Discussion 8
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ch01_ppt.pptxLegal Foundations
Chapter 1
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Learning Objectives
1-1 Understand the broad definition and origins of law.
1-2 List and explain the purposes of law.
1-3 Explain the importance and benefits of legal awareness for business owners and managers in creating strategy and adding value to a company.
1-4 Articulate the role of counsel in legal decision making in a business context.
1-5 Recognize, explain, and give examples of sources of American law.
Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objectives
1-6 Understand the legal doctrine of stare decisis.
1-7 Classify the law into several broad categories.
1-8 Differentiate between the concepts of law and equity.
1-9 Identify and apply important equitable maxims.
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Chapter Overview
How legal issues impact business planning and strategy
The foundations, definitions, and scope of various primary and secondary sources of law
Categories of law
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Introduction to Law
Law
a body of rules of action or conduct prescribed by controlling authority and having legal binding force
creates duties, obligations, and rights that reflect accepted views of a given society.
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Introduction to Law
Jurisprudence
defined as the science and philosophy of law, defines several schools of thought that are used to describe various approaches to the appropriate function of law and how legal doctrines should be developed and applied.
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Purposes of Law
Provide for some system of order that defines rules of conduct and levies punishment or other consequences for the violation of those rules
Method for resolving disputes by providing a basis for deciding the legal interests and rights of the parties
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Purposes of Law
Law serves as an important catalyst for commerce by promoting good faith dealing among merchants and consumers
Gives some degree of reliability in applying the law evenly so that the law can be considered in business planning and commercial transactions.
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Language of the Law
In order to maximize the value of interaction between business owners/managers and attorneys, a basic understanding of legal terminology is useful.
Legal terms are sometimes referred to as jargon or legalese
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Legal Decisions in a Business Environment: Theory to Practice
Key Point
Learning to apply legal theories in practice and having legal awareness present opportunities for proactive business planning, empowering managers to limit liability, gain a competitive edge, and add value to the business.
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Role of Counsel
Business owners and managers work with counsel in one of two formats:
In-house counsel
Law firms
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Sources and Levels of American Law
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Constitutional law
Statutory law
Common law
Administrative law
Constitutional Law
Constitutional law is the foundation for all other law in the United States and is the supreme law of the land
Establishes a structure for federal and state governments setting rules for amending the constitution, and granting specific enumerated powers to the different branches of government
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Constitutional Law
Establishes the concept of federalism, allowing the federal and state governments shared powers
Establishes individual civil rights and providing procedural protections for U.S. citizens from wrongful government actions.
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Statutory Law
Statutes
written laws that are passed by the federal or a state legislature and then either approved or rejected by the executive branch.
Ordinances
Written laws at the local level
Generally regulate issues such as zoning or impose health and safety regulations
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Interpreting Statutes
Plain meaning rule.
if the words in the statute have clear and widely understood meanings, the court applies the statute in accordance with the rule
Statutory scheme
structure of the statute and the format of its mandates in a law
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Common Law
Common law is essentially law made by the courts.
Although lawmaking is primarily the responsibility of state and federal legislatures, courts must fill in the gaps when a controversy arises that is not covered under existing law.
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Stare Decisis and Precedent
Doctrine of stare decisis
the principle that similar cases with similar facts and issues should have the same judicial outcome
one of the most important concepts in American law
Precedent
applying the law of previous cases to current cases with substantially similar circumstances is called
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18
Consider spending additional time on this concept. One could generate class discussion based on Supreme Court nominee confirmation hearings, i.e. Bork, or others.
Advantages of Stare Decisis
Allows individuals and business to have some degree of confidence that the law will remain reasonably consistent
Requires all lower courts, such as a trial court, to follow the case precedent as long as no new statutory law has been enacted
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Administrative Law
Administrative law
Source of law that regulates the exercise of authority by government agencies
Also known as regulations
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Hierarchy of Primary Sources of Federal and State Law
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Secondary Sources of Law
Secondary sources of law.
Restatements of the Law, a collection of uniform legal principles focused in a particular area of traditional state law,
Various sets of model state statutes drafted by legal experts as a model for state legislatures to adopt in their individual jurisdictions.
Secondary sources have no independent authority, nor are they legally binding.
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Uniform Model Laws
Drafted by legal experts, for the purpose of establishing uniform standards in areas of the law where national interests would be achieved through use of uniform laws
Primary focus of the model laws is commerce and chief among these is the Uniform Commercial Code (UCC),
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Give examples, e.g.: UCC – Art 2 Sales
Restatements of the Law
Collections of uniform legal principles in a specific area of law that are designed to reduce the complexity of judicial decisions
Common examples of widely used restatements include torts and contracts
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Criminal Law versus Civil Law
Civil laws
designed to compensate parties (including businesses) for losses as a result of another’s conduct
Criminal laws
designed to protect society, and the violation of criminal laws results in penalties to the violator such as fines or imprisonment
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Substantive Law vs Procedural Law
Substantive laws
provide individuals with rights and create certain duties.
Procedural laws
provide a structure and set out rules for pursuing substantive rights.
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Law vs Equity
We use the terms law and equity when describing the appropriate measure of judicial action intended to compensate an injured party in a civil lawsuit.
These measures are known as remedies.
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Law versus Equity
Remedies at law generally take the form of money damages.
Equitable remedies or relief generally includes an injunction or restraining order (a judicial order requiring a party to cease a certain activity, or perhaps to take a specific action).
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Public Law vs Private Law
Public laws
those derived from some government entity.
Private laws
recognized as binding between two parties even though no specific statute or regulation provides for the rights of the parties.
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Strategic Legal Solutions: The Big Picture
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Noncompliance
Avoidance
Prevention
Value Creation
