Final Paper: Trust in the law

Final Paper: Trust in the Law

by Kesha Jaramillo
Southern New Hampshire University
November, 9 2014

Final Paper: Trust in the law

Introduction
In the case McCulloch v. Maryland Chief Justice Marshall noted that "the question
respecting the extent of the powers actually granted to the Federal Government is perpetually
arising, and will probably continue to arise, as long as our system shall exists (McCulloch v.
Maryland, 4 Wheat. 316, 405, 4 L.Ed. 579 1819). The subject of this case was Congress
authority to incorporate a bank and Maryland believed that the Congress did not have such
authority. Maryland argued that the power of the government is delegated by the states and the
Justices agreed that Congress did not have the power to incorporate any entity, including a bank.
They also repudiated the claim that the federal government is subject to the will of the states, and
the powers of the Government are detailed in the Bill of Rights and Constitution (McCulloch v.
Maryland, 4 Wheat. 316, 405, 4 L.Ed. 579 1819). Using the foundation set forth in the
Constitution and the Bill of Rights relevant statute that impacts business decisions will be
discussed along with how the very system that protects American commerce also breeds distrust
in the law.

Areas of the law that affect business decisions

Some areas of the law that affect business decisions include Negotiable Instruments,
Holder in Due Course (HDC), Business Organizations, Business Ethics, and Property and
Employment Law. Money exchanged during business transactions often occurs through
negotiable instruments.

Types of negotiable instruments and parties are outlined in Article 3 of

Final Paper: Trust in the law

the Uniform Commercial Code (UCC). A negotiable instrument is defined as an unconditional

promise or order to pay a fixed amount of money (Twomey & Jennings, 2014, p. 538).
Negotiable instruments fall into the following categories: promises to pay, certificates of deposit
and promissory notes, and orders to pay, drafts and checks (Twomey & Jennings, 2014, p. 538).
The Holder in Due Course (HDC) status is outlined in Article 3 of the Uniform
Commercial Code (UCC). HDC concerns the rights of a holder who meets certain criteria and
addresses the liability of parties under negotiable instruments (Twomey & Jennings, 2014, p.
579). A holder is a person who possesses an instrument drawn, issued, or indorsed to her, to her
order, to bearer, or in blank (Business Dictionary, n.d.). The Holder in Due Course offers
protection from certain defenses (Twomey & Jennings, 2014, p.579). The HDC status is
important because it defines how negotiable instruments are used in businesses. The HDC status
delineates liability and defense when negotiable instruments are used.
Major underlying principles of law that have the most impact

The Constitution and statues passed by Congress are the supreme law of the land
(Twomey & Jennings, 2014, p. 55). They take preference over state laws that may be in
conflict. Congress can govern over matters of national concern because of Federal power. The
United States Federal System allows the government to exist as is and stand on the principles of
the Bill of Rights and Constitution. This system gives the federal government power over
national matters and allows the states to keep power over local interests.

Final Paper: Trust in the law

The power to regulate commerce is one of powers of Congress. Commerce is addressed

in Article I, Section 8, Clause 3 of the Constitution, which is where the commerce clause comes
from (Twomey & Jennings, 2014, p. 59). The commerce clause gave Congress the power to
regulate commerce with foreign nations, and among the several states, and with the Indian
tribes (Twomey & Jennings, 2014,p. 59). Currently, Congress power over commerce has been
limited by the Supreme Court. Congress authority was restricted, under the commerce clause,
to commercial and economic activity (Twomey & Jennings, 2014, p. 59). The commerce clause
also prevents states from interfering with federal regulation of commerce between states. This is
a point of contention between Congress and the states.
The discord over the Affordable Care Act (ACA) is a recent example of how some states
feel that the authority to control commerce that Congress holds under the commerce clause is
obsolete. The federal government was sued by some states who argued that the requirements of
the ACA are not an economic activity or commerce and not something that should be controlled
by the federal government. In the case of the Affordable Care Act, the Supreme Court ruled in
favor of the federal government.
In the case Nat. Fedn. of Indep. Business v. Sebelius, the state of Florida sued the federal
government because of two provisions of the Affordable Care Act (ACA); the expansion of
Medicaid and the individual mandate. In the individual mandate, the plaintiffs argue that the
government does not have authority over a persons health and that it is not a commerce or
economic activity. The federal government argued that both the expansion of Medicaid and the
individual mandate are economic in nature. Their reasoning was based, in part, on Medicaids
place in the budget and the economic impact that the lack of health insurance has on the

Final Paper: Trust in the law

government. The Justices examined their jurisdiction in deciding the case and the limits of the
authority Congress has in this instance, then determined that their duty was to decide if the
Constitution grants Congress the power to enact ACA (Nat. Fedn. of Indep. Business v. Sebelius,
132 S. Ct. 2566, 567 U.S. 1, 183 L. Ed. 2d 450 (2012)).
Ethics is another principle that impacts business. Ethics make sure that business practices
are kept honest. It affects trust and trust affects the reputation of a business and thus the success
of the business. Because there are so many theories on business ethics, how one conducts
business is just as important to both customers and business owners as the business that one
conducts.
Ethics assure profits are made in such a way that does not cause undo harm. Business
ethics is defined as, balancing the goals of profits with the values of if individuals and society
(Twomey & Jennings, 2014, p. 33). Conducting ethical business is not always easy and when
businesses are accused of unethical practices they find themselves in both a court of law and the
court of public opinion. Many times public opinion is far more damaging than the law because
the public does not always consider the facts of law, it bases opinions on how things look. In the
public eye perception is often reality. How businesses are perceived by the public is one of the
most important components of success. Creating a strong trust in the public eye through ethical
business practices will build a resilient and trustworthy brand. This is why ethics is such an
important factor to consider when making business decisions.
Common sources of distrust and fear of the law

Final Paper: Trust in the law

A big source of fear and distrust of the law is that the law is not easy for the average
person to understand. The language is not used in everyday language and the words and syntax
used are hard to understand. The language used in law was derived from English common law.
Although there has been some modernization of the language it is still foreign to people who are
not familiar with the legal system. Another factor is the American literacy rate.

In 2010, the

National Assessment of Adult Literacy found that 43% of adult Americans read and comprehend
at a third grade level (Mellard, Fall, & Woods, 2011). American law is written at a much higher
comprehension level. It is hard for people to trust something that they do not understand.
Another common source of distrust in the law is the perception that the law favors the
wealthy, men, and the majority. Historically the poor did not always receive justice because
they lacked the means to adequate defense. This is often seen today with celebrities who are
charged with driving under the influence. Their sentences are far more lenient compared to
people who cannot afford the same level of defense attorneys, who committed the same or
similar crimes and find themselves with much harsher punishments. A popular example of the
wealthy privilege in the legal system is when Paris Hilton was released from jail in less time that
it took to get her through processing after a DUI conviction in 2009.
Lawrence W. Shermans paper on Americas trust in the criminal justice system discussed
his finding that despite the fact that there are more minorities and women involved in law and
politics than any period in our history, the publics trust in the legal system particularly amongst
minorities, remains low (Sherman, L. W. ,2002, p. 22-31). Cases such as Zimmerman v State
and Jordan Davis do not help the misperception that the law is stacked against minorities and or
women. This perception does stem from the countrys history of discrimination based on gender,

Final Paper: Trust in the law

socio-economic status, and color. Each issue has been challenged in court. Even with changes
in law attitude cannot be legislated. Trust must be earned and from a social perspective the legal
system has to earn that respect from the public.

Final Paper: Trust in the law

References
Business Dictionary. (n.d.). What is holder? definition and meaning. Retrieved from
http://www.businessdictionary.com/definition/holder.html
David P. Twomey and Marianne M. Jennings, 2014. Business Law: Principles For Todays
Commercial Environment, 4 Edition. Mason, Ohio: Cengage Learning.
th

Engel, K. C., & McCoy, P. A. (2004). Predatory lending: What does Wall Street have to do with it?

Housing Policy Debate, 15(3), 715-751.

Legal Information Institute. (n.d.). 3-302. HOLDER IN DUE COURSE. | UCC - Uniform
Commercial Code | LII / Legal Information Institute. Retrieved from
http://www.law.cornell.edu/ucc/3/3-302.
McCulloch v. Maryland, 4 Wheat. 316, 405, 4 L.Ed. 579 1819
Mellard, D. F., Fall, E., & Woods, K. L. (2011, March 1). A path analysis of reading
comprehension for adults with low literacy. Retrieved from
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2860173/
Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, 567 U.S. 1, 183 L. Ed. 2d 450 (2012).
Sherman, L. W. (2002). Trust and confidence in criminal justice. National Institute of Justice
Journal, 248, 22-31.