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Business Law
Ch. 1: Laws and Their Ethical
Foundations
What is Law?
• Laws are enforceable rules of conduct in a
society that reflects the culture and
circumstances that create them
Codes
• Codes are laws grouped into an organized
form
Stages In the Growth of Law
1. Individuals are free to take revenge for
wrongs done to them.
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Injuries inflicted on one human being by
another are matters for personal revenge
Those that are wronged feel that justice can
be done only through personally punishing
the wrongdoers
Example would be Gang Wars
Stages In the Growth of Law
2. A leader acquires enough power to be
able to force revenge-minded individuals
to accept an award of goods or money
instead
Stages In the Growth of Law
3. The leader gives this power to a system
of courts
4. The leader or central authority acts to
prevent and punish wrongs that provide
individuals to seek revenge.
Common Law vs. Positive Law
• Laws reflect the wisdom or lack of wisdom
of their creators.
• Laws should be predictable and flexible
• Do you want a lack system or controlling?
• Best system evolves slowly toward a form
that is most appropriate to the current
standards of the people.
Common Law vs. Positive Law
• Common Law – laws based on the current
standards or customs of the people.
– Formed from the rules used by judges to
settle people’s disputes.
• Positive Law – Laws dictated from above
Origin of the U.S. Legal System
• Roman Civil Law
– Laws adopted are written, well organized,
comprehensive set of statutes in code form.
– Laws can only be changed by the central
government.
– Louisiana is the only state with a civil law
system
Origin of the U.S. Legal System
• English Common Law
– In England, disputes were decided by local
customs and enforced by the barons’ power.
• Laws were different from region to region.
• Made it difficult to follow
English Common Law
• King Henry appointed a number of judges.
– Judges were given the power of order
wrongdoers to pay with money or goods
– Judges would travel during the good-weather
months and hold court.
– This was called King’s Bench
– Baron’s Courts still heard minor cases.
– Kings court had jurisdiction – The power to
decide cases, over the important cases
English Common Law
• Judges were instructed to choose citizens
from each region to interpret the regions
customs for the courts
– The panel of citizens is called a jury
• Jury consist of 12 people
Advantages of
English Common Law
• Achieves uniformity while maintaining an
ability to adapt to changes in society.
Alternative to Common Law
• Common law courts carefully follow
precedent
– Precedent means that courts use prior cases
as a guide for deciding similar new cases
– Help provide stability in the law.
– Disadvantage was that courts could only grant
remedy for damages
• Had to wait until harm actually ahppened.
Chancellor
• Matter were handed to a chancellor
instead of going to the courts
– No jury
– My issue an injunction (stop something from
being done)
Source of Laws
• Laws in the U. S. are created at all three
levels of the government (Federal, State,
Local)
Forms of Laws
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Constitutions
Statutes
Case Law
Administrative Law
Forms of Laws
• Constitutions
– Document that set forth framework of a
government and its relationship to the people
it governs.
– When constitutions are adopted or amended,
or when courts interprets constitutions –
Constitutional Law is created.
Forms of Laws
• Constitutions
– Highest source of law
– “Supreme Law of the Land”
– Federal, State, or Local laws is not valid if it
conflicts with the federal Constitution.
– State Constitution is the Supreme Law over
all state laws.
Forms of Laws
• Constitutions
– Defines and allocates certain powers in our
society.
– Allocates powers
• Between the people and their government
• Between state government and the federal
government
• Among the branches of the government
Allocating Powers between
People and their Government
• Constitution is the main document for
allocating powers between people and
their government
– Done in the Bill of Rights (first 10
ammendments)
Allocating Powers between
Federal and State Government
• Many governmental powers over business
are divided between state governments
and the federal governments.
– The federal government regulates foreign and
interstate commerce.
• Interstate Commerce occurs between two or more
states.
• Intrastate Commerce occurs within one state. Left
to the state
Allocating Powers among the
Branches of the Government
• Branches: Executive, Legislative, and
Judicial Branches.
– Checks and Balance
• Ensures that no branch of the government
becomes too powerful.
Statutes
• State legislators enacting state laws
– Statutes
• Local government set their own local laws
– Ordinances
– Only effective within boundries
Case Law
• Set by judicial branch
• Is made after a trial has ended and one of
the parties has appealed the result to a
high court.
– Appeal will be based on legal issues arising
from rulings made by the lower court.
– Appellate Court publishes its opinion that
states new or more appropriate rules to be
used in deciding the case and others like it.
Beginning of Class
• Turn to page 9 in your text book
– Take 10 minutes to answers the Assestment
Case Law
• Case Law arises from the doctrine of
“Stare Decisis”
– Means “let the decision stand”
– Requires lower courts to decide similar cases
the same way.
Administrative Law
• Federal, State and Local legislatures
create administrative agencies
– Administrative agencies are government
bodies that carry out particular laws.
• Examples
– Social Security Administration
– DMV
– County Zoning Commission
Administrative Law
• Agencies created by legislature but
controlled by executive branch
– Legislatures grant agencies Legislative
powers and limited judicial powers
• Create there own laws called Rules and
Regulations
• With judicial powers – they would hold hearing,
make decisions, and apply the law.
Turn to Page 13
• What’s your Verdict
Types of Laws
• Civil Law
– Private legal rights of an individual are
violated
– Individuals seek legal remedies for wrongs
done to them
– Another name is Tort
Civil Law
• Two parties
– Plaintiff – one suing
– Defendant
• Liable – Defendant loses
• Punishment
– Compensation
Types of Laws
• Criminal Law
– Is an offense against society rather than
individuals
– Government investigates an alleged
wrongdoing.
Criminal Law
• Two Parties
– Prosecutor
– Defendant
• Conviction
– Fine
– Imprisonment
– Execution
Procedural Law
• Sets forth how rights and responsibilities
can be legally exercised and enforced
through the legal system.
Procedural Law
• Two types
– Criminal Procedure
• Defines the process for enforcing the law when
someone is charged with a crime
– Civil Procedure
• When civil law have been violated
Substantive Law
• Defines rights and duties
• Concerned with rules of conduct
• Defines offenses
Business Law
• Rules that apply to business situations and
transactions.
– Mostly concerned with Civil Law
Uniform Business Laws
• UCC – Uniform Commercial Code
– Governs such areas as sale of goods, certain
aspect of banking and leases of goods.
• Important because of the large use of interstate
commerce and commercial transactions
Assessment
• Turn to page 15 and answer the question
Ethics
• Practice of deciding what is right or wrong
in a reasoned, impartial manner
– Must affect you or others in a significant way
– Should be impartial
Ethics in Business
• Ethics is not considered for one reason
Profit
maximization
Forms of Ethical Reasoning
1. Consequences
– Rightness and Wrongness is based on the
results of the action
– First looks for alternative ways to alter the
current situation
– Then attempts to forecast the consequence
that will arise from each alternative
– Evaluates this possible consequences to
select the alternative that will generate the
greatest good
Forms of Ethical Reasoning
2. Moral
– Based on ethical rules
– Acts are either right or wrong
– Good consequences do not justify wrong or
bad acts
– The standard of judging is based on
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Recognized Authority (Religious)
Human Reasoning
Civil Disobedience
• Open and peaceful violation of a law to
protest its alleged injustice or unfairness.
– Goal is to make the legal system more just
– Participants are willing to be arrested in order
to test the validity of the law in court
Assessment
• Turn to page 19
Handouts
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Complete Lesson 1-1 Reteach
Complete Lesson 1-2 Quiz
Complete Lesson 1-3 Reteach
Complete Lesson 1-3 Quiz
Chapter 1 Assessment
• Complete Your-Legal Vocabulary on page
20
• Complete Review Legal Concepts
questions 20, 21 and 24
• Complete Write Your Legal Concepts #30
• Complete Think Critically About Evidence
#34
• Complete Analyze Cases #36