Legal and Ethical Environment of Business

LEGAL AND ETHICAL ENVIRONMENT OF BUSINESS

August 13th, 2012

LAW / ECONOMIC / ETHICAL

WHERE THE LAW COMES FROM?
• Maintain your property

LAW
• Rules related to the allocation of scarce resources

WHAT DO WE WANT?
• Earth at night
• Predictability – Certainty – commerce loves certainty o Stable governments equal strong economy o Bank accounts, brokerage accounts, land titles o Property the governmentally supported right to exclude o Predictable sanctions for wrongful acts o Democracy – best – why are you so? o Do not think about “right” think about best for you
 Law is a competitive tool

LEGAL SYSTEM OF THE WORLD
• Civil law o Gap filler
• Common Law
• Muslim Law o Role of religion and US 1st amendment
• Customary Law
• Hybrid and Mixed systems

ENGLISH COMMON LAW TRADITION
• 1066 – William o Kings Court
• Power top down
• Decisions tend to go certain ways
• Common Law o Common to all
• Remedy sought determines the court
• Distinction blurred today – equitable – rare
• Law remedies

US
• Merged the law and equity courts
• Juries now very prevalent o Able to handle complex business issues
• Power from the people
• US Constitution – we the people – bedrock beliefs
• Federal Law – State Law o No Federal commercial law
• Statutes – States UCC o Explain uniform laws
• Common law
• Public law o Crimes
• Private law o Contracts o Torts

JURISPRUDENCE
• Stare Decisis – predictability4 o judge made o Precedent
 Mandatory
 Persuasive
 Dual court systems
 Departures from precedent
• Public hospitals
• Plessey – Dred Scott o What goes into a court´s decision
 Public policy?
 Economic theory
 Precedent?
 Pressure

DECISION MAKING
• Using cases as looking at others´ errors
• IRAC o Issue o Rule o Application
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