Chapter 1: Business and
Its Legal Environment
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Business Activities
and the Legal Environment
Knowledge of ‘black-letter’ not
enough - business now assumes an
ethical dimension.
Many Different Laws May Affect a
Single Business Transaction.
Ethics and Business Decision Making.

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Ex. 1-1 Areas of the Law That May Affect
Business Decision Making
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Sources of American Law
Constitutional Law.
Statutory Law.
Ordinances.
Uniform Laws (NCCUSL).
Uniform Commercial Code.
Administrative Law.
Federal Agencies.
State and Local Agencies.
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© 2013
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Learning.
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May not be copied,
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with
a certain
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otherwise
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Sources of American Law
Case Law and Common Law
Doctrines.
Case law governs all areas of law not
covered by statutory or administrative
law.
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The Common Law Tradition
Early English Courts.
American law is based largely on
English Common Law which was
based largely on traditions, social
customs, rules, and cases dating back
to 1066 A.D.
Precedent.
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The Common Law Tradition
Stare Decisis (“to stand on decided
cases”) is judge-made law.
 Importance of Precedents in Judicial
Decision-Making. Precedents are ‘binding’
within a court’s jurisdiction.
 Stare Decisis and Legal Stability. Courts
should not overturn their own precedents
without compelling reasons.
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The Common Law Tradition
Stare Decisis (“to stand on decided
cases”) is judge-made law.
 Departures from Precedent. In cases of
“first impression” a court may refer to
positive law, public policy, or widely held
social values to craft the decision.
 When There is No Precedent.
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The Common Law Tradition
Equitable Remedies and Courts of
Equity.
 Remedy: means given to a party to
enforce a right or compensate for the
violation of the right.
• Remedies in Equity. Equity is “beyond
law” and looks at notions of fairness
and justice. 
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The Common Law Tradition
Equitable Remedies and Courts of
Equity.
 At common law, there were two separate
court systems:
 COURTS OF LAW (awarding money
damages), and
 COURTS OF EQUITY (non-monetary relief)
based on “notions of justice and fair
dealing.” 
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The Common Law Tradition
Equitable Remedies and Courts
of Equity.
Courts of equity were administered by
chancellors appointed by the king.
Equitable remedies include: specific
performance, injunctions, rescissions.
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The Common Law Tradition
Equitable Remedies and Courts of
Equity.
 Merging of Law and Equity. Federal
and state courts have consolidated
remedies at law and equity.
 Generally, the same court can fashion
a remedy that includes both damages
and equitable or injunctive relief.
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Ex. 1-2 Equitable Maxims
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Schools of Legal Thought
Natural Law School. 
Positivist School. 
Historical School. 
Legal Realism. 
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Schools of Legal Thought
Natural Law School.
 Adherents believe a higher or
universal law exists that applies to all
humanity, and all written laws should
imitate these principles.
Laws contrary to natural law are
“unjust” and need not be obeyed. 
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Natural Law In History
“[T]here are two types of laws: just and
unjust laws. . . . A just law is a man-made
code that squares with the moral law . . . .
An unjust law is a code that is out of
harmony with the moral law. . . . An unjust
law is a human law that is not rooted in
eternal and natural law.” Martin Luther King,
Jr., Letter from the Birmingham Jail, April 16,
1963.
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Schools of Legal Thought
Legal Positivism.
 Law is the supreme will of the State
that applies only to the citizens of that
nation at that time.
 Law, and therefore rights and ethics,
are not universal. Whether a law is
“good” or “bad” is irrelevant.
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Schools of Legal Thought
Historical School.
 Emphasizes the evolutionary process of
law.
 Concentrates on the origins of the legal
system.
 Law derives its legitimacy and authority
from standards that have withstood the
test of time.
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Schools of Legal Thought
Legal Realism.
 Law is not simply a result of the
written law, but a product of the
views of judicial decision makers, as
well as social, economic, and
contextual influences.
 Strongly influenced the “sociological
school” of jurisprudence.
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Classifications of Law
Every type of law will be either:
Substantive or Procedural. 
Civil or Criminal. 
Public or Private.
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Classifications of Law
Substantial or Procedural.
 Substantive Law: defines or creates
the rights and obligations of persons
and governments.
 Procedural Law: provides the steps
one must follow in order to avail
oneself of one’s legal rights or enforce
another’s legal obligations.
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Classifications of Law
Civil Law vs. Criminal Law.
 Civil Law: defines the rights between
individuals or individuals and
governments.
 Criminal Law: defines an individual’s
obligations to society as a whole.
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Classifications of Law
National and International Law.
 National Law: laws of a particular
country that vary from country to
country.
 International Law: applies to more
than one country at a time. Who
enforces violations of international law?
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Appendix to Chapter 1: Finding
and Analyzing the Law
Finding Statutory Law and
Administrative Law.
United States Code (USC).
State Codes.
Administrative Rules.
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Appendix to Chapter 1: Finding
and Analyzing the Law
Finding Case Law.
State Court Decisions.
 Regional Reporters.
 Case Citations.
Federal Court Decisions.
 U.S. Supreme Court decisions are
published by the federal government in
United States Reports (U.S.).
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Appendix to Chapter 1: Finding
and Analyzing the Law
Reading and Understanding Case
Law.
 Case Titles and Terminology.
 Parties to Lawsuits.
 Judges and Justices.
 Decisions and Opinions.
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Appendix to Chapter 1: Finding
and Analyzing the Law
Legal cases are identified by a “legal
citation” (or a “cite”) as the sample
below:
Fehr v. Algard, ___ N.J. Super ___, A.3d
(2011).
Title: First Party is Plaintiff, second
party is Defendant. The parties are
either italicized or underlined.
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27
Appendix to Chapter 1: Finding
and Analyzing the Law
Legal cases are identified by a “legal
citation” (or a “cite”) as the sample
below:
Fehr v. Algard, ___ N.J. Super ___, A.3d
(2011).
The case is from the Superior Court of
New Jersey and is not numbered as of
the date of this printing.
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license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
28
Appendix to Chapter 1: Finding
and Analyzing the Law
Legal cases are identified by a “legal
citation” (or a “cite”) as the sample
below:
Fehr v. Algard, ___ N.J. Super ___, A.3d
(2011).
The case was decided in 2011.
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license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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