Week 8 - INTRODUCTION TO LAW2
A law is a standard or rule established by a society to govern the behavior of its members.
Federal, state, and local governments, constitutions, and treaties all establish laws. So do
court decisions. Laws have a direct and substantial impact on how business firms
conduct various activities. In this section, we discuss some of the basic concepts of law,
including the sources of law, the U.S court system, and laws affecting business.
Sources of law
The United States Constitution specifies how the U.S. government must operate, and it is
the foundation of law. Federal and state constitutions provide the framework for the
various levels of government, which derive laws from three major sources: common law,
statutory law, and administrative law.
Common Law The body of law created by judges through their court decisions is known
as common law. Based on custom, usage, and court rulings of early England, common
law came to America when the first colonies were established and has become the major
body of law in the United States. Judicial decisions establish precedents, or standards,
that later are used in similar cases. Following precedents gives certainty and stability to
many areas of law.
Statutory law A law is created by a federal, state or local legislature, constitution, or
treaty is called a statute. Most laws created today are statutes. Together the laws enacted
by various legislative bodies make up statutory law. A statute must be drawn up in a
precise manner to be constitutional. However, courts often must interpret a law’s
meaning. Court decisions sometimes lead to statutes being changed, clarified, or even
dismissed entirely.
Many statues pertain to the business environment or business practices. Congress,
for example, passes laws establishing tax regulations for individuals and businesses.
State legislatures and city councils also pass laws regulating general and specific business
practices. For instance, a toxic substance law passes in California requires that the public
be warned about the dangers of any products containing toxic substances that could cause
cancer and birth defects.
An important part of statutory law is the Uniform Commercial Code (UCC), a
group of statutory laws designed to simplify interstate commerce by eliminating
differences between state laws and governing business. The UCC, consisting of 10
articles, covers the rights of buyers and sellers in transactions. Originally drafted in 1952,
the UCC has been adopted in its entirety by every state except Louisiana (which has
adopted about half of the code)
Administrative Law
Regulations passed by state and federal administrative agencies are included in
administrative flaw. Numerous administrative agencies enforce laws affecting business.
Federal agencies with extensive powers include the Feral Trade Commission, The
Consumer Product Safety Commission, the Federal Communications Commission, and
the Food and Drug Administration. Agencies on the state level include public utilities
commissions, licensing boards for various professions and trades, and other regulatory
bodies. Some examples of local agencies are planning commissions, zoning boards, and
boards of appeal.
Government Agency Responsibility Federal Trade Commission Interstate Commerce
Commission Environmental protection Agency Food and Drug
Administration occupational Safety and Health Administration Federal communications
Commission Securities and Exchange Commission Consumer Product Safety
commission Federal Power commission Nuclear Regulatory Commission
Court System:
The court system or judiciary is the branch of government responsive for applying laws to
settle disputes between parties. Courts possess jurisdiction, the legal right and power to
interpret and apply laws and make binding decision. The major method of taking
d8isputes to court is by filing a lawsuit. Singer Bette Milder filed a lawsuit against Ford
Motor and its advertising agency, Young & Rublicam, for advertisements featuring one of
her backup vocalists, singing a song for which Midler is well known. In the lawsuits,
Middle charged that her voice had been imitated. Although the judge ruled there was
insufficient evidence to proceed against Ford, Midler was awarded $400,000 from Young
& Rubicam. Because of the considerable time and expense involved in going to court,
man6y firms try to resolve their legal disputes outside the courtroom.
A dual court system operates in the Untied States. The federal government and each of
the 50 state governments have separate court systems.
Federal court System
Federal court primarily hear cases involving questions of constitutional law, federal
crimes, disputes between citizens of different states or between an American citizen and a
citizen of another country, over property value d at $10,000 or more, bankruptcy, taxes,
postal, copyright, patent, or trademark laws, and maritime cases.
A U.S district court is the first to hear a federal case. At least one district court is located
in each state. The decision resolving the case is made by a jury, or by the judge if each
party waives the right to a jury trial. The losing party can appeal the case to the U.S. court
of appeals for that region, one of 13 federal courts of appeals. Finally, a party may appeal
the decision of a U.S. court of appeals to the U.S. Supreme Court
The highest court of the land, the U.S. Supreme Court is composed of nine justices
appointed by the president and confirmed by the Senate. Justices are appointed for life.
State Courts: Most state court systems are similar tot the federal system. Cases originate
in a circuit court; each county generally has a circuit court. Most states have a court of
appeal
Specialized courts: Several specialized courts have been created to hear certain types of
cases. Some states have small claims courts to hear cases involving disputes over small
amounts of money, usually below $1500.00. States also have divorce courts, juvenile
courts, and traffic courts.
Laws Affecting Business
Numerous and varied laws regulate the activities of all businesses and everyone involved
in the business, from owner to manager to employee.
The Law of Torts
While criminal law deals with crimes against society or the state, tort law is concerned
with compensating the victims of no criminal wrongs. Derived from the French word for
wrong, a tort is a no criminal injury to other persons or their property or reputation. Torts
can be intentional or they may result from negligence. Intentional torts are deliberate acts
by a person or business firm. For example, stander, spoken defamation of character, and
libel written defamation of character, are intentional torts. A tort results from negligence
when one party fails to exercise reasonable care and causes injury to another.
Product liability is an important part of tort law. Product liability involves the
responsibility of business firms for negligence in design, manufacture, sale, and operation
of their products. A Florida woman sued the heavy medial rock band Motley Crue and
Beach Club Promotions after attending a concerts by the group. She experienced a severe
hearing loss and claimed the musicians and concert promoters knew that the volume of
the music posed a danger and that they failed to warn ticket holders. Her attorney noted
that the performers wore earplugs. This case is one of several such liability complaints
against rock bands.
TO DO: Find a Tort against another rock band.
The Law of Contracts:
A contract is a legally enforceable, voluntary agreement between two or more parties. A
contract is like a privat3e statue, in which the parties define the considerations they owe
each other.
An express contract is one in which the words are actually out forth, either orally or in
writing.
Implied Contract results from the actions of the parties rather than from an explicit
promise. For example when a passage boards a train, it is implied that the passenger will
have a ticket when the agent collects them and that the train will provide sage
transportation to the destination.
Your Assignments:
Voluntary agreement: Both parties must accept the t4rms of the agreement voluntarily,
free of coercion, fraud and the like.
TO DO: Give me an example:
Consideration: Each party must provide something of value to the other, such as money, a
product, or a promise to do or not do something:
TO DO: Give me an example:
Contractual Capacity: Each arty must have the legal ability to enter into binding
agreement.
TO DO: Give me an example:
Legality: A contract must not involve any unlawful act.
TO DO: Give me an example:
The failure of one party to live up to a contractual agreement is called breach of contract.
Law of Property
Real property is real estate, land and anything permanently attached to it, such as a house.
Tangible personal property means physical items such as a stores inventory of goods,
equipment, and automobiles.
Intangible Personal Property is that shown by documents, or other written instruments
like checks.
TO DO: Give me an example of real property, Tangible Personal property, and
Intangible personal Property.
TO DO:
1. What is a Trademark?
2. What is a patent?
3. What is a copyright?
4. Why are there three separate sources of law in our government? How do these
sources of law relate with another?
5. Explain the relationship between the state courts system and the federal system
6. What is a tort? Give an example of a Tort?.
7. Why is product liability a concern of business firms?
8. What requirements must a contract meet to be enforceable? Have you ever entered
into a contract?
9. In a free enterprise system such as the United States why do we regulate
businesses?
10. What type of law does counterfeiting violate?.
11. Why isn’t the Trademark Counterfeiting Act of 1984 effective in controlling
counterfeiting?
12. Why do government agencies regulate the advertising or products such as tobacco
and alcohol?
13. Should the government increase the regulation of advertising by the alcohol,
tobacco, and prescription drug industries? Why or Why not?