Business Law

Chapter 1 Introduction to Law and Legal Systems

Black’s Law Dictionary says that law is “a body of rules of action or conduct prescribed by controlling authority, and having binding legal force.

Law has different meanings as well as different functions.  It affects the rights and duties of every citizen and many non-citizens.

Law is both prohibitory, meaning certain acts must not be committed, and mandatory, meaning certain acts must be done, sometimes in a set way. Additionally, law is permissive: certain acts are allowed, but not required by the law.

A. What Is Law

Functions of Law

The functions of law can serve to (1) keep the peace, (2) maintain the status quo, (3) preserve individual rights, (4) protect minorities against majorities, (5) promote social justice, and (6) provide for orderly social change. Some legal systems.

· the empire may have kept the peace—largely with force—but it changed the status quo and seldom promoted the native peoples’ rights or social justice within the colonized nation

Law and Politics 

· In the federal system, judges are appointed by an elected official (the president) and confirmed by other elected officials (the Senate).

· In most nation-states (as countries are called in international law), knowing who has power to make and enforce the laws is a matter of knowing who has political power.

B. Schools of Legal Thought

There are different schools (or philosophies) concerning what law is all about. Jurisprudence-the Philosophy of law, and the two main schools are legal positivism and natural law.

Legal Positivism: Law as Sovereign Command

Law is only law, in other words, if it comes from a recognized authority and can be enforced by that authority, or sovereign—However, positivism is a philosophical movement that claims that science provides the only knowledge precise enough to be worthwhile

Natural Law

Natural law, also called the law of nature in moral and political philosophy, is an objective norm or set of objective norms governing human behavior, similar to the positive laws of a human ruler, but binding on all people alike and usually understood as involving a superhuman legislator.

Other Schools of Legal Thought

This school emphasizes—and would modify—the long-standing domination of men over both women and the rest of the natural world.

C. Basic Concepts and Categories of US Positive Law

Laws and Legal system of other nations.

Law: The Moral Minimums in a Democratic Society

The law does not correct (or claim to correct) every wrong that occurs in society. it aims to curb the worst kind of wrongs, the kinds of wrongs that violate what might be called the “moral minimums” that a community demands of its members. These include not only violations of criminal law, but also torts, and broken promises.

The Common Law: Property, Torts, and Contracts

· Property Law – deals with the rights and duties of those who can legally own land (real property), how that ownership can be legally confirmed and protected, how property can be bought and sold, what the rights of tenants (renters) are, and what the various kinds of “estates” in land are (e.g., fee simple, life estate, future interest, easements, or rights of way).

· Contract Law — deals with what kinds of promises courts should enforce.

· Tort Law — deals with the types of cases that involve some kind of harm and or injury between the plaintiff and the defendant when no contract exists

State Courts and the Domain of State Law

States had jurisdiction (the power to make and enforce laws) over the most important aspects of business life. The power of state law has historically included governing the following kinds of issues and claims:

· Contracts, including sales, commercial paper, letters of credit, and secured transactions

· Torts

· Corporations

· Partnerships

· Banking 

· Insurance

Civil versus Criminal Cases

· In a Civil Case - you would not be sent to prison; in the worst case, you can lose property (usually money or other assets).

· In a Criminal Case - it involves a governmental decision—whether state or federal—to prosecute someone (named as a defendant) for violating society’s laws.

Substance versus Procedure

 Many rules and regulations in law are substantive, and others are procedural. The substantive rules tell us how to act with one another and with the government. For example, all of the following are substantive rules of law and provide a kind of command or direction to citizens: 

· Drive not more than fifty-five miles per hour where that speed limit is posted.

· Do not discriminate against job applicants or employees on the basis of their race, sex, religion, or national origin.

· Do not discharge certain pollutants into the river without first getting a discharge permit

D. Sources of Law and Their Priority

In the United States today, there are numerous sources of law. The main ones are (1) constitutions—both state and federal, (2) statutes and agency regulations, and (3) judicial decisions. 

· Constitutions - are the foundation for a state or nation’s other laws, providing the country’s legislative, executive, and judicial framework.

· Statutes and Treaties in Congress - In Washington, DC, the federal legislature is known as Congress and has both a House of Representatives and a Senate. The House is composed of representatives elected every two years from various districts in each state. In the Senate, there are two senators from each state, regardless of the state’s population.

· Delegating Legislative Powers: Rules by Administrative Agencies - The Constitution does not expressly provide for administrative agencies, but the US Supreme Court has upheld the delegation of power to create federal agencies.

· State Statutes and Agencies: Other Codified Law - Statutes are passed by legislatures and provide general rules for society. States have legislatures (sometimes called assemblies), which are usually made up of both a senate and a house of representatives.

· Judicial Decisions: The Common Law - Common law consists of decisions by courts (judicial decisions) that do not involve interpretation of statutes, regulations, treaties, or the Constitution.

Priority of Laws

· The Constitution as Preemptive Force in US Law - The US Constitution takes precedence over all statutes and judicial decisions that are inconsistent.

· Statutes and Cases - Statutes generally have priority, or take precedence, over case law (judicial decisions).

· Treaties as Statutes: The “Last in Time” Rule - A treaty or convention is considered of equal standing to a statute

Causes of Action, Precedent, and Stare Decisis

· Causes of Action - Your cause of action is thus based on existing laws, including decided cases

· Precedent - How closely your case “fits” with a prior decided case

· Stare Decisis (Latin for “Let the decision stand”)  - court considering one case would feel obliged to decide that case in a way similar to previously decided cases.

 E. Legal and Political Systems of the World

Our legal and political traditions are different both in what kinds of laws we make and honor and in how disputes are resolved in court.

Comparing Common-Law Systems with Other Legal Systems

There are differences among common-law systems (e.g., most nations do not permit their judiciaries to declare legislative acts unconstitutional; some nations use the jury less frequently), all of them recognize the use of precedent in judicial cases, and none of them relies on the comprehensive, legislative codes that are prevalent in civil-law systems.

Civil-Law Systems

A civil-law or code-law system is one where all the legal rules are in one or more comprehensive legislative enactments. The code is used to resolve particular cases, usually by judges without a jury. Moreover, the judges are not required to follow the decisions of other courts in similar cases.