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SOLUTION MANUAL FOR
The Legal and Regulatory Environment of Business, 19th
Edition By Marisa
Pagnattaro, Daniel Cahoy, Julie Manning Magid, Peter Shedd
Chapter 1-22
Chapter 1
Law as a Foundation for Business
Learning Objectives
The purpose of this chapter is to introduce the students to the
subject of law and to some classifications of its subject matter.
In addition, it is designed to instill in them respect for the role
of the ―rule of law‖ in the society and that the judicial system
is the most important stabilizing force in society. It should
create an awareness that law is a foundation for the private
market and ―property‖ as a legal concept underpins that
market and contributes to the maximum wealth of nations
through productivity. This chapter also describes stare decisis,
basic sources of the American law, and sanctions that can be
imposed when the law is not followed.
1-1
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
,References
• Bethell, Tom, The Noblest Triumph (1999).
• Bernstein, William J., The First of Plenty. McGraw-Hill
(2004).
• Driegel, Blandine, The State and the Rule of Law. Princeton
U. Press (1995).
• Friedman, Lawrence M., American Law, 2d ed. Norton
(1998).
• Harnett, Bertram, Law, Lawyers and Laymen: Making Sense
of the American Legal System. San Diego: Harcourt Brace
Jovanovich (1984).
• Helpman, Elhanan, The Mystery of Economic Growth.
Belknap Press (2004).
• Holmes, The Common Law. Little, Brown and Company
(1922).
• Kelman, M., A Guide to Critical Legal Studies. Harvard
(1988).
• Pound, An Introduction to the Philosophy of Law. Yale
University Press (1922).
• Reed, O. Lee, ―Law, the Rule of Law, and Property,‖
American Business Law Journal, Vol. 38 (2001).
• Reed, O. Lee, ―Nationbuilding 101: Reductionism in
Property, Liberty, and Corporate Governance,‖ 36
Vanderbilt Journal of Transitional Law 673 (2003). The
Spirit of the Common Law. Marshall Jones Co. (1921).
1-2
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
,Teaching Outline
I. Introduction
A. Why Law and Regulations Are Fundamental Foundations
for Business (LO 1-1)
Emphasize:
• That by studying the legal and regulatory environment of
business, students will gain an understanding of basic
legal vocabulary and gain the ability to identify
problematic situations that could result in liability.
• That because of the positive role lawyers can play, they
are increasingly being asked to join corporate boards.
• Sidebar 1.1 titled ‗Sustainability and Integrity: Cautionary
Tales of Legal Liability.‘
II. Law, the Rule of Law, and Property
A. Law
Emphasize:
• The simple definition of law. It can be elaborated by
observing that law is a rule-based, state-enforced formal
ordering system with moral elements.
1-3
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
, • That adequate law and legal institutes promote the
certainty and trust necessary for complex, long-term
business arrangements. In an economic sense, they lower
the costs of transacting business.
Additional Matters for Discussion:
• Discuss that law formalizes values and traditions and that
law is more needed in a large, heterogeneous modern
nation than in a smaller, homogeneous nation. Compare
the U.S.
and Japan.
• It is not too early in this chapter to ask students whether
or not lack of law and strict regulation facilitated the
economic crash and recession that began in 2008.
• Ask students to comment on how mistrust of law and
lawmakers precipitated the
―Occupy Wall Street‖ and other ―Occupy…‖ movements
that arose in 2011.
• Discuss how the law impacts the COVID 19 restrictions on
businesses opening in 2020.
B. The Rule of Law
Emphasize:
1-4
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
SOLUTION MANUAL FOR
The Legal and Regulatory Environment of Business, 19th
Edition By Marisa
Pagnattaro, Daniel Cahoy, Julie Manning Magid, Peter Shedd
Chapter 1-22
Chapter 1
Law as a Foundation for Business
Learning Objectives
The purpose of this chapter is to introduce the students to the
subject of law and to some classifications of its subject matter.
In addition, it is designed to instill in them respect for the role
of the ―rule of law‖ in the society and that the judicial system
is the most important stabilizing force in society. It should
create an awareness that law is a foundation for the private
market and ―property‖ as a legal concept underpins that
market and contributes to the maximum wealth of nations
through productivity. This chapter also describes stare decisis,
basic sources of the American law, and sanctions that can be
imposed when the law is not followed.
1-1
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
,References
• Bethell, Tom, The Noblest Triumph (1999).
• Bernstein, William J., The First of Plenty. McGraw-Hill
(2004).
• Driegel, Blandine, The State and the Rule of Law. Princeton
U. Press (1995).
• Friedman, Lawrence M., American Law, 2d ed. Norton
(1998).
• Harnett, Bertram, Law, Lawyers and Laymen: Making Sense
of the American Legal System. San Diego: Harcourt Brace
Jovanovich (1984).
• Helpman, Elhanan, The Mystery of Economic Growth.
Belknap Press (2004).
• Holmes, The Common Law. Little, Brown and Company
(1922).
• Kelman, M., A Guide to Critical Legal Studies. Harvard
(1988).
• Pound, An Introduction to the Philosophy of Law. Yale
University Press (1922).
• Reed, O. Lee, ―Law, the Rule of Law, and Property,‖
American Business Law Journal, Vol. 38 (2001).
• Reed, O. Lee, ―Nationbuilding 101: Reductionism in
Property, Liberty, and Corporate Governance,‖ 36
Vanderbilt Journal of Transitional Law 673 (2003). The
Spirit of the Common Law. Marshall Jones Co. (1921).
1-2
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
,Teaching Outline
I. Introduction
A. Why Law and Regulations Are Fundamental Foundations
for Business (LO 1-1)
Emphasize:
• That by studying the legal and regulatory environment of
business, students will gain an understanding of basic
legal vocabulary and gain the ability to identify
problematic situations that could result in liability.
• That because of the positive role lawyers can play, they
are increasingly being asked to join corporate boards.
• Sidebar 1.1 titled ‗Sustainability and Integrity: Cautionary
Tales of Legal Liability.‘
II. Law, the Rule of Law, and Property
A. Law
Emphasize:
• The simple definition of law. It can be elaborated by
observing that law is a rule-based, state-enforced formal
ordering system with moral elements.
1-3
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
, • That adequate law and legal institutes promote the
certainty and trust necessary for complex, long-term
business arrangements. In an economic sense, they lower
the costs of transacting business.
Additional Matters for Discussion:
• Discuss that law formalizes values and traditions and that
law is more needed in a large, heterogeneous modern
nation than in a smaller, homogeneous nation. Compare
the U.S.
and Japan.
• It is not too early in this chapter to ask students whether
or not lack of law and strict regulation facilitated the
economic crash and recession that began in 2008.
• Ask students to comment on how mistrust of law and
lawmakers precipitated the
―Occupy Wall Street‖ and other ―Occupy…‖ movements
that arose in 2011.
• Discuss how the law impacts the COVID 19 restrictions on
businesses opening in 2020.
B. The Rule of Law
Emphasize:
1-4
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
