Lecture
Thursday, January 22, 2026 10:56 AM
Law:
- Body of rules of conduct with legal force and effect prescribed by the government of a society.
- Function:
○ Provide stability
○ Permit change in an organized and controlled way through courts and/or legislature
- American legal system is based on English legal system
○ Common law legal system (US, England, etc.)
○ Civil law legal system (many countries in Europe, Latin America, Asia)
Common Law:
- Court made law (case law) is important in U.S.
- Stare Decisis: to stand on decided cases - follow precedent
○ Important principle in our common law legal system
○ Principles of prior decisions
○ Efficiency, predictability, stability
○ Binding authority or controlling precedents must be followed
Precedent
- Follow precedent
- Overturn precedent
- No precedent
○ Persuasive Authorities
▪ Brown v. Board of Education (1954)
Remedies
- Law or legal remedies
○ Money
- Equity or equitable remedies
○ Remedies other than money
○ For fairness
- Law and equity now merged
○ Can ask for both in litigation
U.S. Legal Sources
- Federal and state constitutions
- Federal, state statutes and local ordinances; Uniform laws (e.g, UCC)
- Administrative law of government agencies
- Case law/ common law/ judge made law
○ Legal sources interact
International Law
- Every nation has law
○ Similarities / differences
- Treaties between nations
○ Bilateral, multilateral
- International organizations
○ United Nations
World Trade Organization
Module 1 Page 1
, ○ World Trade Organization
○ Many others
Finding Case Law and Statutory Law
- Citations
- Bound volumes
- Computer databases: Lexis, Westlaw
- Internet (e.g., Google!)
Module 1 Page 2
,Textbook - Ch. 1
Thursday, January 22, 2026 12:41 PM
1–1BusinessActivities and the Legal
Environment
Laws and government regulations affect almost all business
activities—from hiring and firing decisions to workplace safety, the
manufacturing and marketing of products, business financing, and more.
To make good business decisions, businesspersons need to understand the
laws and regulations governing these activities.
Realize also that in today’s business world, simply being aware of
what conduct can lead to legal liability is not enough.
Businesspersons must develop critical-thinking and legal reasoning
skills so that they can evaluate how various laws might apply to a
given situation and determine the best course of action.
Businesspersons are also pressured to make ethical decisions.
Thus, the study of business law necessarily involves an ethical
dimension.
As you will note, each chapter in this text covers a specific area of
the law and shows how the legal rules in that area affect business
activities. Although compartmentalizing the law in this fashion
facilitates learning, it does not indicate the extent to which many
different laws may apply to just one transaction. Exhibit
1–1 illustrates the various areas of the law that may influence
business decision making.
Exhibit 1–1Areas of the Law That May Affect Business Decision Making
Example 1.1
Soon after it launched, YouTube faced a potentially catastrophic $1 billion
copyright infringement lawsuit. Entertainment conglomerate Viacom claimed
that the video-hosting platform was not taking sufficient steps to remove
unlicensed use of Viacom’s content on its site. A federal judge ensured
YouTube’s survival by ruling that the company was in compliance with federal
copyright law as long as it responded reasonably to “takedown” requests from
Viacom and other content providers.
Not surprisingly, with five hundred hours of video uploaded to its site each
minute, YouTube has remained under constant legal pressure ever since.
Liberal and conservative groups have sued the company for discriminating
against their political viewpoints. It has faced regulatory scrutiny for, among
Module 1 Page 3
, against their political viewpoints. It has faced regulatory scrutiny for, among
other things, failing to protect users from sexual and racist harassment and
hosting misleading election-related video content. At one point, the Federal
Trade Commission fined the company $170 million for collecting personal
information from children without their parents’ consent.
From <https://ng.cengage.com/static/nbreader/ui/apps/nbreader/nbreader.html#!&tocId=6452adfa46c3c75b2707feea%
3Factivity.id%3D2731518261×tamp=1769097275134>
Main content
1–2Sources of American Law
Focus Question 1
• What are four primary sources of law in the United States?
There are numerous sources of American law. A source that
establishes the law on a particular issue is called a primary source
of law. Primary sources include the following:
○ 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).
Each of these important primary sources of law are described in the
following pages. (See the appendix at the end of this chapter for a
discussion of how to find statutes, regulations, and case law.)
A secondary source of law is a book or article that summarizes and
clarifies a primary source of law. Legal encyclopedias, compilations
(such as Restatements of the Law, which summarize court decisions
on a particular topic), official comments to statutes, treatises, articles
in law reviews published by law schools, and articles in other legal
journals are examples of secondary sources of law. Courts often
refer to secondary sources of law for guidance in interpreting and
applying the primary sources of law discussed here.
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Main content
Module 1 Page 4
Thursday, January 22, 2026 10:56 AM
Law:
- Body of rules of conduct with legal force and effect prescribed by the government of a society.
- Function:
○ Provide stability
○ Permit change in an organized and controlled way through courts and/or legislature
- American legal system is based on English legal system
○ Common law legal system (US, England, etc.)
○ Civil law legal system (many countries in Europe, Latin America, Asia)
Common Law:
- Court made law (case law) is important in U.S.
- Stare Decisis: to stand on decided cases - follow precedent
○ Important principle in our common law legal system
○ Principles of prior decisions
○ Efficiency, predictability, stability
○ Binding authority or controlling precedents must be followed
Precedent
- Follow precedent
- Overturn precedent
- No precedent
○ Persuasive Authorities
▪ Brown v. Board of Education (1954)
Remedies
- Law or legal remedies
○ Money
- Equity or equitable remedies
○ Remedies other than money
○ For fairness
- Law and equity now merged
○ Can ask for both in litigation
U.S. Legal Sources
- Federal and state constitutions
- Federal, state statutes and local ordinances; Uniform laws (e.g, UCC)
- Administrative law of government agencies
- Case law/ common law/ judge made law
○ Legal sources interact
International Law
- Every nation has law
○ Similarities / differences
- Treaties between nations
○ Bilateral, multilateral
- International organizations
○ United Nations
World Trade Organization
Module 1 Page 1
, ○ World Trade Organization
○ Many others
Finding Case Law and Statutory Law
- Citations
- Bound volumes
- Computer databases: Lexis, Westlaw
- Internet (e.g., Google!)
Module 1 Page 2
,Textbook - Ch. 1
Thursday, January 22, 2026 12:41 PM
1–1BusinessActivities and the Legal
Environment
Laws and government regulations affect almost all business
activities—from hiring and firing decisions to workplace safety, the
manufacturing and marketing of products, business financing, and more.
To make good business decisions, businesspersons need to understand the
laws and regulations governing these activities.
Realize also that in today’s business world, simply being aware of
what conduct can lead to legal liability is not enough.
Businesspersons must develop critical-thinking and legal reasoning
skills so that they can evaluate how various laws might apply to a
given situation and determine the best course of action.
Businesspersons are also pressured to make ethical decisions.
Thus, the study of business law necessarily involves an ethical
dimension.
As you will note, each chapter in this text covers a specific area of
the law and shows how the legal rules in that area affect business
activities. Although compartmentalizing the law in this fashion
facilitates learning, it does not indicate the extent to which many
different laws may apply to just one transaction. Exhibit
1–1 illustrates the various areas of the law that may influence
business decision making.
Exhibit 1–1Areas of the Law That May Affect Business Decision Making
Example 1.1
Soon after it launched, YouTube faced a potentially catastrophic $1 billion
copyright infringement lawsuit. Entertainment conglomerate Viacom claimed
that the video-hosting platform was not taking sufficient steps to remove
unlicensed use of Viacom’s content on its site. A federal judge ensured
YouTube’s survival by ruling that the company was in compliance with federal
copyright law as long as it responded reasonably to “takedown” requests from
Viacom and other content providers.
Not surprisingly, with five hundred hours of video uploaded to its site each
minute, YouTube has remained under constant legal pressure ever since.
Liberal and conservative groups have sued the company for discriminating
against their political viewpoints. It has faced regulatory scrutiny for, among
Module 1 Page 3
, against their political viewpoints. It has faced regulatory scrutiny for, among
other things, failing to protect users from sexual and racist harassment and
hosting misleading election-related video content. At one point, the Federal
Trade Commission fined the company $170 million for collecting personal
information from children without their parents’ consent.
From <https://ng.cengage.com/static/nbreader/ui/apps/nbreader/nbreader.html#!&tocId=6452adfa46c3c75b2707feea%
3Factivity.id%3D2731518261×tamp=1769097275134>
Main content
1–2Sources of American Law
Focus Question 1
• What are four primary sources of law in the United States?
There are numerous sources of American law. A source that
establishes the law on a particular issue is called a primary source
of law. Primary sources include the following:
○ 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).
Each of these important primary sources of law are described in the
following pages. (See the appendix at the end of this chapter for a
discussion of how to find statutes, regulations, and case law.)
A secondary source of law is a book or article that summarizes and
clarifies a primary source of law. Legal encyclopedias, compilations
(such as Restatements of the Law, which summarize court decisions
on a particular topic), official comments to statutes, treatises, articles
in law reviews published by law schools, and articles in other legal
journals are examples of secondary sources of law. Courts often
refer to secondary sources of law for guidance in interpreting and
applying the primary sources of law discussed here.
Change font size
help
From <https://ng.cengage.com/static/nbreader/ui/apps/nbreader/nbreader.html#!&tocId=6452adfa46c3c75b2707feea%
3Factivity.id%3D2731518261×tamp=1769097275134>
Main content
Module 1 Page 4
