Chapter 1 - Law and Legal Reasoning
● If planning on doing business in the United States, need to know laws and how law
interpreted federally and in the States that operate within
● if planning on doing law throughout the world, need to learn about law throughout the
world
● Point is that you want to follow the law of wherever operate/wherever could be sued
● As the business grows, subject to even more laws
1-1 Business Activities and the Legal Environment
● Law: enforceable rules governing relationships among individuals and between
individuals and their society
● Liability: The state of being legally responsible (liable for something, such as a debt or
obligation
1-1b Linking Business Law to the Six Functional Fields of Business
Aspects of business subject to laws:
1. Corporate management
2. Production and transportation
3. Marketing
4. Research and development
5. Accounting and finance
6. Human resource management
1-2 Sources of American Law
● The primary source of law: a document that establishes the law on a particular issue,
such as a constitution, a statute, an administrative rule, or a court decision.
○ Sources that establish the law
■ The U.S. Constitution and the constitutions of the various states
■ Statutory law - including laws passed by Congress, state legislatures, and
local governing bodies
■ Regulations created by administrative agencies, such as the federal Food
and Drug Administration
■ Case law (court decisions)
● A secondary source of law: A publication that summarizes of interprets the law, such as
a legal encyclopedia, a legal treatise, or an article in a law review
○ books and articles that summarize and clarify the primary sources of law
○ Courts often refer to secondary sources of law for guidance in interpreting
1-2a Constitutional Law
● Found in text and cases arising from federal and state constitutions
, ● U.S. Constitution is the supreme law of the land.
○ if challenged, will be declared unconstitutional and will not be enforced, no matter
what its source
● deals with the fundamental principles by which the government exercises its authority is
the law as expressed in these constitutions
● The 10th Amendment reserves to the states all power not granted to the federal
government
1-2b Statutory Law
● Laws enacted by federal and state legislatures.
○ Key Example: The Uniform Commercial Code (UCC)
■ created through the joint efforts of the NCCUSL and the American Law
Institute
● Local city ordinances
○ regulations passed by municipal or country governing units to deal with matters
not covered by federal or state law
1-2c Administrative Law
consists of the rules, orders, and decisions of administrative agencies
● Federal Agencies
○ Executive agencies are subject to the authority of the president, who has the
power to appoint and remove their officers
○ major independent regulatory agencies at the federal level
● State and Local Agencies
○ a state agency is created as a parallel to a federal agency
● Agency Creation
● Rulemaking: rules, orders, and decisions of administrative agencies
● Enforcement and Investigation
● Adjudication
1-2d Case Law and Common Law Doctrines
● Case law: the rules of law announced in court decisions. Case law interprets statutes,
regulations, constitutional provisions, and other case law
● Historical, because this is how laws enacted in Britain under what is referred to as
“common law,” before the United States became a country
1-3 Common Law Tradition
● 1-3a Early English Courts
○ King’s courts started after the Norman conquest of 1066
○ Established the common law-body of general legal principles applied throughout
the English empire
○ King’s courts used precedent to build the common law
● If planning on doing business in the United States, need to know laws and how law
interpreted federally and in the States that operate within
● if planning on doing law throughout the world, need to learn about law throughout the
world
● Point is that you want to follow the law of wherever operate/wherever could be sued
● As the business grows, subject to even more laws
1-1 Business Activities and the Legal Environment
● Law: enforceable rules governing relationships among individuals and between
individuals and their society
● Liability: The state of being legally responsible (liable for something, such as a debt or
obligation
1-1b Linking Business Law to the Six Functional Fields of Business
Aspects of business subject to laws:
1. Corporate management
2. Production and transportation
3. Marketing
4. Research and development
5. Accounting and finance
6. Human resource management
1-2 Sources of American Law
● The primary source of law: a document that establishes the law on a particular issue,
such as a constitution, a statute, an administrative rule, or a court decision.
○ Sources that establish the law
■ The U.S. Constitution and the constitutions of the various states
■ Statutory law - including laws passed by Congress, state legislatures, and
local governing bodies
■ Regulations created by administrative agencies, such as the federal Food
and Drug Administration
■ Case law (court decisions)
● A secondary source of law: A publication that summarizes of interprets the law, such as
a legal encyclopedia, a legal treatise, or an article in a law review
○ books and articles that summarize and clarify the primary sources of law
○ Courts often refer to secondary sources of law for guidance in interpreting
1-2a Constitutional Law
● Found in text and cases arising from federal and state constitutions
, ● U.S. Constitution is the supreme law of the land.
○ if challenged, will be declared unconstitutional and will not be enforced, no matter
what its source
● deals with the fundamental principles by which the government exercises its authority is
the law as expressed in these constitutions
● The 10th Amendment reserves to the states all power not granted to the federal
government
1-2b Statutory Law
● Laws enacted by federal and state legislatures.
○ Key Example: The Uniform Commercial Code (UCC)
■ created through the joint efforts of the NCCUSL and the American Law
Institute
● Local city ordinances
○ regulations passed by municipal or country governing units to deal with matters
not covered by federal or state law
1-2c Administrative Law
consists of the rules, orders, and decisions of administrative agencies
● Federal Agencies
○ Executive agencies are subject to the authority of the president, who has the
power to appoint and remove their officers
○ major independent regulatory agencies at the federal level
● State and Local Agencies
○ a state agency is created as a parallel to a federal agency
● Agency Creation
● Rulemaking: rules, orders, and decisions of administrative agencies
● Enforcement and Investigation
● Adjudication
1-2d Case Law and Common Law Doctrines
● Case law: the rules of law announced in court decisions. Case law interprets statutes,
regulations, constitutional provisions, and other case law
● Historical, because this is how laws enacted in Britain under what is referred to as
“common law,” before the United States became a country
1-3 Common Law Tradition
● 1-3a Early English Courts
○ King’s courts started after the Norman conquest of 1066
○ Established the common law-body of general legal principles applied throughout
the English empire
○ King’s courts used precedent to build the common law
