptions underlying the evidence.  Critical thinking is incomplete without considering alternative interpretations. Finally, the implications of different interpretations must be recognized.
Slide 8: Business Law  Critical thinking consists, more that anything else, in adopting an attitude that is open to both sides of an argument, while proceeding with what might be called intellectual caution.  Additionally, the critical thinker has to be prepared to accept defeat, which may involve having one’s cherished beliefs destroyed by someone else’s betterreasoned, and factually more correct, argument.  Furthermore, the critical thinker must learn to appreciate the new point of view.
Slide 9: Business Law  Critical thinking requires active participation in the learning process. Rather than reading every word written in a business law or legal environment text and accepting it at face value, you, as critical thinking student, must take an active role in questioning the author’s conclusions and those of your instructor.  This brings us to our first rule in critical thinking.
Slide 10: Business Law  Rule 1: Engage in Active Information Acquisition  Don’t be a passive acquirer of information. Don’t just sit in the classroom and take down every word the instructor says. Don’t read a textbook and accept everything in it as “the truth.” Critical thinking requires active questioning of most information offered. While you are taking notes in class, jot down questions in the margins. The same holds true when reading this and all other textbooks.
Slide 11: Business Law  Remember that American law is not black and white, but, in reality, an endless scheme of gray. The cases which are presented must be construed in light of the evidence. Change in a single factor can change the outcome of a case. The critical thinker will go beyond what is stated in books, or what the instructor asserts in class, and will try to find a way in which the outcome of a situation can be altered.  The cases that are presented in all business law and legal environment texts were usually argued by intelligent litigators who had valid arguments for each of the outcomes. The critical thinker must be able to argue both sides of a particular case.
Slide 12: Business Law  Rule 2: Don’t Jump to Conclusions  It is easy for individuals to jump to a conclusion with just a smattering of evidence or logic. To avoid jumping to conclusions, you have to look at the following:  1. The evidence  2. The specificity of the argument: is it too general?  3. Is there any alternative explanation (observational equivalence)?
Slide 13: Business Law  Examine the Evidence  Unless one is dealing in pure logic in a course in philosophy, most hypothetical arguments about how the legal world works must be accompanied by some evidence to be convincing. When you examine arguments in our text or listen to them from your instructor, you must constantly ask, “Where is the evidence?” Then ask yourself “Is there more evidence?”
Slide 14: Evidence  Fatality figures are the numbers most often quoted by the media, insurance industry lobbying groups and even the National Highway Traffic Safety Administration (NHTSA).  Organizations and individuals that quote raw fatality statistics claim “rates” are too complicated for the public to understand. Actually, fatality rates and fatal accident rates are very simple to determine and understand.
Slide 15: Evidence  Quick Hypothetical Example:  Assume that in a given year, 20,000 motorists drive 20,000 miles each and fatal accidents kill eight people. The fatality rate, per 100 million vehicle miles traveled (the recognized standard for measuring fatalities), is two.  The next year, the number of drivers doubles to 40,000, with each of them driving 20,000 miles per year. Everything else being equal, it makes sense that 16 people will die in accidents. However, the fatality rate remains identical: Two deaths per 100 million vehicle miles traveled.  Although fatalities doubled, the highways were equally safe in each of those years.  In this hypothetical situation, the public’s key source of information on highway safety — the media — will likely quote raw fatality numbers given by self-proclaimed “safety” organizations, with headlines such as, “Traffic Fatalities Double From 1995 to 1996!”
Slide 17: Business Law  Consider the question of illegality of contracts. Some contracts are unenforceable because they are contrary to public policy. One of the most famous trials involving this question has been called the Baby M case, in which a couple hired Mary Beth Whitehead to become a surrogate mother in exchange for the payment of $10,000, plus all costs associated with the pregnancy and birth. If one were looking at the case merely as a contract between two parties, then it could be easily resolved. But, because of the emotional nature of the case, it actually became a highly complicated issue, which was decided in part based on standards of morality that the judges thought to be prevalent. Therefore, this case was not decided solely on the basis of whether there was a valid contract, but in fact was partly resolved by considering the moral codes of society. Should it make a difference whether a contract is for the services of a surrogate mother or for the sale of a car? In theory there should not be any difference under the law, but it reality there is always evidence which may not be presented but must be sought.  The point is that any issue demands evidence. You have to be aware of the possibility that you may not know all the evidence.
Slide 18: Business Law  Specificity of the Argument  Is it possible that what you are reading or hearing is a generalization? Many legal arguments result in overgeneralizations that do not apply in many situations. (McDonalds Coffee Case)  Alternative Explanations  Many arguments are presented that sound logically correct and seem to have evidence to support them. The problem, though, is that alternative explanations may be available.
Slide 19:  Take an example that is found virtually every day in the newspaper: What happened to the stock market yesterday? Almost every business page or every radio or television news commentator has something to say about what happened to the price of stocks yesterday. If stock prices went down yesterday, business commentators will cite various reasons— the dollar weakened, there was a threat of war in the Middle East, there was a threat of the steel unions going on strike, or something else happened. If stock prices went up yesterday, commentators might say the latest index of inflation showed it to be falling, the price of oil went down, or the president got over a cold. Neither the explanations of the evidence presented, nor the supporting arguments, are observationally distinguishable from those of any other explanation offered. There are many alternative explanations of why stock prices went up or down yesterday. Merely stating something that sounds logical means absolutely nothing.
Slide 20:  Explaining why stock prices went up or down yesterday involves much more than stating something that sounds plausible. There are at least 100 plausible explanations of why stocks changed price yesterday. Only by focusing on a limited number of explanations, testing those explanations scientifically, and examining much evidence can we even hope to come up with a hypothesis that is not observationally equivalent to a dozen other hypotheses.
Slide 21: In the practice of law there will always be an argument that will sound logically correct. While this argument may make sense, there is always a counter-argument that may prove otherwise. This is precisely the reasoning of the theory of the adversarial procedure, by which both parties present their legally “correct” argument and then the case is decided. If this were not the situation, the American judicial process would be futile, in that there would be no room for interpretation. If an individual were to read the brief of the attorney representing client A, it is quite likely that it would sound logically correct. In contrast, if one were to read the opposing party’s brief, the same situation would arise. The reason for this is that the attorney will represent the case utilizing facts in the light most favorable to his or her client. While the argument may in fact sound logically correct, certain relevant factors probably could have been omitted or extended tenuously to seem helpful to the facts of the case.
Slide 22: Business Law  Rule 3: Beware of Tautologies and Truisms  A problem similar to the one of observational equivalence of explanations about why something happens, involves tautologies and truisms. A tautology is a statement that repeats itself. For example, if you ask what the weather is going to do tomorrow, we could state: It is either going to rain, or it is not going to rain. That is a tautology. It is always a correct statement. Moreover, such a statement can never be disproved by any data. If the data showed that it rained, the statement is confirmed; if it didn’t rain, the statement is also confirmed. A truism is a self-evident truth, such as “Horses normally drink water when they are thirsty.”
Slide 23: Business Law  Think about one element of the American Creed: In the United States, equal justice is to be found under the law. The sentiment behind this statement is certainly one that many Americans support as an ideal; however, it remains an ideal that may not prevail. Regardless of the placards in front of the court houses, the evidence in reality suggests that not everyone is treated and protected in the same manner. Those who can afford it are able to choose the best legal services available. Those individuals who are not financially secure have attorneys appointed to them by the court from the Office of the Public Defender.
Slide 24: Business Law  A critical thinker must avoid tautologies and truisms. They may be great for light cocktail-party conversations, but they do not help you, as critical thinker, get a better understanding of the world around you. When you start listening critically, particularly to people’s casual conversations, you may be surprised how many of the statements are merely truisms.
Slide 25: Business Law  Rule 4: Causation in Tort Law  Many facts in the real world seem to be correlated. That is to say, the movement in one variable appears to mirror the movement in another, or one may appear to oppose the movement in another. We all know the correlation between regularly eating too much and gaining weight. There seems to be a correlation between smoking and contracting lung disease.
Slide 26: Business Law  When we think of who is at fault for gaining weight or contracting cancer, common sense dictates that it is the person who consumed the product, because he or she made the decision. Nevertheless, under the American legal system it is not necessary for the company or individual to be the direct cause of the incident for them to be liable. Furthermore, there does not have to be a specific intent on the part of the defendant to cause a particular action, which resulted in harm, as long as the defendant was the one who caused or helped to cause the injury.
Slide 27: Business Law  It is necessary for the student to realize the distinction between causation as commonly applied in every day life, and causation as applied under the law. The law imposes liability under certain circumstances in which the factor at issue may merely be correlated to the effect.
Slide 28: Business Law  Rule 5: Avoid Oversimplification by Considering Alternative Explanations  Every critical thinker avoids oversimplification. While all explanations of the real world require some simplification, there must be a limit. Typically, oversimplifications result from brief examinations of related findings. Suppose that somebody showed you in which particular courtrooms the county prosecutor tried his cases.
Slide 29: Business Law  Further suppose that in the courtroom that had air conditioning, the prosecutor had a conviction rate of 75 percent, and that in the courtroom that did not have air conditioning, the prosecutor had a conviction rate of 55 percent. One could hardly reach the conclusion that a courtroom with air conditioning caused the prosecutor to be more effective.
Slide 30: Business Law  One way to avoid oversimplifications is to try to go beyond what most people take at face value—go beyond the obvious. This is the beginning of the path of critical thinking.  Even if we ignore your not having started with a theory that prosecutors who try cases in courtrooms with air conditioning have higher conviction rates, you have oversimplified because (1) you have not thought of alternative explanations of the correlation between the findings, and (2) you have not looked at enough evidence.
Slide 31: Business Law  Rule 6: Go Beyond the Obvious: Discover What Variables in the Evidence Changed the Outcome of the Case  To expand the prior example, if you want to find out why the local prosecutor happens to be more successful in one courtroom than in another, go beyond simple correlations and examine the underlying forces that actually determine the rate of conviction
Slide 32: Business Law  First of all, one might try to find out what types of cases are being held in each courtroom. Contrary to the layperson’s belief, courtrooms are usually designated to hear certain types of cases. The reasoning is that the judge presiding over the case should have some knowledge of the subject matter that reaches beyond the briefs of the attorneys. If the prosecutor in one courtroom is trying cases related to driving while under the influence of alcohol, and the prosecutor is handling cases relating to murder in another, it may have some influence on the conviction rate if the prosecutor has less experience with one type of case than another.
Slide 33: Business Law  Another factor that should be analyzed is whether the judge in the courtroom is appointed or elected, and, if elected, is he or she running for reelection sometime in the near future. Unfortunately, elected judges may in fact be playing in the game of politics. This means that the particular judge may be more willing to conform to the community’s moral beliefs on election days than on non-election days, and therefore this would likely influence the conviction rate of the prosecutor.
Slide 34: Business Law  A third factor, which should not be dismissed, is whether the particular issue being decided is receiving a large amount of publicity through the media. It was not too long ago that officers, prosecutors, and judges often turned their backs on cases involving driving while intoxicated. Nevertheless, in recent years, this has become a hot issue and has received an incredible amount of publicity. This has led to prosecution and tougher enforcement of the D.U.I. laws
Slide 35: Business Law  Finally, there may be political implications to the trying of cases. In your text there is a specific chapter on antitrust law. There is a discussion of the effect that antitrust laws have in limiting the acquisition of one company by another. Nevertheless, the rate at which the Federal Trade Commission will enforce these laws depends on the political mood in the nation. There was a time when the F.T.C. rigorously fought to disallow the mergers or acquisitions of companies when these controlled a significant portion of the market. During the Reagan years, however, it appeared that the F.T. C. was tolerating such acquisitions and mergers more than it had done previously.
Slide 36: Business Law  Rule 7: Poke Holes in all Arguments—Even Your Own  A critical thinker always attempts to poke holes in every argument, even his or her own. This is particularly true when you are examining generalizations. Consider a common generalization that is dispelled in all business law and legal environment texts : An oral contract is as valid as a written one, and always enforceable. Insofar as the law is concerned, under the Statute of Frauds, an oral contract will not be enforced if:
Slide 37: Business Law  1. It is for the sale of land.  2. The contract cannot be performed within one year from the date of formation.  3. The contract involves a collateral promise, such as the promise to answer for the debt of another.  4. The promise is made in consideration of marriage.  5. The oral contract is for the sale of goods priced at over $500.
Slide 38: Business Law  We see that in reality an oral contract can only be enforced under very limited circumstances. Therefore, if an oral contract were to fail within one of the five exceptions mentioned above, it would probably not be enforced.  Your job as a critical thinker is constantly to question the arguments, the evidence, casual theories, correlations, generalizations, and all-encompassing statements about how things work.
Slide 39: Business Law  Rule 8: Realize What Your Value Judgments Are  Each of us has a set of values and therefore a set of value judgments about everything that we consider, whether we know it or not. Our values are formed by our parents, peers, schools, the books we read, our religious concepts, the movies we see, and a thousand other variables. A critical thinker can never change these past inputs, but every critical thinker can be aware of what his or her values are with respect to any given issue.
Slide 40: Business Law  If you are examining arguments for and against abortion, your values may enter very strongly into your assessment of the validity of certain legal arguments and evidence. It is important that you are aware of how much your religious and family upbringing affects your views about what others say or write concerning this explosive topic.
Slide 41: Business Law  If you are examining arguments for and against a new trade bill that will impose higher costs on foreign companies attempting to sell their goods in the United States, you must ask yourself whether you have certain values that cause you to want to keep foreign competition out of the United States. Perhaps your values are such that you are basically xenophobic (you dislike anything foreign) or perhaps you had a bad experience with a foreign product.
Slide 42: Business Law  Another example is the analysis of a new bill, which would require factories to diminish their smog emissions by 50 percent. If your values encourage the belief that maximum production in businesses is essential, and that negative externalities, such as the pollution of the local water system, are merely a cost of doing business, then you will attempt to argue against the bill. In contrast, if you believe strongly that it is necessary to save the water system, even though it may cause a decrease in profits or the closing down of a plant, then your bias will be in favor of the new bill.  Therefore, in examining legal arguments, it is necessary to become aware of your own biases. This brings us to another rule of critical thinking.
Slide 43: Business Law  Rule 9: Attempt to Conquer Your Biases  You may have biases against strict product liability in tort law: when you examine the arguments outlining the case for strict product liability against the manufacturers of pharmaceuticals, you may not see through to the true argument because of your biases
Slide 44: Business Law  Rule 10: Define Your Terms  How often have you argued with someone only to discover that you were not talking about the same thing because each of you had a different definition of a key term? Consider an example. Someone tells you that obscenity in the last four years has been on the rise. Can you argue effectively with anyone about obscenity without defining what that term means? You have to state what actions are to considered obscene. You also have to state that you are talking about obscenity only in the United States. Only after such agreement can you discuss what has actually happened in the area of obscenity in this county.
Slide 45: Business Law  One situation in which the definition of obscenity has been discussed is with the lyrics of a musical group called 2 Live Crew. In the case against the musicians in Florida in 1990, the state prosecutors argued that the lyrics of the music were degrading to women, explicit in their sexual context, and lacking in any artistic, political, or social values whatsoever. In contrast, the attorneys for the rap group argued that their work was not obscene in relation to the standards of the community, and furthermore that the lyrics were a form of expressing the environment to which they had been exposed.
Slide 46: Business Law  The attorneys for 2 Live Crew further argued that the lyrics were merely a social satire of the group’s surroundings. If one were to look at the lyrics in relation to another community not exposed to the surroundings of the group and in which that style of music was not prevalent, then the lyrics could be considered obscene. But if the lyrics were to be viewed in the context of those individuals who are most likely to listen to the music for its artistic value and musical quality, then the lyrics might not be considered obscene.
Slide 47: Business Law  In effect, the attorneys for the parties were arguing about the terminology and definition of the word “obscenity.” The test outlined by the Supreme Court is that the work must be viewed in light of the standards of the community.
Slide 48: Business Law  Consider another example in which you are told that a company made large profits last year. What does that mean? What is the definition of “large?” Is it found in Webster’s Dictionary? Is it the definition of an accountant, who does not estimate the full opportunity cost of all factors of production? Is it the definition of a stockholder who received larger-than-normal dividends on the stock?  In order to be able to analyze a certain case or to make a legal argument, it is necessary to define certain terms because otherwise the argument may be too broad, or for that matter incoherent. Defining terms is always helpful, and even necessary, because it can explain seemingly “incorrect” answers and reclassify them as “correct.”
Slide 49: Business Law  Rule 11: Beware of Prescriptive Arguments  Most Arguments consist of an issue, reasons, and a conclusion. That’s the beginning, middle, and end of the argument; you either agree with the conclusion or you don’t. But some arguments go past that, and add a later conclusion that is not necessarily based on the first conclusion. These secondary conclusions are called prescriptive arguments because they ask for action to be undertaken.
Slide 50: Business Law  In the legal arena, the arguments presented are often prescriptive. It is important to critical thinking that they are recognized as such. Consider someone trying to argue that a defendant was temporarily insane at the time he or she shot an individual. been seeing a psychologist for the last two years. His or her conclusion is that this particular defendant has some emotional problems that need to be treated by a psychologist. His or her next conclusion in this argument is a prescriptive one: “Therefore, I believe that the defendant was temporarily insane when he shot the victim and should not be convicted.”  The attorney starts by pointing out that the defendant has
Slide 51: Business Law  The statement that the defendant should be found not guilty because he was temporarily insane at the time of the crime is an added conclusion that goes beyond the basic assertion that the defendant has some emotional problems. Clearly one can agree with the first conclusion the defendant has some emotional problems without agreeing with the prescriptive conclusion that the defendant should be found not guilty because of temporary insanity.
Slide 52: Business Law  Conclusion  The critical thinker is the student who reaches beyond what is stated by the instructor in class. Critical thinking is in reality the only path that can, and should, be taken by the student in order to properly understand the material presented in any business law and legal environment text written by Miller, Jentz, and Cross. The student must analyze both sides of the argument. He or she must question not only the arguments made by the instructor and the textbook, but hose made by himself or herself.
Slide 53: Business Law  One must reach beyond the decision of the case by searching all aspects of the litigation. Look at the arguments being made, the political arena surrounding the lawsuit, and the morals of the society at that particular time.  It is essential to delve into the arguments being made by each party of the suit, and understand their respective points of view. Distinguish between the factual arguments and the emotional ones.
Slide 54: Business Law  Weed out prospective arguments and go beyond the obvious.  The critical thinker will not merely accept the decision of the case, but will also attempt to pierce the judgment and poke holes in the argument. It is necessary to question the justification given in the class, as well as those arguments made in your text.  By becoming a critical thinker, you will not only learn the material discussed in the textbook and in class, in a whole new dimension, but you will also develop an entirely new understanding of everything around you.
Slide 55: Business Law             Summary of Rules for Critical Thinking 1. Engage in active information acquisition 2. Don’t jump to conclusions 3. Beware of tautologies and truisms 4. Causation in tort law 5. Avoid oversimplification by considering alternative explanations 6. Go beyond the obvious: discover what variables in the evidence changed the outcome of the case 7. Poke holes in all arguments—even your own 8. Realize what your value judgments are 9. Attempt to conquer your biases 10. Define your terms 11. Beware of prescriptive arguments
Slide 56: Noteworthy  The law is not simple—there are no simple solutions to complex problems. Legal      principles are presented in this course as “black letter law”—that is, in the form of basic principles generally accepted by the courts or expressed in statutes. In fact, the law is not so concrete and static. One of the purposes of this course is to acquaint students with legal problems and issues that occur in society in general and in business in particular The limits of time and space do not allow all of the principles to be presented against the background of their development and the reasoning in their application. By the end of the course, students should be able to recognize legal problems (“spot the issues”) when they arise. In the real world, this may be enough to seek professional legal assistance. Point out that the law assumes everyone knows it, or, as it’s often phrased, “Ignorance of the law is no excuse.” Of course, the volume and expanding proliferation of statutes, rules, and court decisions is beyond the ability of anyone to know it all. Also, knowing the law allows business people to make better business decisions. Oliver Wendell Holmes noted, “The life of the law has not been logic”—that is, the law does not respond to an internal logic. It responds to social change. Emphasize that laws (and legal systems) are man-made, that they can, and do, change over time as society changes. (Chapter 3)
Slide 57: Noteworthy  The commerce clause has become a very broad source of power for the federal government. It also restricts the power of the states to regulate activities that result in an undue burden on interstate commerce. Determining what constitutes an undue burden can be difficult. A court balances the benefit that the state derives from its regulation against the burden it imposes on commerce. (statute designed to protect natural resources)  CONSTITUTIONAL LAW IS CONCERNED PRIMARILY WITH THE EXERCISE OF JUDICIAL REVIEW. THE EMPHASIS IS ON THE WAY THAT THE COURTS IN GENERAL, AND THE UNITED STATES SUPREME COURT IN PARTICULAR, INTERPRET PROVISIONS OF THE CONSTITUTION. STARE DECISIS DOES NOT HAVE AS MUCH IMPACT IN CONSTITUTIONAL LAW AS IN OTHER AREAS OF THE LAW. IN THIS AREA, THE COURTS ARE NOT RELUCTANT TO OVERRULE STATUTES, REGULATIONS, PRECEDENTIAL CASE LAW, OR OTHER LAW.  What d0 you feel are the chief legal issues in developing a Web site or doing business online. What are the legal risks involved in transacting business over the Internet?
Slide 58: Noteworthy  If justice is defined as the fair, impartial consideration of opposing interests, are law and justice the same thing?  No. There can be law without justice—as happened in Nazi-occupied Europe, for example. There cannot be justice without law.  What is the common law? case law—that is, the body of law derived from judicial decisions. The body of common law originated in England. The term common law is sometimes used to refer to the entire common law system to distinguish it from the civil law system.  Read newspapers and magazines, listen to radio news, watch television news, and surf the World Wide Web for developments in the law—new laws passed by Congress or signed by the president, laws interpreted by the courts, proposals for changes in the law. The omnipresent effect of law on society should be easy to see. Ask them where the government would find the authority within the Constitution to adopt a specific law under consideration.
Slide 59: Chapter 1 Legal Constitutional Environment of Bossiness
Slide 60: Chapter 1 Learning Objectives  What is the Uniform Commercial Code?  What is the common law tradition?  What is a precedent? When might a court depart from precedent?  What are some important differences between civil law and criminal law?  How does the U.S. Constitution affect business activities in the United States?
Slide 61: Chapter 1  The Nature of Law  Law consists of enforceable rules governing relationships among individuals and between individuals and their society. In the study of jurisprudence, this definition is the point of departure for legal scholars and philosophers.  At a minimum law consists of:  Enforceable rules governing relationships,  Among and between individuals and  Their society  Knowledge of “black letter” law is not enough.  Many different laws affect a single business transaction.  Ethics and business decision making: what constitutes right or wrong behavior?
Slide 62: Chapter 1    Sources of American Law A. CONSTITUTIONAL LAW (U.S. CONSTITUTION) The federal constitution is a general document that distributes power among the branches of the government. It is the supreme law of the land. Any law that conflicts with it is invalid. The states also have constitutions, but the federal constitution prevails if their provisions conflict. B. 1. STATUTORY LAW        Federal, State, And Local Statutes and Ordinances Congress, state legislatures, and local legislative bodies enact statutes and ordinances. Much of the work of courts is interpreting what lawmakers meant when a law was passed and apply-ing that law to a set of facts (a case). 2. 3. Uniform Laws These are created by panels of experts and scholars and adopted at the option of each state. The Uniform Commercial Code (UCC) The Uniform Commercial Code (UCC) assists parties involved in com-mercial transactions by helping to determine their intent and by providing for the enforcement of their agree-ment. The UCC has been adopted by all the states (only in part in Louisiana), the District of Columbia, and the Virgin Islands.
Slide 63: UCC What is the Uniform Commercial Code? The Uniform Commercial Code (UCC) was created through the joint efforts of the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute. The UCC was first issued in 1952. The UCC has been adopted almost in its entirety in all fifty states, the District of Columbia, and the Virgin Islands. The UCC facilitates commerce among the states by providing a uniform, yet flexible, set of rules governing commercial transactions. The UCC assures businesspersons that their contracts, if validly entered into, normally will be enforced. Learning Objective #1
Slide 64: Significance of the commerce clause  The commerce clause is a provision in the Constitution authorizing Congress to regulate commerce with foreign nations, commerce between states, and commerce that affects interstate commerce. The commerce clause has had a greater impact on business than any other provision in the Constitution. This power ensures uniformity of the law concerning the movement of goods through the states. The breadth of the power allows the federal government to legislate in areas in which there is no express grant of power to Congress.
Slide 65: Commerce Clause  The commerce clause has become a very broad source of power for the federal government. It also restricts the power of the states to regulate activities that result in an undue burden on interstate commerce. Determining what constitutes an undue burden can be difficult. A court balances the benefit that the state derives from its regulation against the burden it imposes on commerce. The requirements for a valid state regulation under the commerce clause are (1) that it serve a legitimate end and (2) that its purpose cannot be accomplished as well by less discriminatory means. (Heart
Slide 66: Chapter 1  C. ADMINISTRATIVE LAW  Administrative law consists of the rules, orders, and decisions of administrative agencies. The creation of federal administrative agencies, agencies’ powers, and the administrative process (rulemaking, investigation, and adjudication) are discussed in the text.  Adjudication--agencies make rules, then investigate and enforce the rules in administrative hearings.  D. CASE LAW AND COMMON LAW DOCTRINES  Another basic source of American law consists of the rules of law announced in court decisions. These rules include judicial interpretations of constitutional provisions, of statutes enacted by legislatures, and of regulations created by administrative agencies.
Slide 67: Chapter 1 – Common Law Trad  The Common Law Tradition  American law is based on the English common law legal system. Knowledge of this tradition is necessary to students’ understanding of the nature of our legal system.  A. EARLY ENGLISH COURTS  The English system unified its local courts in 1066. This unified system, based on the decisions judges make in cases, is the common law system
Slide 68: Business Law  What is a precedent? When might a court depart from precedent? Judges attempt to be consistent, and when possible, they base their decisions on the principles suggested by earlier cases. They seek to decide similar cases in a similar way and consider new cases with care, because they know that their conflicting decisions make new law. Each interpretation becomes part of the law on the subject and serves as a legal precedent—a decision that furnishes an example or authority for deciding subsequent cases involving similar legal principles or facts. A court will depart from the rule of a precedent when it decides that the rule should no longer be followed. If a court decides that a precedent is simply incorrect or that technological or social changes have rendered the precedent inapplicable, the court might rule contrary to the precedent. (Learning Obj #3)
Slide 69: STARE DECISIS  1.  2. The Importance of Precedents in Judicial Decision Making Stare Decisis and Legal Stability. Stare Decisis is a doctrine that prescribes following earlier judicial decisions in deciding a current case if the facts and questions are similar. Stare Decisis is important because part of the function of law is to maintain stability. Courts attempt to be consistent with their own prior decisions and with the decisions of courts superior to them. Stare Decisis is important because part of the function of law is to maintain stability.  Stare Decisis is important because part of the function of law is to maintain stability. If the application of the law were unpredictable, there would be no consistent rules to follow and no stability.  3. Departures from Precedent  A judge may decide that a precedent is incorrect, however, if there may have been changes in technology, for example, business practices, or society’s at-titudes.
Slide 70: The Bottom Line  Supreme Court precedents, no matter how old, remain controlling until they are overruled by a subsequent decision of the Supreme Court, by a constitutional amendment, or by congressional legislation. Tenth Amendment reserves to all States powers not granted to the federal govt.
Slide 71: Common law tradition  What is the common law tradition?  Because of our colonial heritage, much of American law is based on the English legal system. In that system, after the Norman conquest, the king’s courts sought to establish a uniform set of rules for the entire country. What evolved in these courts was the common law a body of general legal principles that applied throughout the entire English realm. Courts developed the common law rules from the principles underlying judges’ decisions in actual legal controversies. Learning Objective #2
Slide 72: Chapter 1  What are some important differences between civil law and criminal law? ( Learning Objective #4)  Civil law concerns rights and duties of individuals between themselves.  (private rights and duties between persons and government) and between persons and their governments, and the relief available when a person’s rights are violated. In a civil case, a private party may sue another private party (the government can also sue a party for a civil law violation) to make that other party comply with a duty or pay for damages caused by a failure to comply with a duty.  (public wrongs against society)  Civil law spells out the rights and duties that exist between persons
Slide 73: Chapter 1  Criminal law concerns offenses against society as a whole.  Criminal law has to do with wrongs committed against society for which society demands redress. Local, state, or federal statutes proscribe criminal acts. Public officials, such as district attorneys, not victims or other private parties, prosecute criminal defendants on behalf of the state. In a civil case, the object is to obtain remedies (such as damages) to compensate an injured party. In a criminal case, the object is to punish a wrongdoer to deter others from similar actions. Penalties for violations of criminal statutes include fines and imprisonment and, in some cases, death.
Slide 74: Business Law  Civil law spells out the rights and duties that exist between persons and between persons and their governments, and the relief available when a person’s rights are violated. In a civil case, a private party may sue another private party (the government can also sue a party for a civil law violation) to make that other party comply with a duty or pay for damages caused by a failure to comply with a duty.
Slide 75: Business Law  Criminal law has to do with wrongs committed against society for which society demands redress. Local, state, or federal statutes proscribe criminal acts. Public officials, such as district attorneys, not victims or other private parties, prosecute criminal defendants on behalf of the state. In a civil case, the object is to obtain remedies (such as damages) to compensate an injured party. In a criminal case, the object is to punish a wrongdoer to deter others from similar actions. Penalties for violations of criminal statutes include fines and imprisonment and, in some cases, death.
Slide 76: Chapter 1  Classifications of Law  Substantive law (creates legal rights & obligations)  laws that define and regulate rights and duties.  Procedural law (laws which enforce substantive law)  laws that establish methods for enforcing and protecting rights.  Federal and State law  Private and Public law  One of the broadest classification systems divides law into national and international law.  Cyber Law (To be discussed later in the course)
Slide 77: Business Law  Due Process  Both the Fifth and the Fourteenth Amendments provide that no person shall be deprived “of life, liberty, or property, without due process of law.” • A government decision to take life, liberty, or property must be made fairly. This has been interpreted to require that a person have at least an opportunity to object to a proposed action before a fair, neutral decision maker (who need not be a judge). • If a law or other governmental action limits a fundamental right, it violates substan-tive due process unless it promotes a compelling or overriding state interest. Fundamental rights include interstate travel, privacy, voting, and all First Amendment rights. Compelling state interests could include, for example, the public’s safety. In all other situations, a law or action does not violate substantive due process if it rationally relates to any legitimate governmental end.
Slide 78: Constitution As It Affects Business  The U.S. Constitution is the supreme law in the United States.  U.S. Constitution gives Congress the power to “Regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes…..”  The Commerce Clause and the Expansion of National Powers  The Constitution expressly provides that Congress can regulate commerce with foreign nations, interstate commerce, and commerce that affects interstate commerce. The commerce clause has had a greater impact on business than any other provision in the Constitution. This power was delegated to the federal government to ensure a uniformity of rules governing the movement of goods through the states.  The Commerce Power Today  The breadth of the power was interpreted to permit the federal government to legislate in areas in which there is no explicit grant of power to Congress. In the 1990s, the United States Supreme Court began to limit this power, but it still serves as the basis for much federal legislation. (Auto and Bank Bailouts)
Slide 79: Chapter 1  The Regulatory Powers of the States  Another problem that arises under the commerce clause concerns a state’s ability to regulate matters within its own borders. As part of their inherent sovereignty, states possess police power, and state laws enacted pursuant to a state’s police powers carry a strong presumption of validity. Example – Marijuana laws – Medical Use?? (Considered illegal)
Slide 80: Chapter 1 – Learning Obj #5  Under the commerce clause of the U.S. Constitution, the national government has the power to regulate interstate commerce (business activities that affect more than one state). This clause has been interpreted to allow Congress to regulate employment decisions, workplace safety, competitive commercial practices, and business financing. States can regulate intrastate business activities within their borders.  Under the First Amendment, commercial speech, or advertising, receives some protection from government interference, although this protection is not extensive as that afforded political speech. Under this amendment, “Sunday closing laws,” which make the performance of some business activities illegal on Sunday, have been challenged, but the laws have been upheld. Under the Fifth and Fourteenth Amendments’ due process clauses, insurance regulations, price and wage controls, banking controls, and controls of unfair competition and trade practices have been upheld, when they were adjudged to rationally relate to legitimate government ends.
Slide 81: First Amendment: Freedom of Speech & Religion  Right to Free Speech is the basis for our democratic government. (burning the flag, protesting against wars)  Free speech also includes “symbolic” speech, including gestures, movements, articles of clothing.
Slide 82: Unprotected Speech  U.S. Supreme Court has held that certain speech is NOT protected:  Defamatory speech.  Threatening speech that violates criminal laws.  Fighting Words.  Obscene Speech is patently offensive, violates community standards and has no literary, artistic, political or scientific merit.
Slide 83: Corporate Political Speech  Commercial speech (advertising) is given substantial protection. Government restrictions must:  Seek to implement substantial government interest,  Directly advance that interest, and  Must go no further than necessary to accomplish.  Corporations also have protected political speech (although not to the degree of a natural person).
Slide 84: Online Obscenity  Protected or Unprotected?  Some of Congress’ attempts to protect children from online pornography have been ruled unconstitutional restriction on free speech.  Communications Decency Act (1996). Children’s Internet Protection Act (2000) which requires filters for computers in public libraries and public schools). Challenged, in court. http://www.cdt.org/speech/cda/   What about “hate” speech on the web? Blogs!
Slide 85: Regulatory Powers of the States  Tenth Amendment reserves all powers to the states that have not been expressly delegated to the national government.  State have inherent “police powers.”  Police powers include right to regulate health, safety, morals and general welfare.  Includes licensing, building codes, parking regulations and zoning restrictions.
Slide 86: Note to Student  Business law and the legal environment do not just consist of theoretical concepts and vague statutes. Rather, you will find that you can use what you have learned from your course in many practical ways throughout your life.  To a large extent, personal law is preventive—the more you know about the legal consequences of your actions and the actions of those with whom you have dealings, the better you will be able to prevent legal problems.
Slide 87: Note to Student  Like millions of Americans, you may decide not to own your own home. Instead, you may choose to rent a house, an apartment, a mobile home, or some other form of housing. As a tenant, your relationship with your landlord is generally governed by the law of the state in which you live. Leases include such terms as the following items: 1. The names of the parties to the agreement. 2. The address of the rental property. 3. The amount and the due date of the rent. 4. Other fees and charges. 5. The period of time for which the property is rented. 6. The rights and duties of the parties, which relate to use of the premises, alterations, maintenance, repairs, and other areas of responsibility. 7. The amount of a security deposit. 8. The conditions under which the rent can be raised. 9. Provisions for subleasing the property and terminating the lease              Alterations – Subleases - Other Rights - Illegal Terms - Eviction Eviction Notice - Eviction Proceedings - Substandard Housing Implied Warranty of Habitability - Withhold Rent – Rent – Sec Deposit  Liability for Injuries - Common Areas - Insurance
Slide 88: Note to Student  Getting Married  Marriage Requirements  Common Law Marriage  Prenuptial Agreements  Property Ownership  Separation and Divorce  Child Custody  Homosexual Families
Slide 89: Note to Student  Jury Duty – Challenges – Peremptories  Employment In the past under common law, an employer could fire a       worker for any reason whatsoever. Today, courts recognize a wrongful discharge action that makes it illegal to fire employees for certain publicpolicy reasons. MIRANDA WARNINGS http://www.expertlaw.com/library/criminal/miranda_rights.html#Q2 * You have the right to remain silent. Anything you say can be used against you. * You have the right to a lawyer and to have one present during questioning. * If you cannot afford a lawyer, one will be appointed for you before questioning commences. If the police fail to provide Miranda warnings, a suspect may still be prosecuted and convicted. The Miranda warnings are required only for use at trial of statements made by the accused.
Slide 90: Discussion Questions  What are the tests used to determine whether a law comports with substantive due process?  If a law limits a fundamental right, it must be necessary to promote a compelling or overriding interest. In all other cases, a law or action does not violate substantive due process if it rationally relates to any legitimate governmental end. Under this test, virtually any business regulation will be upheld as reasonable.
Slide 91: Discussion Question  What does it mean that under the establishment clause the government cannot establish any religion or prohibit the free exercise of religious practices?  Federal or state regulation that does not promote, or place a significant burden on, religion is constitutional even if it has some impact on religion. The clause mandates accommodation of all religions and forbids hostility toward any.
Slide 92: Discussion Question  Would the ten amendments in the Bill of Rights be part of the Constitution if it were introduced today? (Page 13 in the text)  http://www.billofrights.com/bill_of_rights.htm  If not, what rights might they be willing to guarantee?

   
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