THE LEGAL ENVIRONMENT OF BUSINESS The Legal Environment
THE LEGAL ENVIRONMENT OF BUSINESS The Legal Environment of Business A Critical Thinking Approach 5 th Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -1
THE LEGAL ENVIRONMENT OF BUSINESS CHAPTER 2 Introduction to Law and the Legal Environment of Business © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -2
THE LEGAL ENVIRONMENT OF BUSINESS Chapter 2 Overview q Definition of the legal environment of business q Definition of law and jurisprudence q Sources of law q Classifications of law q International dimensions of the legal environment of business © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -3
THE LEGAL ENVIRONMENT OF BUSINESS Definition of the Legal Environment of Business q It develops critical thinking skills. q The study of legal reasoning, critical thinking skills, ethical norms, and schools of ethical thought that interact with the law. q The study of the legal process and our present legal system, as well as alternative dispute resolution systems. q The study of the administrative law process and the role of business people in that process. q The study of selected areas of public and private law, consumer law, and environmental law. q The examination of the international dimensions of the legal environment of law. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -4
THE LEGAL ENVIRONMENT OF BUSINESS Why study the legal environment of law? q It develops critical thinking skills. q It helps to establish legal literacy. q It develops an understanding that the law is dynamic not static. q It deals with real-world problems. q It is interdisciplinary. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -5
THE LEGAL ENVIRONMENT OF BUSINESS Top Ten Reasons for Studying the Legal Environment of Business q Becoming aware of the rules of doing business. q Recognizing the legal limits on business freedom. q Becoming aware of potential misconduct of competitors. q Appreciating the limits of entrepreneurship. q Being able to communicate with your lawyer. q Making you a more fully informed citizen. q Developing an employment-related skill. q Exploring the fascinating complexity of business decisions. q Providing a heightened awareness of business ethics. q Opening your eyes to the excitement of the law and business. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -6
THE LEGAL ENVIRONMENT OF BUSINESS Jurisprudence science or philosophy of law Plato: law is a form of social control; Aristotle: it is a rule of conduct, a contract, an ideal of reason; Cicero: it is the agreement of reason and nature, the distinction between the just and the unjust; Aquinas: it is an ordinance of reason for the common good; Bacon: certainty is the prime necessity of law; Hobbes: law is the command of the sovereign; Hegel: it is an unfolding or realizing of the idea of right. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -7
THE LEGAL ENVIRONMENT OF BUSINESS Schools of Jurisprudence SCHOOL SOME CHARACTERISTICS Natural Law Source of law is absolute (Nature, God, or Reason). Positivist Source of law is the sovereign. Sociological Source of law is contemporary community opinion and customs. American Realist Source of law are actors in the legal system and scientific analysis of their actions. Critical Legal Theory Source of law is a cluster of legal and non-legal beliefs that must be critiqued to bring about social and political change. Feminist Jurisprudence reflects a male-dominated executive, legislative, and judicial system in which women’s perspectives are ignored and women are victimized. Law and Economics Applies classical economic theory and empirical methods to all areas of law in order to arrive at decisions. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -8
THE LEGAL ENVIRONMENT OF BUSINESS Natural Law School – Natural law has existed since 300 B. C. It consists of the following concepts: q There exist certain legal values or value judgments (e. g. , a presumption of innocence until guilt is proved); q these values or value judgments are unchanging because their source is absolute (e. g. , Nature, God, or Reason); q these values or value judgments can be determined by human reason; and q once determined, they supersede any form of human law. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -9
THE LEGAL ENVIRONMENT OF BUSINESS Natural Law School – Martin Luther King Jr. There are just laws and there are unjust laws. I would be the first to advocate obeying just laws. One has not only a legal but moral responsibility to obey just laws. Conversely, one has the moral responsibility to disobey unjust laws. I would agree with St. Augustine that “An unjust law is no law at all”. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -10
THE LEGAL ENVIRONMENT OF BUSINESS Positivist School Followers of positivism, developed a school of thought in opposition to the natural law school in the 1800’s. Its chief tenets are: q Law is the expression of the will of the legislator or sovereign, which must be followed; q Morals are separate from law and should not be considered in making legal decisions; q Law is a “closed logical system” in which correct legal decisions are reached solely by logic and the use of precedents. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -11
THE LEGAL ENVIRONMENT OF BUSINESS Sociological School Followers of the sociological school propose three steps in determining law: q A legislator or a judge should make an inventory of community interests; q Judges and legislators should use this inventory to familiarize themselves with the community’s standards and mores; and q They should rule or legislate in conformity with those standards and mores. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -12
THE LEGAL ENVIRONMENT OF BUSINESS American Realist School q The American realist school, focuses on the actors in the judicial system instead of on the larger community to determine the meaning of law. q This school sees law as a part of society and a means of enforcing political and social values. “This doing of something about disputes, this doing it reasonably, is the business of the law. And the people who have the doing of it are in charge, whether they be judges, or clerks, or jailers, or lawyers, they are officials of the law. What these officials do about disputes is, to my mind, the law itself. ” Karl Llewellyn in The Bramble Bush © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -13
THE LEGAL ENVIRONMENT OF BUSINESS Critical Legal Studies School q Critical legal studies seek to connect what happens in the legal system to the politicaleconomic context within which it operates. q Adherents believe that law reflects a cluster of beliefs that convinces human beings that the hierarchical relations that they live and work under are natural and must be accommodated. q This cluster of beliefs has been constructed by elitists to rationalize their dominant power. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -14
THE LEGAL ENVIRONMENT OF BUSINESS Feminist School q Most adherents of this school advocate lobbying legislatures and litigating in courts for changes in laws to accommodate women’s views. q They argue that our traditional common law reflects a male emphasis on individual rights, which, at times, is at odds with women’s views that the law should be more reflective of a “culture of caring. ” q To other adherents of this school of jurisprudence, the law is a means of male oppression. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -15
THE LEGAL ENVIRONMENT OF BUSINESS Law and Economics School q It employs economics to explain and predict a judge’s decisions in certain areas. q Most court decisions and legal doctrines they depend on are efforts to promote an efficient allocation of resources in society. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -16
THE LEGAL ENVIRONMENT OF BUSINESS Sources of U. S. Law q The Legislative Branch - creates the law q The Judicial Branch - interprets the laws q The Executive Branch - enforces the laws q Administrative Agencies © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -17
THE LEGAL ENVIRONMENT OF BUSINESS Where to Find the Law Level of Government Legislative Law Executive Orders FEDERAL • United States Code (U. S. C. ) • United States Code Annotated (U. S. C. A. ) • United States Statutes at Large (Stat. ) • Title 3 of the Code of Federal Regulations • Codification of Presidential Proclamations and Executive Orders STATE Common Law/Judicial Interpretations Admin Regulations • United States Reports (U. S. ) • Supreme Court Reporter (S. Ct. ) • Federal Reporter (F. , F. 2 d) • Federal Supplement (F. Supp. ) • Federal agency reports (titled by agency; e. g. , F. C. C. Reports) • Regional reporters • State reporters • Code of Federal Regulations (C. F. R. ) • Federal Register (Fed. Reg. ) • State code or state statutes (e. g. , Ohio Revised Code Annotated, Baldwin’s) • Regional reporters • State reporters • State administrative code or state administrative regulations • Municipal ordinances • Varies; often difficult to find. Many municipalities do not publish case decisions but do preserve them on microfilm. Interested parties usually must contact the clerk’s office at the local courthouse. • Municipality administrative regulations FEDERAL © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -18
THE LEGAL ENVIRONMENT OF BUSINESS Legislation - How a Bill Becomes a Law Introduction H. R. 1 Introduced in House Sent to Clerk of House S. 1 Introduced in Senate Sent to Clerk of Senate Referred to Appropriate House Committee Referred to Subcommittee Reported by Full Committee House Rules Committee Action House Floor Debate and Vote on Bill Joint House – Senate Conference Committee House (H. R. I. ) © 2009 Pearson Education, Inc. publishing as Prentice Hall Senate (S. 1) Ch. 2 -19
THE LEGAL ENVIRONMENT OF BUSINESS Judicial Branch Definition: is comprised of the federal courts and most state courts. Landmark case: Marbury v. Madison 1. Judicial Review – the power to determine whether a statute is constitutional was given to the courts in this case. 2. Case law precedents © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -20
THE LEGAL ENVIRONMENT OF BUSINESS Executive Branch Definition: is composed of the President, President’s staff and the cabinet (heads of the executive departments). q Treaty Making q Executive Orders © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -21
THE LEGAL ENVIRONMENT OF BUSINESS Administrative Agencies Congress delegates authority to these agencies to make rules governing the conduct of business and labor in certain areas. Examples of Federal Regulatory Agencies: q SEC q FTC q OSHA q EEOC © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -22
THE LEGAL ENVIRONMENT OF BUSINESS Classifications of Law Case Law results from judicial interpretations of constitutions and statutes. Statutory Law made by the legislative branch of government. Criminal Law Civil Law composed of federal and state statutes prohibiting wrongful conduct ranging from murder to fraud. governs litigation between two private parties. © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -23
THE LEGAL ENVIRONMENT OF BUSINESS Classifications of Law Public Law Private Law deals with the relationship of deals with the enforcement government to individual of private duties. citizens. Substantive Procedural creates and regulates legal rights sets out the rules for enforcing the legal rights. It is the “ Process”. Cyber law - is not a new type of law. It applies the traditional categories of law to a new form of communication (online). © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -24
THE LEGAL ENVIRONMENT OF BUSINESS Summary Variables that have an impact on business decision making: q Legal q Financial q Economic q Ethics © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -25
THE LEGAL ENVIRONMENT OF BUSINESS All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch. 2 -26
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