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.
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).
,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.
• 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:
• That Under A Rule Of Law, Laws Are Generally And Equally Applicable.
,• That Lack Of The Rule Of Law Internationally Has Produced Hundreds Of Calls For
It In The
, Last Several Years By Business And Political Leaders. Get Students To Search
For Rule-Of- Law References 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 Equally To Everyone,
The Only Way Lawmakers Can Benefit Themselves Is By Benefitting Everyone.
This Answer Is Theoretical, Of Course. Lawmakers Are Often Benefited
Individually For Making Laws 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.
C. Property (Lo 1-2)
Emphasize:
• The Two Meanings Of Property.
• That Property Is Not The Resource Or Thing Itself. It Is A Right (Or Series Of Rights).
• That The Property Right Gives A Major Incentive To Develop Resources.
• That The Exclusionary Right Of Property Provides A Basis For The Private
Market And Modern Business.
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 Property Is
Greatly Diminished For Most. Would They Even Be In School If Accumulation Of
Property Rights Were Not Attainable?
D. Property In Its Broadest Sense
Emphasize:
• How In Its Broadest Sense ―Property‖ Is The Central Concept Of Western Legal
Systems.
• How Property Can Be Thought Of As The Hub Of A Wheel And The Various
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.
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).
,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.
• 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:
• That Under A Rule Of Law, Laws Are Generally And Equally Applicable.
,• That Lack Of The Rule Of Law Internationally Has Produced Hundreds Of Calls For
It In The
, Last Several Years By Business And Political Leaders. Get Students To Search
For Rule-Of- Law References 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 Equally To Everyone,
The Only Way Lawmakers Can Benefit Themselves Is By Benefitting Everyone.
This Answer Is Theoretical, Of Course. Lawmakers Are Often Benefited
Individually For Making Laws 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.
C. Property (Lo 1-2)
Emphasize:
• The Two Meanings Of Property.
• That Property Is Not The Resource Or Thing Itself. It Is A Right (Or Series Of Rights).
• That The Property Right Gives A Major Incentive To Develop Resources.
• That The Exclusionary Right Of Property Provides A Basis For The Private
Market And Modern Business.
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 Property Is
Greatly Diminished For Most. Would They Even Be In School If Accumulation Of
Property Rights Were Not Attainable?
D. Property In Its Broadest Sense
Emphasize:
• How In Its Broadest Sense ―Property‖ Is The Central Concept Of Western Legal
Systems.
• How Property Can Be Thought Of As The Hub Of A Wheel And The Various
