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Dynamic business law 4e kubasek 4e CH01

Chapter 1
An Introduction to Dynamic
Business Law

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education.


LO1-1: What is business law?
LO1-2: How does business law relate to business education?
LO1-3: What are the purposes of law?
LO1-4: What are alternative ways to classify the law?
LO1-5: What are the sources of the law?
LO1-6: What are the various schools of jurisprudence?


Chapter 1 Discussion
• As indicated in Exhibit 1-2 of the textbook, there are many purposes fulfilled
by the law, including:
• Providing order such that one can depend on a promise or an expectation of
• Serving as an alternative to fighting.
• Facilitating a sense that change is possible, but only after a rational consideration
of options.
• Encouraging social justice.
• Guaranteeing personal freedoms.
• Serving as a moral guide by indicating minimal expectations of citizens and

• Based on your personal ideology, rank the foregoing purposes of law from
most to least important, and discuss your rankings with fellow students. To
what extent are your rankings determined by your political affiliation? In
your reasoned opinion, is it possible to achieve all of the purposes of law
simultaneously, or are certain purposes mutually exclusive (for example,
providing order versus guaranteeing personal freedoms)?


Chapter 1 Hypothetical Case 1
• John Harrison is the owner of Harrison Enterprises, Inc., a small metal fabrication shop
located in Poughkeepsie, New York. Andrew Jameson, an employee of Harrison
Enterprises, has approached John with a request. Jameson is the proud parent of a
newborn son, and he would like to take the next two weeks off from work in order to
bond with his new child. Harrison knows that Jameson does not have any accrued
vacation time (shortly before his son was born, Jameson had taken a final two-person
family trip to Florida with his wife, Sara). He also knows that Harrison Enterprises is
not legally required to comply with the Family and Medical Leave Act (FMLA), since
the company only has seventeen employees (FMLA mandates that businesses
employing more than fifty people provide their workers with up to twelve weeks'
unpaid leave every year for a host of specified reasons, including the birth of a child).
• Harrison wonders whether his company has an ethical obligation to comply with the

spirit of the Family and Medical Leave Act, even though it does not have a technical,
legal obligation of compliance. Advise Harrison as to whether his company has such an
ethical obligation. Should Harrison allow Jameson to take his requested two weeks of
leave from work?


Chapter 1 Hypothetical Case 2 
• A group of attorneys, judges, and law professionals has collaborated to
write a uniform criminal code. The code would create uniformity in
criminal law across the United States, defining what constitutes a
misdemeanor, what constitutes a felony, how crimes are defined, and
what the punishment for particular crimes will be. The code also
proposes that the death penalty be abolished, and that the maximum
punishment for murder be life imprisonment.
• Would you favor the adoption and implementation of such a code? What
advantages would result from a uniform criminal code? What
disadvantages would result? What is the likelihood that all states would
favor its adoption and implementation, as opposed to the traditional
practice of each state defining criminal law within its own jurisdiction?
Reference: An Introduction to the Model Penal Code


What Is Business Law?
• Definition: The enforceable rules
of conduct that govern the actions
of buyers and sellers in market


Functional Areas of Business
Affected by Business Law
• Corporate management
• Production and transportation
• Marketing
• Research and development
• Accounting and finance
• Human resource management


Purposes of the Law
• Providing order
• Serving as an alternative to altercation
• Facilitating a sense that change is possible
• Encouraging social justice
• Guaranteeing personal freedoms
• Serving as a moral guide


Classification of Law:
Private and Public
• Private Law:
Regulates disputes
between private
individuals or groups

• Public Law: Regulates
disputes between
private individuals or
groups and their


Classification of Law:
Civil and Criminal
• Civil Law: The body
of laws that govern
the rights and
involved in
between persons and
between persons and
their government

• Criminal Law: A
classification of law
involving the rights
and responsibilities
an individual has
with respect to the
public as a whole


Sources of Business Law
• Constitutions
• Statutes
• Cases (common law)
• Administrative law
• Treaties
• Executive orders


Major Federal Administrative
Agencies (Independent)
• Commodity Futures Trading Commission
• Consumer Product Safety Commission
• Equal Employment Opportunity Commission
• Federal Trade Commission
• Federal Communications Commission
• National Labor Relations Board
• National Transportation Safety Board
• Nuclear Regulatory Commission
• Securities and Exchange Commission


Major Federal Administrative
Agencies (Executive)
• Federal Deposit Insurance Corporation
• Occupational Safety and Health Administration
• General Services Administration
• National Aeronautics and Space Administration
• Small Business Administration
• U.S. Agency for International Development
• National Science Foundation
• Veterans Administration
• Office of Personnel Management


Schools of Jurisprudence
• Natural law
• Legal positivism
• Identification with the vulnerable
• Historical school: Tradition
• Legal realism
• Cost-benefit analysis

Chapter 1 Hypothetical Case 3  
• In 2013, Wal-Mart Stores, Inc. pleaded guilty to charges of dumping hazardous waste at
sites in California and Missouri. The company was fined $82 million for actions in
violation of the Clean Water Act and the Federal Insecticide, Fungicide and Rodenticide
Act. In addition, the company agreed to create an environmental management system
throughout its network of retail stores. The resolution was a settlement of suits filed by
the U.S. Environmental Protection Agency (EPA) and the Department of Justice.
• Some believe that the powers of the independent federal administrative agencies, such
as the EPA, should be limited, noting that regulatory agencies today straddle the lines
between the legislative, executive, and judicial areas of government. Do you agree that
these agencies are too powerful? Or are they not doing enough? What would be the
advantages of limiting regulatory agencies' powers? What would be the disadvantages?
What are the avenues available to lawmakers—and the people who vote for them—to
limit or expand their powers?
References: Wal-Mart Is Fined $82 Million Over Mishandling of Hazardous Wastes
Who Will Regulate the Regulators? Administrative Agencies, the Separation of Powers,
and Chevron Deference


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