BUS202: Exam #1 Study Guide

This covers terms and concepts from Chapters 1-6B and a small portion of Chapter 7.

Law

establishes rights, duties, and privileges that are consistent with values and beliefs of their society or its ruling group.

Functions of Law

• To Maintain Order

• To Protect Rights and Freedoms

• To Resolve Disputes Peacefully

• To Promote Stability and Trust

• To Adapt to Change

rule of law

a set of principles, or ideals, for ensuring an orderly and just society.

common law

Came about as judges in different areas settled disputes in similar ways by consulting with their fellow judges on their previous decisions before making decisions. Also known as Judge-made law.

• not codified

• Judicial precedents are binding

• Judges make rulings, set precedent, and moderate between the conflicting parties.

• Main source is judicial precedents or case law.

• An adversarial system.

civil law

Defines the rights between individuals or individuals and governments.

• codified statutes and ordinances rule the land.

• is a codified set of laws.

• Judicial precedents are NOT binding.

• Judge’s role is to establish the facts of the case and to apply the provisions of the applicable code.

• Statutes and other subsidiary legislations are the main sources.

• An inquisitorial system

stare decisis

“To stand by things decided”

Judge made law based on precedent. It follows prior judicial decisions.

• promotes stability, represents an element of continuity in law, and is rooted in the psychological need to satisfy reasonable expectations.

precedents

judicial decisions in cases that give rise to legal principles that can be applied in future cases based upon similar facts.

binding authority

precedents and other forms of positive law, such as statutes, constitutions, and regulations that must be followed.

Stare decisis has 2 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.

The highest court in a jurisdiction can depart from precedent if it decides that:

The precedent is incorrect, or the technological or social changes have rendered the precedent inapplicable.

Fairness of the Law

The American legal system is one of the most comprehensive, fair, and democratic systems of law ever developed and enforced.

Flexibility of the Law

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

• Law must be flexible and predictable

• Law can’t change so quickly that parties cannot rely on its existence or protection.

criminal law

defines an individual’s obligations to society as a whole.

substantive law

defines or creates the rights and obligations of persons and governments.

procedural law

provides the steps one must follow in order to avail oneself of one’s legal rights or enforce another’s legal obligations.

cyberlaw

the emerging body of law (court decisions, new and amended statutes, etc.) that governs cyberspace transactions.

Issue-Rule-Application-Conclusion (IRAC)

Legal reasoning requires learning the facts of a case, identifying the issues and the relevant legal rules, applying the rules to the facts, and coming to a conclusion.

appellant

The petitioner. The party who appeals a case to another court or jurisdiction from the one in which the case was originally brought.

appellee

The party against whom an appeal is taken. The respondant.

The Court’s Opinion

The court’s reason for its decision, rules of law that apply, and the judgement.

unanimous opinion

all judges/justices agree.

Majority opinion

outlines the views of the majority, if not unanimous.

concurring opinion

a judge emphasizes a point that was not emphasized in a unanimous or majority opinion.

dissenting opinion

may be written by a judge who does not agree with the majority. A dissent may form the basis of arguments used years later in overruling the majority opinion.

Weaknesses of the Articles of Confederation

• power to coin money, non. Each state had its own currency.

• Congress unable to regulate interstate and foreign commerce.

• Congress unable to impose taxes; could only borrow money on credit.

• Immigration decided by each state.

• No executive branch or national court system.

• Approval of 9/13 states required to pass a law in Congress.

• One vote allotted for each state, not accounting population.

Federal form of government

a system of government in which the states form a union, and the sovereign.

sovereignty

the quality of having independent authority over a geographic area.

police powers

powers possessed by states as part of their inherent sovereignty.

• These powers may be exercised to protect or promote the public order.

checks and balances

the system in which 3 branches of the national government exercises checks on the powers of the other branches.

Dormant commerce clause

used to prohibit state legislation that discriminates against or excessively burdens interstate or international commerce. When state regulations affect interstate commerce, the states’ interest in the merits and purposes of the regulation must be balanced against the burden placed on interstate commerce.

U.S. commerce clause (Article 1, Section 8)

“U.S. Congress shall have power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

• Has greater impact on business than any other provision in the Constitution.

Bill of Rights

The first ten amendments to the U.S. Constitution. It embodies a series of protections for the individual against various types of interference by the federal government.

1st Amendment

guarantees the freedoms of religion, speech, press, and the rights to assemble peacefully and to petition the government.

2nd Amendment

The right to keep and bear arms shall not be infringed.

3rd Amendment

prohibits, in peacetime, the lodging of soldiers in any house without the owner’s consent.

4th Amendment

prohibits unreasonable searches and seizures of persons or property.

5th Amendment

guarantees the rights to indictment (formal accusation) by a grand jury to due process of law, and to fair payment when private property is taken for public use. Also prohibits compulsory self-incrimination and double jeopardy (trial for the same crime twice).

6th Amendment

guarantees the accused in a criminal case the right to a speedy and public trial by an impartial jury and with counsel. The accused has the right to cross-examine witnesses against him/her to solicit testimony from witnesses in his/her favor.

7th Amendment

guarantees the right to trial by jury in a civil case involving at least $20.

8th Amendment

prohibits excessive bail and fines and cruel and unusual punishment.

9th Amendment

establishes that people have rights in addition to those stated in the Constitution.

10th Amendment

establishes that those powers neither delegated to the federal government nor denied to the states are reserved to the states and to the people.

14th Amendment

“No state shall deprive any person of life, liberty, or property without due process of law.”

• Most rights include to the states

Grand Jury Indictment Clause - 5th Amendment

• requires indictment by a grand jury for serious federal crimes.

• Does NOT apply to the states! The states may use:

  • prosecutor’s information and preliminary hearings.

7th Amendment - Civil Jury Trial

• right to jury in civil cases exceeding $20

• Does NOT apply to the states! Applies only in federal civil cases.

Judicial interpretation

the rights secured by the Bill of Rights are not absolute.

• Ultimately, the U.S. Supreme Court, is the final interpreter of the Constitution, giving meaning to these rights and determines their boundaries.

ethics

moral principles and values applied to social behavior. What is right or wrong, fairness and justness.

business ethics

ethics in a business context; a consensus of what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in a business setting.

moral minimum

the minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.

gray areas

are situations where the law is so broad and difficult to interpret and apply. The law is not always clear, resulting in negotiations or debates.

company codes

are not laws. They are rules that the company sets forth and can enforce. Outlines policies on particular issues and indicate how employees are supposed to act.

triple bottom line

the idea that investors and others should consider not only corporate profits, but also the corporations’ impact on people and on the planet in assessing the firm. (The bottom line is people, planet, and profits.)

four-part analysis

maximizes profits and good corporate citizenship.

1. The legal implications of each decision.

2. The public relations impact

3. The safety risks for consumers and employees

4. The financial implications

ethical reasoning

a reasoning process in which an individual links their moral convictions or ethical standards to the particular situation at hand

duty-based ethics

an ethical philosophy rooted in the idea that every person has certain duties to others, including both humans and the planet. Those duties may be derived from religious principles or from other philosophical reasoning.

outcome-based ethics

an ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders.

principle of rights

the principle that human beings have certain fundamental rights (to life, freedom, pursuit of happiness, etc.) Key factor to determine if its ethical in business is how that decision affects the rights of others, such as employees, consumers, suppliers, and the community.

categorical imperative

a concept developed by a philosopher Immanuel Kant as an ethical guideline for behavior. In deciding whether an action is right/wrong, desirable/undesirable, a person should evaluate the action in terms of what would happen if everybody else in the same situation, or category, acted the same way.

utilitariansim

an approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action of those who will be affected by it. In utilitarian reasoning, a “good” decision is one that results in the greatest good for the greatest number of people affected by the decision.

It requires the following steps:

1. a determination of which individuals will be affected by the action in question.

2. A cost-benefit analysis, which involves an assessment of the negative and positive effects of alternative actions on these individuals.

3. A choice among alternative actions that will produce maximum societal utility. (The greatest positive net benefits for the greatest number of individuals.)

cost-benefit analysis

a decision-making technique that involves weighing the costs of a given action against the benefits of the action.

corporate social responsibility (CSR)

the concept that corporations can and should act ethically and be accountable to society for their actions.

1) environmental efforts

2) ethical labor practices

3) charitable donations

4) volunteer work

stakeholders

groups, other than the company’s shareholders, that are affected by corporate decision. Stakeholders include employees, customers, and the community in which the corporation operates.

short-run profit maximization

a company may increase its profits by continuing to sell a product even though it knows that the product is defective.

long-run profit maximization

due to lawsuits, large settlements, and bad publicity, such unethical conduct will cause profits to suffer.

I Desire to Do Right (IDDR)

approach to organizing issues and approaching them systematically. Has series of steps best conducted by a group.

1. Inquiry

2. Discussion

3. Decision

4. Review

blind spot

an unknown obstacle that prevents us from seeing our unethical behavior. It does not allow us to see the gap between who we think we are, who we would like to be, and who we truly are.

• can originate with individuals and accumulate to an organization-level.

ethical fading

the removal of ethics from the decision-making process.

• People believe they can behave ethically, but they do not.

values

relatively permanent and deeply held underlying beliefs and attitudes that help determine a person’s behavior.

• reflects a person’s sense of right and wrong or what “ought” to be.

ethical reasoning

the process by which an individual examines a situation according to his/her moral convictions or ethical standards.

religious ethical standards

the rightness or wrongness of an action is usually judged according to its conformity to an absolute rule that commands a particular form of behavior. The motive of the actor is irrelevant in judging the action.

corporate citizenship

to do good and solve social problems

Social responsibility involves 3 basic considerations:

• an act’s profitability, its legality, and whether it is ethically justifiable.

Legal compliance

the moral minimum

writ of mandamus

an order directing a government official to fulfill a duty .

Judicial review

enables the judicial branch to act as a check on the other two branches of government, in line with the checks and balances system established by the U.S. Constitution.

Jurisdiction

the power of a court to hear a dispute and to “speak the law” into a controversy and render a verdict that is legally binding on the parties to the dispute.

• not every court has the authority to hear all types of cases.

Exclusive Federal Jurisdiction

1) Admiralty

2) Antitrust

3) Bankruptcy

4) Copyright

5) Federal Crimes

6) Patents

7) Suit Against the U.S.

8) Other specified federal statues

Concurrent Jurisdiction

1) Federal questions

2) Diversity of citizenship cases

Exclusive State Jurisdiction

Matters not subject to federal jurisdiction.

federal question

cases in which the rights or obligations of a party are created or defined by some federal law or the constitution.

Diversity cases where:

• the parties are not front the same state, and the amount in controversy is greater than $75,000.

subject matter jurisdiction

the authority or power that each court has over certain types of legal disagreements (disputes).

• For a court to hear a particular case, it must have subject matter jurisdiction over the issue or issues that you are the court to decide on.

general jurisdiction

a court has the ability to hear and decide a wide range of cases.

• Unless a law or constitutional provision denies them jurisdiction, courts of general jurisdiction can handle any kind of case.

Limited Jurisdiction

a court has restrictions on the cases it can decide. Small claims court is a court of limited jurisdiction. It can only hear and decide cases that claim $10,000 or less.

• Limited civil courts can only hear and decide cases for up to $25,000. While these are heard in California superior courts, the judge has to follow the jurisdictional limits in these cases.

Exclusive Jurisidiction

only a particular court can decide the case.

• A Court’s Initial Questions

• Subject Matter Jurisdiction

• In Personam Jurisdiction (Personal Jurisdiction)

• Venue

• Standing

• Service of Process

• Statute of Limitations

Long Arm Statues

courts use long-term statues for non-resident parties based on “minimum contracts” with state. Means defendant had support some connection with forum state.

“Sliding Scale”

standard to determine whether to exercise jurisdiction.

Venue

is concerned with the most appropriate location for the trial. The county generally, proper venue is where the injury occurred.

The Court System

1. Limited-Jurisdiction Trial Courts

2. General-Jurisdiction Trial Courts

3. Intermediate Appellate Courts

4. Supreme Court

“courts of record”

court reporters

• opening and closing arguments

• Juries are selected

• Evidence, such as witness testimony, physical objects, documents, and pictures, is introduced.

• Witnesses are examined and cross-examined.

• Verdicts and Judgements are rendered.

appellate courts

middle level of court systems.

• Review proceedings conducted in the trail court to determine whether the trial was according to the procedural and substantive rules of law.

• Will consider questions of law but not questions of fact.

state supreme court

the highest court in a state court system.

• hears appeals from intermediate state courts and certain trial courts.

• No new evidence or testimony is heard.

• Decisions of state supreme courts are final, unless a question of law is involved that is appealable to the U.S. Supreme Court

Alternative Dispute Resolution

• Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve.

• There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved.

Mediation

• Involves a neutral 3rd party (mediator)

• Talkers face-to-face with parties (who typically are in different adjoining rooms) to determine common ground.

• Advantages: few rules, customize processes, parties control results (win-win)

• Disadvantages: mediator fees, no sanctions or deadlines

Arbitration

settling of dispute by neutral 3rd party (arbitrator) who renders a legally binding decision; usually an expert or well respected official (government) arbitration clause in contracts.

• Binding on the parties

• Parties give up right to trial by jury.

Pretrial Litigation Process

1. Pleadings

2. Discovery

3. Dismissals and Pretrial Discovery

4. Settlement Conference (Trial)

5. Post

1st Stage: The Pleadings

• File petition / complaint

• court must have jurisdiction over subject matter defendant and be in proper venue.

• Facts: what happened

• Prayer: court relief

Pleadings-service

• Defendant served with complaint and summons

• Court acquires Personal Jurisdiction over Defendant (person or corporation)

• Corporate Defendants served via Registered Agent. If the defendant is out-of-state, court can acquire jurisdiction by “long-arm” statues.

Pleadings-Answer

• The answer is the Defendant’s response to the allegations stated in the Plaintiff’s Complaint

• In the answer, the Defendant must specifically admit or deny each allegation in the complaint.

  • Defendant’s Response (Answer):

    • states general denial

    • may move for change of venue

    • may allege affirmative defenses

    • may counter-claim against plaintiff.

counterclaim

a lawsuit filed by the Defendant against the Plaintiff, in response to the original complaint. A cross-claim is against a co-plaintiff or co-Defendant.