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Roger LeRoy Miller

BUSINESS LAW TODAY


STANDARD EDITION
TEXT & SUMMARIZED CASES, 11E

Copyright
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The Legal Environment
Chapter 1

Chapter Outline
1-1 Business Activities and the Legal Environment
1-2 Sources of American Law
1-3 Common Law Tradition
1-4 Classifications of Law

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Learning Objectives

1. What are four primary sources of law in the


United States?
2. What is the common law tradition?
3. What is a precedent? When might a court
depart from precedent?
4. What is the difference between remedies at
law and remedies in equity?
5. What are some important differences between
civil law and criminal law?

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1-1 Business Activities and
the Legal Environment
Liability: The state of being legally
responsible (liable) for something, such as
a debt or obligation.
1-1a Many Different Laws May Affect a
Single Business Transaction

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1-1b Linking Business Law to the
Six Functional Fields of Business
1. Corporate management
2. Production and transportation
3. Marketing
4. Research and development
5. Accounting and finance
6. Human resource management

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1-1c The Role of the Law in a Small
Business
Just as the functional fields of business are
linked to the law, so are all of the managerial
roles a small business owner/operator must
perform.

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1-2 Sources of American Law

Primary source of law: A document that


establishes the law on a particular issue,
such as a constitution, a statute, an
administrative rule, or a court decision.
Secondary source of law: A publication
that summarizes of interprets the law,
such as a legal encyclopedia, a legal
treatise, or an article in a law review.

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1-2a Constitutional Law

Found in text and cases arising from federal


and state constitutions
U.S. Constitution is the supreme law of the
land.

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1-2b Statutory Law

Laws enacted by federal and state


legislatures
Uniform Laws
The Uniform Commercial Code (UCC)

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1-2c Administrative Law

Federal Agencies
State and Local Agencies
Agency Creation
Rulemaking: rules, orders and decisions of
administrative agencies.
Enforcement and Investigation
Adjudication

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1-2d Case Law and Common Law
Doctrines
Case law: The rules of law announced in
court decisions. Case law interprets statutes,
regluations, constitutional provisions, and
other case law.

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1-3 Common Law Tradition

1-3a Early English Courts


Kings courts started after Norman conquest
of 1066.
Established the common lawbody of
general legal principles applied throughout
the English empire
Kings courts used precedent to build the
common law.

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1-3b Stare Decisis (slide 1 of 2)

Practice of deciding new cases based on


precedent
The Importance of Precedents in Judicial
Decision Making
A higher courts decision based on certain facts
and law, is a binding authority on lower courts.
Helps courts stay efficient

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1-3b Stare Decisis (slide 2 of 2)

Stare Decisis and Legal Stability


Departures from Precedent
Case Example 1.5 Brown v. Board of Education
(1954): The U.S. Supreme Court overturned
precedent when it held that separate but equal
facilities was unconstitutional.
When There is No Precedent

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1-3c Equitable Remedies and
Courts of Equity (slide 1 of 2)

Remedy: means to enforce a right or


compensate for injury to that right.
Remedies at law: in kings courts, remedies
were restricted to damages in either money
or property.
Remedies in Equity
Based on justice and fair dealing a chancery court does what is right:
specific performance, injunction, rescission.
Plaintiffs (injured party initiating the lawsuit)
Defendants (allegedly caused injury)

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1-3c Equitable Remedies and
Courts of Equity (slide 2 of 2)

The Merging of Law and Equity


A court will normally only grant an equitable
remedy only when the remedy at law (monetary
damages) is inadequate.
Equitable Principles and Maxims

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1-3d Schools of Legal Thought (slide 1 of 3)

The Natural Law School


Oldest and most significant view of law
Government and legal system should reflect
universal moral and ethical principles; basis for
natural rights
These principles are inherent in human nature,
can be discovered through right reason.

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1-3d Schools of Legal Thought (slide 2 of 3)

Legal Positivism
Morality of a law is irrelevant
Applies only to citizens of that nation or society
No higher law than the nations highest governing
body or court
Laws must be obeyed regardless of whether they
are just or unjust

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1-3d Schools of Legal Thought (slide 3 of 3)

The Historical School


Emphasizes the evolutionary process of law
Looks to the past to determine laws for present
Law derives legitimacy from precedent
Legal Realism
Began in 1920s; law must be viewed within the
social context
Judges should take economic and social realities
into account.
Not bound by past decisions

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Landmark in the Law

Equitable Principles and Maxims


1. Whoever seeks equity must do equity.
2. Where there is equal equity, the law must prevail.
3. One seeking the aid of an equity court must come
to the court with clean hands.
4. Equity will not suffer a wrong to be without a
remedy.
5. Equity regards substance rather than form.
6. Equity aids the vigilant, not those who rest on their
rights.

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1-4 Classifications of Law

Substantive vs. Procedural Law


Substantive law: Law that defines, describes,
regulates, and creates legal rights and
obligations.
Procedural law: Law that establishes the
methods of enforcing the rights established
by substantive law.

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1-4a Civil Law and Criminal Law

Civil law: The branch of law dealing with the


definition and enforcement of all private or
public rights, as opposed to criminal matters.
Criminal law: The branch of law that defines
and punishes the wrongful actions
committed against the public.

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1-4b National and International
Law
National law: Law that pertains to a
particular nation (as opposed to international
law).
International law: The law that governs
relations among nations.

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Appendix to Chapter 1 (slide 1 of 3)

Finding and Analyzing the Law


Finding Statutory and Administrative Law
United States Code (U.S.C.)
State Codes
Administrative Rules

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Appendix to Chapter 1 (slide 2 of 3)

Finding Case Law


State Court Decisions: most state trial court
decisions are not printed and published
Regional Reporters
Case Citations
Federal Court Decisions
Unpublished Opinions
Old Cases

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Appendix to Chapter 1 (slide 3 of 3)

Reading and Understanding Case Law


Case Titles and Terminology
Parties to Lawsuits
Judges and Justices
Decisions and Opinions
A Sample Court Case
Review of Sample Court Case

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