Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
CLASSIFICATIONS OF LAW
1. Criminal vs. Civil
2. Substantive vs. Procedural
3. Public vs. Private
Criminal vs. Civil Law
CRIMINAL  Concerns behavior so threatening that society outlaws it altogether.
 Breach of Duty to society at large
 Society via gov’t employees (prosecutors) brings court action against violators
 Punishment by fine and/or imprisonment
 If fined, $ generally goes to state (NOT victim)
CIVIL  Regulates the rights and duties between parties
 Private duty owed by one person (or corporation) to another.
 Suit must be brought by person wronged
 money damages awarded to make person “whole”.
 Exception: Outrageous behavior by wrongdoer could result in Punitive damages being
awarded.
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
Criminal vs. Civil Law
Criminal
Case
Civil
Case
Intentional violation of
a statute
Harm to another person
or property (tort), or
breach of a contract
Prosecutor v. Defendant
(gov’t v. accused)
Plaintiff v. Defendant
(wronged party v.
wrongdoer
Fines, imprisonment,
execution
Defendant may have to
pay Plaintiff
compensatory and
punitive damages.
Elements
Actors
Punishment
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
Substantive vs. Procedural Law
SUBSTANTIVE LAW  Defines the rights of people
 Sets out the rights & duties governing people
 Duties: typically resemble commands to “Do this” or “Don’t do that”.
 Establishes rights & privileges
PROCEDURAL LAW  Establishes the processes for settling disputes.
 Establishes the rules under which the substantive rules of law are enforced
 E.g., Rules specifying the types of cases a particular court can decide
 Rules regarding how a trial is conducted
 Rules that stipulate how a judgment by a court is to be enforced.
Public vs. Private Law
PUBLIC LAW
 Concerns the powers of the gov’t and the relations between gov’t & private parties.

Constitutional, Administrative & Criminal law.
PRIVATE LAW  Regulates the duties between individuals.
 A framework of legal rules that enables parties to set the rights & duties they owe each
other.
 Courts enforce but only parties to the agreement are required to comply with terms.
(e.g., contracts, property, & agency)
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
What is the Law? -- Part II
How can we define “the law” in general terms (w/o just enumerating a list of things that
are considered law)?.
 Schools of JURISPRUDENCE
1. Legal Positivism
2. Natural Law
3. American Legal Realism
4. Sociological Jurisprudence
School of Jurisprudence
LEGAL
POSITIVISM
Definition of Law
The commands of a legitimate political
authority.
The commands of a legitimate political
authority that do NOT offend higher law.
NATURAL
LAW
AMERICAN
LEGAL
REALISM
SOCIOLOGICAL
JURISPRUDENCE
The behavior of public officials as they
deal w/matters before the legal system.
Umbrella term uniting a wide range of
approaches to law. & society study.
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
KEY POINTS
Legal Positivism “LP”:


Law is separate & distinct from morality
Validly enacted positive laws should be enforced & obeyed (whether just or not)
until they are changed through the legitimate lawmaking process.
 Results:
 Sometimes harsh & inequitable but
 Very predictable in enforcement
Natural Law “NL”:





One of the oldest & most significant schools of jurisprudence (Aristotle 384 – 322
B.C.)
Makes a distinction between the laws governing a nation and “natural law”.
Recognizes a “higher law” (set of universal moral rules) that bind all human beings.
Therefore,  “Natural Law’ applies universally to all mankind.
Rejects the “LP” separation of law & morality.
Serves as a criterion for evaluating positive law.
 Results:
 Unjust positive laws are NOT valid under this view, so no duty to obey.
 Reality: An unjust law’s supposed invalidity does NOT translate into a “natural
law defense”. (e.g., Lynch case)
 Natural Law judges may take NL views into account when interpreting & applying the
law. For example:
 May read constitutional provisions broadly in order to strike down positive law
they regard as unjust
 May be more likely to let morality influence their interpretation of law
Inherent difficulty: May not be uniformity regarding what is “moral” or “immoral”.
Key differences between LP & NL:
1. Relationship between law & morality
2. Duty to obey unjust positive laws
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
American Legal Realism:
 Stresses that law must be considered in light of its day-to-day application.
Focus: “law in action” vs. “law in books”
 Decisions more attributable to the discretion, biases & moods of the decision-makers.
 Since the actions of these officials are what really affects people’s lives, the behavior
itself is really “the law”.
ALR vs. NL & LP
Focus is very different. ALR has little to say about morality or the duty to obey just/unjust
PL.
Sociological Jurisprudence
 Each case & legal decision is viewed as a piece of a much bigger & more important
puzzle.
 When interpreting statutes, they look beyond the plain meaning of the words and
consider the legislative intent as well as the prevailing social policies.
 Implication: Stresses the need for law to change and keep pace with the evolution of
society.
 Compared to “NL”:
In general, “SJ” recognizes the fact that morals influence the law, however, it is not
concerned with the goodness or badness of the law.
 Exception: Some legal sociologists have a vision for where society is going (or should
be going) and make decisions that promote this social agenda.
Functions of Law
 The law serves as a flexible tool for the accomplishment of specific/chosen purposes.
 Positive: Willingness to adapt law to further social good
 Negative: Legal instability & uncertainty.
Types of Social Functions Served:
1. Peacekeeping
2. Check Gov’t Power & Promote Personal Freedom
3. Facilitate planning & realization of reasonable expectations
4. Promote economic growth & free competition
5. Promote Social Justice
6. Protect Environment
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Business Law: The Nature of Law
Lecture Notes
(S.Spencer)
(Chapter 1 continued)
LEGAL REASONING
Q: Why consider legal reasoning?
A: Important for understanding how laws are interpreted.
 LR gives insight into how lawyers & judges think
 Helps dispel the notion that law is a fixed body of predictable “Black Letter” rules
 Provides some understanding of the mechanisms by which law responds to social
change.
Types of Legal Reasoning
1. Case Law Reasoning
2. Statutory Interpretation
Case Law:
 Find appropriate legal rule

Standard for selection: Doctrine of Stare Decisis (Chapter 4)
 If not similar enough, Distinguish case
Note: A valid distinguish must exist.
 E.g., “Employment-at-Will”
 E.g., Hagan v. Coca-Cola
Statutory Interpretation (Chapter 4)
 Courts face a challenge when interpreting statutes.
1. Natural ambiguity of language
2. Intentional ambiguity by legislature
 Various techniques of interpretation used to deal with the ambiguity
 No technique has priority over any other
 Different techniques yield different results
 Specific Techniques:
1. Plain Meaning
2. Legislative History & Purpose
3. General Public Purpose (Policy)
4. Prior Interpretations
5. Maxims
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