Appendix I Sample Answers for End-of-Chapter
7. Gaining Insights into How the Law Affects or
The above list, of course, is representative only. You will understand much more of what the law is about as you read through the court casespresented in this book, including extended case excerpts,which will give you a feel for how the courts really decide cases,in the courts’ language.
Improving Your Ability to Perform Legal Reasoning and Analysis
Although business law may seem to be a mass of facts, your goal in taking this course should also be an increased ability to use legal reasoning and analysis to figure out how legal situations will be resolved.To this end,you will find the following key learning features to assist you in mastering legal reasoning and analysis:
• Finding and Analyzing Case Law—In Chapter 1, you will find a section with this title that explains:
1. Legal citations.
2. The standard elements of a case.
3. The different types of opinions a court can issue.
4. How to read and understand cases.
• Briefing a Case—In Appendix A, you will see how to brief and analyze case problems. This explana- tion teaches you how to break down the elements of a case and will improve your ability to answer theCase Problemsin each chapter.
• Questions with Sample Answers—At the end of each chapter, there is one hypothetical factual sce- nario that presents a legal question for which you can access a sample answerin Appendix I (and also on the text’s Web site).This allows you to prac- tice and to see if you are answering the hypotheti- cal problems correctly.
• Case Problems with Sample Answers—Each chapter has a series of chapter-ending Case Problems.You can find an answer to one prob- lem in each chapter on this book’s student com- panion Web site at academic.cengage.com/
blaw/clarkson. You can easily compare your answer to the court’s answer in the actual case.
• Impact of This Case on Today’s Law—Each landmark classic case concludes with a short sec- tion that explains the relevance of older case law to the way courts reason today.
• What If the Facts Were Different?—This section, found at the end of selected cases, encourages you to think about how the outcome of a case might be different if the facts were altered.
• The Ethical [E-Commerce, Global, or Legal Environment] Dimension—Every case in this text concludes with two critical-thinking questions, which may include What If the Facts Were Different?
questions, as discussed above. For this edition, we’ve included several new possibilities—(The Ethical Dimension, The E-Commerce Dimension, The Global Dimension,andThe Legal Environment Dimension.) These questions ask you to explore the law in a variety of contexts to help you meet the specific curriculum requirements for business law students.
The Companion Student Web Site
As already mentioned, the companion student Web site at academic.cengage.com/blaw/clarkson pro- vides you with short videos on various legal topics and with sample answers to one case problem per chapter.
In addition, you will find the following:
• Interactive quizzesfor every chapter.
• Aglossaryof terms for every chapter in the text.
• Flashcardsthat provide an optional study tool for reviewing the key terms in every chapter.
• Appendix A: How to Brief and Analyze Case Problems that will help you analyze cases. This useful appendix for the book is also provided on the Web site and can be downloaded.
• Legal reference materialsincluding a “Statutes”
page that offers links to the full text of selected statutes referenced in the text, a Spanish glossary, and links to other important legal resources avail- able for free on the Web.
• Internet exercisesfor every chapter in the text (at least two per chapter) that introduce you to how to research the law online.
• Relevant Web sites for additional research for Emerging Trends features as well as links to the URLs listed in the Law on the Web section at the end of each chapter.
• Online Legal Research Guidethat offers com- plete yet brief guidance to using the Internet and evaluating information obtained from the Internet. As an online resource, it now includes hyperlinks to the Web sites discussed for click- through convenience.
• Court case updates for follow-up research on topics covered in the text.
• Link to CengageNOW for Business Law:
Interactive Assignment System with different types of questions related to every chapter in the text and one set of cumulative questions for each unit in the text. (Available on an instructor’s request, see below.)
Interactive Assignments on the Web
Some of you may have instructors who provide assign- ments using our world-class interactive Web-based sys- tem, called CengageNOW for Business Law:
Interactive Assignment System.
CengageNOW for Business Law: Interactive Assignment System allows you to improve your mas- tery of legal concepts and terminology,legal reasoning and analysis, and much more.Your instructor will give you further information if she or he decides to use this Web-based system.
Of course, whether or not you are using the CengageNOW system,you will wish to consider purchas- ing the Study Guide,which can help you get a better grade in your course (see the inside cover for details).
The law is all around you—and will be for the rest of your life.We hope that you begin your first course in business law and the legal environment with the same high degree of excitement that we, the authors, always have when we work on improving this text, now in its Eleventh Edition.Business Lawhas withstood the test of time—several million students before you have already used and benefited by it.
Dedication
To John Meisenbach, You are truly one of the world’s good guys.
Thanks for your friendship and your professionalism.
R.L.M.
To my wife, Joann; my children, Kathy, Gary, Lori, and Rory; and my grandchildren, Erin, Megan, Eric, Emily, Michelle, Javier, Carmen, and Steve.
G.A.J.
To my parents and sisters.
F. B.C.
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Schools of
Jurisprudential Thought
You may think that legal philosophy is far removed from the practical study of business law and the legal environment. In fact, it is not. As you will learn in the chapters of this text, how judges apply the law to spe-
cific disputes, including disputes relating to the busi- ness world, depends in part on their philosophical approaches to law.
Clearly, judges are not free to decide cases solely on the basis of their personal philosophical views or on their opinions about the issues before the court. A judge’s function is not to make the laws—that is the function of the legislative branch of government—but provide stability, predictability, and
continuity so that people can be sure of how to order their affairs. If any society is to survive, its citizens must be able to determine what is legally right and legally wrong.
They must know what sanctions will be imposed on them if they commit wrongful acts. If they suffer harm as a result of others’
wrongful acts, they must know how they can seek redress. By setting forth the rights, obligations, and privileges of citizens, the law enables individuals to go about their business with confidence and a certain degree of predictability. The stability and predictability created by the law provide an essential framework for all civilized activities, including business activities.
What do we mean when we speak of “the law”? Although this term has had, and will continue to have, different definitions, they are
consists of enforceable rules governing relationships among individuals and between
individuals and their society.These
“enforceable rules” may consist of unwritten principles of behavior established by a nomadic tribe.
They may be set forth in a law code, such as the Code of Hammurabi in ancient Babylon (c. 1780 B.C.E.) or the law code of one of today’s European nations.
They may consist of written laws and court decisions created by modern legislative and judicial bodies, as in the United States.
Regardless of how such rules are created, they all have one thing in common: they establish rights, duties, and privileges that are consistent with the values and beliefs of their society or its ruling group.
Those who embark on a study of law will find that these broad statements leave unanswered
of the study of law, often referred to as jurisprudence,involves learning about different schools of jurisprudential thought and discovering how the approaches to law characteristic of each school can affect judicial decision making.
We open this introductory chapter with an examination of that topic.We then look at an important question for any student reading this text: How does the legal environment affect business decision making? We next describe the basic sources of American law, the common law tradition, and some general classifications of law.
We conclude the chapter with sections offering practical guidance on several topics, including how to find the sources of law discussed in this chapter (and referred to throughout the text) and how to read and understand court opinions.
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to interpret and apply them. From a practical point of view, however, the courts play a significant role in defining what the law is.This is because laws enacted by legislative bodies tend to be expressed in general terms. Judges thus have some flexibility in interpreting and applying the law. It is because of this flexibility that different courts can, and often do, arrive at different conclusions in cases that involve nearly identical issues, facts, and applicable laws. This flexibility also means that each judge’s unique personality, legal phi- losophy, set of values, and intellectual attributes neces- sarily frame the judicial decision-making process to some extent.
Over time several significant schools of legal, or jurisprudential, thought have evolved. We now look at some of them.
The Natural Law School
An age-old question about the nature of law has to do with the finality of a nation’s laws, such as the laws of the United States at the present time.For example,what if a particular law is deemed to be a “bad”law by a sub- stantial number of that nation’s citizens? Must a citizen obey the law if it goes against his or her conscience to do so? Is there a higher or universal law to which indi- viduals can appeal? One who adheres to the natural law tradition would answer these questions in the affir- mative.Natural lawdenotes a system of moral and ethical principles that are inherent in human nature and that people can discover through the use of their natural intelligence, or reason.
The natural law tradition is one of the oldest and most significant schools of jurisprudence.It dates back to the days of the Greek philosopher Aristotle (384–322 B.C.E.), who distinguished between natural law and the laws governing a particular nation.
According to Aristotle, natural law applies universally to all humankind.
The notion that people have “natural rights” stems from the natural law tradition.Those who claim that a specific foreign government is depriving certain citi- zens of their human rights implicitly are appealing to a higher law that has universal applicability. The ques- tion of the universality of basic human rights also comes into play in the context of international busi- ness operations. Should rights extended to workers in the United States, such as the right to be free of dis- crimination in the workplace, be extended to workers employed by a U.S. firm doing business in another country that does not provide for such rights? This
question is rooted implicitly in a concept of universal rights that has its origins in the natural law tradition.
The Positivist School
In contrast,positive law,or 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.
Those who adhere to the positivist school believe that there can be no higher law than a nation’s positive law.According to the positivist school, there is no such thing as “natural rights.” Rather, human rights exist solely because of laws. If the laws are not enforced, anarchy will result. Thus, whether a law is “bad” or
“good” is irrelevant. The law is the law and must be obeyed until it is changed—in an orderly manner through a legitimate lawmaking process. 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.
The Historical School
The historical school of legal thought emphasizes the evolutionary process of law by concentrating on the origin and history of the legal system. Thus, this school looks to the past to discover what the principles of contemporary law should be. The legal doctrines that have withstood the passage of time—those that have worked in the past—are deemed best suited for shaping present laws. Hence, law derives its legitimacy and authority from adhering to the standards that his- torical development has shown to be workable.
Adherents of the historical school are more likely than those of other schools to strictly follow decisions made in past cases.
Legal Realism
In the 1920s and 1930s, a number of jurists and schol- ars, known as legal realists, rebelled against the his- torical approach to law.Legal realismis based on the idea that law is just one of many institutions in society and that it is shaped by social forces and needs. The law is a human enterprise, and judges should take social and economic realities into account when deciding cases. Legal realists also believe that the law can never be applied with total uniformity. Given that judges are human beings with unique personalities, value systems, and intellects, different judges will obviously bring different reason- ing processes to the same case.
Legal realism strongly influenced the growth of what is sometimes called the sociological schoolof jurisprudence. This school views law as a tool for pro- moting justice in society. In the 1960s, for example, the justices of the United States Supreme Court played a leading role in the civil rights movement by upholding long-neglected laws calling for equal treatment for all Americans, including African Americans and other minorities. Generally, jurists who adhere to this philos- ophy of law are more likely to depart from past deci- sions than are those jurists who adhere to the other schools of legal thought.Concept Summary 1.1reviews the schools of jurisprudential thought.
Business Activities
and the Legal Environment
As those entering the world of business will learn,laws and government regulations affect virtually all busi- ness activities—from hiring and firing decisions to workplace safety, the manufacturing and marketing of products,business financing,and more. To make good business decisions,a basic knowledge of the laws and
regulations governing these activities is beneficial—if not essential. Realize also that in today’s world a knowledge of “black-letter” law is not enough.
Businesspersons are also pressured to make ethical decisions. Thus, the study of business law necessarily involves an ethical dimension.
Many Different Laws May
Affect a Single Business Transaction
As you will note, each chapter in this text covers a specific area of the law and shows how the legal rules in that area affect business activities. Though compartmentalizing the law in this fashion promotes conceptual clarity, it does not indicate the extent to which a number of different laws may apply to just one transaction.
Consider an example. Suppose that you are the president of NetSys, Inc., a company that creates and maintains computer network systems for its clients, including business firms. NetSys also markets software for customers who require an internal computer net- work. One day, Hernandez, an operations officer for Southwest Distribution Corporation (SDC), contacts you by e-mail about a possible contract concerning SDC’s computer network. In deciding whether to enter
THENATURALLAWSCHOOL
THEPOSITIVISTSCHOOL
THEHISTORICALSCHOOL
LEGALREALISM
One of the oldest and most significant schools of legal thought.Those who believe in natural law hold that there is a universal law applicable to all human beings.This law is discoverable through reason and is of a higher order than positive (national) law.
A school of legal thought centered on the assumption that there is no law higher than the laws created by the government. Laws must be obeyed, even if they are unjust, to prevent anarchy.
A school of legal thought that stresses the evolutionary nature of law and that looks to doctrines that have withstood the passage of time for guidance in shaping present laws.
A school of legal thought, popular during the 1920s and 1930s, that left a lasting imprint on American jurisprudence. Legal realists generally advocated a less abstract and more realistic and pragmatic approach to the law, an approach that would take into account customary practices and the circumstances in which transactions take place. Legal realism strongly influenced the growth of the sociological schoolof jurisprudence, which views law as a tool for promoting social justice.
C O N C E P T S U M M A R Y 1 . 1
Schools of Jurisprudential Thought School of Thought Description
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into a contract with SDC, you should consider, among other things, the legal requirements for an enforceable contract. Are there different requirements for a con- tract for services and a contract for products? What are your options if SDC breaches(breaks, or fails to per- form) the contract? The answers to these questions are part of contract law and sales law.
Other questions might concern payment under the contract. How can you guarantee that NetSys will be paid? For example, if payment is made with a check that is returned for insufficient funds, what are your options? Answers to these questions can be found in the laws that relate to negotiable instruments (such as checks) and creditors’rights. Also,a dispute may occur over the rights to NetSys’s software, or there may be a question of liability if the software is defective.