BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 1 of 7
Law, Court Systems, and Constitutions
What is law?
Law consists of rules that regulate the conduct of individuals, businesses, and other organizations
within society. It is intended to protect persons and their property from unwanted interference from
others.
1. Functions of Law
a. Facilitating orderly change
b. Facilitating planning
c. Keeping the peace
d. Maintaining the status quo
e. Maintaining individual freedom
f. Promoting social justice
g. Providing a basis for compromise
h. Shaping moral standards
2. Qualities of the Law
a. Fairness: The American legal system is one of the most comprehensive, fair, and
democratic systems of law ever developed and enforced.
b. Flexibility: The American legal system is generally responsive to cultural, technological,
economic, and social changes.
3. Schools of Jurisprudential Thought
a. Analytical School: believes law is shaped by logic
b. Command School: believes law is a set of rules developed and enforced by the ruling
party
c. Critical Legal Studies School: believes legal rules are unnecessary and that legal disputes
should be solved using rules of fairness
d. Feminist School: believes a female perspective should be considered when laws are
developed, interpreted, and applied
e. Historical School: believes law is an aggregate of social traditions and customs
f. Law and Economics School: believes promoting market efficiency should be the central
concern of legal decision-making
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 2 of 7
g. Sociological School: believes law is a means of achieving and advancing certain
sociological goals
h. Natural School: believes law is based on what is “correct”
4. English Common Law
a. Common Laws: are developed by judges who issued opinions when deciding a case. The
principles became precedent for later judges deciding similar cases
b. Law Court: A court that developed and administered a uniform set of laws decreed by
the kings and queens after William the Conqueror. Legal procedure was honored over
merits.
c. Court of Chancery (equality court): was a court that granted relief based on fairness
d. Merchant Court: courts established to administer the law of merchants
5. Sources of Law
a. Codified Law
b. Constitutions
c. Executive Orders
d. Judicial Decisions
e. Regulations and Administrative Orders
f. Treaties
6. Constitutions
a. The U.S. Constitution established the structure of the federal government:
i. Legislative
ii. Executive
iii. Judicial
b. The U.S. Constitution and treaties take preference over all other laws
7. Treaties: a treaty is a compact made between two or more nations
8. Codified Law
a. Statute: is a written law enacted by the legislative branch of federal and state
governments that establish certain courses of conduct that must be adhered to by
covered parties
b. Ordinances: are laws enacted by local governments such as cities, counties, school
districts, and water districts
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 3 of 7
9. Administrative Agency Rules and Regulations
a. Legislative and executive branches of federal and state governments are empowered to
establish administrative agencies to enforce and interpret statutes enacted by congress
and state legislatures
b. Many agencies regulate business
c. Executive Orders: this is an order issued by a member of the executive branch of
government
d. Judicial Decisions: these are decisions of courts in an individual lawsuit issued by federal
and state courts
e. Stare Decisis:
i. This is based on the common law tradition, past court decisions become precedent
for deciding future cases
ii. Precedent is a rule of law established in a court decision. Lower courts must follow
the precedent established by higher courts
iii. Stare Decisis is Latin for “stand by the decision” which also means adherence to
decision
10. Critical Legal Thinking
a. This is the process of developing and specifying the issue presented by a case. The next
step is to identify the key facts and the applicable law. Finally, a conclusion is formed
that answers the issue presented
As you can see from this text and your reading from the chapters assigned for this
module, the study of the law is vast and complex. That is why knowledge of the court
system is vital.
b. State Court Systems:
i. Limited jurisdiction trial courts
ii. General jurisdiction trial courts
iii. Intermediate appellate courts
iv. Highest state courts
c. United States Supreme Court
i. Created by Article III of the U.S. Constitution
ii. Highest court in the United States
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 4 of 7
iii. Located in Washington, D.C.
iv. Composed of nine justices who are nominated by the President and confirmed by
the U.S. Senate
v. Types of decisions
1. Unanimous
2. Majority
3. Plurality
4. Tie
d. Special Federal Courts
i. U.S. Tax Court
ii. U.S. Claims Court
iii. U.S. Court of International Trade
iv. U.S. Bankruptcy Court
e. United States Court of Appeals
i. Federal court system’s intermediate appellate court
ii. There are thirteen district courts
f. United States District Courts
i. Serve as the federal court system’s trial courts of general jurisdiction
ii. Presently, there are ninety-six district courts
iii. There is a cost of fifty thousand dollars when there is a controversy or diversity of
jurisdiction
g. Anatomy of a Jury Trial
i. Jury selection
ii. Opening statement
iii. Plaintiffs Case
iv. Defendants Case
v. Rebuttal and rejoinder
vi. Closing statements
vii. Jury statements
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 5 of 7
viii. Jury deliberations
ix. Verdict
x. Entry of Judgment
h. Mediation and Conciliation
i. Mediation is a form of ADR in which the parties choose a neutral third party to act
as the mediator of the dispute
ii. Conciliation is a form of mediation in which the parties choose an interested third
party to act as the mediator
iii. Minitrial is a session, usually lasting a day or less in which the lawyers for each side
present their cases to representatives of each party who have authority to settle the
dispute
iv. Fact-Finding is a process where the parties hire a neutral person to investigate the
dispute. The fact-finder reports the findings to the adversaries and may even
recommend a basis for settlement
v. Judicial Referee: The parties agree that the court may appoint a judicial referee,
often a retired judge, to conduct a private trial and render a judgment
vi. Discovery: Includes interrogatories, depositions, requests for admissions, motions
for physical and mental exams
11. Constitutional Authority and Power to Regulate Business
a. As mentioned before, the Constitution creates the three branches of government.
b. The Constitution protects individual rights in limiting the government’s ability to restrict
these rights.
c. Articles I, II, and III establishes the three branches of government to ensure a separation
of power
d. Supremacy Clause establishes that the federal constitution, treaties, federal laws, and
federal regulations are the supreme law of the land.
e. Commerce Clause grants Congress the power to regulate commerce with foreign
nations, and among the several states, including Indian tribes
f. State “Police Power” is allowed by the U.S. Constitution for states to enact laws to
protect and promote the public health, safety, welfare and morals, and finally that state
and local laws cannot unduly burden interstate commerce.
g. Incorporation Doctrine allows the most fundamental guarantees found in the Bill of
Rights are also applicable to state and local government action
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 6 of 7
h. Freedom of Speech
i. Prohibits governments at all levels from prohibiting or regulating
ii. Provides for limited protected speech which is considered dangerous or offensive
iii. Addresses unprotective speech, that which is dangerous such as fighting words,
obscene words, child pornography, any speech that invites the violent or
revolutionary overthrow of the government
i. Freedom of Religion
i. Establishment clause protects governments from establishing a government
sponsored religion promoting one religion over Free Exercise Clause prohibits
governments from enacting laws that prohibit or inhibit people from participating in
or practicing their chosen religion
j. Treaties and Conventions—are agreements or contracts between two or more nations
that are formally signed by an authorized representative and ratified by the supreme
power of each nation
12. United Nations—an international organization created by a multilateral treaty in 1945
a. Security Council one of the governing components is composed of fifteen member
nations with five permanent members
b. General Assembly is composed of all member nations
c. Secretariat—administers day-to-day operations of the U.N.
13. International Regional Organizations
a. European Union
b. Latin, Central, and South American Economic Communities
c. African Economic Communities
d. Middle Eastern Economic Communities
e. World Trade Organization
14. International Courts
a. International Court of Justice
b. European Court of Justice
c. National Courts—keep in mind that a majority of cases involving international law
disputes are heard by the national courts of individual nations
BLAW 320: Legal Environment of Business
Module 1—Lecture Notes
Chapters 1, 4, & 5
Page 7 of 7
15. International Contract Clauses
a. Affect Jurisdiction and choice of law
b. Forum selection designates the judicial or arbitral forum that will hear and decide the
case
c. Choice of law designates the law to be applied by the court or arbitrator in deciding the
case
16. Act of State Doctrine and Sovereignty Immunity Compared
a. Act of State is an act of government in its own country that is not subject to suit in
another country’s courts
b. Sovereign Immunity is an act of a government in a foreign country that is not subject to
suit in the foreign country
c. Arbitration is a nonjudicial method of dispute resolution where a neutral third party
decides the case. Parties are bound by the decision
d. Extradition is the sending of a person back to a country for criminal prosecution
