Business Law (CH 1)

1) School of Jurisprudential Thought

a) General
b) The Natural Law School
i) Natural Law denotes a system of moral and ethical principles that are inherent in human
natural and that people can discover through the use of their natural intelligence, or
reason.
ii) The Oldest and most significant schools of jurisprudence- Aristotle.
iii) Basic Human Rights.
(1) Extended to workers in the USA.
c) The Positivist School
i) Positive Law (AKA National Law), the written law of a given society at a particular point in
time, applies ONLY to the citizens of that nation or society.
ii) Positivist School believes:
(1) Theres no higher law than a nations positive law.
(2) No such Natural Rights.
(3) No laws Anarchy
(4) A judge with positivist leanings probably would be more inclined to defer to an
existing law than would a judge who adheres to the natural law tradition
d) The Historical School
i) Historical School of legal thought emphasizes the evolutionary process of law by
concentrating on the origin and the history of the legal system.
ii) The legal doctrines that have withstood the passage of timethose that have worked in
the pastare deemed best suited for the shaping present laws.
(1) More likely to follow decision made in the past cases.
e) Legal Realism
i) Legal Realism is based on the idea that law is just one of many institutions in society and
that it is shaped by social forces and needs.
(1) Take social and human economic realities into account when deciding a case.
(2) No uniformity (different judges will obviously bring different reasoning process)
(3) Against historical approach.
ii) Influenced the growth of Sociological School of Jurisprudence:
(1) The school views law as a tool for promoting justice in the society.
(a) US Supreme Court played a leading role in the civil rights movement in upholding
long- neglected laws.

2) Business Activities and the Legal Environment

a) General
b) Many different laws may affect a single business transaction:
i) Breaches (Break, or fails to perform) the contract.

c)

Ethics and Business Decisions making

i) Ethics is the generally defined as the study of what constitutes right or wrong behavior.

3) Sources of American Law

a) General
i) Primary:
(1) The U.S. Constitution and the constitutions of the various states.
(2) Statutory law
(a) Laws passed by Congress, state legislatures, or local governing bodies.
(3) Regulations
(a) Created by administrative agencies, such as the Food and Drug Admin.
(4) Case Law and Common Law.
ii) Secondary:
(1) Books & Articles that summarize and clarify the primary sources of law.
(2) Legal encyclopedias, treaties, articles in law reviews, and compilations of law
(a) Restatements of Law (Guidance in interpreting and applying primary sources of
law)
b) Constitutional Law
i) Federal government and States government have separate written constitution that set
forth the general organization, powers, and limits of their respective governments.
ii) Constitutional Law is the law as expressed in these constitutions.
(1) According to Article VI of the US Constitution, the Constitution is the supreme law of
the land.
(a) When a law in violation of the Constitution, if challenged, will be declared
unconstitutional and will not be enforced.
(2) The Tenth Amendment to the US Constitution reserves to the states all powers not
granted to the federal government.
(a) Each state in the union has its own constitution.
(b) Unless conflict with the US Constitution, or federal law, a state constitution is
supreme within states border.
c) Statutory Law
i) General
(1) Laws enacted by legislative bodies at any level of government referred to as
statutory law.
(a) For example: statutes passed by Congress or state legislature.
(b) When a legislature passes a statute ultimately is included in the federal code of
laws or the relevant state code of laws.
(2) Statutory law also included local ordinances- Statutes (laws, rules, or orders) passed
by municipal or county governing units to govern matters not covered by federal or
state law.
(a) For Example: City or County land use (zoning ordinances), Building and Safety
codes, other matters affecting the local community.
ii) Uniform Law
(1) National Conference of Commissioners on Uniform State Laws (NCCUSL) draft
Uniform Laws or Model Laws for state to consider adopting.
(a) 1800s, when theres conflict in state statutes frequently made trade and
commerce among the states difficult.
(b) Each state has the option to adopt or reject a uniform law.

(i) Only if a state legislature adopts a uniform law does that law become part of
the statutory law of that state.
(ii) The state adopts the uniform law, but those states law may not be entirely
uniform.
(iii) The earliest Uniform Law, the Uniform Negotiable Instruments Laws, was
completed by 1986 and adopted in every state by the early 1920.
iii) The Uniform Commercial Code
(1) The Uniform Commercial Code (UCC), which was created through the joint efforts of
the NCCUSL and the American Law Institute, was first issued in 1952.
(a) All fifty states (besides Louisiana), the District of Columbia and the Virgin Islands
have adopted the UCC.
(i) Providing a uniform, yet flexible set of rules governing commercial
transactions.
(ii) The UCC assures businesspersons that their contracts, of validly entered into,
normally will be enforced.
d) Administrative Law
i) General
(1) Administrative Law is defined as the rules, orders, and decisions of administrative
agencies.
(2) Administrative Agency is da federal, state or local government agency established to
perform a specific function, especially business operation.
(a) These business operation included capital structure and financing, its hiring and
firing procedures, its relationship with employees ad unions and the way it
manufactures and market its products.
ii) Federal Agencies
(1) At national level, numerous executive agencies exist within the cabinet departments
of the executive branch
(a) EG: The Food and Drug Administration is an agency within the Department of
Health and Human Services.
(b) The executive agencies are subject to the authority of the president, who has the
power to appoint and remove officers of federal agencies.
(2) Independent Regulatory Agencies at federal level, such as the Federal Trade
Commission, the Securities and Exchange Commission.
(a) The presidents power is less pronounced in regard to independent agencies,
whose officers serve for fixed terms and cannot be removed without just cause.
iii) State and Local Agencies
(1) State: State Pollution Control Agency;
(2) Federal: Environmental Protection Agency.
e) Case Law and Common Law Doctrines
i) The body of judge-made law is referred to as case law.
ii) The doctrine and principles announced in cases- governs all areas not covered by
statutory law or administrative law and is part our common law tradition.

4) The Common Law Tradition

a) General
b) Early English Court
i) General

(1) The means that Norman has used when they conquer England: Establishment of
Kings Court (curiae regis).
(2) Kings court sought to establish a uniform set of customs for the try as a whole.
(3) Common Law: A body of general rules hat applied throughout the entire English
Realm.
(4) Eventually, the common law tradition became part of the heritage of all nations that
were once British colonies, including the United States.
ii) Courts of Law and Remedies at Law
(1) The early English Court could grant very limited kinds of remedies (the legal means
to enforce a right or redress a wrong)
(2) If a person wronged, the kings court could award as compensation one or more of
the following:
(a) Land
(b) Item of Value
(c) Money
(3) Court of Law is the court that awarded this compensation.
(4) Remedies at law are the three remedies (land, item of value and money).
(a) Today, the remedy of law normally takes the form of monetary damage.
(b) A party whose legal interest has been injured.
(i) Although the system introduced uniformity in the settling of disputes, when a
complaining party wanted a remedy other than economic compensation, the
courts of law could do nothing.
(ii) No remedy, No right.
iii) Courts of Equity and Remedies in Equity.
(1) Equity is a branch of law, founded on what might be described as notions of justice
and fair dealing that seek supply a remedy when no adequate remedy at law is
available.
(a) When individual s could not obtain an adequate remedy in a court, they
petitioned the king for relief.
(i) Most of these petitions were decided by an adviser to the king, called a
chancellor (who had the power to grant new and unique remedies).
(ii) Formal Chancery Court or Court of Equity was established.
(2) Remedies in equity are the remedies granted by the equity courts. The remedies
included:
(a) Specific Performance (ordering a party to perform an agreement as promised)
(b) Injunction (Ordering a party to cease engaging in a specific activity or undo some
wrong or injury)
(c) Rescission (The cancellation of a contractual obligation)
(i) **GENERAL RULE: Todays courts, like the early English Courts, will not grant
equitable remedies unless the remedy at law monetary damages- is
inadequate**
(ii) EG: Purchase a parcel of land; you could sue the seller for the return of any
deposits or down payment you might have made on the land. You want the
court to grant the equitable remedy of specific performance because
monetary damages are inadequate in this situation.
iv) Equitable Maxim
(1) Equitable Maxim is defined as the propositions or general statements of equitable
rules, judges are often guided by EM.
(2) The last maxim listed in that exhibit: Equity aids the vigilant, not those who rests on
their rights.- merits special attention.
(a) Known as equitable doctrine of laches (laches = negligent or lax)

(b) It can be used as a defense [an argument raised by the defendant (aka petitioner;
the party being sued) indicating why plaintiff (aka respondent; the suing party)
should not obtain the remedy sought]
(c) Time periods for different types of lawsuits are now fixed by statutes of
limitations.
(i) After the time allowed under a statute of limitations has expired, no action
(lawsuit) can be brought, no matter how strong the case was originally.
c) Legal and Equitable Remedies Today
i) General
(1) Medieval England, There are two different of courts:
(a) Courts of law and Courts of Equity
(i) Different set of judges
(ii) Different set of remedies
(2) 19th Century, combines courts of law and courts of equity
(a) A party now may request both legal and equitable remedies in the same action
(b) Trial courts judge may grant either or both form of relief.
d) The Doctrine with Stare Decisis
i) General
(1) One of the unique features of the common law is that it is Judge made law.
(a) The body principles + Doctrines from the common law emerged over time as
judges decided legal controversies.
ii) Case Precedent and Case Reporters
(1) Precedents
(a) Judges attempted to be consistent and to base their decision on the principles
suggested by earlier case.
(b) New case might become the new law Precedents
(2) Reporters:
(a) Single place or publication where court opinions or written decision can be found.
iii) Stare Decisis and the Common Law
(1) The practice formed a doctrine known as stare decisis (meaning to stand on decided
case).
(2) Two aspects of Stare Decisis:
(a) Decisions made by a higher court are binding on lower courts.
(b) A court should not overturn its own precedent unless there is a compelling reason
to do so.
(3) Stare Decisis advantages:
(a) The courts to be more efficient because if other courts have carefully analyzed a
similar case.
(b) It also makes the law more stable and predictable.
iv) A typical Scenario
(1) *Binding Decision- a case precedent, statute, or other source of law that a court must
follow when deciding a case.
(2) Supreme Courts decision will influence the outcome of all future cases on this issue
brought before the Georgia State Court.
v) Departure from Precedent
(1) If a court decides that a ruling precedent is simply incorrect or that technological or
social changes have rendered the precedent inapplicable, the court might rule
contrary the precedent.
(2) Judges do have some flexibility in applying precedents.
(a) Lower court may avoid applying a precedent set by a higher court in its
jurisdiction by distinguishing the two cases based on their facts.

(b) When this happens, the lower courts ruling stands unless it is appealed to a
higher court and that court overturns the decision.
vi) When theres no precedent.
(1) Case of first impression: when theres no precedent.
(a) Usually the court looks at persuasive authorities (precedent from other
jurisdictions) for guidance.
(b) Factors that included:
(i) Legal principles and policies underlying previous court decisions or existing
statutes, fairness, social values and customs, public policy (governmental
policy based on widely held societal values), and data and concepts drawn
from social sciences.
(ii) The nature of the case
(iii) The case being considered
(iv) The particular judges
(v) Judges hearing the case.
e) Stare Decisis ad Legal Reasoning
i) General
(1) Legal Reasoning is the reasoning process used by judges in deciding what law applies
to a given dispute and then applying that law to the specific facts or circumstances of
the case.
ii) Basic Steps in Legal Reasoning
(1) IRAC Method: Issue, Rule, Application and Conclusion.
(2) To apply IRAC method, you would ask the following questions:
(a) What are the key facts and issues?
(i) Assault
(b) What rules of law apply to the case?
(i) Allege (Claim) that defendant committed a tort (refer to case precedent.)
(c) How do the rules of law apply to the particular facts and circumstances of this
issue?
(i) Theres no two identical case.
(ii) Case on Point: Previously decided cases that are as similar as possible to the
one under consideration
(d) What conclusion should be drawn?
(i) The conclusion is evident if the previous three steps have been followed
carefully.
iii) Form of Legal Reasoning
(1) Deductive Reasoning (AKA Syllogistic Reasoning)
(a) It employs a syllogistic- a logical relationship involving a major premise, I minor
premise, and a conclusion.
(i) Major Premise: Under common law of torts, an individual must be aware of a
threat of danger for the threat to constitute assault.
(ii) Minor Premise: The plaintiff in this case was unaware if the threat at the time
occurred.
(iii) Conclusion: Therefore, the circumstances do not amount to an assault.
(2) Linear Reasoning
(a) It proceeds from one point to another, with the final point being the conclusion.
(i) The landlord, who was on the premises the evening injuring occurred, testifies
that none of the other nine tenants who used the stairway that night
complained about the light.
(ii) The fact: None of the tenants complained is the same as if they had said the
lighting was sufficient.

(iii) That there were no complaints does not prove that the lighting was sufficient
BUT does prove the landlord had no reason to believe that it was not.
(iv) The landlords belief was reasonable because no one complained.
(v) Therefore, the landlord acted reasonably and was not negligent with respect
to the lighting in the stairway.
(3) Reasoning Analogy
(a) Analogy is to compare the facts in the case at hand to the facts in other cases
and, to the extent that the patterns are similar, to apply the same rule of law to
present case.
(i) Case A: The court held that a driver who crossed a highways centerline was
negligent.
(ii) Case B: A driver who crosses the line to avoid hitting a child.
(iii) Analogy: If the judge hold that Bs Driver is not liable, that the judge must
indicate why case As rule is not relevant to the facts presented in case B.
iv) Theres No One Right Answer

5) The Common Law Today

a) General
i) The Common Law derived from juridical decisions continues to be applied throughout the
United States.
ii) Common Law doctrines and principles govern all areas not covered by statutory and
administrative law.
iii) Statutory law will apply rather than common law doctrine that applied prior to the
enactment of the statute.
b) The Continuing Importance of the Common Law
i) Many statutes essentially codify existing common law rules and regulations issued by
various administrative agencies are based, at least in part, on common law principles.
ii) The court in interpreting statutory law, often rely on the common law as a guide what the
legislator intended.
iii) The applicability of a newly enacted statute does not become clear until a body of case
law develops to clarify how, when and to whom the statutes applied.
c) Restatement of Laws
i) The American Law Institute (ALI) has drafted and published compilations of the common
law called Restatements of Law.
(1) Included contracts, torts, agency, trust, property, restitution, security, judgment and
conflict of law.

6) Classification of Law
a) General
i) Substantive VS Procedural Law
(1) Substantive Law consists of all laws that define, describe, regulate, and create legal
rights and obligation.
(2) Procedural Law consists of all laws that delineate the methods of enforcing the rights
established by substantive law.
ii) Federal Law VS State Law
iii) Private Law VS Public Law VS National Law

(1) Private Law (Dealing with relationships between private entities)

(2) Public Law (Addressing the relationship between person and their government)
iv) Civil Law VS Criminal Law
b) Civil Law VS Criminal Law
i) Civil Law spells out the rights and duties that exist between persons ad between persons
and their governments, as well as the relief available when a persons rights is violated.
(1) Private party sues another private party (although government can also sue a party
for a civil law violation) to make that other party comply with a duty or pay for the
damage caused by failure to comply with a duty. (Contract Law)
ii) Criminal Law, in contrast, is concerned with wrongs committed against public as a whole.
(1) Criminal acts are defined and prohibited by local, state or federal government
statutes.
c) Cyber Law
i) Cyber Law refers to the emerging body of law that governs transactions conducted via
the Internet.
ii) NOT CLASSIFICATION OF LAW NOR IS IT NEW TYPE OF LAW.
7) How to find Primary Source of Law
a) General
i) Primary source of lawfederal and state, the US Constitution and state Constitutions,
regulations issued by administrative agencies and court case.
(1) Citation: A reference to a publication in which a legal authoritysuch as a statute or
a court decision or other source can be found)
ii) Finding Statutory and Administrative Law
(1) General
(a) When Congress passes law, they are collected in a large publication titled United
States at Large.
(b) When State passes law, they are collected in the same publication. (Compiled by
subject)
(2) United States Code
(3) States Code
(4) Administrative Law.
iii) Finding Case Law
(1) State Court Decision
(a) Regional Reporters
(b) Case Citations
(2) Federal Court Decisions
(3) Unpublished Opinions
(4) Old Case Law
8) How to Read and Understand Case Law
a) General
i) 2/3 of the case law contains (Summarized background and facts, as well as the courts
decision and remedy, in our own words and have included selected portions of the court
opinion.
ii) 1/3 only provided a longer excerpt from the court decision.
b) Case Titles
i) Adams v Jones
(1) Versus = Against
(2) Adams: Plaintiff
(3) Jones: Defendant

ii) Jones v Adams

(1) Jones = Appellate
c) Terminology
i) Plaintiff or Petitioner, depending on the nature of the action and the party against whom
a lawsuit is brought to the defendant or respondent.
(1) Lawsuit usually more than one plaintiff and defendant.
ii) When a case is appealed from the original court or jurisdiction to another court or
jurisdiction, the party appealing is called the appellant or petitioner. The appellee or
respondent is the party against whom the appeal is taken.
d) Judges and Justices
i) Justices
(1) All members of the U.S. Supreme Court.
(2) Formal title often given to judges of appellate courts.
(3) In NY, a justice is a judge of a trial court (Supreme Court).
ii) Judges
(1) In NY, a member of the Court of Appeal (the state highest court)
e) Decisions and Opinions.
i) Most decisions reached by reviewing, or appellate, courts are explained in written
opinions.
(1) Opinions contain the courts reasons for its decision, the rules of law that apply and
the judgment.
ii) Unanimous, Majority, Concurring and Dissenting Opinions.
(1) Unanimous opinion: when all judges or justices unanimously agree on an opinion, the
opinion is written for the entire court.
(2) Majority opinion: The majority opinion outlines the view supported by the majority of
the judges or justices deciding the case.
(3) Concurring opinion: If a judge agrees or concurs with the majority decision, but for
different reasons.
(4) Dissenting opinion: The views of one or more judges who disagree with the majoritys
decision. **Important: It may form the basis of the arguments used years later in
overruling the precedential majority opinion**
iii) Other Types of Opinions
(1) Per Curiam Opinion: Theres no indication as to which judge or justice authored the
opinion. Case does not accompanied by a written opinion.
(2) En Banc Decision (in the bench): Generally all of the judges sitting on the bench if
that court review a case.
f)

A sample Court Case

i) Background of the Case
(1) Student files a suit in a federal district court against the principal and others, alleging
a violation of his rights under the U.S. Constitution.
(2) The Court issued judgment.
(3) One of the students appeals, the U.S Court of Appeals for the Ninth Circuit reversed
this judgment.
(4) The defendants appealed to the United States Supreme Court.
ii) Editorial Practice
(1) Triple asterisks (***) and Quadruple asterisk (****) frequently appear in the opinion.
(a) *** Indicates we have deleted a few words or sentences from the opinion for the
sake of readability or brevity.
(b) ****Indicates an entire paragraph or more has been omitted.
(c) ****Indicates when the opinion cites another case or legal source, the citation to
the case or other source has been omitted to save space and to improve the flow
of the text.

(2) Bracket or paraphrase.

(a) Whenever we present a court opinion that includes a term or phrase that mat not
be readily understandable.
iii) Briefing Case
(1) Legal researchers routinely brief cases by reducing the texts of the opinion to their
essential elements.
(a) Must brief the background and facts of the cases.