Business Law 2

• The modern environment of business involves law and ethics
• Key functions of the legal systems

  • Improving social stability by influencing behavior
  • Conflict resolution
  • Reflecting social values and customs
• Legal environment


  Refers to rules, standards and principles that define the behavioral boundaries for business activities
• Sources of law in the U.S.

  • Constitutions
  • Legislatures and statutes
  • Administrative agencies and regulations
  • The judiciary and common law
  • The executive
  • International sources
• U.S. Constitution


  Fundamental law of the land, establishes the limits and power of government, oldest written constitution in force in the world, establishes legislative, executive and judicial branches of government
• State constitutions


  Like the U.S. Constitution, create legislative, judicial and executive branches of state governments, often very long and detailed, easier to amend than the U.S. Constitution
• Two types of government - federal and state, each with 3 independent branches (legislative, judicial, executive) with checks and balances
• Legislatures and statutes


  1. Congress creates statute

  2. Statute designates administrative agency

  3. Agency makes regulations
• Administrative agencies and regulations

  Agencies and regulations outline details of applying the statute, businesses should focus on regulations for better understanding and application of statute
• Judiciary and common law


  Judge usually follows earlier decisions that resolved similar disputes, legal principle from cases is called "precedent", use of precedent is Stare Decisis, common law varies by state but there is consistency
• Case structure


  Plaintiff, defendant, valid cause of action, holding, judgment, motion for summary judgment
• Old common law rule

  When a contractor finishes work and owner accepts it, the contractor is no longer liable, only the property owner has liability
• New common law rule

  The contractor is liable for injury to 3rd parties as a result of negligent work, even if the work was accepted by the property owner
• The executive


  President can create law through executive orders, has influence on administrative agencies
• International sources of law

  • Code law
  • Treaties and trade agreements
  • Multinational regional or global organizations
• Classifications of law


  • Public and private
  • Civil and criminal
  • Substantive and procedural
• Public law


  Legal relationships between members of society and the government, influence behavior, bring about social change
• Private law


  Legal relationships among members of society, resolves disputes, primarily common law
• Criminal law


  The guilty can be fined, imprisoned or both, creates either a felony or a misdemeanor, legal requirement for guilt is "beyond a reasonable doubt"
• Civil law


  Wrongdoer pays money, no jail time, legal requirement for liability is "preponderance of the evidence"
• Substantive law


  Defines legal rights and regulates behavior
• Procedural law


  How the law is to be enforced (the "nuts and bolts")
• Public perception of business leaders has fallen, the general public expects more transparency from businesses today
• Ethics


  Rules or standards governing conduct of members of a profession
• Integrity

  Living by a moral code and standards of ethics
• Morality


  Conformity to rules of correct conduct within the context of society, religion or other institutional belief
• Corporate leaders are to ensure the corporate mission is fulfilled, commitment to a code of ethics goes beyond legal obligations, practical consequences are high jury awards against large corporations who cross ethical lines into illegality
• Chapter issues


  • Overview of the American court system
  • How an injured party can seek relief in the courts
  • Jurisdiction: which court has the power and authority to decide the case
  • Relations between court systems
• Organization of the court systems

  • Lower courts: courts of original jurisdiction (trial courts)
  • Appellate courts: courts of appellate jurisdiction
• Ethics


  Rules of correct conduct within the context of society, religion or other institutional belief
• Corporate Social Responsibility


  Corporate leader is to ensure corporate mission is fulfilled
• Commitment to a code of ethics goes beyond legal obligations
• Practical consequences are high jury awards against large corporations who cross ethical lines into illegality
• The court systems
• Overview of the American court system

  • How an injured party can seek relief in the courts
  • Jurisdiction: Which court has the power and the authority to decide the case?
  • Relations between court systems
• Organization of the Court Systems

  • Lower courts: Courts of Original Jurisdiction
  • Appellate Courts: Courts of Appellate Jurisdiction
• State Judges


  • Judges chosen by variety of methods
  • Unlike federal court, most state judges serve fixed terms
  • Evidence indicates that for elected judges the average judgment in tort cases are larger and out-of-state companies are treated more poorly than in states with appointed judges
• Federal Judges


  • Federal judges are nominated by the President and confirmed by a majority vote in US Senate
  • Lifetime appointment
  • May be removed from office only if Congress impeaches them
  • Job security guarantees that judges are independent and free from political pressure
• Judicial Immunity


  • A judge is absolutely immune from suit for damages for judicial acts taken within his/her jurisdiction
  • Applies even if action is excessive/malicious
  • Purpose is to protect the system from undue influence on judicial decision-making
• Davis v. West


  • Houston Reporting Service sued attorney Davis for unpaid deposition fees
  • Court appointed Radoff as receiver in the case
  • Radoff sent letter to Davis's bank demanding $4,144.91 which the bank paid
  • Davis sued Radoff for abuse of process but Radoff was granted derived judicial immunity