This document provides an overview of key concepts in business law, including: 1) The importance of law for regulating business and allowing for order and justice in society. 2) The sources of law in the US including constitutions, statutes, judicial decisions, and administrative rules. 3) The role of case law in developing the common law through principles like stare decisis and precedents. 4) Issues that can arise with interpreting laws and reconciling conflicting case decisions.

1. Business Law, Sixth Edition
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Chapter 1:
Law: Importance, Purposes,
and Sources

2. Business Law, Sixth Edition
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Learning Objectives
• Discuss the importance of law to business.
• Understand the definitions of law.
• Describe the objectives of the legal system.
• Explain the sources of law in the United
States.
• Recognize uniform state laws.
• Discern the importance of case law.

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1.0 In the News
Trump’s executive order on immigration: a ban
or not a ban? (5:32) http://bvtlab.com/8aQw6
Executive Order 13769, titled Protecting the Nation
from Foreign Terrorist Entry into the United States,
was an executive order issued by United States
President Donald Trump.
•
• Discuss the rationale of the various court decisions
from Executive Order 13769.
•
• Explain the sources of law being utilized.

4. Business Law, Sixth Edition
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1.1a Legal Environment of Business
Why Study the Legal Environment
of Business?
• Law controls the relationships between
parties.
• Law provides the mechanism by which
government regulates business behavior.

5. Business Law, Sixth Edition
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1.1b Strategic Integration
Knowledge of the law allows one to
identify legal risks and effectively
reduce or eliminate liability.
• Use law to strategic advantage

6. Business Law, Sixth Edition
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1.1b Critical Thinking
Case: Kelo
• Based on the majority and minority opinions,
what should be the role of the law?
• What should be the role of the courts and the
legislature?
• What respect is there for history?
• What is the possible impact of the majority
decision on business?
Eminent Domain – Supreme Court Case (:48)
http://bvtlab.com/76829

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1.2a Definitions of Law
Legislative law – laws passed by legislative
bodies (federal and state constitutions)
Judicial pronouncements – legal statements
made by courts
Procedural law – determine how lawsuits are
handled in courts

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1.2b Objectives of a Legal System
• Promote order
• Allow justice to be attained
• Cultivate a sense of reasonableness
in society

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1.3a Hierarchy of Sources of Law
• Constitutions
• Legislation
• Judicial decisions
• Administrative rules

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1.3b Basic Constitutional Principles
• Highest priority in the system
• Doctrine of separation of powers
- Legislative, executive and judicial
branches function separately
• Doctrine of judicial review
- Power of courts to decide laws and
executive actions are unconstitutional

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1.3c Legislation
Statutes – laws passed by Congress or
state legislature
Ordinances – legislative acts passed
by municipalities
Codes – a collection of statutes on a
particular subject

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1.3d Interpreting Legislation
What would the will or intent be today,
given the current problem?
• Examine legislative history
• Narrow construction of criminal and tax laws
• Remedial statutes liberally construed
• Plain or usual meaning
• Role of context

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1.3e Uniform State Laws
Each state has its own constitution,
statutes, and case law.
Two methods of achieving uniformity in
business law:
• Having federal legislation govern
business law
• Having states’ legislatures adopt uniform
laws

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1.3f Court Decisions
Elemental aspects of court decisions:
• Common law: Decided cases are the
source of law.
• Civil law (used differently from
criminal-civil distinction): law developed
by legislatures and reduced to statutes

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1.4a Stare Decisis
Definition: “Let the decision stand”
• Advantages: certainty, predictability,
expediency
• Contrast with res judicata—once a
dispute is litigated and resolved, these
parties are forever barred from litigating
the same matter again
Stare Decisis Doctrine: Definition and Example
Cases (4:08) http://bvtlab.com/3Y9vn

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1.4b Problems with Case Law
• Complex
• Conflicting precedents
• Rejection of precedent
• Conflict of laws
• Public law subjects

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1.4c Critical Thinking
Case: Kimble
• Why did the court apply stare decisis
principles in this case?
• Who should change the law, according to
the court, if it needs to be changed?
Stephen Kimble v Marvel Entertainment, LLC
(2:27) http://bvtlab.com/6K8wH

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1.4d Critical Thinking
Case: Estee Lauder
• Would a court sitting in California
have reached the same conclusion?
• Did the conflict of laws’ principles
work in this case?
Estee Lauder v Shashi Batra (3:34)
http://bvtlab.com/8QP77