THE LEGAL ENVIRONMENT OF BUSINESS A Critical Thinking Approach Fourth Edition Nancy K. Kubasek...

© 2006 Prentice Hall© 2006 Prentice Hall Ch. 2-Ch. 2-11

THETHE LEGALLEGAL ENVIRONMENTENVIRONMENT OFOF BUSINESSBUSINESS

A Critical Thinking ApproachA Critical Thinking ApproachA Critical Thinking ApproachA Critical Thinking ApproachFourth EditionFourth Edition

Nancy K. KubasekNancy K. Kubasek

Bartley A. BrennanBartley A. Brennan

M. Neil BrowneM. Neil Browne

Nancy K. KubasekNancy K. Kubasek

Bartley A. BrennanBartley A. Brennan

M. Neil BrowneM. Neil Browne

© 2006 Prentice Hall© 2006 Prentice Hall © 2006 Prentice Hall© 2006 Prentice Hall

THE LEGAL ENVIRONMENT OF BUSINESS

Introduction to Law and the Legal Introduction to Law and the Legal Environment of Business Environment of Business

CHAPTER 2CHAPTER 2

Ch 2-Ch 2-22



Chapter 2 OverviewChapter 2 Overview

Definition of the legal environment of businessDefinition of the legal environment of business

Definition of law and jurisprudence Definition of law and jurisprudence

Sources of lawSources of law

Classifications of lawClassifications of law

International dimensions of the legal environment International dimensions of the legal environment of businessof business



Why study the legal environment of law?Why study the legal environment of law?

It develops critical thinking skills.It develops critical thinking skills.

It helps to establish legal literacy. It helps to establish legal literacy.

It develops an understanding that the law is It develops an understanding that the law is dynamic not static. dynamic not static.

It deals with real-world problems. It deals with real-world problems.

It is interdisciplinary. It is interdisciplinary.

Top Ten Reasons for Studying the Legal Top Ten Reasons for Studying the Legal Environment of BusinessEnvironment of Business

© 2006 Prentice Hall Ch 2-5

EXHIBIT2-1

1. Becoming aware of the rules of doing business.

2. Familiarizing yourself with the legal limits on business freedom.

3. Forming an alertness to potential misconduct of competitors.

4. Appreciating the limits of entrepreneurship.

5. Being able to communicate with your lawyer.

6. Making you a more fully informed citizen.

7. Developing an employment-related skill.

8. Exploring the fascinating complexity of business decisions.

9. Providing a heightened awareness of business ethics.

10. Opening your eyes to the excitement of the law and business.



Definition of the Legal Environment of BusinessDefinition of the Legal Environment of BusinessIt develops critical thinking skills.It develops critical thinking skills.

The study of legal reasoning, critical thinking skills, ethical The study of legal reasoning, critical thinking skills, ethical norms, and schools of ethical thought that interact with the law.norms, and schools of ethical thought that interact with the law.

The study of the legal process and our present legal system, as The study of the legal process and our present legal system, as well as alternative dispute resolution systems.well as alternative dispute resolution systems.

The study of the administrative law process and the role of The study of the administrative law process and the role of businesspeople in that process.businesspeople in that process.

The study of selected areas of public and private law, consumer The study of selected areas of public and private law, consumer law, and environmental law. law, and environmental law.

The examination of the international dimensions of the legal The examination of the international dimensions of the legal environment of law.environment of law.



Definition of Law and JurisprudenceDefinition of Law and Jurisprudence Jurisprudence is the science or philosophy of law, or law in its most generalized form. Jurisprudence is the science or philosophy of law, or law in its most generalized form.

We have been told by:Plato that law is a form of social control; Aristotle that it is a rule of conduct, a contract, an ideal of reason; Cicero that it is the agreement of reason and nature, the distinction between the just and the unjust; Aquinas that it is an ordinance of reason for the common good; Bacon that certainty is the prime necessity of law; Hobbes that law is the command of the sovereign; Hegel that it is an unfolding or realizing of the idea of right.

SOME CHARACTERISTICS

Source of law is absolute (Nature, God, or Reason).

Source of law is the sovereign.

Source of law is contemporary community opinion and customs.

Source of law is actors in the legal system and scientific analysis of their actions.

Source of law is a cluster of legal and nonlegal beliefs that must be critiqued to bring about social and political change.

Jurisprudence reflects a male-dominated executive, legislative, and judicial system in which women’s perspectives are ignored and women are victimized.

Applies classical economic theory and empirical methods to all areas of law in order to arrive at decisions.

Law and Economics

Feminist

Critical Legal Theory

American Realist

Sociological

Positivist

Natural Law

Schools of JurisprudenceSchools of Jurisprudence

© 2006 Prentice Hall Ch 2-8

TABLE2-1

SCHOOL



Natural Law SchoolNatural Law SchoolFor adherents of the natural law school, which has existed For adherents of the natural law school, which has existed since 300 B.C., law consists of the following concepts: since 300 B.C., law consists of the following concepts:

(1)(1) There exist certain legal values or value judgments (e.g., There exist certain legal values or value judgments (e.g., a presumption of innocence until guilt is proved); a presumption of innocence until guilt is proved);

(2)(2) these values or value judgments are unchanging because these values or value judgments are unchanging because their source is absolute (e.g., Nature, God, or Reason); their source is absolute (e.g., Nature, God, or Reason);

(3)(3) these values or value judgments can be determined by these values or value judgments can be determined by human reason; and human reason; and

(4)(4) once determined, they supersede any form of human law.once determined, they supersede any form of human law.

There are just laws and there are unjust laws. I would be the first to advocate obeying just laws. One has not only a legal but moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with Saint Augustine that “An unjust law is no law at all.”

There are just laws and there are unjust laws. I would be the first to advocate obeying just laws. One has not only a legal but moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with Saint Augustine that “An unjust law is no law at all.”

Martin Luther King Jr.Martin Luther King Jr.

© 2006 Prentice Hall Ch. 2-10

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Positivist SchoolPositivist SchoolEarly in the 1800s, followers of positivism developed a Early in the 1800s, followers of positivism developed a school of thought in opposition to the natural law school. Its school of thought in opposition to the natural law school. Its chief tenets are:chief tenets are:

(1)(1) Law is the expression of the will of the legislator or Law is the expression of the will of the legislator or sovereign, which must be followed; sovereign, which must be followed;

(2)(2) morals are separate from law and should not be morals are separate from law and should not be considered in making legal decisions (thus judges considered in making legal decisions (thus judges should not take into consideration extralegal factors should not take into consideration extralegal factors such as contemporary community values in determining such as contemporary community values in determining what constitutes a violation of law); and what constitutes a violation of law); and

(3)(3) law is a “closed logical system” in which correct legal law is a “closed logical system” in which correct legal decisions are reached solely by logic and the use of decisions are reached solely by logic and the use of precedents (previous cases decided by the courts). precedents (previous cases decided by the courts).



Sociological SchoolSociological SchoolFollowers of the sociological school propose three steps Followers of the sociological school propose three steps in determining law: in determining law:

(1)(1) A legislator or a judge should make an inventory of A legislator or a judge should make an inventory of community interests; community interests;

(2)(2) judges and legislators should use this inventory to judges and legislators should use this inventory to familiarize themselves with the community’s familiarize themselves with the community’s standards and mores; and standards and mores; and

(3)(3) they should rule or legislate in conformity with those they should rule or legislate in conformity with those standards and mores. standards and mores.



American Realist SchoolAmerican Realist SchoolThe American realist school, though close to the sociological The American realist school, though close to the sociological school in its emphasis on people, focuses on the actors in the school in its emphasis on people, focuses on the actors in the judicial system instead of on the larger community to judicial system instead of on the larger community to determine the meaning of law.determine the meaning of law.

This school sees law as a part of society and a means of This school sees law as a part of society and a means of enforcing political and social values. In a book entitled enforcing political and social values. In a book entitled The The Bramble BushBramble Bush, Karl Llewellyn wrote:, Karl Llewellyn wrote:

“This doing of something about disputes, this doing it reasonably, is the business of the law. And the people who have the doing of it are in charge, whether they be judges, or clerks, or jailers, or lawyers, they are officials of the law. What these officials do about disputes is, to my mind, the law itself.”

“This doing of something about disputes, this doing it reasonably, is the business of the law. And the people who have the doing of it are in charge, whether they be judges, or clerks, or jailers, or lawyers, they are officials of the law. What these officials do about disputes is, to my mind, the law itself.”



Critical Legal Studies SchoolCritical Legal Studies School

A contemporary extension of American legal realism, A contemporary extension of American legal realism, critical legal studies seeks to connect what happens in critical legal studies seeks to connect what happens in the legal system to the political-economic context the legal system to the political-economic context within which it operates. within which it operates.

Adherents of critical legal jurisprudence believe that Adherents of critical legal jurisprudence believe that law reflects a cluster of beliefs that convinces human law reflects a cluster of beliefs that convinces human beings that the hierarchal relations that they live and beings that the hierarchal relations that they live and work under are natural and must be accommodated. work under are natural and must be accommodated.

According to this school, this cluster of beliefs has According to this school, this cluster of beliefs has been constructed by elitists to rationalize their been constructed by elitists to rationalize their dominant power. dominant power.



Feminist SchoolFeminist School

Most adherents of this school, believing that significant Most adherents of this school, believing that significant rights have been denied to women, advocate lobbying rights have been denied to women, advocate lobbying legislatures and litigating in courts for changes in laws legislatures and litigating in courts for changes in laws to accommodate women’s views. to accommodate women’s views.

They argue that our traditional common law reflects a They argue that our traditional common law reflects a male emphasis on individual rights, which at times is at male emphasis on individual rights, which at times is at odds with women’s views that the law should be more odds with women’s views that the law should be more reflective of a “culture of caring.” reflective of a “culture of caring.”

To other adherents of this school of jurisprudence, the To other adherents of this school of jurisprudence, the law is a means of male oppression.law is a means of male oppression.

• Municipality administrative regulations

• Varies; often difficult to find. Many municipalities do not publish case decisions but do preserve them on microfilm. Interested parties usually must contact the clerk’s office at the local courthouse.

• Municipal ordinances

LOCAL

• State administrative code or state administrative regulations

• Regional reporters• State reporters

• State code or state statutes (e.g., Ohio Revised Code Annotated, Baldwin’s)

STATE

• Code of Federal Regulations (C.F.R.)

• Federal Register (Fed. Reg.)

• United States Reports (U.S.)• Supreme Court Reporter (S.

Ct.)• Federal Reporter (F., F.2d)• Federal Supplement (F.

Supp.)• Federal agency reports (titled

by agency; e.g., F.C.C. Reports)

• Regional reporters• State reporters

• Title 3 of the Code of Federal Regulations

• Codification of Presidential Proclamations and Executive Orders

• United States Code (U.S.C.)

• United States Code Annotated (U.S.C.A.)

• United States Statutes at Large (Stat.) FEDERAL

Administrative Regulations

Common Law/Judicial

Interpretations

Executive Orders

Legislative Law

Where to Find the LawWhere to Find the Law


TABLE2-2

Level of Government

How a Bill Becomes a LawHow a Bill Becomes a Law


EXHIBIT2-2

HR 1Introduced in House

S 2Introduced in Senate

Introduction Introduction

Referred to House committee

Referred to Senate committee

Referred to subcommittee

Referred to subcommittee

Reported by full committee

Reported by full committee

Rules committee action

Rules committee action

House debate, vote on passage

Senate debate, vote on passage

Floor ActionFloor Action Floor ActionFloor Action

Committee ActionCommittee Action Committee ActionCommittee Action

Compromise Version

Compromise Version

Conference ActionConference Action



Sources of U.S. LawSources of U.S. Law

The Judicial BranchThe Judicial Branch

The Executive BranchThe Executive Branch

Treaty MakingTreaty Making

Executive OrdersExecutive Orders

Administrative Agencies Administrative Agencies



Classifications of LawClassifications of LawStatutory LawStatutory Law - made by the legislative branch of - made by the legislative branch of government.government.

Case LawCase Law - results from judicial interpretations of - results from judicial interpretations of constitutions and statutes.constitutions and statutes.

Criminal LawCriminal Law - composed of federal and state statutes - composed of federal and state statutes prohibiting wrongful conduct ranging from murder to fraud.prohibiting wrongful conduct ranging from murder to fraud.

Civil LawCivil Law - governs litigation between two private parties. - governs litigation between two private parties.

Public LawPublic Law - deals with the relationship of government to - deals with the relationship of government to individual citizens.individual citizens.

Private LawPrivate Law - deals with the enforcement of private duties. - deals with the enforcement of private duties.



Global Dimensions of the Legal Environment Global Dimensions of the Legal Environment of Businessof Business

Variables that have an impact on business Variables that have an impact on business decision making:decision making:

LegalLegal

Financial Financial

EconomicEconomic

LegalLegal

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