ACCT-2700 Test 1 (Chapters 1-5)

Law

A body of rules of conduct prescribed by a controlling authority that has binding legal force and must be obeyed, with sanctions or legal consequences for violations.

Functions of the law

Keeping the peace, shaping moral standards, promoting social justice, maintaining the status quo, facilitating orderly change, facilitating planning, encouraging compromise, maximizing individual freedom, and providing stability and predictability.

Legal environment

The framework of laws and regulations that affect business activities.

Black-letter law

Well-established and generally accepted legal rules.

Ethics

Moral principles that guide behavior beyond what the law requires.

Primary sources of law

Official sources of law, including constitutions, statutes, administrative regulations, and case law.

Secondary sources of law

Books, articles, and other writings that explain or analyze primary sources of law.

Constitutional law

Law derived from the U.S. Constitution and state constitutions that sets out government structure, powers, and limits.

Statutory law

Laws enacted by legislative bodies at the federal, state, or local level.

Administrative law

Rules and regulations issued by administrative agencies to carry out statutory laws.

Case law

Law established by judicial decisions in court cases.

Common law

Law developed through judicial decisions rather than statutes or constitutions. (Origanated from kings court)

English common law

The body of law developed in England that serves as the foundation of American common law.

Common Law: Courts of law

Historical courts that could award only monetary damages or property.

Common Law: Courts of equity

Historical courts that could award non-monetary remedies based on fairness and justice.

Merged court system

The modern system in which courts can award both legal and equitable remedies.

Precedent

A court decision that serves as a guide for deciding future cases with similar facts.

Stare decisis

The doctrine requiring courts to follow precedents(previous cases) when deciding cases.

Two aspects of Stare Decisis

Courts should not overturn their own precedents without compelling reasons

Decisions made by a higher court are binding on lower courts

Courts only change a precedent if

The precedent is clearly wrong

Times have changed, and a new precedent is needed

Case of first impression

A case involving a legal issue that has never been decided before.

Distinguishing cases

The process of deciding that a precedent(previous case) does not apply because the facts are materially different.

Uncertainty in law

The idea that legal outcomes cannot be predicted with absolute certainty.

Restatements

Summaries of common law rules that reflect the majority view among states.

Role of courts today

To interpret statutes, apply common law principles, and adapt law to changing circumstances.

Constitutional Convention

Meeting of the states held to create a new and workable form of national government.

United States Constitution

The supreme law of the United States that establishes government structure, powers, and limits.

Bill of Rights

The first ten amendments to the Constitution that protect individual rights and liberties.

Federal form of government

A system of government in which power is shared between national and state governments.

Police powers

State powers to regulate public health, safety, morals, and general welfare.

Privileges and Immunities Clause

Prevents states from discriminating against citizens of other states.

Full Faith and Credit Clause

Requires states to recognize and enforce the laws and court decisions of other states.

Checks and balances

A system that allows each branch of government to limit the power of the others.

Legislative branch

Creates and enacts laws; consists of Congress.

Executive branch

Enforces laws; includes the President and administrative agencies.

Judicial branch

Interprets laws; consists of federal courts.

Commerce Clause

Grants the federal government the power to regulate interstate commerce.

Interstate commerce

Commercial activity that crosses state lines or affects more than one state.

Supremacy Clause

Establishes that federal law takes precedence over conflicting state or local laws.

Federal preemption

The principle that federal law overrides conflicting state law when Congress intends to regulate an area.

Congressional intent

The determining factor courts examine to decide whether federal preemption applies.

Bill of Rights and business

Most constitutional protections apply to business entities as well as individuals.

First Amendment

Protects freedom of speech, including limited protection for commercial speech.

Fourth Amendment

Protects against unreasonable searches and seizures.

Fifth Amendment

Protection against being compelled to testify against oneself; applies only to natural persons. (Not forced to Self-Incriminate)

Due process

A constitutional guarantee of fair legal procedures before the government deprives a person of life, liberty, or property.

Fourteenth Amendment

Everyone must be treated similarly.

Strict scrutiny

Highest level of judicial review applied to laws involving race, national origin, or citizenship.

Intermediate scrutiny

Standard of review applied to laws involving gender or legitimacy.

Rational basis review

Lowest level of judicial review applied to economic or social welfare laws.

Privacy rights

An implied constitutional right derived from various amendments, though not explicitly stated in the Constitution.

Business ethics

The application of moral and ethical principles to decision-making in the marketplace and workplace.

Law versus ethics

The distinction between what is legally required and what is morally right.

Profit maximizer model

The view that a business's primary responsibility is to maximize profits.

Corporate citizen model

The view that businesses have ethical responsibilities to society beyond profits.

Corporate social responsibility (CSR)

The duty of businesses to contribute positively to society.

Environmental, Social, and Governance (ESG)

A framework evaluating business practices based on sustainability, social impact, and governance.

Ethical issues in management

Common ethical challenges faced by business leadership.

Right of disconnecting

The ethical issue concerning employees' right to disconnect from work outside normal hours.

Management attitude

The ethical tone set by leadership that influences employee behavior.

Unrealistic goals

Ethical problems created when management sets unattainable performance expectations.

Short-term profits

The ethical risk of prioritizing immediate gains over long-term responsibility.

Ethics issues today

Modern factors that complicate ethical decision-making. (Social media, Awareness, Rationalization, Uncertainty)

Judicial review

The power of the judiciary to interpret laws and apply them to specific cases, including declaring laws unconstitutional.

Marbury v. Madison (1803)

Supreme Court case that established the doctrine of judicial review.

Role of the judiciary

To interpret laws and apply them to specific legal disputes.

Basic judicial requirements

The three requirements that must be met before a court can hear a case: jurisdiction, venue, and standing to sue.

Jurisdiction

The power of a court to hear and decide a case and render a legally binding decision.

A court must have either

In Personam Jurisdiction or In Rem Jurisdiction

In personam jurisdiction

Jurisdiction over the person or business involved in the lawsuit.

In rem jurisdiction

Jurisdiction over property or objects located within a court's geographic area.

Long-arm statute

A state law that allows courts to exercise jurisdiction over non-resident defendants.

Minimum contacts

The level of connection a non-resident defendant must have with a state for a court to exercise jurisdiction.

Subject matter jurisdiction

The authority of a court to hear specific types of cases.

General jurisdiction

The authority of a court to hear almost any type of case.

Limited jurisdiction

The authority of a court to hear only certain types of cases such as small claims, probate, divorce, or bankruptcy.

Original jurisdiction (trial level)

The power of a court to hear a case first, focusing on facts.

Appellate jurisdiction

The power of a court to review decisions of lower courts, focusing on questions of law.

Federal question jurisdiction

Federal court jurisdiction over cases involving the U.S. Constitution, federal laws, or treaties.

Diversity of citizenship jurisdiction

Federal court jurisdiction when parties are from different states and the amount in controversy exceeds $75,000.

Cyberspace jurisdiction

The ability of courts to exercise jurisdiction based on a defendant's online activities.

Sliding scale test

A test used to determine jurisdiction based on the level of a defendant's internet activity.

Interactive website

A website that allows some interaction and may establish jurisdiction.

Substantial online business

A website conducting significant commercial activity that establishes jurisdiction.

Venue

The geographic location where a lawsuit is tried and a jury is selected.

Proper venue

Usually where the injury occurred or where the defendant resides or does business.

Standing to sue

The requirement that a plaintiff has a sufficient stake in a controversy to bring a lawsuit.

Elements of standing

The three requirements: harm, causation, and remedy.

State court system

A court system that includes trial courts, appellate courts, and the state's highest court.

State trial courts

Courts that hear cases for the first time and have limited or general jurisdiction.

State appellate courts

Courts that review questions of law or procedural errors made by trial courts.

State's highest court

The highest court in a state whose decisions are final on issues of state law.

Selection of state judges

State judges may be elected or appointed.

Federal court system

A three-tiered system consisting of district courts, courts of appeals, and the U.S. Supreme Court.

U.S. District Courts

Federal trial courts where cases begin.

U.S. Courts of Appeals

Intermediate federal appellate courts that review district court decisions. (13 courts)

Binding authority of Courts of Appeals

Decisions are binding on lower federal courts within the circuit.

U.S. Supreme Court

The highest court in the United States and final authority on constitutional and federal law.

Composition of Supreme Court

Nine justices serve on the U.S. Supreme Court.

Writ of certiorari

A request asking the U.S. Supreme Court to review a lower court's decision.