Explain Why Nations Are Economic Weak Or Strong

Legal Environment of Business Study Guide
Chapters: 1, 2, 3, 4, 6 and Founding Brothers

Chapter 1: Law as the Foundation of Business 1. Why nations are economically weak or strong: a. Dependency theory: economically strong nations exploit the resources and labor of weaker nations through trade i. However, economically stronger nations invest more in each other b. Natural resources: whether or not a nation has an abundant supply of resources is another thought i. However, Japan as little resources c. Education and technology: economically stronger nations have better schools and implement technology more quickly than weaker nations d. Climate: some believe climate relates to economic success i. Not true e. Private market:
presence or lack thereof a private market is the biggest indicator of economic success i. Russia switched to a private market, but experienced 7 years of economic decline f. Law and legal system: an enforced system of equally applied law is recognized as a major factor 2. Law: tells members of society what they can or cannot do a. Law is made up of rules b. Laid down by the state and backed up by enforcement 3. Rule of law: idea that laws that are made are generally and equally applicable a. Apply to all or most members of society and apply to various groups in the same way 4. Property: is the legal right to exclude or keep others from interfering with what you own a. The right of property is the most important factor for economic development b. Property means ownership i. Gives people incentive to use their property to the greatest efficiency 5. Property in its broadest sense: property (the right of) is the central concept underlying western legal systems a. Private property comes from the thinking of John Locke 6. Jurisprudence: are philosophies that explain the meaning and essence of law a. Natural law: asserts that law contains universal moral principles i. Principles are observable in nature ii. Belief that law is discovered from nature or divine sources iii. John Locke believed property came from natural law b. Positive law: believes that law is simply the commands of the state backed up by force and punishments i. One of the most dominate thoughts of law ii. Believes that the legal is completely separate from the moral iii. Idea that “law is law, whether it is just or not” c. Historical school: emphasizes that contemporary law should focus on legal principles that have withstood the test of time in a nation i. Belief that law reflects the cultural traditions of a people and recognizes that different nations have different cultures and laws d. Sociological jurisprudence: supports the idea that law can and should change to meet new developments in society i. Similar to the belief that law reflects culture of a nation e. Legal realism: tries to go beyond just the words of law to examine what police, administrators, prosecutors, and judges are actually doing as they enforce, interpret, and apply laws 7. Common law and civil law: a. Common law: emphasizes the role of judges in determining the meaning of laws and how they are applied i. Believes in the precedent ii. System used in the US b. Civil law: relies more on legislation than judicial decisions to determine what the law is i. Civil law judges do not make law, nor do they have to follow the precedent 8. Public (criminal) and private law (civil): a. Public law: includes those matters that involve the regulation of society as opposed to individuals interacting i. Constitutional law: involves the interpretation and application of either the federal or state constitutions ii. Administrative law: covers the legal principles that apply to government agencies, bureaus, boards, or commissions iii. Criminal law: specifies various offenses against the proper order or the state b. Private law: covers those legal problems and issues that concern your private resource relationships with other people i. Property law: recognition of exclusive right in both tangible and intangible resources 1. Patents, copyrights, trade secrets ii. Contract law: covers the rules of how owners transfer resources by exchanging them iii. Tort law: deals with compensation when an owner’s legal boundaries are wrongfully crossed by another 9. Constitutions: US constitution is supreme law of the land a. Establishes the laws and laws that can be created in a nation i. Also contains basic rights and liberties 10. Legislation: most significant source of law a. Drafts laws i. Called statues or acts a the federal level 1. Ordinances at the local level 11. Judicial decisions or case law: a. Judges deliver opinions that then become precedent or followed from that point on i. Stare decisis: let it stand (as in the precedent) 1. People become secure with knowing the precedent 12. Sources of law hierarchy: a. US Constitution and amendments b. Statutes (passed by congress) c. Federal administration regulation d. State constitutions e. State statutes f. State administration regulation g. Local ordinances h. Case law

Chapter 2: Ethical basis of law and business management: 1. Ethics and society: a. Public education and family structure: rising concern over business ethics comes from a decline in public education and the family structure as sources for ethical teachings b. News media and the internet: makes us more aware of the failure of business ethics 2. Ethics and the government: a. Government has become more involved in the regulation of businesses due to their ethical failures b. Adam Smith recognized the need for morals and ethics in business 3. Ethics and morality: a. Morals: values that guide our behavior i. Sharing of moral values brings society closer together b. Ethics: is a systematic statement of right and wrong together with a philosophical system that both justifies and necessitates rules of conduct i. The good: those morals and objectives we choose to pursue 1. Defines who we are 4. Ethics and law: both consist of rules to guide conduct and foster social cooperation a. Both deal with what is right and wrong b. Society’s ethical values may become law through legislation c. Differences: i. Unlike ethical systems, the legal system is an institution of the state 1. State enforces rules through civil and criminal sanctions 2. Ethical violations are usually not enforced by law ii. Whether or not to observe laws/ethics 1. Ethics come from within and the individual must decide to follow them 2. Law comes from outside and are followed as to not get in trouble with the state iii. Law sets the minimum standards that cannot be crossed 1. Ethics are usually a higher threshold of rules/ideas to be followed iv. Commitment to ethical behavior is higher than following law 1. Can follow law with ease, but not be ethical 5. Two systems of law: a. Formalism (follows natural law): is an approach to ethics that affirms an absolute morality i. A particular act is right or wrong, no grey area 1. No justification for an action 2. To be ethical, you have a duty ii. For the formalist, the ethical focus on the individual follows the idea that individuals have rights and should not be infringed by others, even at the expense of others 1. 1st amendment has a formalist approach iii. Kant was the premier formalist 1. Categorical imperative: you must act in ethically consistent ways a. Follows the golden rule iv. Social contract: idea of how to construct a just society with a veil of ignorance b. Consequentialism (positive law): concerns itself with the moral consequences of actions rather than with the morality of the actions themselves i. Looks at the end results rather than what it took to get there ii. Belief of utilitarianism: 1. Idea that actions are moral that increase the common good for every one

Chapter 3: Court System 1. Judges and justices: a. Judges: individuals who operate courts (also referred to as magistrates) i. At the supreme court, these individuals are called justices b. Judges/justices must determine the applicable rules of law to be used to decide the case i. Justices give reasons for their decisions, known as opinions 1. Normally resolving issues of law, rather than fact 2. Jurors: a. Petit jury: trial jury that returns a verdict in both situations 3. Lawyers: required in most cases a. Present evidence, points of law, and their arguments are weighed by a jury b. Three roles: i. Counselor, advocate, and public servant 4. Organization of the court system: lawsuits begin at the trial court level and are reviewed at the appellate court level a. Subject matter jurisdiction: refers to the power of a court to hear a case i. For any court to hear a case it must have subject matter jurisdiction, which is the power to hear any type of case b. State courts: i. Operated from: 1. State constitutions provide general framework 2. State legislatures enacts statutes that add to that framework c. Trial courts: parties file their lawsuits i. Compliant describes the facts and law giving rise to this cause of actions and relief requested by the court d. Appellate courts: parties to litigation are entitled as a matter of review of their case by a higher court i. A second appeal is called a writ of certiorari 5. Federal courts: a. Diversity of citizenship (individuals from two different states) the trial must be held in a federal court to remove bias b. Federal district courts: are the trial courts of the federal judicial system i. One in every state c. Appellate courts: 12 appellate courts across the US 6. Decisions by the supreme court: must be obtained by a writ of certiorari a. 4 of 9 justices must agree to take the case b. Final judgments of a state are reviewed only by the Supreme Court i. If no federal matter is at hand, then there is no subject to review by the Supreme Court 7. Power of Judicial Review: Marbury vs. Madison (Chief Justice John Marshall) a. Judicial restraint: believe this power of judicial review should be used sparingly i. Belief in being a strict constructionism: believe the constitution should be interpreted in the light of what the founding fathers intended ii. Belief that political change should come from legislation b. Judicial activism: belief that this power should be used whenever the needs of society justify its use i. Believe courts have a major role to play in correcting wrongs in our society ii. More result conscious and less focus is put on the precedent

Chapter 4: Litigation 1. Overview: a. Parties: i. Plaintiff: individual who files a civil action ii. Defendant: the party who is sued b. Standing to sue: a plaintiff must establish that he/she is entitled to have the court decide the dispute i. Two factors: 1. Must allege that the litigation involves a case or controversy 2. Plaintiff must allege a personal stake in the resolution of the controversy c. Personal jurisdiction: to hear a case, a court must have power over the matter, and the individuals involved i. Summons: notice to appear in court ii. Long arm statutes: ability to provide service of process beyond state boundaries iii. States must also guarantee due process 2. Pretrial procedures: a. Pleadings: legal documents that are filed with the court to begin the litigation process i. Complaint: lawsuits begin by a plaintiff filing a pleading ii. Answer: response by a defendant to a summons b. Steps in discovery: i. Purpose: discovery procedures are designed to take the sporting aspect out of litigation and ensure that lawsuits are based on merits 1. Ensures that each side is fully aware of all facts ii. Methods? c. Motions: are pretrial determinations of parties’ rights i. Statute of limitation: set time limit for litigation ii. Judgment on the pleadings: asking the judge to decide the case solely on the complaint and the answer 3. Trial: a. Jury selection: prospective jurors are summoned by the court clerk i. Voir Dire: to speak the truth, jurors are examined to see where they stand on the case ii. Peremptory challenges: each side can excuse a certain number of jurors with out reason or cause b. Burden of proof: describes the duty that a person has to come forward on a particular issue and the party alleging the existence of certain facts has the duty of coming up with evidence to establish them i. Criminal cases: 1. Beyond a reasonable doubt: the prosecution must prove the case that the defendant is guilty and deserves punishment and that there is no doubt in a jurors mind ii. Civil cases: 1. Clear and convincing proof: must prove that the facts are the way they are contended and are clearly established iii. Deciding the case: 1. Jury gives a verdict a. If the judge agrees, a judgment is given in favor of the winning party iv. Appeals: based solely on the proceedings, testimony, and issues if handed correctly and to make sure the lower court did not reach an erroneous result 1. Each party files a brief, which is a short description of the case and arguments for reversing or affirming the lower court’s decision 2. Oral argument: attorneys are given time to orally state their case

Chapter 6: Legal Foundations of Business: 1. Separation of powers: a. Known as federalism i. Separation of state and federal power ii. Federal is more powerful, but 10th amendment recognizes state power b.
Supremacy clause: states that the Constitution is the most powerful document in the land and that federal laws passed under it reign supreme c. Preemption: idea that if a federal law preempts an area of law, no state law can be created in that area d. Contract clause: laws cannot be passed impairing the obligations of contracts i. States cannot pass laws that impact rights and duties under existing contracts 2. Amendments and basic protections: a. Freedom of religion: 1st amendment states that congress shall make no law respecting an established religion or prohibiting the free practice of it i. Freedom of religion in business usually wins for the employee rather than the business b. Freedom of the press: covers both verbal and written communications i. Also covers symbolic speech 1. Commercial speech was not protected until the 1970s when the Supreme Court recognized that free commercial speech was essential to public knowledge a. There must be a compelling reason to limit commercial speech c. Due process / equal protection clause: deals with the fundamental issues of liberty and justice 3. Commerce Clause: government’s ability to regulate
business a. Power: i. Regulation of foreign commerce ii. Regulation of interstate commerce 1. Most important 2. Not only covers people engaged in interstate commerce but activities that could affect interstate commerce iii. Limitation on state police power iv. Limitation on state taxation