SOLUTION MANUAL
FOR THE LEGAL AND REGULATORY
ENVIRONMENT OF BUSINESS, 19TH EDITION BY
MARISA PAGNATTARO, DANIEL CAHOY, JULIE
MANNING MAGID, PETER SHEDD
,Introduction
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.‘
Law, the rule of law, and property
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.
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 arosein 2011.
Discuss how the law impacts the covid 19 restrictions on businesses opening in 2020.
The rule of law
Emphasize:
That under a rule of law, laws are generally and equallyapplicable.
That lack of the rule of law internationallyhas produced hundreds of calls for it in the
,Last several years by business and political leaders. Get students to search for rule-of- lawreferences in computer
databases.
That the complete rule of law is an ideal rather than a fact in even the most democratic societies.
Additional matters for discussion:
Get students to discuss why the managing director of j.p. Morgan and co. Called the rule of law ―a
cornerstone of free trade.‖
Ask students why the rule of law tends to produce rules that benefit everyone. Answer: because laws apply
generally and equallyto everyone, the only waylawmakers can benefit themselves is by benefitting
everyone. This answer is theoretical, of course. Lawmakers are often benefited individuallyfor
makinglaws that favor special interests.
Ask students to imagine how society would be with no laws. What if the governor of one‘s state
announced that tomorrow would be no-law day and that nothing would be
Penalized or enforced, no police would be present and no penalties would result from anyone‘s actions. What would
the students do? One is likely to find that after a few fleeting and whimsical thoughts, they would agree that they
would primarily act to protect their real and personal property.
Property (lo 1-2)
Emphasize:
The two meanings of property.
That propertyis not the resource or thing itself. It is a right (or series of rights).
That the propertyright gives a major incentive to develop resources.
That the exclusionary right of propertyprovides a basis for the private market and modernbusiness.
Additional matters for discussion:
Ask students to discuss the incentive to grow and prosper and the incentive to innovate and progress
under a system with a right to private property ownership and a communist
System where private ownership of propertyis greatly diminished for most. Would they even be in school if
accumulation of propertyrights were not attainable?
Property in its broadest sense
Emphasize:
Howinitsbroadestsense―property‖isthecentral conceptofwesternlegalsystems.
How property can be thought of as the hub of a wheel and the various legal topics studied in the text as
spokes of the wheel. Law and the rule of law provide the unifying
, Rim of the wheel. (refer to figure 1.1)
That for madison and other constitutional framers, propertyprotected not onlyphysical resources like land
but also human rights like freedom of speech, freedom of religion, and freedom from unreasonable
intrusion bythe government.
Additional matters for discussion:
Askstudentstod iscussthestatement:―bill gatesand yourprofessorhave equal
q q q q
property.‖thepoint istoexaminetheconfusionbetween―resources‖and ―property.‖ arguably, although bill
q q
gates and the student may have vastlydifferent amounts of resources, he and the student have exactlythe
same right to these respective resources, thus the same ―property.‖
Infederalist paper10,madison wrote:―property…in its particularapplicationmeans that ‗domination
q q q q
which one man claims and exercises over the external things of the world, in exclusion of every other
individual.‘ in its larger and juster meaning, it embraces everything to which a man may attach a value
and have a right; and which leaves to everyone else a like advantage. In the former sense, a man‘s land,
or merchandise, or money is called his property. In the latter sense, a man has property in his opinions and
the free communication of them. He has a property of peculiar value in his religious opinions, and in the
profession and practice dictated by them. He has property very dear to him in the safety and liberty of his
person. He has an equal property in the free use of his faculties and free choice of the objects on which to
employ them. In a word, as a man is said to have a right to his property, he may be equallysaid to have a
propertyin his rights.‖
Madison‘s―largerand justermeaning‖of propertyopensup allsortsofopportunities for
q
Discussion with students. Note that although a system of property is basic to private business in the modern nation, it
does not preclude redistribution of resources for education, health, and relief of poverty and adversity, etc. Even as
the american revolutionariesmaintained―notaxation(ofourindividualresources)without
q
Representation,‖ they appreciated the necessityof appropriate taxation (of one‘s resources) with democratic
q
representation.
The importance of the broader sense of private propertyin the common law grows out of the magna carta.
From the 13th through the 18th centuries, the importance of private propertycreated constitutional tension
between the english monarchs and their subjects.
The monarchs often claimed in essence that they owned the nation, its land, and its produce, yet in opposition to this
there was a growing sense that people owned things privately and could be taxed on this private ownership only
through their own representative consent. Thus, the british colonists in the new world claimed they could not be taxed
without representation. The sons of liberty, one of the first revolutionary groups,hadas theirslogan
q
―liberty,property, and nostamps.‖
FOR THE LEGAL AND REGULATORY
ENVIRONMENT OF BUSINESS, 19TH EDITION BY
MARISA PAGNATTARO, DANIEL CAHOY, JULIE
MANNING MAGID, PETER SHEDD
,Introduction
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.‘
Law, the rule of law, and property
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.
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 arosein 2011.
Discuss how the law impacts the covid 19 restrictions on businesses opening in 2020.
The rule of law
Emphasize:
That under a rule of law, laws are generally and equallyapplicable.
That lack of the rule of law internationallyhas produced hundreds of calls for it in the
,Last several years by business and political leaders. Get students to search for rule-of- lawreferences in computer
databases.
That the complete rule of law is an ideal rather than a fact in even the most democratic societies.
Additional matters for discussion:
Get students to discuss why the managing director of j.p. Morgan and co. Called the rule of law ―a
cornerstone of free trade.‖
Ask students why the rule of law tends to produce rules that benefit everyone. Answer: because laws apply
generally and equallyto everyone, the only waylawmakers can benefit themselves is by benefitting
everyone. This answer is theoretical, of course. Lawmakers are often benefited individuallyfor
makinglaws that favor special interests.
Ask students to imagine how society would be with no laws. What if the governor of one‘s state
announced that tomorrow would be no-law day and that nothing would be
Penalized or enforced, no police would be present and no penalties would result from anyone‘s actions. What would
the students do? One is likely to find that after a few fleeting and whimsical thoughts, they would agree that they
would primarily act to protect their real and personal property.
Property (lo 1-2)
Emphasize:
The two meanings of property.
That propertyis not the resource or thing itself. It is a right (or series of rights).
That the propertyright gives a major incentive to develop resources.
That the exclusionary right of propertyprovides a basis for the private market and modernbusiness.
Additional matters for discussion:
Ask students to discuss the incentive to grow and prosper and the incentive to innovate and progress
under a system with a right to private property ownership and a communist
System where private ownership of propertyis greatly diminished for most. Would they even be in school if
accumulation of propertyrights were not attainable?
Property in its broadest sense
Emphasize:
Howinitsbroadestsense―property‖isthecentral conceptofwesternlegalsystems.
How property can be thought of as the hub of a wheel and the various legal topics studied in the text as
spokes of the wheel. Law and the rule of law provide the unifying
, Rim of the wheel. (refer to figure 1.1)
That for madison and other constitutional framers, propertyprotected not onlyphysical resources like land
but also human rights like freedom of speech, freedom of religion, and freedom from unreasonable
intrusion bythe government.
Additional matters for discussion:
Askstudentstod iscussthestatement:―bill gatesand yourprofessorhave equal
q q q q
property.‖thepoint istoexaminetheconfusionbetween―resources‖and ―property.‖ arguably, although bill
q q
gates and the student may have vastlydifferent amounts of resources, he and the student have exactlythe
same right to these respective resources, thus the same ―property.‖
Infederalist paper10,madison wrote:―property…in its particularapplicationmeans that ‗domination
q q q q
which one man claims and exercises over the external things of the world, in exclusion of every other
individual.‘ in its larger and juster meaning, it embraces everything to which a man may attach a value
and have a right; and which leaves to everyone else a like advantage. In the former sense, a man‘s land,
or merchandise, or money is called his property. In the latter sense, a man has property in his opinions and
the free communication of them. He has a property of peculiar value in his religious opinions, and in the
profession and practice dictated by them. He has property very dear to him in the safety and liberty of his
person. He has an equal property in the free use of his faculties and free choice of the objects on which to
employ them. In a word, as a man is said to have a right to his property, he may be equallysaid to have a
propertyin his rights.‖
Madison‘s―largerand justermeaning‖of propertyopensup allsortsofopportunities for
q
Discussion with students. Note that although a system of property is basic to private business in the modern nation, it
does not preclude redistribution of resources for education, health, and relief of poverty and adversity, etc. Even as
the american revolutionariesmaintained―notaxation(ofourindividualresources)without
q
Representation,‖ they appreciated the necessityof appropriate taxation (of one‘s resources) with democratic
q
representation.
The importance of the broader sense of private propertyin the common law grows out of the magna carta.
From the 13th through the 18th centuries, the importance of private propertycreated constitutional tension
between the english monarchs and their subjects.
The monarchs often claimed in essence that they owned the nation, its land, and its produce, yet in opposition to this
there was a growing sense that people owned things privately and could be taxed on this private ownership only
through their own representative consent. Thus, the british colonists in the new world claimed they could not be taxed
without representation. The sons of liberty, one of the first revolutionary groups,hadas theirslogan
q
―liberty,property, and nostamps.‖
