Chapter 4 - Common Law, Statutory Law and Administrative Law
Business Law and Ethics
Common Law, Statutory Law and
Administrative Law
Common Law
Judge-Made Law: Sum total of all cases decided by appellate courts. 200 yrs ago almost
all laws were common laws. Today most laws are statutory.
Disadvantages:
Each state has a body of law different from other states (problems for
businesses)
Stare Decisis
Stare Decisis is the essence of common law. It means “Let the decision stand”. Law by
precedent (by state). So there should be a precedent in that.
Disadvantages:
This is not easy. How to balance between predictability and flexibility?
Because common law is trying to accommodate both above goals. The
more flexibility, the less predictability.
Bystander cases
Bystander cases - where common law says no duty to assist someone in peril unless you
created the danger. But common law changes slightly over time. For example bystander law
changed in cases where bystander is an employer or a doctor or even a public place where
one can make phone calls.
Statutory Law
Most new law is statutory law. It affects each of us in business, professional and
personal lives. This is more a people-made law or a law made as a result of people
electing local legislators who pass state statutes; people vote for senators and
representatives who create federal statutes.
Example:
Criminal Law.
Bills
Bill is a proposed statute (proposed either by House of Representatives or the Senate). A
bill must be voted on passed by both houses. Once both houses pass the bill they send it to
the President and if he/she signs the bill it becomes law and then is a statute.
Debate
Conference Committee
If both houses pass a bill the legislation normally must go to a conference committee to
resolve differences between the 2 versions.
March 7, 2016
1 of 3
Chapter 4 - Common Law, Statutory Law and Administrative Law
Example:
Business Law and Ethics
Proposed statute that employers cannot discriminate against race, color,
religion, national origin or sex was debated and had to go to the conference
committee since one of the houses added “sex “to the statute.
Statutory Interpretation
Courts are often called upon to interpret a statute. The court follows these steps in order:

Plain Meaning Rule
Example:

Legislative History and Intent
Example:

The word “religion” has plain meaning rule and courts apply its
commonsense definition when there is a dispute.
Griggs vs Duke (Griggs won, Duke lost, employer cannot discriminate by
having tests that are not required for the job performance)
Public Policy
Congressional Override
A bill vetoed by the President can technically be made into law by the Congress by both
houses re-passing the bill each by a 2/3rd majority
Example:
Restoring of “business necessity” in the Civil Rights Act.
The Other Player: Money
Example: Raising and using “Soft Money” in election campaigns.
Administrative Law
Examples:
FCC, EPA, IRS, FTC, FAA, FDA (Agencies and Service Commissions)
Classification of Agencies
Executive-Independent
The President has much greater control of the executive agencies since he can fire the
agency head at any time. Examples: IRS, FBI, FDA, NGC
The other type is Independent Agencies
Examples:
FCC, FTC, SEC, EPA, NLRB, OSHA
What do agencies do? They make rules (legislative and interpretative), they investigate
(example: subpoena) and they adjudicate (hearing before administrative law judge, ALJ).
Limits on Agency Power
Statutory Control
The enabling legislation of an agency provides some limits. For example, formal rule making
or investigating only certain issues.
March 7, 2016
2 of 3
Chapter 4 - Common Law, Statutory Law and Administrative Law
Business Law and Ethics
Political Control
By President, By Congress who controls money
Judicial Review
Information Control and the Public
Freedom of Information Act
FOIA – a landmark statute passed in 1966. Gives everyone access to the information that
the federal agencies are using.
Privacy Act
Passed in 1974. This statute prohibits federal agencies from giving information about
individuals to other agencies or organizations without written consent.
March 7, 2016
3 of 3