1 Today s Business Environment Law Ethics MAIN TOPICS Law the Key Functions of Legal Systems Sources of Law in the U S Classifications of Law Public Image of Big Business Business Ethics Social Responsibility KEY FUNCTIONS OF THE LEGAL SYSTEM No Generally Accepted Definition of Law Law May be viewed as a collection of rules or principles that limit and direct human behavior made and enforced by government Improving Social Stability by Influencing Behavior The legal system defines social behavior limits actions detrimental to the public interest restricts business practices that are outside of the ethical norms and encourages furtherance of social and political goals Laws and different jurisdictions may reflect social norms Look at exhibit 1 1 how does a small business do these legal functions HOW DOES THIS HAPPEN The legal environment is influenced by the needs and demands of the business community consumers and government p 2 What government body makes law What influences are on government body Who communicates with the government body Who are the players impacted parties by law Think individuals victim s rights Businesses profit predictability Does society and business have similar goals Conflict Resolution Courts are one mechanism for resolving disputes Businesses turning to formal private settlement techniques alternative dispute resolution systems outside the court Do businesses want lawsuits Social Stability Change reflect the social values and customs of a society which over time may instill a sense of fairness the changing status of same sex marriages controversies involved Ex Effective way to change what is acceptable behavior Ex Laws reflect social changes about discrimination in the workplace SOURCES OF LAW IN THE UNITED STATES Constitutions US Constitution State Constitutions Federal State Legislatures Statutes Administrative Agencies Regulations The Judiciary Common Law The Executive Executive Orders International Sources of Law U S CONSTITUTION Fundamental law of the land Establishes the limits and power of government US Constitution is the oldest written constitution in force in the world Establishes Legislative Executive and Judicial Branches of government Recommend reading at least Articles 1 3 Creates the Separation of Powers Article 1 creates gives Congress its powers and limits Article 2 makes the executive branch of the government The Executive branch administers on a daily basis Article 3 creates a judicial branch in the US The Judicial branch is the court system that interprets the law In the US the judicial branch includes the Supreme Court established by Constitution and the lower courts which are made by Congress STATE CONSTITUTIONS governments Like US Constitution create Legislative Judicial and Executive Branches of state Often very long and detailed Amending a state constitution is often much easier than amending the US Constitution LEGISLATURES STATUTES Legislature elected or selected body of people with the responsibility and power to make laws for a political unit i e state or nation Legislatures create statutory law Federal laws State laws Municipal laws Judges interpret Laws must pass Constitutional muster Ex Ex 1972 Congress enacted Clean Water Act setting standards for national water quality and giving EPA authority to adopt necessary regulations States statutes regulate insurance industry usually giving authority to state insurance commissions to assist in regulation ADMINISTRATIVE AGENCIES REGULATIONS Congress legislative body creates a statute Statute names administrative agency Agency makes regulations Sometimes both congress and states enact regulations in the same area of concern Ex environmental regulations Agencies and Regulations very important effect on the legal environment of business THE JUDICIARY COMMON LAW Came from old English system Judge usually followed earlier decisions that resolved similar disputes Legal principles from cases is called precedent Cases published in books called case reporters primary source Restatements are secondary source IMPORTANT Use of this precedent is Stare Decisis New issue Court makes new common law Common law varies by state but generally there is consistency Provides stability but allows change See Davis v Baugh Industrial Contractors Inc CASE DAVIS V BAUGH INDUSTRIAL CONTRACTORS INC Glacier Northwest hired Baugh Industrial Contractors to build a processing facility including underground pipe system 3 years later Glacier suspected a pipe leak Assigned an employee Davis to uncover the leak While Davis was in the hole to get to the pipes a concrete wall collapsed killing him Pipes should last 100 yrs These were likely damaged in the installation prob expert testimony which caused the leak Davis daughter sued Baugh others for negligence in father s death The trial court used the precedent that when a contractor finishes work owner accepts it the contractor Baugh is no longer liable only the property owner has liability Suit dismissed at trial court Appealed to Supreme Court of Washington HELD Reversed and remanded DID SHE WIN HELD Court rejected previous common law rule and accepted a more modern approach The contractor is liable for injury to 3rd parties because of negligent work EVEN IF the work was accepted by the property owner WHY Construction has become highly scientific and complex Landowners rely on a contractor s expertise and non expert landowners often don t recognize poor performance by the contractor Liability occurs when it is reasonably foreseeable that a 3rd party could be injured due to the contractor s negligence QUESTIONS 1 The court rejected the common law rule concerning completion and acceptance that had been in effect until this decision and ordered a new trial Key reason for that decision How does this affect liability shifts from landowner to contractor A The old rule had been abandoned by most states already It was outmoded because the complexity of construction has increased What would you advise your contractor clients Look at predictability certainty What was atty telling clients WAS THIS TRIAL JUDGE AN IDIOT no just going by precedent WAS THIS FRIVOLOUS 2 A judge on the court dissented Explaining his opposition to the decision he said this change in the law should have been done by the legislature in a statute not the court What are the practical problems with such a view A Legislatures rarely fiddle with relatively technical rules of law They deal with broader issues