1Prentice Hall © 2007

PowerPoint Slides to accompanyTHE LEGAL ENVIRONMENT OF BUSINESS

AND ONLINE COMMERCE 5E, by Henry R. Cheeseman

Chapter 1Legal Foundations and Global

Environment

Prentice Hall © 2007 2

What Is Law? Law consists of rules

that regulate the conduct of individuals, businesses, and other organizations within society. It is intended to protect persons and their property from unwanted interference from others.

Prentice Hall © 2007 3

Functions of Law

Keeping the peace Shaping moral standards Promoting social justice Maintaining the status quo

Prentice Hall © 2007 4

Functions of Law Facilitating orderly change Facilitating planning Providing a basis for

compromise Maximizing individual freedom

Prentice Hall © 2007 5

Qualities of the Law Fairness

The American legal system is one of the most comprehensive, fair, and democratic systems of law ever developed and enforced.

Prentice Hall © 2007 6

Qualities of the Law Flexibility

The American legal system is generally responsive to cultural, technological, economic, and social changes.

Prentice Hall © 2007 7

What Is Jurisprudence? Jurisprudence is

the philosophy or science of law.

Prentice Hall © 2007 8

Schools of Jurisprudential Thought Natural school—Believes law is

based on what is “correct” Historical school—Believes law is

an aggregate of social traditions and customs

Analytical school—Believes law is shaped by logic

Prentice Hall © 2007 9

Schools of Jurisprudential Thought

Sociological school—Believes law is a means of achieving and advancing certain sociological goals

Command school—Believes law is a set of rules developed and enforced by the ruling party

Prentice Hall © 2007 10

Schools of Jurisprudential Thought

Critical legal studies school—Believes legal rules are unnecessary and that legal disputes should be solved using rules of fairness

Law and economics school—Believes promoting market efficiency should be the central concern of legal decision making

Prentice Hall © 2007 11

History of American Law English common law

Developed by judges who issued their opinions when deciding a case. The principles became precedent for later judges deciding similar cases.

49 states base their legal systems on common law.

Prentice Hall © 2007 12

History of American Law Law court

A court that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror. Legal procedure was emphasized over merits.

Court of Chancery (Equity Court) Court that granted relief based on fairness Equitable remedies were shaped to fit individual

situations. Merchant court

Courts that were established to administer the “law of merchants”

Prentice Hall © 2007 13

Sources of U. S. Law Constitutions Treaties Codified law Executive orders Regulations and administrative

orders Judicial decisions

Prentice Hall © 2007 14

Constitutions The U.S. Constitution

established the structure of the federal government.

Legislative branch Executive branch Judicial branch

The U.S. Constitution and treaties take precedence over all other conflicting laws.

Prentice Hall © 2007 15

Treaties A treaty is a

compact made between two or more nations.

Prentice Hall © 2007 16

Codified Law Statutes

Written law enacted by the legislative branches of federal and state governments

Ordinances Laws enacted by local government bodies

such as cities and municipalities, counties, school districts, and water districts

Prentice Hall © 2007 17

Executive Orders An executive

order is an order issued by a member of the executive branch of government.

Prentice Hall © 2007 18

Administrative Agency Rulesand Regulations

The legislative and executive branches of federal and state governments establish administrative agencies to enforce and interpret statutes enacted by Congress and state legislatures.

Many agencies regulate business.

Prentice Hall © 2007 19

Judicial Decisions A judicial

decision is a decision about an individual case issued by a federal or state court.

Prentice Hall © 2007 20

Doctrine of Stare Decisis Based on the common law tradition, past

court decisions become precedent for deciding future cases.

Precedent is a rule of law established in a court decision. Lower courts must follow the precedent established by higher courts.

Stare decisis—Latin for “to stand by the decision”—means adherence to precedent.

Prentice Hall © 2007 21

Priority of Law in the U.S. The US Constitution and treaties take

precedence over all other laws. Federal statutes take precedence over

federal regulations. Valid federal law takes precedence

over any conflicting state or local law.

Prentice Hall © 2007 22

Priority of Law in the U.S. State constitutions rank as the

highest state law. State statutes take precedence

over state regulations. Valid state law takes

precedence over local laws.