Leb Exam #2 Study Guide

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BUSINESS LAW EXAM #2 STUDY GUIDE

Chapter 1: Nature & Sources of Law

I. What is “law”?
*The general purpose of law is to create an orderly society; ensuring orderliness to all human activity; still no definition of law that has universal approval; law is very broad •Primary sources – legally binding rules/procedures, federal/state constitutions, states, administrative agency regulations, court decisions •Secondary sources – research articles, restatements, legal texts and encyclopedias; summarize and explain law; not legally binding

II. Law and Business
Should law factor into business strategy? Is it ok to use the law to your advantage? Any other good reasons for a business to use the law to its advantage? Must factor legal and regulatory factors into strategic business planning; analyze governmental policy and attempt to proactively improve firms’ legal environment; companies should leverage their legal resources into source of competitive advantage

III. Rules and Process – law is both rule & process
Rule-oriented approach to the law – views law as rules that are in effect within state/nation at a given time; law is body of principles, standards, rules that courts apply •Process-oriented approach to the law – views law in broader light as processes by which rules/principles are formulated, rather than rules/principles themselves

IV. Requirements for a good legal system under democratic govnt •Certainty – reasonable certainty about laws based on assumption legal principles will remain stable over long periods of tie; courts reluctant to overturn established principles •Flexibility – societal changes occur rapidly so rules must be relatively flexible; each change presents new legal problems that must be resolved; problems step from scientific/ technological advances, changing business methods, shifting attitudes/morals, politics; many problems settled through judicial process where duty to arrive at solution falls on courts •“Knowability” – rules must be known/knowable to great majority of citizens; necessary for persons who need legal advice to have access to lawyers, experts on rules •Reasonableness, *IMPORTANT – rules must appear reasonable to great majority of people if going to be obeyed for long; should reflect/adapt to changing views of morality/justice

V. Classifications of Law
Subject Area – classify all laws on basis of subject matter to which it relates; ex. contracts, constitutional law, corporate law, criminal law, personal property, taxation, torts, etc. •Federal and State – classify all laws on basis of governmental unit which it arises; all law is either federal law or state law; great bulk of law is state or local law •Common and Statutory – common law = all rules/principles currently existing in any state that result form judicial decisions in those areas of law where legislatures have not enacted comprehensive statures; statutory law = written law = rules that have been formally adopted by legislative bodies rather than by courts oCommon law is case law; Case law and statutory law comes out of state law; case law is making laws after statutory laws are made; case law involves interpreting the statutory law; sometimes statutory law/case law isn’t so good; if have bias judge (“legislating from the bench”) then you have bad case law; most case law is good & doesn’t get overturned; most statutory law is reasonably certain; if not there’s process for changing; diff. b/t two is where they come from/ diff. perspectives •Civil and Criminal – anything that is not specifically criminal law would be civil; criminal court is any offense that’s defined as a crime; civil court involves anything that’s not crime; criminal court you can go to jail/be executed; civil court you only pay money damages; criminal punishment is potentially so much harsher than civil punishment; a civil offense can in some cases rise to criminal offense by criminal negligence which can lead you to jail;...
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