OBE 118 – Legal Environment
of Business
INTRODUCTION
Dr. Donald L. Carper
Law is powerful
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•
Affects all people, from CEO’s to
children
Affects most of life, from work to leisure
Law is important
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But which is more important -- written law or
the people who enforce it?
Law is fascinating

Complex, but never just theoretical
 To examine law is to examine social life
 One person alone does not require law
 Any investigation about law could begin or
include
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Definitions of law
Philosophy of law
History of law
Functions of law and
Sources of law
 All of these topics are interrelated
Whatever definition of law chosen there exists a
set of rules or “general standards of conduct,
established and enforced by government
officials.”
Law consists of
 Norms (standards of behavior)
 Regularly enforced by coercion
 By persons authorized by society
 As stipulated by courts of law
Classifications & Categories of LAW
helpful to understanding law
Classifications & Categories of Law helpful
to understanding Law
 PUBLIC LAW
 PRIVATE LAW
 CRIMINAL LAW
 CIVIL LAW
 SUBSTANTIVE LAW
 PROCEDURAL LAW
 COMMON LAW
 STATUTORY LAW
 LAW
 EQUITY
Private v. Public Law
• Public law: Body of law directly concerned
with public rights and obligations.
• Private law: Body of law regulating the
rights and duties existing between private
persons. The rights and duties are
created by the affected parties.
Civil v. Criminal Law
• Civil law: Body of law directly concerning
the rights and duties between parties.
• Criminal law: Body of law dealing with
crimes and their punishment
CONTRAST BETWEEN CIVIL AND CRIMINAL LAW
Civil
Criminal
Wrongs against
society as a whole
Person Initiating
Action
Rights and duties
of individuals to
each other
Plaintiff or person
injured
Burden of Proof
in Trial
Preponderance of
the evidence
Result sought
Money damages
or equitable
remedy
Nature
Either federal,
state, or local
prosecutor
Beyond a
reasonable doubt
Death, fine or
imprisonment
Substantive v. Procedural Law
• Substantive law: General principles and
detailed rules defining legal rights and
duties.
• Procedural law: General principles and
detailed rules that define the methods of
administering the substantive law
SUBSTANTIVE LAW: General principles and
detailed rules defining legal rights and duties.
Example of a substantive law
Definition of minor: “a person below the age of
legal competence. For most purposes, in most
states, minority ends at age 18. For some purposes,
such as the purchase and consumption of alcoholic
beverages, it may end later, up to the age 21.”
Procedural Law Examples
•Rules of evidence such as the hearsay rule
•Method of filing a lawsuit such as the
requirement of a complaint and service of
summons
•To be able to seize assets of a judgment
debtor the law requires a creditor to file an
affidavit as to the debtor’s ownership of any
assets to be seized
EXAMPLES
Substantive law
Procedural law
Agency
Administrative procedure
Contracts
Appellate procedure
Criminal law
Criminal procedure
Partnerships
Evidence
Torts
Civil procedure
EXAMPLES
Substantive law
Procedural law
Agency
Contracts
Administrative
procedure
Appellate procedure
Criminal law
Criminal procedure
Partnerships
Evidence
Torts
Civil procedure
Case: Oculist's Case (1329), p. 8
•
This seal was found in
the bed of the Moselle
River in France. The
Romans were the first
people to have
specialized eye doctors,
called oculists, who were
devoted to treating eye
diseases such as
cataracts
Case: Oculist's Case (1329), p. 8
• The defendant, attempting to heal the
plaintiff, left him blind in one eye. The
plaintiff has sued in trespass
• What was the defendants response?
• Was it procedural or substantive?
• How did the court rule?
Case: Oculist's Case (1329), p. 8
• Consider the underlying facts and the
probable legal treatment today.
Common Law v. Statutory Law
• Common law: Laws from the courts as
opposed to a legislature or court of equity
Common law is also called unwritten law.
• Statutory law: Laws enacted by Congress
state legislatures or local government.
Statutory law is also called written law.
COMMON V. STATUTORY LAW
Common and also called case law
 From the courts
 After the fact
 Narrow
 Based on actual situations and conflict
 Law maker is neutral
 Law from court cases may be changed in the future by
courts or by the legislature
COMMON V. STATUTORY LAW
STATUTORY LAW
 From the legislature and executive branch
 Prospective
 Can be broad or narrow
 Can be initiated at any time by legislator
 Lawmaker can be an advocate
 Interpreted by the courts
 May only be changed by courts only if unconstitutional
COMMON LAW
STATUTORY LAW
Creation
Judicial branch
through decisions in
cases appearing
before the courts
Legislative branch
through a formal lawmaking process
Form
Rules found in official
fact patterns &
decisions of prior
cases
Codified text
Scope
Narrow-limited to
actual cases
Broad-subject only to
constitutional
limitations
Effects of Social
Forces
Indirect-judges
somewhat insulated
from political pressure
Direct-Through the
political process
STATUTES, CODES, AND
ORDINANCES
STATUTE
Single Legislative enactment.
A completed and signed bill.
CODE
Statute indexed by subject
matter or a comprehensive
statute
ORDINANCE
City or County Statute
Equity
• Equity: A civil trial held without a jury
when relief sought by the plaintiff is
equitable in nature, such as an injunction,
or a divorce or dissolution of a marriage.
• Other than equity: Often referred to as the
common law.
Equity
Other than
Equity
Subject Matter
Family law, matter
juvenile, probate trusts,
foreclosure, when remedy
it law is inadequate
Everything but equity
Fact Finding
No jury-chancellor of trial
makes findings and a
issues degree
Jury-leading to
judgment
Remedies
Specific performance,
injunction, recission,
restitution, reformation
Money damages or
replevin
Enforcement
Contempt of court
Can attach
defendant’s
property
SOURCES OF LAW
• Constitutional
law
• Treaties
• Administrative
law
• Statutory law
• Case law
Federal law
• State law
•
Constitutional
• State constitutions
are supreme within
their own borders
to the extent that
they do not violate
• The U.S. Constitution
or are inconsistent
is the Supreme Law
with the U.S.
of The United States.
Constitution or
other federal law.
SOURCE
DESCRIPTION
TREATIES
Agreements With Foreign
Nations made by the
President and ratified by a
2/3 vote of the Senate.
An Exclusive Federal
Function.
SOURCE
DESCRIPTION
STATUTORY LAW
Created by Federal, State, and Local
Legislatures or Governing Bodies.
Neither Federal Nor State Statutes
are Valid if in-consistent with the
U.S. Constitution.
State Statutory Law is invalid if
inconsistent with its Constitution.
Uniform Statutes Create uniform
State Law in those adopting States.
Administrative Law
DESCRIPTION
Law Concerned with the power and
actions of Administrative agencies at
all levels of government.
Enabling Legislation from the U.S.
Congress create federal administrative
agencies. Also created at State and
local levels of government.
Agency functions include:
Rule-making
Investigation
Enforcement, &
Adjudication.
COMMON LAW
DESCRIPTION
Use of past judicial
decisions and reasoning
through the application
of the doctrine of stare
decisis-the rule of
precedent-in deciding cases.
Originated in England.
Applies to situations not
otherwise covered by
statutory law.
COMMON LAW
DESCRIPTION
Use of past judicial
decisions and reasoning
through the application
of the doctrine of stare
decisis-the rule of
precedent-in deciding cases.
Originated in England.
Applies to situations not
otherwise covered by
statutory law.