Legal Environment of Business Study Guide

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Legal Environment of Business Study Guide
Chapters: 1, 2, 3, 4, 6 and Founding Brothers

Chapter 1: Law as the Foundation of Business
1. Why nations are economically weak or strong:
a. Dependency theory: economically strong nations exploit the resources and labor of weaker nations through trade i. However, economically stronger nations invest more in each other b. Natural resources: whether or not a nation has an abundant supply of resources is another thought i. However, Japan as little resources

c. Education and technology: economically stronger nations have better schools and implement technology more quickly than weaker nations d. Climate: some believe climate relates to economic success i. Not true

e. Private market: presence or lack thereof a private market is the biggest indicator of economic success i. Russia switched to a private market, but experienced 7 years of economic decline f. Law and legal system: an enforced system of equally applied law is recognized as a major factor 2. Law: tells members of society what they can or cannot do a. Law is made up of rules

b. Laid down by the state and backed up by enforcement
3. Rule of law: idea that laws that are made are generally and equally applicable a. Apply to all or most members of society and apply to various groups in the same way 4. Property: is the legal right to exclude or keep others from interfering with what you own a. The right of property is the most important factor for economic development b. Property means ownership

i. Gives people incentive to use their property to the greatest efficiency 5. Property in its broadest sense: property (the right of) is the central concept underlying western legal systems a. Private property comes from the thinking of John Locke 6. Jurisprudence: are philosophies that explain the meaning and essence of law a. Natural law: asserts that law contains universal moral principles i. Principles are observable in nature

ii. Belief that law is discovered from nature or divine sources iii. John Locke believed property came from natural law
b. Positive law: believes that law is simply the commands of the state backed up by force and punishments i. One of the most dominate thoughts of law
ii. Believes that the legal is completely separate from the moral iii. Idea that “law is law, whether it is just or not”
c. Historical school: emphasizes that contemporary law should focus on legal principles that have withstood the test of time in a nation i. Belief that law reflects the cultural traditions of a people and recognizes that different nations have different cultures and laws d. Sociological jurisprudence: supports the idea that law can and should change to meet new developments in society i. Similar to the belief that law reflects culture of a nation e. Legal realism: tries to go beyond just the words of law to examine what police, administrators, prosecutors, and judges are actually doing as they enforce, interpret, and apply laws 7. Common law and civil law:

a. Common law: emphasizes the role of judges in determining the meaning of laws and how they are applied i. Believes in the precedent
ii. System used in the US
b. Civil law: relies more on legislation than judicial decisions to determine what the law is i. Civil law judges do not make law, nor do they have to follow the precedent 8. Public (criminal) and private law (civil):

a. Public law: includes those matters that involve the regulation of society as opposed to individuals interacting i. Constitutional law: involves the interpretation and application of either the federal or state constitutions ii. Administrative law: covers the legal principles that apply to government agencies, bureaus, boards, or commissions iii. Criminal law: specifies various offenses against the proper order or the state b. Private law: covers those...
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