Business Ethics Unit 1

Law

That which must be obeyed and followed by citizens, subject to sanctions or legal consequences; a body of rules of action or conduct prescribed by controlling authority and having binding legal force.

Functions of Law

• Keeping the peace 

  • Some laws make certain activities crimes 

• Shaping moral standards 

  • Some laws discourage drug and alcohol abuse 

• Promoting social justice 

  • Some laws prohibit discrimination in employment

• Maintaining the status quo

  • Some laws prevent the forceful overthrow of government

• Facilitating planning 

  • Laws are enacted only after considerable study, debate, and public input 

• Providing a basis for compromise 

  • Laws allow for the settlement of cases prior to trial 

• Maximizing individual freedom 

  • The rights of freedom of speech, religion, and association are granted by the First Amendment to the U.S. Constitution

Fairness of Law

• The U.S. legal system is one of the most comprehensive, fair, and democratic systems of law ever developed and enforced. Nevertheless, some misuses and oversights of our legal systems uses of discretion and mistakes by judges and juries

  • Abuses discretion and mistakes by judges and juries 

  • Unequal applications of the law

  • Procedural mishaps

Flexibility of the Law

United States law evolves and changes along with the norms of society, technology, and the growth and expansion of commerce in the United States and the world.

Brown v. Board of Education

• A U.S. Supreme Court case decided in 1954 that held the “separate but equal” doctrine for schools that was established by an earlier U.S. Supreme Court decision violated the Equal Protection Clause of the Fourteenth Amendment to the Constitution and was unconstitutional

Moral Theory of Law

A school thought that emphasizes that law should be based on morality and ethics

Historical School

• A school of jurisprudential thought that postulates that law is an aggregate of social traditions and customs 

  • Look to precedent (past legal problems) to solve current problems 

Natural Law School

• A school of jurisprudential thought that postulates that law is based on what is “correct”. It emphasizes a moral theory of law - that is, law should be based on morality and ethics. 

Analytical School

• A school of jurisprudential thought that maintains that law is shaped by logic

  • Emphasis on the logic of the result vs how the result is reached 

Sociological School

• A school of jurisprudential thought that asserts that law is a means of achieving and advancing certain sociological goals

Command School

A school of jurisprudential thought that postulates that law is a set of rules developed, communicated,a and enforced by the ruling party

Critical Legal Studies School

• A school of jurisprudential thought that maintains that legal rules are unnecessary and that legal disputes should be solved by applying arbitrary rules based on fairness 

Law and Economics School (Chicago School)

 A school of jurisprudential thought that postulates that promoting market efficiency should be central concern of legal decision making

English Common Law

• Law developed by judges who issued their opinions when deciding a case. The principles announced in these cases became precedent for deciding similar cases in the future 

Court of Chancery

Court that grants relief based on fairness, which is also called an equity court; A special court of Delaware that hears and decides  business cases.

Law Merchant

• Rules developed in England to solve commercial disputes that were based on common trade practices and usage 

Merchant Court

• A court in England that solved commercial disputes by applying common trade practices and usage

Romano-Germanic Civil Law System

• A civil law system based on a code of laws, which dates to 450 BCE, when Rome adopted the Twelve Tables, a code of laws applicable to the Romans 

Civil Law

law based on codes or statues. In civil law, the adjudication of a case is based on the application of the code or statutes to a particular set of facts.

French Civil Code of 1804 (Napoleonic Code)

• A civil law based on a code of laws 

German Civil Code of 1896

A civil law based on a code of laws

Constitution of the United States of America

• The fundamental law of the United States of America. It was ratified by the states in 1788 and is the supreme law of the United States. 

Legislative Branch

The branch of the federal government that consists of the U.S. Congress (Senate and House of Representatives). The U.S. Congress enacts federal statutes.

Judicial Branch

• The branch of state and federal governments that is composed of courts of the relevant jurisdiction; Federal courts are authorized by Article III of the U.S. Constitution 

State Constitution

Constitutions that are adopted by states. State constitutions are often patterned after the U.S. Constitution, although many are more detailed.

Treaties

An agreement between two or more nations that is formally signed by an authorized representative of each nation and ratified by each nation

Statue

• Written law enacted by the legislative branch of the federal and state governments that establishes certain courses of conduct that must be adhered to by covered parties. 

Federal Statutes

• Statutes enacted by the U.S. Congress.

Code Books

• Books that contain statutes enacted by the U.S. Congress and state legislatures and ordinances enacted by municipalities

Codified Law

Statutes enacted by Congress and state legislatures and ordinances passed by municipalities and local government bodies

Chamber

• A portion of the legislative branch of government; refers to either the U.S. House of Representatives or the U.S. Senate 

Committee

• A special group composed of members of the U.S. House of Representatives or the U.S. Senate to which a bill that has been introduced in the U.S. Congress is referred for review 

Subcommittee

A special group composed of members of a committee of the U.S. House of Representatives or the U.S. Senate

Conference Committee

A special group composed of members of both the U.S. House of Representatives and the U.S. Senate whose task is to try to reconcile the difference in bills passed by each chamber

State Statue

Statues enacted by state legislatures

Ordinance

Law enacted by local government bodies, such as cities and municipalities, counties, school districts, and water districts

Executive Order

An order issued by a member of the executive branch of the government. The part of the government that consists of the president and vice president 

Administrative rules and regulations

• Directives issued by federal and state administrative agencies that interpret the statutes that the agency is authorized to enforce 

Judicial Decision

• A decision in a lawsuit made by a federal or state court 

Priority of Law in the United States 

• Constitutions 

• Treaties 

• Codified law: statues and ordinance 

• Executive orders

• Regulations and orders of administrative agencies 

• Judicial decisions

Precedent (Stare Decisis)

• A rule of law established in a court decision. Lower courts must follow the precedent established by higher courts 

Critical Legal thinking

The process of investigating, analyzing, evaluating, and interpreting information to solve legal issues or cases

Socratic Method

• A question and answer method used by law professors in class to stimulate class discussions and debate 

IRAC Method

• A critical legal thinking method for analyzing court cases. The acronym IRAC stands for issue, rule, application, and conclusion

Ethics and the law

The relationship between ethics and the law. Sometimes the rule of law and the rule of ethics demand the same response by a person confronted with a problem, while in other situations the law may permit an act that is ethically wrong.

Ethics

• A set of moral principles or values that governs the conduct of an individual or a group 

  • Ethical fundamentalism- A theory of ethics that says a person looks to an outside source for ethical rules of commands. Does not permit people to determine right and wrong for themselves. 

  • Utilitarianism- A theory of ethics that dictates that people must choose the action or follow the rule that provides the greatest good to society. 

    • Origins in works of Bentham and Stuart 

    • Criticisms: 

      • It is difficult to estimate the “good” that will result from different actions 

      • It is hard to apply 

      • It treated morality as an impersonal calculation 

  • Kantian (Duty, Deontological) Ethics- A theory of ethics that says that people owe moral duties that are based on universal rules. Such as the categorical imperative “Do unto others as you would have them do unto you” 

    • The rules are based on two principles: 

      • Consistency - All cases are treated alike with no exceptions 

      • Reversibility - Actor must abide by the rule he or she uses to judge the morality of someone else’s conduct

    • Critics argue that it is hard to reach a consensus as to what the universal rules should be 

  • Social Contract Theory (Rawl’s social justice theory)- A theory of ethics that asserts that fairness is the essence of justice. The theory proffers that each person is presumed to have entered into a social contract with all others in society to obey moral rules that are necessary for people to live in peace and harmony

  • Ethical relativism- A theory of ethics that holds that individuals must decide what is ethical, based on their own feelings about what is right and wrong 

    • Critics argue that actions widely regarded as unethical, would be see a ethical, depending on perpetrator's viewpoint 

Ethical fundamentalism

A theory of ethics that says a person looks to an outside source for ethical rules of commands. Does not permit people to determine right and wrong for themselves.

Utilitarianism

• A theory of ethics that dictates that people must choose the action or follow the rule that provides the greatest good to society. 

  • Origins in works of Bentham and Stuart 

  • Criticisms: 

    • It is difficult to estimate the “good” that will result from different actions 

    • It is hard to apply 

      • It treated morality as an impersonal calculation

Kantian (Duty, Deontological) Ethics

• A theory of ethics that says that people owe moral duties that are based on universal rules. Such as the categorical imperative “Do unto others as you would have them do unto you” 

  • The rules are based on two principles: 

    • Consistency - All cases are treated alike with no exceptions 

    • Reversibility - Actor must abide by the rule he or she uses to judge the morality of someone else’s conduct

  • Critics argue that it is hard to reach a consensus as to what the universal rules should be 

Social Contract Theory (Rawl’s social justice theory)

• A theory of ethics that asserts that fairness is the essence of justice. The theory proffers that each person is presumed to have entered into a social contract with all others in society to obey moral rules that are necessary for people to live in peace and harmony

Ethical relativism

• A theory of ethics that holds that individuals must decide what is ethical, based on their own feelings about what is right and wrong 

  • Critics argue that actions widely regarded as unethical, would be see a ethical, depending on perpetrator's viewpoint 

Section 43 of the Lanham Act

A section of a federal statute that allows a competitor to sue another competitor for engaging in unfair competition, including false advertising and misleading labeling

Social Responsibility of Business

• A requirement that corporations and businesses act with awareness of the consequences and impact that their decision will have on others

  • Maximize profits- A theory of social responsibility that says a corporation owes a duty to take actions that maximize profits for shareholders 

  • Moral Minimum- A theory of social responsibility that says a corporation’s duty is to make a profit while avoiding causing harm to others 

  • Stakeholder interest- A theory of social responsibility that says a corporation must consider the effects its actions have on persons other than its stockholders  

  • Corporate citizenship- A theory of social responsibility that says a business has a responsibility to do good 

Maximize profits

• A theory of social responsibility that says a corporation owes a duty to take actions that maximize profits for shareholders 

Moral Minimum

• A theory of social responsibility that says a corporation’s duty is to make a profit while avoiding causing harm to others 

Stakeholder interest

A theory of social responsibility that says a corporation must consider the effects its actions have on persons other than its stockholders

Corporate citizenship

• A theory of social responsibility that says a business has a responsibility to do good 

Code of Ethics

• A code adopted by a company wherein the company sets forth rules of ethics for the company’s managers and employees to follow when dealing with customers, employees, suppliers, and others. 

Public Benefit Corporation

• A corporation that requires directors and officers to make decisions to accomplish general-public benefits and stipulated specific public benefit purposes stated in the articles of incorporation and to consider stakeholders other than shareholders, such as employees, customers, suppliers, and the community, when making corporate decisions

There are two major court systems in the United States

• The federal court system 

• The court systems of the 50 states, Washington DC, and territories of the United States 

State Courts

Courts established by states

Limited-Jurisdiction Trial Courts (District Court)

• A court that hears matters of a specialized or limited nature 

  • 33 District Courts in Maryland 

  • Hears: 

    • Civil cases with claims for $5,000 or less 

    • Claims over $5,000 but less than $30,000 

    • Shares with the circuit court in criminal cases, classified as misdemeanors and certain felonies, with a jail time penalty of 3 years or more or a fine of $2,500 or more 

    • No jury trials 

• District Court Judges 

  • Must be members of the Maryland Bar

  • Must be at least 30 years old 

  • Must reside in the county in which they sit 

  • Must meet high standards of professionalism and personal integrity 

  • Judges are selected by the Governor and confirmed by the state Senate

Inferior Trail Courts

• A court that hears matters of a specialized or limited nature 

Small Claims Courts

• A court that hears civil cases involving small dollar amounts 

General-Jurisdiction Trial Court

• Courts that hear cases of a general nature that are not within the jurisdiction of limited-jurisdiction trial courts; often referred to as courts of records 

  • 24 circuit Courts in Maryland 

  • Hears: 

    • More serious criminal and major civil cases 

    • Cases appealed from the District court, orphans court, and administrative agencies 

    • Jury trials and Judge (COURT/BENCH) trials 

    • Family law cases -divorce, custody and child support (Civil)

    • Juvenile (Criminal)

  • In criminal cases, the defendant can appeal but no the prosecution 

  • Records and stores testimony and evidence in trials 

  • Some states have division as to 

    • Criminal cases 

    • Civil cases 

  • Decisions are appealable to an intermediate appellate court or the state supreme court 

• Circuit Court Judges 

  • Must be members of the Maryland Bar

  • Must be at least 30 years old 

  • Must meet high standards of professionalism and personal integrity 

  • Judges are nominated by special judicial selection commissions, and appointed by the Governor. They may also be elected by the voters 

Courts of Record

Courts that hear cases of a general nature that are not within the jurisdiction of limited-jurisdiction trial courts; often referred to as courts of record

Intermediate appellate courts (appellate courts or courts of appeals)

• A court that hears appeals from trial courts

  • No juries, just a brief about the law and in some situations you present the brief. Arguing the law and saying if it is just or not.  

  • Review trial court record to determine if: 

    • Error of law have occurred during trial that require reversal or modification of decision 

    • No new testimony or evidence permitted 

    • Decisions are appealable to the state’s highest court  

  • Hears

    • Appeals from almost any case that originates in a circuit court or an orphans’ court (Orphans’ court deals with wills and testaments)  in Maryland. 

    • 15 active judges, at least on from each of the State’s 7 geographic appellate circuits 

    • Sit in 3 Judge panels to review briefs, trial records, and sometimes hears oral arguments 

    • One Judge authors the decision known as the Opinion 

    • No evidence or trials; this is a review process

• Appellate Court of Maryland Judges

  • Must be members of the Maryland Bar

  • Must be at least 30 years old 

  • Must reside in Maryland 

  • Must meet high standards of professionalism and personal integrity 

  • Judges may serve until they are 70

  • Judges are nominated by special judicial selection commissions, and appointed by the Governor. They may also be elected by the voters 

Highest state court (State supreme court)

The highest court in a state court system, which hears appeals from intermediate appellate state courts and certain trial courts; often called the state supreme court

Delaware Court of Chancery

A Delaware state court that hears and decides cases involving business and corporate matters

Article III or the U.S. Constitution

• The part of the U.S. Constitution that establishes the judicial branch of the federal government

Special Federal Courts

• Federal courts that hear matters of specialized or limited jurisdiction 

U.S. Tax Court

A federal court that decides cases involving federal tax laws

U.S. Court of Federal Claims

A federal court that decides cases brought against the United States

U.S. Court of International Trade

• A federal court that decides cases involving tariffs and international trade disputes 

U.S. Bankruptcy

• Federal courts that decide cases that involve federal bankruptcy laws

U.S. Court of Appeals for the Armed Forces

• A federal court that decides cases involving members of the armed forces 

U.S. Court of Appeals for Veterans Claims

A federal court that decides cases involving veterans of the armed forces

FISA Warrants

• A warrant issued by the Foreign Intelligence Surveillance Court (FISA Court) that permits physical and electronic surveillance of Americans or foreigners in the United States who are deemed a threat to national security. 

U.S Foreign Intelligence Surveillance Court of Review (FISCR)

A special federal court to which the U.S. government may appeal a decision of the U.S. Foreign Intelligence Surveillance Court (FISA Court) when it denies a government application for a FISA warrant

Federal Court System 

• US Special Courts 

• US District Courts 

• US Court of Appeals

• Supreme Court

U.S District Courts

Federal trial courts of general jurisdiction that decide cases not within the jurisdiction of specialized federal courts

District

the area served by a U.S. district court

U.S. Territorial Courts

Federal trail courts located on Guam, the Mariana Islands, and the U.S. Virgin Islands

U.S. Courts of Appeals

• Federal intermediate appellate courts that decide appeals from U.S. district courts, several other federal courts, and some federal administrative agencies 

Circuit

• The geographical area served by a U.S. circuit court of appeals 

U.S. District of Columbia Circuit

• A federal intermediate appellate court located in Washington DC

U.S Court of Appeals for the Federal Circuit

• A court of appeals located in Washington DC, that has special appellate jurisdiction to review the decisions of the U.S. Court of Federal Claims, the U.S. Patent and Trademark Office, and the U.S. Court of International Trade 

Supreme Court of the United States

The highest court of the federal court system. It hears appeals from the U.S. courts of appeals and, in some instances, from special federal courts, U.S. district courts, and the highest state courts. Also called the U.S. Supreme Court.

Chief Justice of the U.S. Supreme Court

The justice who is responsible for the administration of the Supreme Court

Associate Justices of the U.S. Supreme Court

• Justices of the U.S. Supreme Court other than the chief justice  

Petition for Certiorari

• A petition asking the Supreme Court to hear a case 

Writ of Certiorari

• An official notice that the Supreme Court will review a case 

Unanimous Decision

• A decision of the court in which all of the justices agree as to the outcome and reasoning used to decide a case and the decision becomes precedent; A decision in a criminal trial in which the jury members unanimously find the defendant guilty or not guilty of a crime 

Majority Decision

• A decision of the court in which a majority of the justices agree as to the outcome and reasoning used to decide a case. The decision becomes precedent.

Plurality Decision

• A decision of the court in which a majority of the justices agree as to the outcome of a case but not as to the reasoning for reaching the outcome. A plurality decision settles the case but is not precedent for later cases. 

Tie Decision

• A decision in which appellate or supreme court justices reach a tie (equal) vote. The lower court’s decision stands. The decision has no precedent. 

Concurring Opinion

• An opinion written by a justice who agrees with the outcome of a case reached by other justices but not the reason proffered by them, wherein the justice sets forth his or her reasons for deciding the case

Dissenting Opinion

An opinion written by a justice who does not agree with a decision of the majority of the justices wherein the justice sets forth the reasons for his or her dissent