CHAPTER 1
OVERVIEW OF THE LEGAL ENVIRONMENT OF MARKETING
ACTIVITIES
CHAPTER SUMMARY
Chapter 1 provides a brief overview of the American legal system, court structure, sources
of the law, and jurisdiction.
MAIN CHAPTER TOPICS
I. Introduction
II. Classifications of the Law
III. Sources of the Law
A. Primary Sources of the Law
1. Primary Sources of Federal Law
2. Primary Sources of State Law
B. Secondary Sources of the Law
IV. The American Legal System
, A. Common Law and Equity
B. Court Structure
1. State Court Structure
2. Federal Court Structure
V. Jurisdiction
A. Subject Matter Jurisdiction
B. Jurisdiction Over the Parties
D.C. 1.1 Pebble Beach v. Caddy
D.C. 1.2 The American Automobile Association, Inc. v. Darba
Enterprises Inc.
C. Jurisdiction on the Internet
LECTURE CONSIDERATIONS
If your students have already had a legal environment or business law course, you may
want to run through this material very quickly. If your students have never had another law
course, you may choose to spend more time on this issue. It is often helpful to briefly
introduce the concepts of this Chapter, then come back to specific issues and discuss them
in more detail as they arise throughout the course (e.g., discuss the distinction between law
and equity in more detail when dealing with contract remedies, discuss the court structure
when running through the procedural history of a specific case, etc.).
NOTES ON CASE ILLUSTRATIONS
No Case Illustrations provided in this Chapter.
,NOTES ON DISCUSSION CASES
D.C. 1.1 Pebble Beach Co. v. Caddy
Answers to Questions for Discussion
1. Because the defendant, Michael Caddy, is located in the United Kingdom.
2. The minimum contacts test has three elements. According to the court:
This “minimum contacts” test is satisfied when:
(1) the defendant has performed some act or
consummated some transaction within the forum or
otherwise purposefully availed himself of the privilege
of conducting activities in the forum; (2) the claim
arises out of or results from the defendant’s forum-
related activities; and (3) the exercise of jurisdiction is
reasonable.
If any one element is not satisfied, the court lacks jurisdiction. Here, the
court found that the first element was not satisfied, which meant that there
was no need to consider the remaining two elements.
3. The court looks to the Supreme Court’s opinion in Calder v. Jones, and the
“Calder effects test” to determine whether Caddy purposefully directed his
behavior toward California. The court then considers a number of earlier
cases–Panavision v. Toeppen, Metropolitan Life Ins. Co. v. Neaves, Bancroft &
Masters, Inc. v. Augusta National Inc., and Rio Properties Inc. v. Rio Int’l
Interlink–which illustrate instances in which purposeful direction or aiming
, was found to exist. The court then distinguishes the Pebble Beach case on its
facts. The court finds that Pebble Beach is more like the precedent of
Schwarzenegger v. Fred Martin Motor Co., and concludes that there is no
evidence of express aiming at California.
D.C. 1.2 The American Automobile Association v. Darba Enterprises Inc.
Answers to Questions for Discussion
1. Toe have personal jurisdiction over a non-resident defendant, the court must
find that the defendant has either (1) “a continuous and systematic presence
in the state;” or (2) “minimum contacts with the forum state such that the
exercise of jurisdiction “does not offend traditional notions of fair play and
substantial justice.”
2. The court concludes that it does have jurisdiction over the defendant under
the long arm statute because the defendant has sufficient contacts with the
state.
Note how the court sets forth the test for minimum contacts: The test
requires that:
(a) “the ‘nonresident defendant must do some act or consummate
some transaction with the forum or perform some act which he
purposefully avails himself of the privilege of conducting
activities in the forum’”;
OVERVIEW OF THE LEGAL ENVIRONMENT OF MARKETING
ACTIVITIES
CHAPTER SUMMARY
Chapter 1 provides a brief overview of the American legal system, court structure, sources
of the law, and jurisdiction.
MAIN CHAPTER TOPICS
I. Introduction
II. Classifications of the Law
III. Sources of the Law
A. Primary Sources of the Law
1. Primary Sources of Federal Law
2. Primary Sources of State Law
B. Secondary Sources of the Law
IV. The American Legal System
, A. Common Law and Equity
B. Court Structure
1. State Court Structure
2. Federal Court Structure
V. Jurisdiction
A. Subject Matter Jurisdiction
B. Jurisdiction Over the Parties
D.C. 1.1 Pebble Beach v. Caddy
D.C. 1.2 The American Automobile Association, Inc. v. Darba
Enterprises Inc.
C. Jurisdiction on the Internet
LECTURE CONSIDERATIONS
If your students have already had a legal environment or business law course, you may
want to run through this material very quickly. If your students have never had another law
course, you may choose to spend more time on this issue. It is often helpful to briefly
introduce the concepts of this Chapter, then come back to specific issues and discuss them
in more detail as they arise throughout the course (e.g., discuss the distinction between law
and equity in more detail when dealing with contract remedies, discuss the court structure
when running through the procedural history of a specific case, etc.).
NOTES ON CASE ILLUSTRATIONS
No Case Illustrations provided in this Chapter.
,NOTES ON DISCUSSION CASES
D.C. 1.1 Pebble Beach Co. v. Caddy
Answers to Questions for Discussion
1. Because the defendant, Michael Caddy, is located in the United Kingdom.
2. The minimum contacts test has three elements. According to the court:
This “minimum contacts” test is satisfied when:
(1) the defendant has performed some act or
consummated some transaction within the forum or
otherwise purposefully availed himself of the privilege
of conducting activities in the forum; (2) the claim
arises out of or results from the defendant’s forum-
related activities; and (3) the exercise of jurisdiction is
reasonable.
If any one element is not satisfied, the court lacks jurisdiction. Here, the
court found that the first element was not satisfied, which meant that there
was no need to consider the remaining two elements.
3. The court looks to the Supreme Court’s opinion in Calder v. Jones, and the
“Calder effects test” to determine whether Caddy purposefully directed his
behavior toward California. The court then considers a number of earlier
cases–Panavision v. Toeppen, Metropolitan Life Ins. Co. v. Neaves, Bancroft &
Masters, Inc. v. Augusta National Inc., and Rio Properties Inc. v. Rio Int’l
Interlink–which illustrate instances in which purposeful direction or aiming
, was found to exist. The court then distinguishes the Pebble Beach case on its
facts. The court finds that Pebble Beach is more like the precedent of
Schwarzenegger v. Fred Martin Motor Co., and concludes that there is no
evidence of express aiming at California.
D.C. 1.2 The American Automobile Association v. Darba Enterprises Inc.
Answers to Questions for Discussion
1. Toe have personal jurisdiction over a non-resident defendant, the court must
find that the defendant has either (1) “a continuous and systematic presence
in the state;” or (2) “minimum contacts with the forum state such that the
exercise of jurisdiction “does not offend traditional notions of fair play and
substantial justice.”
2. The court concludes that it does have jurisdiction over the defendant under
the long arm statute because the defendant has sufficient contacts with the
state.
Note how the court sets forth the test for minimum contacts: The test
requires that:
(a) “the ‘nonresident defendant must do some act or consummate
some transaction with the forum or perform some act which he
purposefully avails himself of the privilege of conducting
activities in the forum’”;
