Good Morning The Legal & Regulatory Environment of Business
To understand the legal & regulatory environment of business, you must appreciate the role of law as the foundation for business practice in the private market system. Not just any kind of law, but a property-based legal system. Three concepts: Law, the Rule of Law, and Property provide a necessary foundation for a successful modern business and set maximum conditions for generating national wealth.
I. National Wealth what is national wealth? National Wealth what makes for the difference? Dependency Theory Natural Resources Education & Technology Climate Modern Private Market Law & a Legal System
II. Three concepts necessary for a successful modern nation A. Law Laws are rules - what you can t & can do Created by the State & backed up by enforcement Religion vs. Customs vs. Economics vs. Laws Laws bind together diverse groups B. The Rule of Law Laws are generally and equally applicable to everyone. C. Property The right to exclude or keep others from interfering with what you own your resources.
III. Property: The central concept underlying modern legal systems. A. Contract Law - Determines how resources, including labor, are exchanged between owners. (Ch. 7) B. Criminal Law - Provides public protection for private resources and punishes those who harm them. (Ch. 9) C. Tort Law - Protects and compensates owners through private civil lawsuits when their resources, including those they have in themselves, are wrongfully harmed by the actions of others. (Ch. 8) D. Constitutional Law - Establishes the framework of the state whose purpose is to protect property in its broadest sense. (Ch. 6) E. Administrative and Regulatory Law - Concerns public laws that protect, tax, regulate, or redistribute an owner s resources. (Ch. 12) F. Law of Business Organizations - Identifies how individuals can own and use resources in groups. Includes corporate governance. (Ch. 11)
IV. Acquisition of Property (Resources) Gift Exchange - transfer by exchange (wages) Accession - adding or changing something Confusion - undivided mass First Possession - previously un-owned Adverse Possession - occupying land for a legal period Original Possession - your rights
V. Jurisprudence - Philosophies that explain the origin, justification meaning and essence of law. Natural law - universal moral principles that are observable in nature. Positive law - the commands of state backed upby force and punishments. Historical school - legal principles that have stood the test of time. Sociological jurisprudence - law can and should change to meet new developments in society Legal realism - what officials do about it
VI. Classification of Law A. Common vs. Civil law (Anglo-American vs. Romano-Germanic) Common law - emphasizes the role of judges Civil law - relies on legislation (Louisiana) B. Public vs. Private law Public law - matters involving the regulation of society Ex.: Constitutional / Administrative / Criminal Law Private law - issues & problems of individuals Ex.: Property / Contract / Tort Law
C. Civil vs. Criminal law Civil law - Torts & breach of contract Criminal law - wrongs against society seeking punishment D. Substantive vs. Procedural law Substantive law - The part of the law creating, defining, and regulating rights, duties & powers. (The What ) Procedural law - The part of the law telling the methods & means for having rights or duties enforced. (The How )
VII. Sources of Law A. Constitution - Highest laws of the nation that override all other sources. Establish basic rights & liberties. Describe & empower government Set forth limitations on power B. Legislation - Statutes, Acts, Ordinances & Codes Uniformity of Legislation - Fed/State single laws UCC (Uniform Commercial Code) - Commercial transactions Interpretation - intent of legislature ( Statutory Construction ) C. Administrative Regulation Agencies like the EPA / SEC / OSHA
D. Case Law ( Judge Made Opinions & Precedents) Advantages: Stare decisis - doctrine of prior precedents 1. Judges follow precedents 2. Gives certainty, predictability & stability Disadvantages 1. Volume of cases 2. Conflicting precedents 3. Conflicts of law
VIII. Legal Sanction - Enforcement is vital to the rule of law. A. Criminal Conduct Purpose of punishment: Deter persons from wrongful conduct Death/Imprisonment/Fine/Removal/Disqualification B. Breach of Conduct - failure to do what was agreed Compensatory damages Specific Performance C. Tortious Conduct - a civil wrong Intentional - Assault/Battery/Conversion/Trespass Negligence - Unreasonable behavior Strict liability - Only prove injury to property Punishment: Compensatory & possibly punitive damages
C. Violation of Statute or Regulation Generally fines IX. Corporate Governance A. Corporation - A business chartered by the state to do business as a legal person B. Corporate Governance - legal rules that structure, empower, and regulate the agents of corporations and define their relationship to the owners. (Ch. 12)