Legal Environment of Business Chapter Overview

2
CHAPTER 1:
Sources of the Law and the Court System
CHAPTER 2:
Torts
CHAPTER 3:
Criminal Law
Unit I
The Legal Environment
of Business
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© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
3
T
he study of law as it affects business is essential for every
businessperson. We live
in the most litigious society on earth. As a result, business
owners, managers, and
employees need to have an awareness of legal issues that affect
business as well as a

solid grasp of basic legal principles so that they can spot
potential problem areas and seek
expert legal advice before problems grow into costly and time-
consuming impediments.
The question most persons involved with business need to ask is
not whether they are ever
likely to be involved in litigation, but rather when they are
likely to encounter it. Conse-
quently, awareness of basic legal principles is probably the best
(and cheapest) risk man-
agement tool available to any businessperson. Indeed, an
employee who fully understands
basic legal principles and can recognize potential legal
problems before they arise can be a
company’s greatest asset.
In Unit I we begin our journey into practical legal training by
examining the sources of
American law and our court system, as well as the basic
principles of tort and criminal law.
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5
Chapter Overview
Sources of the Law
and the Court System
Learning Objectives
After studying this chapter, you will
be able to:
1. Distinguish between common law and
civil law.
2. Describe the structure and function of
both state and federal courts.
3. Define jurisdiction and its implication.
1
1.1 Sources of the Law
• The Civil Law Tradition
• The Common Law Tradition
• Constitutional Law
• Statutory Law
• Administrative Law
1.2 The Courts
• State Court Systems
• The Federal Court System
• Jurisdiction: The Power to Decide a Case
1.3 Chapter Summary
• Focus on Ethics

• Case Study: Snyder v. Phelps
• Case Study: Citizens United v. Federal
Election Committee
• Critical Thinking Questions
• Hypothetical Case Problems
• Key Terms
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6
CHAPTER 1Section 1.1 Sources of the Law
Law, distilled to its essence, can be described as rules of
conduct decreed and enforced by government for the benefit of
its citizens. Laws are by no means the only type of rules that
regulate conduct. A restaurant may require patrons to wear ties
and
jackets when dining in its premises, a college professor may
demand that students refrain
from talking in class, and a religious institution may command
that its members abstain
from using certain types of contraceptives. In all three cases, a
penalty may be imposed
for failure to observe the rules: the restaurant may deny
entrance to anyone not wear-
ing the proper attire, the professor may expel a student who
talks during class, and the

church may ostracize any member who challenges the
prohibition on contraceptive tech-
nology. Nevertheless, these rules do not rise to the level of laws
simply because they are
not enacted and enforced by the state.
Note also that while law in a sense is derived from a society’s
sense of morality, or what
people think is right and wrong, law is distinctly different from
either morals or ethics.
Nonetheless, it is worthwhile to consider the ethical
implications of the law.
In this chapter, we will trace the law to its various sources, as
well as explore an overview
of the federal and state court systems in order to gain a better
understanding of our sys-
tem of justice.
1.1 Sources of the Law
It is a common misconception to think of the law as a set of
rules written down in old, dusty books that show little change
over time. Such a vision of the law makes it seem stagnant and
inflexible. The reality, however, is quite different. Law in the
United States
is vibrant, adaptable, and ever changing (albeit slowly). The
U.S. Constitution is the start-
ing point for our law. Statutes passed by legislative bodies such
as the U.S. Congress and
the various states’ legislatures are an important part of the law,
as are decisions handed
down by federal and state judges, and the regulations and
administrative decisions of
state and federal agencies. All of these taken together make up
what we commonly refer

to as the law. We will examine each of these important sources
separately in order to gain
a better understanding of how they help to shape our law. We
will begin with the two
basic legal systems in the world: civil law and common law.
The civil law system empha-
sizes lawmakers setting down rules in written codes, whereas
common law derives from
judges making decisions in actual lawsuits.
The Civil Law Tradition
Civil law is the dominant legal system, favored by most non-
English-speaking countries
in Europe, Asia, Africa, and Latin America. The civil law
system is based on a tradition
that dates back to the Code of Hammurabi (2100 bce), which
reduces the law to statutes,
or written codes. For example, there is a section that provides
for the liability of a builder
when a house collapses. A contractor in ancient times could
thus reference the code and
know the risks of shoddy work in advance!
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This tradition continued with Roman

law, which traces its recorded origin to
the Twelve Tables (450 bce)—bronze tab-
lets setting down the law which were
attached to the orator’s platform in the
Roman Forum so that all citizens could
read and know the law. Finally, the tra-
dition reached its zenith around 533 ce
when the Byzantine emperor Justinian I
undertook the task of recording and inte-
grating 1000 years of existing law into a
single code—the Corpus Juris Civilis (lit-
erally the body of the civil law), more
commonly referred to as the Justinian
Code. That nearly 1500-year-old code
forms the most important pillar of the
civil law system.
The tradition of putting the law into a code that the general
public can read and under-
stand continues today in most countries using a civil law
system. Civil law requires that
law be written and made accessible to the people so that they
may know their rights and
obligations as citizens. There is relatively little leeway given to
judges in interpreting civil
law, and little room for debate as to the meaning and
application of the law in any given
circumstance. Civil law jurisdictions generally make it simpler
for citizens to know the
law and to predict its outcome. As a result, there tends to be
less litigation and less need
for attorneys in civil law societies, and many routine tasks are
handled by paralegals.
Societal opinions, changing values, or the cumulative wisdom of
judicial interpretation
of the law gleaned from legal precedent have a lesser role in

civil law systems than they
do under a common law system. Therefore, the law tends to be
relatively inflexible and
changes only when and if legislative bodies see fit to change it.
The Common Law Tradition
The common law system emphasizes the making of rules
through court decisions, and
traces its roots to England. After the Norman Conquest of 1066,
King William I began
the attempts to consolidate what were at times conflicting laws
throughout the country
into a unified common law that would apply throughout the
realm. By the 13th century,
magistrates traveled throughout the countryside, hearing cases
as they went from town
to town in regular circuits. Since the magistrates had no great
body of written law to rely
upon, they in essence created the law as they decided cases, by
applying basic principles
of fairness drawn from the customs, traditions, and ethics of the
time. Ultimately, these
decisions were written down and used as precedents or
guidelines, to be referred to and
followed when similar cases arose in the future. Before the
United States of America came
into existence, this land consisted largely of English colonies,
which adopted the common
law tradition. The exception is Louisiana, which still adheres to
much of the civil law sys-
tem developed as a French colony.
Modern law has roots in ancient Rome.
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Under the doctrine of stare decisis (“let the decision stand”),
courts today still follow prec-
edent closely and decide cases in a way that is consistent with
the way that similar cases
were decided in the past. The role of lawyers in a common law
system largely involves
arguing how existing precedent should be applied to a particular
set of facts.
Example 1.1. In an 1834 case titled Joel v. Morison, the court
found that
an employer could be liable under some circumstances where
his servant,
driving the master’s horse and cart, had collided with a
pedestrian. The
key issue was whether the servant was on the master’s business
or on a
small detour, in which case the master was liable, as opposed to
the ser-
vant’s going off on a frolic of his own, whereupon the master
would not be
liable. The same rules the court used in Joel are still being used
today. If a
United Parcel Service truck hits someone, the attorney for UPS
will argue

the driver was on a frolic, and the lawyer for the injured person
will claim
he was still on UPS business.
The characteristic distinguishing common law from civil law is
that common law is pri-
marily derived from judges deciding actual cases. That is not to
say that only judges make
law. Today, there are large bodies of statutes in common law
(not unlike those of civil
law jurisdictions) that seek to codify important areas of the law.
Unlike civil law jurisdic-
tions, however, statutes do not form the foundation of the law in
most areas, but largely
serve to alter or clarify the common law. For example, the basic
rules governing contracts
(enforceable agreements) have evolved from the common law,
but today many contracts
are subject to a statutory body of law, the Uniform Commercial
Code (UCC). The UCC
is a summary of traditional common law rules governing
commercial transactions, which
has been all or partially enacted into statutory law by the state
legislatures. UCC rules are
in many places identical to those from the common law.
Even in areas where the law has been largely modified by
statute, the courts still retain the
power of interpreting, modifying, and generally fine-tuning the
law through legal deci-
sions. In order to know what a given statute means, one must
always look to see how it
has been interpreted and applied by the courts.
Example 1.2. A number of federal statutes apply only in
situations involv-

ing “interstate commerce.” A commonsense definition of
interstate com-
merce might be “commercial transactions that cross state lines.”
But the
courts interpret the phrase far more broadly, so that a business
exclusively
within one state can still be regulated by federal statutes
because of its
potential effects on interstate commerce. Thus a barbeque
restaurant in
Alabama that refuses to promote African Americans to
management posi-
tions can be sued for racial discrimination (a federal law), even
if the plain-
tiff (the person suing) is also from Alabama (thus not crossing
state bound-
aries). The discrimination can potentially affect the interstate
job market,
since African Americans from other states might be less likely
to seek jobs
in Alabama.
Also unlike civil law, it can be difficult for the average
layperson to know with any cer-
tainty what the common law is with regard to any specific
situation. In many instances,
even experienced attorneys can only venture an educated guess
on how a court is likely
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9
to apply the law to a given set of facts. And even the best
judicial minds often disagree,
based at least in part on their judicial philosophy and political
ideology. Many decisions
of the U.S. Supreme Court are not unanimous and are sometimes
decided by narrow five-
to-four margins, with judges interpreting the law very
differently based in great part on
their judicial philosophy.
Example 1.3. A majority of the Supreme Court has found that
commercial
speech (such as advertising) merits First Amendment protection,
but not to
the same degree as other types of speech. Nowhere in the First
Amendment
is this distinction drawn. Thus when Puerto Rico passed a law
allowing
casino gambling but forbidding advertising of gambling
establishments,
the Court said the First Amendment was not necessarily
violated. Four
judges dissented, partly because they thought it made no sense
to allow
the activity (gambling) but not speech about the activity.
Supreme Court
justices still disagree about whether commercial speech should
be
treated differently. Justice Clarence Thomas stated in a 1996
case,
Liquormart, Inc. v. Rhode Island, “I do not see a philosophical

or historical
basis for asserting that ‘commercial’ speech is of ‘lower value’
than
‘noncommercial speech.’”
This uncertainty and susceptibility of the common law to
varying interpretations, which
may depend on judges’ personal philosophies and opinions, is
perhaps its major drawback.
On the positive side, common law is not as inflexible as civil
law; judges have a consider-
able amount of power to change, adapt, and mold the law to fit
particular cases in order
to insure that justice is done and that the law reflects society’s
changing social values. For
example, consider the changing views of racial discrimination
that caused the Supreme
Court over time to switch from endorsing “separate but equal”
segregation in the 1896
case Plessy v. Ferguson, which allowed states to mandate
separate schools for African
American children, to finding such policies unconstitutional in
the 1954 case Brown v. the
Board of Education.
Constitutional Law
A constitution establishes a state or nation’s form of
government and sets out its most
fundamental legal principles. The United States has a federal
Constitution as well as con-
stitutions for each of the 50 states. In addition, local
municipalities may have their own
versions, known as charters. Article VI, Section 2 of the U.S.
Constitution (see Appendix
A) specifically states that the U.S. Constitution “shall be the

supreme Law of the Land.”
If a conflict arises between the U.S. Constitution and any other
law, including a state con-
stitution or city charter, the federal Constitution rules and the
conflicting law is deemed
unconstitutional, which means it has no force or effect.
Constitutions are of necessity rather broad documents stating
the basic principles a gov-
ernment must follow. The interpretation of the constitution is
left to the courts and the
final say on the meaning of the U.S. Constitution is reserved to
the U.S. Supreme Court.
Once the highest court in the land has interpreted the
Constitution, all other courts are
bound by its interpretation.
Example 1.4. The state of Texas enacts a statute that makes it a
crime to
destroy an American flag. Jennifer attends a protest against
United States
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involvement in Afghanistan,
where she burns an Ameri-
can flag, while shouting, “War
sucks!” Jennifer is arrested,
charged, and convicted under
the Texas law. She appeals, stat-
ing that this law violates her First
Amendment right to free speech.
Jennifer would win her case, and her con-
viction would not stand. The Supreme
Court found in a 1989 case, Texas v. John-
son, that flag burning is symbolic speech
and protected by the First Amendment.
Thus the Texas law is unconstitutional.
Suppose the Supreme Court finds a
federal law unconstitutional. What can
Congress do if it disagrees with the U.S.
Supreme Court’s interpretation of the
Constitution? Only one thing: amend the
Constitution. Under Article V, Congress
has the right to amend the Constitution
by a two-thirds vote by the House of Repre-
sentatives and the Senate. If three-quarters
of the states’ legislatures then approve the amendment, or if a
constitutional convention
in three-quarters of the states approves it, the amendment
becomes law and the Constitu-
tion is changed to include the new amendment. However, the
right of each state to equal
representation in the Senate may not be amended. It should be
noted that it is relatively

rare that the amendment procedure is successful; in the past 200
or so years, there have
only been 27 amendments.
The First Amendment protects flag burning as a form of
political speech. In 1967, demonstrators gathered in Sheep
Meadow of Central Park and burned an American flag in
opposition to the war in Vietnam.
1967/Daily News, L.P. (New York) / New York Daily News via
Getty Images
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In the Media: Eminem’s Lyrics—Free Speech or Defamation?
Marshall Mathers, better known as the rapper Eminem, is one of
the best-
selling hip hop artists of all time. He has sold over 85 million
albums, all
with the parental advisory warning stamped on the front.
Drawing inspi-
ration from his own, evidently difficult upbringing, Eminem has

rapped
about his mother, his ex-wife, a former schoolmate, and even
his fans, in
his notoriously abrasive style. As a result, he has been involved
in numer-
ous lawsuits for defamation.
Classmate DeAngelo Bailey sued Eminem in 2002, alleging that
he was the
subject for the song “Brain Damage” from Eminem’s 1999 debut
album,
The Slim Shady LP. “Brain Damage” is about a childhood bully
who is physi-
cally violent with little Marshall, and it includes the following
lines: “I was
harassed daily by this fat kid named DeAngelo Bailey. [. . .]
[E]very day he’d
shove me in the lockers. One day he came in the bathroom [. . .]
and beat
me into submission.” Although Bailey was working in sanitation
when he
filed the million-dollar suit, Bailey claimed that Eminem’s
lyrical disparage-
ment cost him a career in music. In 2003, the lawsuit was
dismissed in a
14-page ruling, but not without Michigan trial judge Deborah A.
Servitto
finding her own lyrical voice. In footnote 11 of the order of
dismissal, Judge
Servitto wrote the following gem: “To convey the Court’s
opinion to the
fans of rap, the Court’s research staff has helped the Court put
the decision
into a universally understandable format:
Mr. Bailey complains that his rep is trash.

So he’s seeking compensation in the form of cash.
Bailey thinks he’s entitled to some monetary gain
Because Eminem used his name in vain.
Eminem says Bailey used to throw him around
Beat him up in the john, shoved his face in the ground
Eminem contends that his rap is protected
By the rights guaranteed by the first amendment
Eminem maintains that his story is true
And that Bailey beat him black and blue
In the alternative he states that his story is phony
And a reasonable person would think it’s baloney
The Court must always balance the rights
Of a defendant and one placed in a false light
If the plaintiff presents no question of fact
To dismiss is the only acceptable act.”
The First Amendment’s protection of the freedom of speech
includes certain speech or communication
that might seem to be hurtful, particularly when what is being
expressed are opinions or, in this case,
opinions as lyrics to a copyrighted song. Of course, asserting as
fact something that is objectively false
would not be protected by the Constitution and would be
defamation.
Source:
http://www.thesmokinggun.com/documents/crime/judge-raps-
eminem-accuser
In 2009, Eminem
received the “Best Hip
Hop Video” award at
the MTV Video Music

Awards. The rapper is
known for his strong
lyrical style.
Jason DeCrow/Associated Press
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Statutory Law
Another important source of law in the United States is statutes
enacted by federal, state,
and local legislatures, which are elected lawmaking bodies. In
general, the federal gov-
ernment can legislate in any area for which it has been granted
the power to regulate
by the U.S. Constitution. Article I, Section 8 enumerates the
powers of Congress, which
include the power to levy taxes, borrow money, regulate
international and interstate com-
merce, award patents and copyrights, declare war, and so forth.
While recognizing that
some regulation must be done on a nationwide basis (imagine
the chaos that would ensue
from each state establishing its own currency, for example!) the
framers of the Consti-

tution intended to limit federal power, believing that most
regulation is better done by
government units that are closer to the people they govern.
Under the Tenth Amend-
ment, matters not granted to the federal government for
regulation are left to the states.
Nowhere in the Constitution is it stated that the federal
government has the power to, for
example, pass social legislation for the common good.
Where, then, does Congress get the authority to legislate in
these areas? From Article
I, Section 8, Clause 2 (the commerce clause), which gives
Congress the power to regu-
late “commerce with foreign nations, and among the several
States, and with the Indian
tribes.” In a long series of decisions concerning the commerce
clause, the Supreme Court
has interpreted the clause in the broadest possible sense, in
effect giving Congress the
power to regulate any activity that either directly or indirectly
may affect or burden inter-
state commerce. Consequently, the 1964 and 1991 Civil Right
Acts enacted by Congress, for
example, owe their existence to the commerce clause; the reason
Congress has the power
to pass these acts is that discrimination based on sex, race,
color, religion, or national
origin can burden interstate commerce. In passing the
legislation, Congress was merely
exercising its right to regulate commerce. Without such a broad
interpretation of the con-
stitution, Congress would lack the power to pass any social
legislation that did not come
under any of the areas specifically reserved to it in the
constitution.

Administrative Law
Administrative agencies are a kind of hybrid part of
government, which in some instances
act in a legislative manner by making administrative laws, or
rules, and in others take on
judicial functions by holding hearings and issuing decisions.
Agencies also have investi-
gatory and enforcement powers when their rules are alleged to
be violated. These agen-
cies exist on federal, state, and local levels, but the focus here
will be on federal agencies.
There are many instances in which the executive or legislative
branches lack the tech-
nical expertise or even the time to regulate and control an area
over which they have
jurisdiction. Consider the plight of Congress, entrusted with
regulating civil aviation in
the United States. What do senators know about how often
commercial planes should be
inspected, how airline personnel should be trained, or what
safety features airplanes need
to adopt? Only aviation experts can make such determinations.
Congress, recognizing its
limitations, created the Federal Aviation Administration (the
FAA) to act on its behalf and
empowered the agency to create regulations affecting
commercial flight and enforce these
regulations through the administrative process.
Some federal agencies, such as the Internal Revenue Service
(IRS) and Food and
Drug Administration (FDA), are considered to be part of the
executive branch of

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CHAPTER 1Section 1.2 The Courts
government, and thus are more subject to direction
from the president. Others are independent, such as the
Environmental Protection Agency (EPA) and Federal
Communications Commission (FCC). Congress cre-
ates administrative agencies through legislation when
it sees the need for special regulation in a particular
area. Thus the Interstate Commerce Commission was
established in the heyday of the railroads, when rules
were needed to govern this early version of mass tran-
sit, and the Equal Employment Opportunity Commis-
sion was born out of the 1960s civil rights movement.
The administrative process requires that those who are
subject to agency regulation be given the opportunity to
be heard before any new regulation is passed; the pro-
cess tries to ensure that agencies do not act in a vacuum,
but rather remain responsive to the needs and concerns
of those they regulate. If, for example, the Federal Avia-
tion Administration were to propose a new rule affect-
ing the airline industry (e.g., prohibiting flight personnel
from drinking any alcoholic beverage 48 hours prior to a
flight), it would have to go through public hearings giv-
ing all interested individuals the right to testify before it

and make their point of view known before the new rule
could be adopted. Agencies also exercise quasi-judicial
powers through hearings and administrative decisions.
Persons accused of violating agency rules are brought before the
agency for a hearing
resembling a trial. Such hearings are held before administrative
law judges who are
employees of the agency empowered to decide administrative
hearings, although their
rulings can also be challenged in court.
1.2 The Courts
As we’ve seen, laws are interpreted and implemented by the
courts. There are, in effect, 52 court systems (which are
sometimes referred to as jurisdictions), in the United States: the
federal courts, state court systems for each of the 50 states, and
a
court system for Washington D.C. Even though there are some
differences between court
systems, they are structured in a similar manner.
State Court Systems
State court systems generally conform to the following model,
albeit with occasional
minor variations (see Figure 1.1):
1. Lower courts of limited jurisdiction
2. Trial courts of general, original jurisdiction
3. Intermediate appeals courts
4. The state’s highest appellate court (generally, the state’s
supreme court)
The FAA, a federal administrative agency,
regulates all aspects of U.S. air travel,

including safety protocol, flight standards,
and pilot certificates.
Stockbyte/Thinkstock
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14
Lower State Courts
Most states have several lower courts of limited jurisdiction,
which function to hear par-
ticular types of cases and to help reduce the workload of the
general trial courts, which
often have crowded calendars. Such courts include small claims
courts (which hear civil
cases involving small dollar amounts that vary from state to
state but are generally in the
$1,500 to $15,000 range), justice of the peace courts (where
minor criminal offenses are
adjudicated), traffic court, surrogate court (where matters
relating to trusts and estates are
heard), and family court (where child custody, divorce,
separation, and a variety of other
matters pertaining to families are adjudicated).
State Trial Courts of General Jurisdiction
Unless a case involves a type of subject matter that means it
will go to a limited jurisdic-

tion court, the trial court of general jurisdiction is where most
cases will begin. Nearly all
cases affecting business will be litigated in these courts. As the
name implies, trial courts,
or courts of original general jurisdiction, try almost any type of
criminal or civil case. Trial
courts of general jurisdiction can award an unlimited amount of
money damages in civil
cases and can also hear a type of civil action known as an equity
case, where the person
suing seeks something other than money damages. They have
the widest trial jurisdiction
available. Typical cases heard by trial courts include crimes,
breach of contract actions,
and torts.
Intermediate State Appeals Courts
Intermediate appeals courts have jurisdiction to hear appeals
from most trial and some
limited jurisdiction courts, as well as some rulings of
administrative agencies. These courts
provide parties who believe that a legal error was made by the
original trial judge with
the opportunity to have their trial court record reviewed.
Appellate courts only review
questions of law and do not review findings of fact.
Accordingly, no new witness testi-
mony or evidence is presented in the appeals court. A court of
appeals will only consider
Traffic CourtFamily CourtTrial Courts
Small Claims Court
(Appeal is not
always available)

Surrogate Court
State
Supreme Court
Intermediate
Appellate Courts
Figure 1.1: The state court system
The highest state court system is usually known as the state
supreme court, followed by the intermediate
appellate courts. Beneath these are the lower state courts, which
include trial courts, family court, traffic
court, surrogate court, and small claims court (in which appeal
is not always available).
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15
the testimony and evidence presented at the trial court. Thus,
for example, a losing party
could successfully appeal on the grounds that the trial judge
improperly instructed the
jury on a point of law, or failed to sustain a valid objection by
the losing litigator (both
questions of law), but an appeal based on a contention that a
witness lied at the trial (a

question of fact) would not be valid.
State Supreme Court
The state’s highest court—usually named the State Supreme
Court—has the final say on
all appeals from trial and intermediate appeals courts. Whether
a state’s highest court
hears a case on appeal is usually at its own discretion. If the
court does hear a case on
appeal from an intermediate appellate court, its decision is final
and can only be over-
turned by the U.S. Supreme Court if a federal question such as a
violation of the U.S.
Constitution is involved. State supreme courts operate much
like intermediate appellate
courts. They only review questions of law and not findings of
fact. They do not hear wit-
ness testimony or consider evidence that was not previously
admitted at the trial court.
The Federal Court System
The federal court system contains courts of limited jurisdiction,
trial courts called U.S.
District Courts, intermediate appeals courts known as the U.S.
Courts of Appeals, and the
U.S. Supreme Court (see Figure 1.2).
Patent and
Trademark Office
Court of
International Trade
U.S. Claims Court
(Federal Circuit)

Tax Court
Administration
Agency Court
Bankruptcy Court
United States
Supreme Court
Court of Appeals
for the Federal Circuit
District Courts of Appeal
(11 Circuits and the
D.C. Circuit)
District Court
Figure 1.2: The federal court system
Below the United States Supreme Court is the Court of Appeals
for the Federal Circuit and the District
Courts of Appeal (11 Circuits and the D.C. Circuit). Below the
Courts of Appeals for the Federal Circuit are
the U.S. Claims Court, Court of International Trade, and Patent
and Trademark Offices. Below the District
Courts of Appeal are Bankruptcy Court, Administrative Agency
Decisions, Tax Court, and District Courts.
rog80328_01_c01_001-026.indd 15 9/20/16 11:18 AM

16
Federal Courts of Limited Jurisdiction
The federal court system also contains a number of courts of
limited original jurisdic-
tion that try only specific types of cases. These include the U.S.
Tax Court, Bankruptcy
Court, Court of Claims (tries cases in which the U.S.
government is a party), Court of
International Trade (tries civil cases involving trade tariffs and
related trade issues), and
the Territorial Courts. A special Court of Military Appeals also
exists to hear appeals from
military tribunals.
U.S. District Courts
The U.S. District Courts are the federal trial courts that hear
both criminal and civil cases.
Currently, there are 89 districts in the 50 states, in addition to
district courts in Puerto Rico,
the Virgin Islands, the District of Columbia, Guam, and the
Northern Mariana Islands for
a total of 94 judicial districts. The number and location of
judicial districts can be changed
by Congress at will and varies as changes in population and the
load of district court
calendars demand.
U.S. Circuit Courts of Appeals
The U.S. Circuit Courts of Appeals are intermediate appellate
courts that hear appeals
from specialized federal court and federal district court

decisions, and from many federal
agency decisions. Just as in the state appellate courts, the U.S.
Circuit Courts of Appeals
decide questions of law, not fact. The U.S. Courts of Appeals
review the testimony and
evidence admitted in the U.S. District Courts. No new
testimony or evidence is admit-
ted. There are 11 judicial circuits, or geographic areas, each
encompassing more than one
state, plus the District of Columbia and the Federal Circuit (see
Table 1.1) for a total of 13
circuits. Decisions of the Circuit Courts may be appealed to the
U.S. Supreme Court, but
generally the Supreme Court has the discretion to grant review
or refuse it. Each year
thousands of petitions for review, from both federal and state
high courts, are made to the
Table 1.1: The federal court system
Circuit Name Composition
District of Columbia District of Columbia
First Maine, Massachusetts, New Hampshire, Puerto Rico,
Rhode Island
Second Connecticut, New York, Vermont
Third Delaware, New Jersey, Pennsylvania, Virgin Islands
Fourth Maryland, North Carolina, South Carolina, Virginia,
West Virginia
Fifth Louisiana, Mississippi, Texas
Sixth Kentucky, Michigan, Ohio, Tennessee

Seventh Illinois, Indiana, Wisconsin
Eighth Arkansas, Iowa, Minnesota, Missouri, Nebraska, North
Dakota, South Dakota
Ninth Alaska, Arizona, California, Guam, Hawaii, Idaho,
Montana, Nevada, Oregon, Washington
Tenth Colorado, Kansas, New Mexico, Oklahoma, Utah,
Wyoming
Eleventh Alabama, Florida, Georgia
Federal Circuit All federal judicial districts [includes the U.S.
Court of Federal Claims, the U.S. Court of
International Trade, and the U.S. Court of Appeals for
Veterans’ Claims]
rog80328_01_c01_001-026.indd 16 9/20/16 11:18 AM
17
Supreme Court, but since the Court typically takes less than a
hundred cases per term, the
odds are that a federal appeals court decision will be the final
word.
The Supreme Court of the United States

Although the Constitution grants the Supreme Court both
appellate jurisdiction and
original (trial) jurisdiction in certain types of cases (for
example, those involving foreign
ambassadors or ones in which a state is a party), as a practical
matter the Supreme Court
functions as a court of appeals.
Litigants who are unhappy with the results from either the
state’s highest court (in cer-
tain types of cases) or a Circuit Court of Appeals may petition
the Supreme Court for a
writ of certiorari. These petitions essentially seek to convince
the justices that the case
is of such import that they should grant review. Generally, the
Supreme Court is only
interested in cases involving important constitutional issues or
possibly a conflicting
interpretation of federal law among the Circuit Courts of
Appeals. The petitions circu-
late among the nine justices; if at least four vote to take the
case, the Court will issue a
writ of certiorari, which means that the Supreme Court will
decide the case. If the Court
refuses to issue a writ of certiorari, the lower court’s decision is
left standing. A refusal by
the U.S. Supreme Court to issue a writ of certiorari is not
necessarily an indication that
it supports the lower court’s position; it merely means that at
the time that the case was
appealed, fewer than four justices wanted to hear it.
Jurisdiction: The Power to Decide a Case
Before any court, state or federal, may validly accept and
decide a case, that court must
have jurisdiction over that case. The word “jurisdiction” is

sometimes used to refer to
a court system: for example, we might say that California and
New York are different
jurisdictions, meaning they
make their own laws and a
California court is not bound
by a New York law. But juris-
diction is used here to refer
to any given court’s power
to decide a given case. In
other words, if a court does
not have proper jurisdiction
over the case, it will be over-
turned on appeal.
Furthermore, to decide a case
the court generally needs
two types of jurisdiction:
subject matter and personal.
With regard to subject mat-
ter jurisdiction, this means
that you cannot get a divorce
in bankruptcy court, because a bankruptcy court would lack
jurisdiction. Personal
jurisdiction requirements are designed to ensure that there is a
basic fairness, or due pro-
cess, in the way in which the law is used by or against a person.
Suppose Heather is an
The Supreme Court, the highest court in the U.S., operates from
this building in Washington, D.C.
iStockphoto/Thinkstock
rog80328_01_c01_001-026.indd 17 9/20/16 11:18 AM

18
Illinois resident whose car collides with one driven by Aaron,
and this takes place in Illi-
nois. It would seem unfair to Heather to allow Aaron to sue her
in Alaska, a place where
she has never even been!
Federal Courts and Subject Matter Jurisdiction
There are two types of federal subject matter jurisdiction:
federal question jurisdiction
and diversity jurisdiction. A federal court needs one of these to
take a case. Federal ques-
tions involve claims arising under the federal Constitution, a
federal statute, or a federal
treaty. For example, if Better Bank sues Bigger Bank for
anticompetitive practices under
the Sherman Act, an antitrust law, this would be a federal
question case because a federal
law is involved. On the other hand, if Better sues Bigger for
breach of contract, it would be
state subject matter because the law of contracts is state law.
Some federal subject matter is exclusive to the federal courts,
meaning these cases can
only be brought in federal courts. For example, if Microcorp
sues Macrocorp for patent
infringement, Micro would have to file its case in federal court.
Other examples of exclu-

sive federal jurisdiction include bankruptcy, copyright, the bulk
of securities law claims,
admiralty and maritime claims, cases in which the United States
is a party, and cases
involving foreign ambassadors or consuls. However, most
federal laws fall into the con-
current jurisdiction category, meaning the case can be brought
in federal or state court.
The other type of federal subject matter jurisdiction is known as
diversity of citizenship.
Diversity jurisdiction means that the plaintiff (the person suing)
and the defendant (the
one being sued) are from different states. There is also a
requirement that the claim be over
$75,000. Since these cases typically involve state law claims
such as breach of contract or
personal injury, it may seem odd to find them in federal court.
The rationale is that an out-
of-state party might face local prejudice in state courts (where
judges are often elected,
and may lose their jobs if they make an unpopular decision) and
so they are given the
choice to go to federal court (where judges are appointed for
life or until they retire or are
impeached for misconduct).
Example 1.5. Beta Inc., a company that is incorporated in and
has its head-
quarters in Wisconsin, wants to sue Jared, a software developer
who lives in
Minnesota, for breach of contract, claiming damages of
$100,000. Although
this claim arises out of state law, the case could be brought in
either a state
or federal court, since diversity jurisdiction is present.

Personal Jurisdiction
Whether the case is brought in federal or state court, there must
also be jurisdiction
over the parties involved, known as personal jurisdiction or in
personam jurisdiction.
Furthermore, the court must have personal jurisdiction over
both the parties involved in
the lawsuit. Since the plaintiff has chosen the court in which he
or she files the case, the
plaintiff submits voluntarily to the court and gives it the right to
decide his or her fate.
But what of the defendant, who certainly didn’t choose to be
sued? Basic fairness, or
due process (required by the U.S. Constitution in both the 5th
and 14th Amendments),
demands that at a minimum the defendant be given notice of the
lawsuit, and that he or
she has at least “minimum contacts” with the state in which the
court is located (other-
wise known as the forum).
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19
CHAPTER 1Section 1.3 Chapter Summary
The notice requirement is generally met by service of process, a
procedure in which an
agent of the plaintiff delivers the legal papers that commence

the lawsuit to the defendant.
These papers tell the defendant the basis for the lawsuit (such as
negligence or breach of
contract) and direct him or her how to proceed (such as filing an
answer with the court or
appearing in person).
If the defendant is a resident of the forum state (meaning the
state in which the court
is physically located), she may be served at her legal address,
which can often be done
by mail. But if the defendant is a nonresident, there must be
minimum contacts with
the forum, in order to serve the defendant out of state (known as
long-arm jurisdiction,
because the long arm of the law is reaching out to get the
defendant back into the legal
system). Minimum contacts may consist of doing business in the
forum state, causing an
injury there, or owning real estate there.
Example 1.6. Berry Gordy, founder of Motown records and
resident of Cal-
ifornia, sued the Daily News, which is located in New York, for
libel (a tort,
involving publishing a false statement) in California. The
newspaper con-
tended California lacked personal jurisdiction, pointing out that
99 percent
of its business is in New York, and it does not solicit business
in Califor-
nia. But because the News did have 13 subscribers in
California, and had
deliberately targeted a California resident, the defendant had
minimum
contacts with California and could be sued in that state.

Venue
A court that has subject matter jurisdiction and personal
jurisdiction may still refuse
to hear a case on the grounds that the action should be brought
in the state with closer
ties to the litigants or the subject matter of the action. For
example, suppose Jason, a
resident of California, is flying from Los Angeles to
Bakersfield, California, aboard a
charter plane operated by a California company, which then
blows up in Nevada air-
space. California will be the most likely venue to hear a case
brought by Jason’s family
against the charter company.
1.3 Chapter Summary
The basic foundation of U.S. law is the Constitution, but much
of our legal tradition is also grounded in the common law
tradition, where rules evolve through case precedent, and the
concept of having written statutes has come from the civil law
tradition. The law is generally enforced through the mechanism
of the courts, which are
organized in a manner that takes into account both geographical
boundaries and subject
matter restrictions. For any court to render a valid decision in a
case, it must have both
personal and subject matter jurisdiction.
The Constitution sets forth restrictions on the federal
government’s lawmaking ability,
and also guarantees certain individual liberties, such as freedom
of expression, to indi-
viduals. However, both the Constitution and the statutory law
made by legislatures often

must be fleshed out by the courts. Thus the law is not a static
concept, but rather an evolv-
ing system of rules that will change over time.
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20
Focus on Ethics
While the First Amendment right to free speech includes the
right to
commercial speech, the limits on government restrictions are
not always
easy to predict. For example, courts have ruled that the
government can
compel speech to protect consumers from confusion and
deception. The
FDA is authorized by statute to regulate tobacco, and the
agency required
cigarette manufacturers to place graphic images showing
smokers with
tracheotomies and cancerous lesions on packages. A group of
manufac-
turers challenged the law on the basis that it violated their First
Amend-
ment rights, as the right to free speech often includes the right
to not
speak. The judge agreed with the defendants, and found the

FDA require-
ment unconstitutional.
Questions for Discussion
1. How do you think the government should balance the need
to pro-
tect public health with the right to free speech?
2. Tobacco companies have for years used advertising to
convey a
message to consumers that smoking is manly (the Marlboro
cow-
boy ads), sophisticated (product placement in Hollywood
movies),
cool, and fun. They have targeted children with cartoon ads
such as
Camel’s Joe Camel series. Is this ethical? Do the companies
have a
valid point that people, after all, decide for themselves whether
to start smoking?
3. What are the pros and cons of requiring gruesome pictures
on cigarette packages? Do they
convey a message that verbal warnings do not? Are they just
sensational fear-mongering?
4. Is there a valid reason to treat tobacco companies
differently from other manufacturers whose
products can damage health, such as alcoholic beverage
manufacturers and the makers of
junk food?
Does requiring such
graphic pictures of
smokers on cigarette

labels violate the First
Amendment?
2011 Getty Images
Case Study: Snyder v. Phelps
131 S. Ct. 1207, 179 L. Ed. 2d 172 (2011)
Facts: Mathew Snyder, a Marine, was killed in Iraq. A group
from the Westboro Baptist Church picketed
outside the funeral, holding signs that read “God Hates the
USA,” “Fag Troops,” “America is doomed,”
“Pope in hell,” and “Thank God for dead soldiers.” The pastor
of the church was Fred Phelps, who
believed that God hates homosexuality and is punishing
America for tolerating it. In addition, the
church’s website, www.godhatesfags.org, made statements that
Snyder’s father, Albert, “taught Mat-
thew to defy his creator,” “raised him for the devil,” and
“taught him that God was a liar.” The picketers
were on a public sidewalk and followed police directions.
Albert Snyder sued, alleging among other
things that the defendants had committed the torts (civil
wrongs, to be discussed in Chapter Two) and
caused him emotional distress. The trial ended in a $5 million
judgment for the plaintiff. The case even-
tually wound up in the Supreme Court. (continued)
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http://www.supremecourt.gov/opinions/10pdf/09-751.pdf

21
Case Study: Snyder v. Phelps (continued)
Issue: Does the First Amendment right to free speech
protect Westboro’s activities?
Discussion: The Court noted that the speech in question
was of “public concern,” since it involved political/social
issues, and thus was entitled to the highest degree of
protection under the First Amendment. Whether the
statements were inappropriate or controversial was
irrelevant, and the fact that the church used the funeral
of a marine as an occasion to convey its message, in part
to gain publicity, did not matter.
The Westboro website’s comments were also protected,
with a majority of the Court apparently agreeing with the
reasoning of the Fourth Circuit Court of Appeals, which
found a reasonable person would not take the statements
literally, but rather would view it as “rhetorical hyper-
bole,” not actual facts about the soldier and his father.
Justice Breyer filed a concurring decision (meaning that
he agreed with the majority’s result, but not necessarily
with its reasoning), emphasizing that the picketing was within
the First Amendment but not including
comments on the website. Justice Alito filed a dissent (meaning
that he disagreed with the holding), stat-
ing that there could be open and vigorous debate on public
issues without the need to protect vicious
comments of the type involved in this case.
Holding: Westboro’s demonstration and website were protected

under the First Amendment.
1. The First Amendment restricts government controls on
speech. Since Snyder was suing a
private individual (Phelps and the church), how was the
government involved?
2. Why did the majority of the Court decide this was protected
speech?
3. Do you think it is hard to draw the line between speech that
the First Amendment should
protect and speech that can be regulated? Explain.
4. Do you agree with the majority, the concurrence, or the
dissent? Why?
5. Suppose a case arises where a website is devoted to
negative remarks about a particular com-
pany. Employees and customers are invited to leave their
opinions on a public bulletin board.
Would this type of website be treated the same as the one
involved in the Snyder case?
In 2007, Pastor Fred Phelps of Westboro
Baptist Church demonstrated with family
members outside the federal courthouse
in Baltimore, Maryland, where a jury
deliberated over a suit brought against him
by Albert Snyder. Members of the church
held signs at the funeral of Snyder’s son, a
soldier killed in Iraq, in 2006.
Jed Kirschbaum/Associated Press

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22
Case Study: Citizens United v. Federal Election Commission
558 U.S. 50 (2010)
Facts: A nonprofit corporation, Citizens United, produced a
documentary called Hillary, which was
critical of then Senator Hillary Clinton, who was a candidate for
the Democratic Party’s presidential
nomination in 2008. The film violated the Bipartisan Campaign
Reform Act of 2002 (BCRA), Section
203, which bans “big money” from unfairly influencing federal
elections. Citizens United, concerned
about possible civil and criminal penalties for violating the
BCRA, filed a suit against the Federal Elec-
tion Commission (FEC) asking the court for an injunction to
prohibit the FEC to apply Section 203 to
the film. Citizens United argued that Hillary was protected
political speech and could not be regulated
by the FEC. The U.S. District Court for the District of
Columbia denied the injunction and ruled that
Section 203 was constitutional because of prior decisions of the
U.S. Supreme Court on similar issues.
In essence, the District Court reasoned that since Hillary was a
form of express advocacy intended

to inform voters that Senator Clinton was not qualified for the
office of president, it was a campaign
speech, and Section 203 was applied correctly. Citizens United
appealed and the case eventually went
to the Supreme Court.
Issues: Is an advocacy documentary created by a corporation
protected as political speech under the
First Amendment? Is Section 203 of the BCRA constitutional?
Discussion: The Court held that the prohibition on such
corporate independent expenditures, backed
by criminal sanctions, is an “outright ban on speech,” in
violation of the First Amendment’s guarantee
of the freedom of speech. As part of its decision, the majority
said that as a vital part of democracy,
“political speech must prevail against laws that would suppress
it.” Since corporations have been rec-
ognized by the Court as “persons,” they have the First
Amendment rights. The Court ruled that the gov-
ernment “may not suppress political speech on the basis of the
speaker’s corporate identity.” The very
basis of the First Amendment is to prevent the government from
disfavoring certain viewpoints and
speakers. The Court rejected the federal government’s argument
that corporations should be treated
differently under the First Amendment because they are not
“natural persons” (although media cor-
porations were exempted from Section 203 of the BCRA). The
Court also rejected the government’s
argument that the ban on corporate speech is necessary to
prevent corruption. Furthermore, the Court
overruled some of its prior decisions that allowed limitations on
political speech. The Court concluded
that Section 203 was unconstitutional and could not be applied
to Hillary.

Holding: The district court’s judgment was reversed as to the
constitutionality of the restrictions on
corporate independent expenditures.
1. What was the purpose of the Bipartisan Campaign Reform
Act (BCRA) of 2002?
2. Why did Citizens United file a lawsuit against the Federal
Election Commission? What did
Citizens ask the district court to do?
3. What was the decision of the U.S. District Court for the
District of Columbia?
4. What was the reasoning of the Supreme Court with respect
to the constitutionality of Section
203 of the BCRA? Why this decision is considered
controversial?
5. Do you agree that corporations, being “persons,” should
enjoy the same constitutional
protection as “natural persons” (at least as it concerns the
freedom of speech clause of the
First Amendment)?
rog80328_01_c01_001-026.indd 22 9/20/16 11:19 AM
23

Critical Thinking Questions
1. Describe the differences between the common law and civil
law systems. Which
do you think is preferable? Explain.
2. Is the only law that which is written in statutes or court
decisions? In Nazi Ger-
many, those written laws made it legal for the government to
commit genocide
against certain groups such as Jews, homosexuals, and gypsies.
After World War
II ended, Nazis were prosecuted for those same acts, under the
theory that they
had violated “natural law.” Should there be such a thing as
natural law? Are
there some acts which should be considered illegal, regardless
of what a statute
says, or is this equating law and morality?
Hypothetical Case Problems
Case 1. Javier is traveling from his home in New York to
Dallas, Texas. While driv-
ing through Oklahoma, his brakes fail and he is injured in the
ensuing crash.
Javier wants to sue the maker of his car, Energy-Auto Inc.
Energy’s headquar-
ters is in New York. It does not have any dealerships in
Oklahoma or do any
advertising in Oklahoma.
A. In which state or states can the plaintiff sue the defendant?

B. Assume that the plaintiff will sue the defendant for
$100,000 in damages.
Can the suit be brought in federal court? Explain.
C. If Javier only had relatively minor damage, and was suing
for $9,000,
could he sue in federal court?
D. In a similar situation, a defendant argued that the auto
manufacturer
could still be held liable in Oklahoma, because it was
foreseeable that the
defective car could end up there and cause injury. The court
disagreed,
and found Oklahoma did not have jurisdiction. Why did the
court think it
inadvisable to base jurisdiction on foreseeability? If it had ruled
otherwise,
where would makers of products potentially have to stand trial?
What
would this do to their costs?
Case 2. Amanda is extremely annoyed with her next-door
neighbor Nicole, whose
perfume is so strong it lingers in the hallway of their apartment
building.
Amanda sues Nicole, and the trial court dismisses the case,
saying that there
is no legal basis for the claim. Amanda wants to appeal.
A. Would this case present a question of law or fact?
B. Which court would likely handle the appeal? What would
be the likely
outcome?

C. Suppose Amanda loses her appeal at the state supreme court
level, and
now petitions the U.S. Supreme Court to hear her case. Do you
think the
Supreme Court will grant her a writ of certiorari? Why or why
not?
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24
administrative agency A government
entity that is part of the executive branch,
which makes rules governing a specific
type of activity and has the power to hold
judicial type hearings.
administrative law The rules made by
administrative agencies, which regulate in
specialized areas.
civil law (1) Law designed to protect
individual rights and allow individuals
to sue for redress of wrongs, as opposed
to criminal laws, which protect society in
general; (2) a legal system that puts the
most emphasis on statutory rules rather
than judicial decisions.

commerce clause From Article I, Sec-
tion 8 of the U.S. Constitution, giving the
federal government the right to regulate
interstate commerce. Broadly interpreted
by the courts, it expanded the power of the
federal government.
common law Law made by the decisions
of judges in individual cases.
compel To force or mandate.
concurrent jurisdiction Cases which can
be brought in either federal or state court.
constitution The supreme law of the land.
Unless otherwise noted, the constitution is
used generally to refer to the basic govern-
ing document of the federal government,
but states and other governmental units
can also have constitutions.
court of limited jurisdiction A court that
hears only cases involving a specific type
of situation, or claims arising under a cer-
tain law; for example, small claims court,
tax court.
diversity jurisdiction A type of federal
court subject matter jurisdiction applying
to cases involving state law, which may be
brought in federal court if the amount in
controversy is over $75,000 and no plaintiff
is from the same state as any defendant.

due process The concept of basic fairness
in how the law is applied, that no person
should be denied life, liberty, or property
without due process of the law. Found in
both the 5th and 14th Amendments to the
U.S. Constitution.
exclusive jurisdiction Cases that can only
be brought in federal court.
federal question jurisdiction A type of
federal court subject matter jurisdiction
applying to cases involving federal law.
forum The state where the court is
located.
jurisdiction (1) A legal system; (2) the
power of a court to validly decide a case.
law A set of rules capable of being
enforced by government.
legislature An elected body of representa-
tives that is empowered to enact statutory
law. In the United States, Congress is the
federal legislature, but legislatures also
exist in every state, and on the local level
in the form of bodies such as city councils.
minimum contacts The degree of connec-
tion that a nonresident defendant must
have with the forum state, consisting of
owning real estate, doing business, or
causing injury in the forum.

personal jurisdiction The right of the
court to decide the fate of the parties
before it.
Key Terms
rog80328_01_c01_001-026.indd 24 9/20/16 11:19 AM
25
precedent/doctrine of precedent/stare
decisis The decision in a previous case
sets a rule to guide the decisions of future
cases.
service of process Procedure by which a
defendant is given notice of a civil pro-
ceeding against him, consisting of delivery
of a summons and complaint.
statutes Codified law; law that is passed
by legislatures and set out in written
codes, accessible to the public.
subject matter jurisdiction The right of
the court to decide the type of law pre-
sented by a case before the court.
Uniform Commercial Code A statutory

law for certain types of commercial trans-
actions, including sales of goods, which
has been adopted by all 50 states. Many of
its rules are similar to the common law, but
it contains important differences.
venue Legally proper or most convenient
place where a particular case should be
handled.
writ of certiorari Document granted by
the U.S. Supreme Court, indicating it will
hear a case.
rog80328_01_c01_001-026.indd 25 9/20/16 11:19 AM
rog80328_01_c01_001-026.indd 26 9/20/16 11:19 AM
Discussion1
Cyber security is the system which causes the association to
shield and protect their systems from different digital assaults.
Digital security and hazard the executives encourages the
associations to shield the foundation of the business by taking
best choices and controls different escape clauses from where
digital lawbreakers endeavor to hack the systems.
All the association ought to be very much arranged for any sort

of dangers and furthermore they ought to have recorded their
past encounters with the goal that it very well may be kept as a
source of perspective. One great record will direct us from
multiple points of view and furthermore The innovation is
especially basic for any associations alongside the people as
they must be shielded from any sorts of programmers.
Cyber Security and Risk Management
The interconnectivity of PCs has managed most clients to
impart almost in a split second over the globe and this makes
the ordinary action less demanding and increasingly proficient
like web-based business, e-keeping money, e-learning.
Lamentably, not every person online means well, similarly as
individuals have locks, edge fence, security monitors, and cops
to guarantee security and avoid wrongdoing in reality;
cybersecurity diminishes wrongdoing and threat in the virtual
world. Cybersecurity can be characterized as a lot of systems
expected to secure the mystery, trustworthiness and
accessibility of PCs and information.
- Secrecy
- Integrity
- Availability
As an IT manager, always needs to focus on the performance of
the business as well as needs to protect the business from
various external threats. As internet is growing fast and people
are able to access the internet from everywhere, internet is like
a free flight ticket for all the cyber criminals. Lack of adequate
knowledge about the various cybercrimes people are getting
affected knowingly or unknowingly.
Discussion2
An effective communication system is the key to the success of
any organization. Intellectual property security and the
management of confidential or sensitive information provide a
competitive advantage, helping to protect the reputation of the
business. This information is in the form of product design,
production processes, negotiation strategies, or sensitive

personal data. At the same time, there is a need to capture and
share more information than is now, using a wide range of
technical features to threaten or increase the risks that can be
obtained. A commitment to information, for example, a staff
error or an external intended component, could have a lasting or
at least long-term impact on the organization. A successful
attack could have a devastating impact on the organization's
economy and reputation. 's commitment to T. Loss of
productivity, loss of intellectual property rights, reputable
corruption, cost recovery, research time, regulatory and lower
legal prices can all lead to losses. This could be a loss of
interest communities, a low market Low profits, unfavorable
media coverage, bankruptcy, and possibly the loss of the
security system-the damage to life. The board and executives
want a perfect understanding of the key information assets of
the company's success, and I also have information about the
threats and business security capabilities they know when it
comes to bringing risk information, "Mas said.
Many of the behaviors that attempt to destroy information are
characterized by "social engineering" or a commitment to
individuals and humanity. Typically, if the recipient of an email
is busy or busy, it becomes easier to deceive someone by
clicking on a malicious link in an email that they think from a
friend or colleague, rather than hacking the system. There are
also document cases that are persuaded to open the network or
reset passwords to workers, and to hide trusted people.

Legal Environment of Business Chapter Overview

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