Chapter 1 – Business and Its Legal
Environment
C O P Y R I G H T © 2 0 1 1 - J E F F R E Y P I T T M A N

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The following slides are not intended to be a complete treatment of Chapter 1
Additional resources from the textbook authors are found at the textbook companion website
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In a singular sense, law consists of mandatory rules promulgated by the government that regulate societal conduct
In a plural sense, law establishes how society is governed, allowing society to function
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Schools of Jurisprudential Thought

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The science or philosophy of law is jurisprudence
Jurisprudence deals with the question “What should be the law?" as opposed to the question “What is the law?”
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Schools of
Jurisprudential Thought
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 There are multiple schools of jurisprudence, many not presented in the textbook
 The textbook examines the following schools (see
Concept Summary 1.1, p.4):
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Natural Law
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Positivist
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Historical
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Legal Realism
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Natural law denotes a system of moral principles that are inherent in human nature
The moral principles are usually identified through belief in God and a religious system, or through the application of human reason
For example, consider the Declaration of
Independence
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IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable
Rights, that among these are Life, Liberty and the pursuit of Happiness
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The natural law school influenced the civil rights movement of the 1960s – as reflected by Martin
Luther King's writings
The following letter excerpt was written after
Reverend King lead peaceful civil disobedience against racial segregation in Birmingham, Alabama in 1963
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Martin Luther King's
Letter from Birmingham Jail
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April 13, 1963
MY DEAR FELLOW CLERGYMEN:
While confined here in the Birmingham city jail, I came across your recent statement calling my present activities "unwise and untimely." . . . I want to try to answer your statements in what I hope will be patient and reasonable terms
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Martin Luther King's
Letter from Birmingham Jail
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You express a great deal of anxiety over our willingness to break laws. This is certainly a legitimate concern. Since we so diligently urge people to obey the Supreme Court's decision of
1954 outlawing segregation in the public schools, at first glance it may seem rather paradoxical for us consciously to break laws. One may ask: "How can you advocate breaking some laws and obeying others?". . . .
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Martin Luther King's
Letter from Birmingham Jail
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The answer lies in the fact that there are two types of laws: just and unjust. Now, what is the difference between the two? . . . A just law is a man-made code that squares with the moral law or the law of
God. An unjust law is a code that is out of harmony with the moral law
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Martin Luther King's
Letter from Birmingham Jail
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We should never forget that everything Adolf Hitler did in Germany was "legal" and everything the
Hungarian freedom fighters did in Hungary was
"illegal" . . .
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 Analyze King’s last quote under positive law and legal realism, pages 3-4 in the textbook
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 Under the schools of jurisprudential thought, how would you analyze the following section from the
California Constitution (a section under current court review)?
Cal. Const., Art. I § 7.5 (2010)
§ 7.5. - Marriage validity limited to man and woman
Only marriage between a man and a woman is valid or recognized in California.
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Business Activities and the Legal
Environment
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The reach of law into the business realm is extensive
One transaction may be affected by multiple laws
See exhibit 1-1, page 5
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Sources of American Law
The Common Law Tradition
The Common Law Today

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At the federal level, the primary sources of law include the Constitution, federal statutes and regulations, and executive orders
At the state level, the same sources of law exist – a constitution, statutes, etc.
State courts also create law through the common law process, a power the federal government lacks
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The Legal Process - An Overview
1st Tier - Law Sources – in Rank Order
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. US Constitution
2. Federal Statutory Law
3. State Constitution
4. State Statutory Law
5. Local Law
Above sources are created by lawmakers and interpreted by courts –
Stare Decisis is important regarding precedents
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2nd Tier - The Common
Law Process
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Stare Decisis, or
Overruling Precedent,
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Creating First
Precedent
Common law is created by and found only in state court opinions
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 Our common law (or case law) originated in the laws of
William the
Conqueror (1027-
1087, A.D.)
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Today, common law refers to court created rules in areas where constitutional and statutory rules are silent
Common law is only created by state courts, not federal courts, and each state is sovereign and supreme in its common law
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Courts of Law
Distinctions
Courts of Law - Courts of Equity
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Courts of Equity
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Relief granted usually money damages
Jury trial allowed
Time to sue governed by statutes of limitation
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Relief granted usually court orders
(e.g., injunctions, orders of specific performance, etc.)
Jury trial not allowed
Time to sue governed by the doctrine of laches
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 Stare Decisis, where past court decisions become precedent for future cases, is the cornerstone of our
American judicial system
 Stare decisis is Latin for “let the decision stand”
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Lower courts must follow the precedent established by higher courts, but higher courts have the power to overturn their own precedents
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Classifications of Law

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The law may be classified in a variety of categories
Examples include substantive versus procedural, public versus private, and civil versus criminal
Regarding high profile defendants and criminal law, see the blog Sentencing Law and Policy
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Criminal Law Civil Law
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Area of concern: Rights and duties between individuals
Wrongful act: Harm to a person or to a person's property
Party who brings suit: Person who suffered harm
Standard of proof:
Preponderance of the evidence
Remedy: Damages (money) and/or an equitable remedy
 Area of concern: Offenses against society as a whole
 Wrongful act: Behavior that violates a criminal statute
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Party who brings suit: The state
Standard of proof: Beyond a reasonable doubt
 Remedy: Punishment (fine and/or imprisonment)
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Cyberlaw is a new field of law comprised of legal principles applicable to business conducted via the
Internet
The Internet is not owned by a government; many of the standards of behavior are found in voluntary codes
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How to Find Primary Sources of Law
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Court decisions are published in chronological order, using a case citation for identification
Statutes are collected and published by subject matter, using a statutory citation
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Westlaw and Lexis-Nexis are the two leading feebased computerized legal search systems
Lexis-Nexis is available free for ASU students through the ASU library Web site
A variety of smaller legal databases are available free on the WWW
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How to Read and Understand Case Law
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 Case name and citation
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Facts – a summary of the essential facts
Issue – the legal question raised by the case
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Decision - the answer to the case question
Reason(s) – the court’s reasoning for its ruling
Using the above format, explain Berger v. City of
Seattle
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