Legl CH 1+ 3

What is a Law?

Granny tells her grandson to get her a glass of water from the kitchen. Is that a law?

IRAC (thinking like a lawyer) – always state your conclusion at end

Issue → Does Granny's statement meet the definition of a “law?”
Rule:
- Rule
- Set down by the state (think “gov’t”)
- Backed up by enforced again by the state
Analysis:
- While it may be a “rule” in Granny’s house that you get her a glass of water when we ask, Granny is certainly not the gov’t. Additionally, she is not able to utilize the resources of the gov’t to enforce her household “rule”
Conclusion:
- Granny’s demand to her grandson is not a law

Practice

Casey approached a stop sign at a quiet neighborhood intersection. Seeing no other cars or pedestrians, Casey slowed down but did not come to a complete stop since the intersection was clear. She claims that her ticket was invalid.

IRAC

Issue → Casey did not stop at the intersection
- Is Casey required to come to a complete stop at a stop sign even if the intersection appears clear?
Rule → You have to stop when encountering a stop sign – set by the gov’t
- Traffic laws requires drivers to come to a complete stop at stop signs, regardless of traffic or pedestrian presence
Analysis → Stopping at a stop sign is a law set by the gov’t
- Although intersection was
- Slowing down isn’t sufficient to fulfill legal requirements
Conclusion → The ticket is valid

Laws? Who needs them?

What if I said there will be no enforcement of laws for the next 24 hours?
- Maybe we do need laws after all
Why is it important to learn about laws in a business school curriculum?
- Keep us out of trouble!
- Certainty and predictability → helps business function (or else chaos)
More than just avoiding sanctions
- Use law to our advantage
  - Sometimes law is specifically designed in a way that we can use to our advantage (ex → intellectual property (patents, trademarks, copymarks, tax incentives)
More than just IP, Tax Laws, etc
- Develop new businesses
Something for the Sales and Marketing Teams
Professional Services
How about influencing laws in your favor?

What about the Rule of Law?

The same thing as the law? NO
- Rule of Law → enforcement of the law and no one is above the law
Laws are generally and equally applied – and requires solid, stable institutions
- “No one is above the law”
How important is the Rule of Law or business?
- Essential? We need to know how to play the game… again, certainty and predictability…

Recap

What is a law? → use to as a way to attack new problems
How do lawyers attack new fact patterns?
- Apply IRAC!
Why do we learn about law (rule of law) in a business school?
- Stay out of trouble!
- Use the law to our advantage
Rule of Law
- Not the same as law → no is above the law and equally apply to ppl
- Provides certainty and predictability, trust – no one is above the law
- Helps reduce at least one form of “transaction costs” (money spent to enter into and enforce contacts)
  - Transaction costs → the more trust and rule of laws the lowers it is

Property Defined

Ex → You have the same “property” as Jeff Bezos of Amazon
- Not the thing but the right
- Property is not the same as resources
Property is the term for the right to possess resources and shield from others
Resources are things
Right to property is the basis for a private market and basis for modern business
- Property right → right to keep your things

Classifications of Law

Some laws are higher than others (hierarchy)
Common Law (system level)
- Judge-made
- Precedent (Stare decisis) – let the prior decision stand
- Case law

Criminal Law and Civil Law (different meanings)
- Type of sanctions violating each law (apply)
  - Criminal (from gov’t)
    - Death
    - Imprisonment
    - Fines
    - Removal from office
    - Disqualification from holding office and from voting
  - Civil (money, suing)
    - Compensatory damages
    - Consequential damages
    - Punitive damages
    - Equitable remedies (not money you are suing for)

Hierarchy of laws

Reasons for Agencies – decide on more the specific parts + more experts in the field + protect ppl

Criticisms of Administrative process

Hard to hire the best, hard to fire the worst, and political ties
A lot of red tape, favors industry with policies
- Nothing is efficient
Adds to cost – directly through funding of agencies but who pays for the regulations in the end?

Administrative Agencies

Boards, bureaus, commissions, and organizations that make up the gov’t bureaucracy
quasi - judicial + executive + legislative power

Corporations ( and to some extent other business entities too )

Owned by shareholders which can mean a lot of different things depending on type of organization
Corporation organized in certain way: Board of Directors oversee the business, they hire officers who then hire rest of employees
Officers and manager are in charge of day-to-day business operations
What issues could this set-up create?
- Principal - Agent problem
  - Companies (principal) + agent (bod are serving the principal
- Corporate Governance ! → system of governing a company so that the interest of corporate owners and other stakeholders are protected

Specific Sense of Corporate Governance

Laws, policies, and procedures that protect the property interest that owners have in the business
Try to prevent people inside the company from abusing their positions for their own advantage to the detriment (hurt) of the owners of the company
Shareholder primacy theory
- What is purpose of business → make money
  - maximize shareholder value
Specific Governance: you may own stock in a company, but you don’t run the company