1. 1-1McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 1 P A R TFoundations of American Law The Nature of Law The Resolution of Private Disputes Business and The Constitution Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking 1-2 3. C H A P T E R 01The Nature of LawThe sacred rights of mankind . . . are written, as with a sunbeam in the whole volume of human nature, . . . and cannever be erased or obscured by mortal power.Alexander Hamilton, 1775 1-3 4. Learning Objectives Identify sources and types of law Identify the law that has precedencewhen laws conflict Differentiate criminal law from civil law Differentiate schools of jurisprudence Describe precedent (stare decisis) Explain major techniques of statutoryinterpretation1-4 5. Types and Classifications of Law At the federal, state, and tribal level: Constitutions: establish governmental structure, specific rights and duties Example: U.S. Constitution Statutes: enacted by legislative body to regulate conduct Example: Clean Air Act, 42 U.S.C. 7401 et seq. (1970) 1-5 6. Types and Classifications of Law Common law or case law is made andapplied by judges at the state level asjudges decide cases according to thedoctrine of precedent or stare decisis(let the decision stand) Example: in the negligence case of Youngv. Beck, the court reviewed applicable lawand concluded that a long-standingcommon law rule should remain in effect 1-6 7. Types and Classifications of Law Equity is applied by state level judiciaryto achieve justice when common lawrules would produce unfair results Injunction: court forbids a party to do someact or orders a party to perform an act Specific performance: party is ordered toperform according to contract terms Reformation: court rewrites contract to reflectintention of parties Recission: cancellation of the contract1-7 8. Types and Classifications of Law Administrative Regulations & Decisions: made by state and federal agencies that were created by statute and hold delegated (granted) power Treaty: made with other nations, by the U.S. president on behalf of the nation, approved (ratified) by the U.S. Senate Example: The Antarctic Treaty 1-8 9. Types and Classifications of Law Ordinance: made by subunits of state governments (e.g., counties, cities) for local issues, such as zoning Executive Order: issued by the U.S. President or a state governor under limited powers Example: Executive Orders Disposition Tables Index 1-9 10. Priority Rules Federal supremacy: a rule of priority forconflicts between laws stating that theU.S. Constitution is the supreme law Supremacy Clause, Article VI, Section 2, ofthe U.S. Constitution Practical meaning: Federal law defeats state law State constitution defeats state legislation Statute defeats administrative regulation Statute or regulation defeats common law 1-10 11. Trentadue v. Gorton Facts & Procedural History: Trial court decided that common law discovery rule applied to claims against corporate defendants for the crime of an employee rather than a statute of limitations. Appellate court affirmed and case appealed. Issue: Does a legislated rule (statute oflimitations) abrogate a common law rule? Holding: Yes. Plain language of statuteindicates a legislative intent to excludecommon law rules.1-11 12. Classification of Law Criminal law establishesduties to society Government chargesand prosecutesdefendant, who will befound guilty or innocent A convicted defendantwill be imprisoned orfined1-12 13. Classification of Law Civil law establishesduties and obligationsbetween privateparties Plaintiff sues defendantfor monetary damagesor equitable relief A defendant will beheld liable or not liablefor the plaintiffs injury 1-13 14. Classification of Law Substantive law establishes rights andduties of people in society Example: A statute making murder acrime is a substantive law Procedural law establishes how toenforce those rights and duties Example: Rules for the proper conduct ofa trial are rules of procedural law 1-14 15. Classification of Law Public law refers to the relationshipbetween governments and privateparties Examples: constitutional, statutory, andadministrative law Private law refers to the regulation ofconduct between private parties Examples: contract, tort, property, andagency laws 1-15 16. Jurisprudence Jurisprudence refers to the philosophyof law as well as the collection of laws Legal positivism: law is the commandof a recognized political authority Just or unjust, law must be obeyed Natural law: universal moral rules bindall people whether written or unwritten Unjust positive laws are invalid 1-16 17. Jurisprudence American legal realism defines law asthe behavior of the judiciary as theyrule on matters within the legal system Thus law in action dominates positive law Sociological jurisprudence unitestheories that examine law within itssocial context1-17 18. Functions of Law Peacekeeping Checking government power andpromoting personal freedom Facilitating planning and the realization ofreasonable expectations Promoting economic growth through freecompetition Promoting social justice Protecting the environment 1-18 19. Legal Reasoning Basically deductive, with legal rule asmajor premise and facts as the minorpremise Result is product of the two Case law reasoning: Court may standon precedent or distinguish prior casefrom current case If precedent inapplicable, new ruledeveloped1-19 20. Hagan v. Coca-Cola Bottling Co. Facts & Procedural History: Florida plaintiffs drank from bottle of Coke, found foreign object, suffered emotional distress, and brought suit for negligence Jury returned verdict for plaintiffs, judge reduced jury award, & both parties appealed Certified question sent to Florida Supreme Court Question: Should the impact rule (physical injuryrequired to state a claim) be abolished oramended in Florida? 1-20 21. Hagan v. Coca-Cola Bottling Co. Courts Reasoning: Reviewed facts and arguments of parties Reviewed application of impact rule withinFlorida, including modifications to the rule Discussed public policy recognized by theFlorida Supreme Court in Doyle v. Pillsbury Co. Noted court decisions in other states Holding: Impact rule does not apply whereemotional damages are caused by conduct thatis a freestanding tort (e.g., contaminated food)1-21 22. Reasoning by Statutory Interpretation Plain meaning rule: court applies statuteaccording to usual meaning of the words Courts examine legislative history andpurpose when plain meaning rule isinadequate Example A: Why does the CommunicationsDecency Act offer immunity for some entities? Example B: What is meant by a prohibitionagainst discrimination because of anindividuals age?1-22 23. Federal Communications Commission v. Facts: Corporation challenged a Freedom of Information Act request arguing that Exemption 7(C), an unwarranted invasion of personal privacy, applied to the request and prevented disclosure Issue: whether corporations have personal privacy for the purposes of this exemption? 1-23 24. Federal Communications Commission v. AT&T, Inc. Reasoning: Personal not defined by the statute,but personal privacy ordinarily refersto individuals and the ordinary meaningof the phrase should apply Holding: Corporations do not have personalprivacy for purposes of Exemption 7(C) 1-24 25. Statutory Interpretation Courts may interpret a statute in light ofa general public purpose or publicpolicy Courts follow prior interpretation of astatute (precedent) to promoteconsistency Maxims may be used to assist instatutory interpretation 1-25 26. Statutory Interpretation Example of a maxim: Ejusdem generis (things of the same type) When general words follow specificwords, the general words are limited tothe same things as specific words Automobiles and other vehicles doesnot include airplanes1-26 27. Limitations on Judicial Power Courts limited to deciding existingcases or controversies In other words, the dispute must becurrent and not yet resolved However, a declaratory judgment allowsparties to determine rights and dutiesprior to harm occurring 1-27 28. Limitations on Judicial Power Parties must have standing (directinterest in the outcome) to sue Whales, for example,do not have standing The Cetacean Community v. Bush, 386 F.3d 1169 (9th Cir. 2004) 1-28 29. Global Business Environment Courts may faced withtreaty interpretation The carrier shall beliable for damage sustained in the event of U.S. Supreme Court the death or wounding of a passenger or anyinterpreted The Warsaw other bodily injury suffered by a passenger,Convention inif the accident which caused the damage soOlympic Airways v.sustained took place onboard the aircraft or inHusainthe course of the operations of embarking How would you have or disembarking.Warsaw Convention,interpreted the treatyArt. 17language? 1-29 30. Test Your Knowledge True=A, False = B The Constitution, statutes, and case laware sources of law in the United States Agency regulations, presidential orders,and treaties are sources of law in theUnited States Stare decisis refers to the doctrine of equity The Supremacy Clause states that the U.S.Constitution is the supreme law of the land 1-30 31. Test Your Knowledge True=A, False = B Civil law establishes the duties anindividual has to keeping a civil society Substantive law establishes how toenforce the rights and duties of people insociety Jurisprudence refers to the philosophy oflaw as well as the collection of laws Legal reasoning is basically inductive 1-31 32. Test Your Knowledge Multiple Choice The plain meaning rule means that thecourt applies a statute a) according to the unique or specialmeaning of words b) according to usual meaning of thewords c) according to public policy andlegislative purpose 1-32 33. Test Your Knowledge Multiple Choice Courts are: a) Limited to hearing existing cases orcontroversies b) Limited to hearing cases in which plaintiffhas standing (a direct interest in theoutcome) c) Unlimited in types of cases they may hear d) All of the above e) Both A & B1-33 34. Thought Question What do you think the authors of theU.S. Constitution would think aboutcurrent legal issues in our society? 1-34