The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.Chapter One:Today’s Business Environment Law and EthicsI. Law and Key Functions of the Legal SystemA. What is the Law?1. In the context of Business Law- the rules, standards and principles that define the behavior boundaries for business activities.2. According to Black’s-a. A body of rules of action or conduct prescribed by the controlling authority and having binding legal force.b. That which must be obeyed and followed by members of a society subject to sanctions or legal consequences.B. Functions of the Law-1. Improving Social Stability by Influencing Behavior-2. Conflict Resolution-3. Social Stability and Change- II. Sources of the Law in the United StatesA. Constitutions- The constitution is the fundamental law of a nation.1. The United States Constitution- Establishes three separate branches of governmenta. Provides for separation of powerb. Provides that all powers not granted to the federal government are retained by the states. c. Highest Level of US Authority- overrides any state or federal law that goes beyond what the Constitution permits.---Patient Protection and Affordable Care Act--2. State Constitutions-a. Specify how state officials are chosen and removedb. How laws are passedc. How court systems are rund. How finances and revenues are paid and collectedB. Legislatures and Statutes- Congress and State Legislatures are the sources of statutory law which makes up much of the law that affects business. 1. United States Congress-The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.a. Article I, Section I of the US Constitution provides that allpower to make laws for the federal government is given toCongress, a legislative body consisting of the US House of Representative and the US Senate.2. State Legislatures- Each state has lawmaking bodies similar to Congress in their function and procedure. All but Nebraska are bi-cameral. 3. Judicial oversight of Legislationa. If congress or a state legislature enacts legislation that in contrary the constitution that legislation can be struck down by the state supreme court or the US Supreme Court.b. If a state Supreme Court fails to strike an unconstitutionalpiece of legislation enacted by a state legislature the matter can be appealed to the US Supreme Court which has the authority to strike unconstitutional matters of state law. C. Administrative Agencies and Regulations-1. Administrative Agency- is created by the delegation of legislative power to the executive branch. Congress or the state legislature enacts a law that directs the agency to issue regulations, bring lawsuits, and otherwise act to the fulfill thelaw’s purpose.-- Endangered Species Act—-- Bi-partisan Campaign Reform Act— D. The Judiciary- Enforces and Interprets law enacted by legislatures. 1. Common Law- law made and applied by judges as they resolve disputes among private parties.a. Charter of Liberties-b. Magna Carta-2. Case Law- a. Disputes- Come to court in the form of a case and is set forth in pleadings and is recorded in case reporters.c. Precedent- The resolution of matters sets forth a history ofhow matters of such nature have been resolved by the courts.The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.2. Doctrine of Stare Decisis- The use of precedent in deciding present cases “to stand on decided cases”.3. Value of Precedent-a. Consistency- Creates consistency in the legal system which helps in the planning of business decisionsb. Confidence- as rules are enforced uniformly in similar circumstances businesses have confidence that the rules will be applied the same in their situation.c. Neutralizing Prejudices- All are equal in the eyes of the law.4. Changes in Law and Society- Precedent is not entirely determinative. As situations change, the decisions may change based on need.E. The Executive- The Chief Executive creates law through executive orders.III. Classifications of Law-A. Public or Private-1. Public Law- Concerns the legal relationship between members of society (business and individual) and the government.2. Private Law- Sets forth rules governing the legal relationships among members of society.B. Civil or Criminal- Unless a statute is designated as criminal it is considered to be civil.1. Criminal Law- concerns legal wrongs or crimes committed against the state.a. Misdemeanor-b. Felony-2. Civil Law- concerned with the rights and responsibilities that exist among members of society or between individuals and the government in non-criminal matters.-- Casey Anthony --C. Procedural or Substantive- 1. Substantive Law- includes common law and statutory law that define and establish legal rights and regulate behavior.2. Procedural Law- determines how substantive law is enforced through the courts by determining how a lawsuit begins,The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.what documents need to be filed, which court can hear the case, how the trial proceeds, etc. IV. Business Ethics and Social Responsibility-A. Ethics, Integrity, Morality, and the Law-1. Business Ethics-2. Political Reality-B. Perception of Ethics and the Law-C. Ethics Codes and Compliance Programs-D. Ethics and Corporate Social