legal environment of business midterm

English common law

The U.S. legal system is based on ______________ which uses judicial decisions and precedents as a source of law.

Function of Law

Law provides order, protects rights, enforces duties, resolves

disputes, and promotes justice. It regulates relationships between individuals,

businesses, and government.

Constitutional law

Found in the U.S. and state constitutions.

Statutory law

Laws passed by Congress and state legislatures (codified in

the U.S. Code at the federal level).

Administrative law

Rules and regulations made by government agencies

to carry out statutes.

Case law (common law)

Court decisions interpreting laws and setting

precedents

Civil law

resolves disputes between individuals or businesses (e.g.,

contracts, property)

Criminal law

addresses offenses against society, with penalties like fines or

imprisonment.

Regulations

Detailed rules issued by administrative agencies (like the EPA, SEC, or

OSHA) to enforce laws

Commerce Clause

Gives the federal government power to regulate interstate and

international trade

Supremacy Clause

Federal law overrides conflicting state law within its area of

authority.

Federalism

Division of powers between state governments and the federal

government.

Bill of Rights & Business

Some protections (like freedom of speech and due

process) extend to corporations. Not all rights apply (e.g., corporations don’t have

rights against self-incrimination)

14th Amendment

Provides due process and equal protection; not originally part of

the Bill of Rights but crucial for civil rights and business law

Actus Reus

The physical act of committing a crime

Mens Rea

The mental intent behind the act. Both are usually required for

conviction.

Burden of Proof:

In criminal cases, the prosecution must prove guilt beyond a

reasonable doubt.

Arraignment

The first court appearance where charges are read and the defendant

enters a plea

Business Crime Examples

Fraud, bribery, insider trading, environmental crimes,

and corporate misconduct

Larceny

Unlawfully taking another’s property

Embezzlement

Lawfully possessing property but misusing or stealing it

Foreign Corrupt Practices Act (FCPA)

Prohibits U.S. businesses from bribing

foreign officials to gain business advantages.

Negotiation

Informal discussion between parties to resolve conflict without

outside help

Mediation

Neutral third party (mediator) helps parties reach a voluntary

settlement

Arbitration

Neutral arbitrator issues a decision (can be binding or non-binding).

Often used in business disputes because it is private and faster than court

Enforcement of Arbitration

Courts can enforce binding arbitration awards.

However, decisions generally cannot be retried in court.

Business Ethics

Standards of right and wrong that guide business decision-

making.

Code of Conduct

A company’s written set of ethical principles and expected

behavior. Common elements: compliance with laws, fair treatment, conflicts of

interest, workplace conduct

Consequences of Unethical Behavior

Loss of reputation, lawsuits, loss of

customers or employees, financial penalties.

Corporate Social Responsibility (CSR)

Companies acting responsibly toward

society, environment, and stakeholders

Triple Bottom Line

Evaluating business success by people, planet, and profit.

Intentional Torts

Wrongful acts done on purpose (e.g., assault, battery, false

imprisonment, defamation)

Negligence

Failure to exercise reasonable care that causes harm. Elements: duty,

breach, causation, and damages

Strict Liability

Liability for inherently dangerous activities, even without negligence

(e.g., blasting, wild animals)

Res Ipsa Loquitur

The thing speaks for itself.” Doctrine that allows negligence to

be inferred if harm would not normally occur without negligence

Attractive Nuisance

A hazardous condition likely to attract children (e.g.,

swimming pools, construction sites)

Elements of a Valid Contract

Offer, acceptance, consideration, legality, and

capacity

Consideration

Something of value exchanged between parties (cannot be

something already received in the past)

Capacity

Minors and mentally incapacitated individuals may avoid contracts,

except for “necessaries” like food, clothing, or shelter

Invalidating Factors

Fraud, duress, undue influence, mistake, or illegality.

Illegal Contracts

Agreements that involve unlawful activities are unenforceable

Remedies for Breach

Monetary damages, rescission, restitution, or specific

performance (courts may order completion of the contract, but not for personal

service contracts).