Chapter 1: Law & Legal Reasoning (Notes)

Courts Interpret Statutes

+ A judge's function is not to make the laws but to interpret and apply them. > Because judges have some flexibility in interpreting and applying the law, different courts often arrive at different conclusions in cases that involve nearly identical issues, facts, and applicable laws.

1-2c Administrative Law

+ Administrative Law- the body of law created by administrative agencies in order to carry out their duties and responsibilities. > Administrative Agency- a federal or state government agency created by the legislature to perform a specific function, such as to make and enforce rules pertaining to the environment. + Administrative law and procedures constitute a dominant element in the regulatory environment of business. > Regulations govern: ~ A business' capital structure and financing. ~ A business' hiring and firing procedures. ~ A business' relations with employees and unions. The way a business manufactures and markets its products.

1-3a Early English Courts

+ After the Norman Conquest of 1066, the king's courts sought to establish a uniform set of customs for England as a whole. > What evolved in these courts was the beginning of the common law. ~ Common Law- the body of law developed from custom or judicial decisions in English and U.S. courts, not attributable to a legislature.

Federal Agencies

+ At the national level, the cabinet departments of the executive branch include numerous executive agencies. > Executive Agency- an administrative agency within the executive branch of government. ~ Example: The U.S. Food and Drug Administration is an agency within the U.S. Department of Health and Human Services. > Executive agencies are subject to the authority of the president, who has the power to appoint and remove their officers. + There are also major independent regulatory agencies at the federal level. > Independent Regulatory Agency- an administrative agency that is not considered part of the government's executive branch and is not subject to the authority of the president. ~ Examples: Federal Trade Commission, Securities and Exchange Commission Independent agency officials cannot be removed without cause.

1-3 The Common Law Tradition

+ Because of our colonial heritage, much of American law is based on the English legal system. + Judges in the United States still apply common law principles when deciding cases.

1-2d Case Law & Common Law Doctrines

+ Case Law- the rules of law announced in court decisions. > Case law interprets: ~ Statutes ~ Regulations ~ Constitutional Provisions ~ Other Case Law Case law governs all areas not covered by statutory law or administrative law and is part of our common law tradition.

1-6 How To Find Primary Sources Of Law

+ Citation- a reference to a publication in which a legal authority - such as a statute or a court decision - or other source can be found. In addition to being published in sets of books, most federal and state laws and case decisions are available online.

1-5a Civil Law & Criminal Law

+ Civil Law- the branch of law dealing with the definition and enforcement of all private or public rights, as opposed to criminal matters. > Civil law spells out the rights and duties that exist between persons and between persons and their governments, as well as the relief available when a person's rights are violated. ~ Typically, in a civil case, a private party sues another private party who has failed to comply with a duty. + Criminal Law- the branch of law that defines and punishes wrongful actions committed against the public. > Criminal acts are defined and prohibited by local, state, or federal government statutes. ~ Criminal defendants are thus prosecuted by public officials, such as a district attorney (D.A.), on behalf of the state, not by their victims or other private parties.

1-2a Constitutional Law

+ Constitutional Law- law that is based on the U.S. Constitution and the constitutions of the various states. + The Constitution is the supreme law of the land and is the basis of all law in the United States. > A law in violation of the Constitution, if challenged, will be declared unconstitutional and will not be enforced, no matter what its source. + Each state in the union has its own constitution. Unless it conflicts with the U.S. Constitution or a federal law, a state constitution is supreme within the state's borders.

1-5b Cyberlaw

+ Cyberlaw- an informal term used to refer to all laws governing electronic communications and transactions, particularly those conducted via the Internet.

State Court Decisions

+ Decisions from state trial courts are typically filed in the office of the clerk of the court, where the decisions are available for public inspection. + Written decisions of the appellate, or reviewing, courts are published and distributed in print and online. > The reported appellate decisions are published in volumes called reports or reporters, which are numbered consecutively and published by each state. + State court opinions appear in regional units of the West's National Reporter System, which divides the states into different geographic areas. > Most lawyers and libraries have these reporters because they report cases more quickly and are distributed more widely than the state-published reporters. After appellate decisions have been published, they are normally referred to (cited) by the name of the case and the volume, name, and page number of the reporter in which the opinion can be found; the year that the decision was issued is often included at the end in parentheses.

Federal Court Decisions

+ Federal district court decisions are published unofficially in the Federal Supplement. + Opinions from the circuit courts of appeals are reported unofficially in the Federal Reporter. + Cases concerning federal bankruptcy law are published unofficially in the Bankruptcy Reporter. + The official edition of the United States Supreme Court decisions is the United States Reports. + Unofficial editions of Supreme Court cases include the Supreme Court Reporter and the Lawyers Edition of The Supreme Court Reports.

1-4c The Historical School

+ Historical School- a school of legal thought that looks to the past to determine what the principles of contemporary law should be. + The historical school emphasizes the evolutionary process of law by concentrating on the origin and history of the legal system. > The legal doctrines that have withstood the passage of time - those that have worked in the past - are deemed best suited for shaping present laws. ~ Hence, law derives its legitimacy and authority from adhering to the standards that historical development has shown to be workable. Followers of the historical school are more likely than those of other schools to strictly follow decisions made in past cases.

Courts of Law & Remedies at Law

+ If a person wronged another in some way, the early English king's courts could grant only land, items of value, or money as remedies. > Remedy- the relief given to an innocent party to enforce a right or compensate for the violation of a right. + The courts that awarded this compensation became known as courts of law, and the three remedies were called remedies at law. > Court of Law- a court in which the only remedies that can be granted are things of value, such as money damages. > Remedy at Law- a remedy available in a court of law. ~ Money damages are awarded as a remedy at law. Damages- a monetary award sought as a remedy for a breach of contract or a tortious act.

1-3d Stare Decisis & Legal Reasoning

+ In deciding what law applies to a given dispute and then applying that law to the facts or circumstances of the case, judges rely on the process of legal reasoning. > Legal Reasoning- the process of reasoning by which a judge harmonizes his or her opinion with the judicial decisions in previous cases.

Equitable Maxims

+ In fashioning appropriate remedies, judges are guided by so-called equitable maxims. > Equitable Maxims- general propositions or principles of law that have to do with fairness (equity). + The equitable doctrine of laches can be used as a defense. > Laches- the equitable doctrine that bars a party's right to legal action if the party has neglected for an unreasonable length of time to act on his or her rights. > Defense- reasons that a defendant offers in an action or suit as to why the plaintiff should not obtain what he or she is seeking. ~ Defendant- one against whom a lawsuit is brought, or the accused person in a criminal proceeding. ~ Plaintiff- a party that initiates a lawsuit. + In equity proceedings, the plaintiff is called the petitioner, and the defendant is called the respondent. > Petitioner- a party that initiates a lawsuit. > Respondent- the party who answers a complaint or other proceeding. + The doctrine of laches arouses to encourage people to bring lawsuits while the evidence was fresh. > What constitutes a reasonable time varies according to the circumstances of the case. > Time periods for different types of cases are now usually fixed by statutes of limitations. ~ Statutes of Limitations- a federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced. ~ After the time allowed under a statute of limitations has expired, no action (lawsuit) can be brought, no matter how strong the case was originally.

1-4 Schools Of Legal Thought

+ Jurisprudence- the science or philosophy of law. > There are four schools of jurisprudential thought: ~ Natural Law School ~ Positivist School ~ Historical School ~ Legal Realism + How judges apply the law to specific cases depends in part on their philosophical approaches to law. > Thus, jurisprudence involves learning about different schools of legal thought and how the approaches to law characteristic of each school can affect judicial decision making.

1-1 Business Activities & The Legal Environment

+ Law and government regulations affect almost all business activities. > To make good business decisions, a basic knowledge of the laws and regulations governing these activities is beneficial-if not essential. + In today's business world, knowing what conduct can lead to legal liability is not enough. > Liability- the state of being legally responsible (liable) for something, such as a debt or obligation. > Businesspersons must develop critical thinking and legal reasoning skills so that they can evaluate how various laws might apply to a given situation and determine the best course of action.

1-4d Legal Realism

+ Legal Realism- a school of legal thought that holds that the law is only one factor to be considered when deciding cases and that social and economic circumstances should also be taken into account. + Legal realists believe that the law can never be applied with total uniformity. > Because judges have different personalities, value systems, and intellects, different judges will bring different reasoning processes to the same case. + Legal realism strongly influenced the growth of what is sometimes called the sociological school. > Sociological School- a school of legal thought that views the law as a tool for promoting justice in society. Jurists who adhere to this philosophy of law are more likely to depart from past decisions than are jurists who adhere to other schools of legal thought.

Unpublished Opinions

+ Many court opinions that are not yet published or that are not intended for publication can be accessed through Thomson Reuters Westlaw, an online legal database.

There Is No One "Right" Answer

+ Many people believe that there is no one "right" answer to every legal question. > Thus, the outcome of a particular lawsuit before a court cannot be predicted with certainty. ~ Good arguments can usually be made to support either side of a legal controversy. ~ Each judge has her or his own personal beliefs and philosophy which, at least to some extent, shape the legal reasoning process.

1-6a Finding Statutory & Administrative Law

+ Most frequently, laws are referred to in their codified form - that is, the form in which they appear in the federal and state codes. > In these codes, laws are compiled by subject.

1-4a The Natural Law School

+ Natural Law- the oldest school of legal thought, based on the belief that the legal system should reflect universal (higher) moral and ethical principles that are inherent in human nature. + According to the natural law theory: > A higher, or universal, law applies to all human beings. > If each written law does not reflect the principles inherent in natural law, then it loses its legitimacy and need not be obeyed. The notion that people have natural rights stems from the natural law tradition.

When There Is No Precedent

+ Occasionally, courts must decide cases for which no precedents exist, called cases of first impression. > In deciding cases of first impression, courts often look at persuasive authorities. ~ Persuasive Authority- any legal authority or source of law that a court may look to for guidance but need not follow when making its decision. ~ Sources of persuasive authority include: > Precedents from other jurisdictions. > Legal principles and policies underlying previous court decisions or existing statutes. > Issues of fairness, social values and customs, and public policy (governmental policy based on widely held societal values). Unpublished opinions (those not intended for publication in a printed legal reporter).

1-4b The Positivist School

+ Positive law, or national law, is the written law of a given society at a particular time. > In contrast to natural law, it applies only to the citizens of that nation or society. + Legal Positivism- a school of legal thought centered on the assumption that there is no law higher than the laws created by a national government. > Laws must be obeyed, even if they are unjust, to prevent anarchy. + A judge who takes this view will probably be more inclined to defer to an existing law than would a judge who adheres to the natural law tradition.

Controlling Precedents

+ Precedents that must be followed within a jurisdiction are called controlling precedents. > Controlling precedents are a type of binding authority. ~ Binding Authority- any source of law that a court must follow when deciding a case. Binding authorities include constitutions, statutes, and regulations that govern the issue being decided, as well as court decisions that are controlling precedents within the jurisdiction.

Remedies In Equity

+ Remedy In Equity- a remedy allowed by courts in situations where remedies at law are not appropriate. > Remedies in equity include injunction, specific performance, recission, and restitution. ~ An injunction is an order to a party to cease engaging in a specific activity or to undo some wrong or injury. ~ Specific performance involves ordering a party to perform an agreement as promised. ~ Recission is the cancellation of a contractual obligation. > As a general rule, today's courts will not grant equitable remedies unless the remedy at law - monetary damages - is inadequate. > Breach- to violate a law, by an act or an omission, or to break a legal obligation that one owes to another person or to society.

1-2 Sources of American Law

+ Sources of American law are classified as either primary or secondary. > Primary sources of law, or sources that establish the law, include the following: ~ The U.S. Constitution and the constitutions of the various states. ~ Statutory law- including laws passed by Congress, state legislatures, or local governing bodies. ~ Regulations created by administrative agencies, such as the Federal Trade Commission (FTC). ~ Case law and common law doctrines. > Secondary sources of law are books and articles that summarize and clarify the primary sources of law. ~Examples: Legal encyclopedias and treaties.

1-2b Statutory Law

+ Statutory Law- the body of law enacted by legislative bodies (as opposed to constitutional law, administrative law, or case law). + Statutory law includes: > Federal and state statutes ~ A federal statute is passed by Congress and applies to all states. ~ A state statute is passed by state legislature and applies only within the state's borders. + Ordinances- a law passed by a local governing unit, such as a city or a county. Ordinances commonly have to do with city or country land use (zoning ordinances), building and safety codes, and other matters affecting the local community.

Statutory Conflicts

+ Tension may sometimes arise between federal, state, and local laws.

Restatements Of The Law Clarify and Illustrate the Common Law

+ The American Law Institute (ALI) has published compilations of the common law called Restatements Of The Law, which generally summarize the common law rules followed by most states. > The Restatements are an important source of legal analysis and opinion, and judges often rely on them in making decisions.

Basic Steps in Legal Reasoning

+ The basic steps of the legal reasoning process are commonly referred to as the IRAC (Issue, Rule, Application, and Conclusion) method. > To apply the IRAC method, the following questions are asked: ~ Issue- What are the key facts and issues? ~ Rule- What rule of law applies to the case? ~ Application- How does the rule of law apply to the particular facts and circumstances of this case? > Case On Point- a previous case involving factual circumstances and issues that are similar to those in the case before the court. ~ Conclusion- What conclusion should be drawn?

Stare Decisis & Legal Stability

+ The doctrine of stare decisis: > Helps the courts to be more efficient. > Makes the law more stable and predictable.

1-3b Legal & Equitable Remedies Today

+ The establishment of courts of equity in medieval England resulted in two distinct court systems: > Courts of Law > Courts of Equity + The courts had different sets of judges and granted different types of remedies. + During the nineteenth century, most states in the United States adopted rules of procedure that resulted in the combining of courts of law and equity. > A party now may request both legal and equitable remedies in the same action, and the trial court judge may grant either or both forms of relief. > However, certain vestiges of the procedures used when there were separate courts of law and equity still exist.

1-5 Classifications Of Law

+ The law may be broken down according to several classification systems. > Substantive Law and Procedural Law ~ Substantive Law- law that defines, describes, regulates, and creates legal rights and obligations. ~ Procedural Law- law that establishes the methods of enforcing the rights established by substantive law. > Federal Law and State Law > Private Law and Public Law ~ Private law deals with relationships between private entities. ~ Public law addresses the relationship between persons and their governments. > National Law and International Law > Criminal Law and Civil Law

Stare Decisis & The Common Law Tradition

+ The practice of deciding new cases with reference to former decisions, or precedents, became a cornerstone of the English and American judicial systems and formed a doctrine known as stare decisis. > Stare Decisis- a common law doctrine under which judges are obligated to follow the precedents established in prior decisions. > Under the doctrine of stare decisis, judges are obligated to follow the precedents established within their jurisdictions. ~ Jurisdiction refers to a geographic are in which a court or courts have the power to apply the law. > Stare Decisis has two aspects: ~ A court should not overturn its own precedents unless there is a compelling reason to do so. Decisions made by a higher court are binding on lower courts.

State & Local Agencies

+ There are administrative agencies at the state and local levels. > Commonly, a state agency is created as a parallel to a federal agency. ~Example: A state pollution-control agency is a parallel to the Environmental Protection Agency.

1-6b Finding Case Law

+ There are two types of courts in the United States: > Federal Courts > State Courts + Both systems consist of several levels, or tiers, of courts. > Trial Courts, in which evidence is presented and testimony given, are on the bottom tier. > Decisions from a trial court can be appealed to a higher court, which commonly is an intermediate court of appeals, or appellate court. Decisions from these intermediate courts of appeals may be appealed to an even higher court, such as a state supreme court or the United States Supreme Court.

1-1b Ethics & Business Decision Making

+ Today, business decision makers need to consider not just whether a decision is legal, but also whether it is ethical. + Ethics generally is defined as the principles governing what constitutes right or wrong behavior. + The underlying reason for bringing some lawsuits is a breach of ethical duties.

Courts of Equity

+ When individuals could not obtain an adequate remedy in a court of law, they petitioned the king for relief. > Most of these petitions were decided by an adviser to the king, called a chancellor, who had the power to grant new and unique remedies. ~ Eventually, formal chancellor courts, or courts of equity, were established. > Court of Equity- a court that decides controversies and administers justice according to the rules, principles, and precedents of equity. Equity is a branch of law - founded on notions of justice and fair dealing - that seeks to supply a remedy when no adequate remedy at law is available.

1-3c The Doctrine of Stare Decisis Case Precedents & Case Reporters

+ When possible, judges attempted to be consistent and to base their decisions on the principles suggested by earlier cases, and they considered new cases with care because they knew their decision would make new law. > Each interpretation became part of the law on the subject and thus served as a legal precedent. ~ Precedent- a court decision that furnishes an example or authority for deciding subsequent cases involving identical or similar facts. + In the early years of common law, there was no single place or publication where court opinions, or written decisions, could be found. + Today, cases are published, or reported in volumes called reporters and are also posted online. > Reporter- a publication in which court cases are published or reported.

United States Code

All federal laws passed by congress are arranged by broad subject in the United States Code (U.S.C).

1-3e The Common Law Today

Common law doctrines and principles govern only areas not covered by statutory or administrative law.

Administrative Rules

Rules and regulations adopted by federal administrative agencies are initially published in the Federal Register, a daily publication of the U.S. government, and later incorporated into the Code of Federal Regulations (C.F.R.).

State Code

State codes passed by state legislatures are collected in state publications and follow the U.S.C. pattern of arranging law by subject.

1-1a Many Different Laws May Affect a Single Business Decision

Various areas of the law may influence business decision making.