1 - 1Visit UMT online at © 2004 UMT Version 07-22-04MGT102 Legal Environment of Business University of Management and Technology 1901 North

1 - 1Visit UMT online at www.umtweb.edu© 2004 UMTVersion 07-22-04 MGT102

Legal Environment of Legal Environment of BusinessBusiness

University of Management and TechnologyUniversity of Management and Technology1901 North Fort Myer Drive1901 North Fort Myer Drive

Arlington, VA 22209Arlington, VA 22209Voice: (703) 516-0035 Fax: (703) 516-0985Voice: (703) 516-0035 Fax: (703) 516-0985

Website: www.umtweb.eduWebsite: www.umtweb.edu


Chapter 1:Chapter 1:The Modern Environment of The Modern Environment of BusinessBusiness

Meiners, R. E., Ringleb, A. H. & Edwards, F. L. Meiners, R. E., Ringleb, A. H. & Edwards, F. L. Legal Environment of Business (8th ed.) Legal Environment of Business (8th ed.)

© 2003 South-Western. © 2003 South-Western. ISBN 0324121512ISBN 0324121512


Chapter 1Chapter 1

The Modern Environment of The Modern Environment of BusinessBusiness

1 - 4 Visit UMT online at www.umtweb.edu© 2004 UMTVersion 07-22-04 MGT102

The Modern Environment of The Modern Environment of BusinessBusiness

Key Functions of the Legal Systems

Sources of Law

Classifications of Law

Ethics and Business

Chapter IssuesChapter Issues


September 11, 2001September 11, 2001The Effects of Terrorism in the Modern Business WorldThe Effects of Terrorism in the Modern Business World

Loss of thousands of lives and billions of dollars in assetsLoss of thousands of lives and billions of dollars in assetsIncrease in military and domestic securityIncrease in military and domestic securityRipple effect to businesses and legal relationshipsRipple effect to businesses and legal relationshipsAirlines cut about 100,000 employees, nearly go bankrupt and are Airlines cut about 100,000 employees, nearly go bankrupt and are bailed out by the federal governmentbailed out by the federal governmentCompanies lose employees through death and economic losses Companies lose employees through death and economic losses and decide whether or not to invoke and decide whether or not to invoke force majeureforce majeure and “acts of and “acts of war” clauses in contractswar” clauses in contractsSome companies pushed over the brink to bankruptcySome companies pushed over the brink to bankruptcyOthers are able to reorganize, working creatively and ethically in a Others are able to reorganize, working creatively and ethically in a significantly changed world significantly changed world


Key functions of the Legal Key functions of the Legal SystemsSystems

Enhancing social stability - limit actions that are detrimental to the “public interest” and encourage beneficial actions

Conflict resolution - courts are one mechanism for resolving disputes

Social maintenance - reflect the social values and customs of a society

Social change - effective way to change what is “acceptable” behavior

See “Chad: A Third-World Country Looks to Create a Legal System”


Sources of LawSources of Law

Common Law

Constitutions

Legislatures

Administrative Agencies

Judiciary

Executive


COMMON LAWCOMMON LAW

Came from old English systemCame from old English system

Judge usually followed earlier decisions that resolved Judge usually followed earlier decisions that resolved similar disputessimilar disputes

Legal principle from cases is called precedentLegal principle from cases is called precedent

Use of this precedent is Use of this precedent is Stare DecisisStare Decisis

Novel issue? Judge makes new common lawNovel issue? Judge makes new common law

Common law varies by stateCommon law varies by state

Provides stability but allows changeProvides stability but allows change


Constitutional LawConstitutional Law

Fundamental law of the landFundamental law of the land

Establishes limits and power of governmentEstablishes limits and power of government

U.S. Constitution, the oldest written constitution in U.S. Constitution, the oldest written constitution in force in the worldforce in the world

Establishes legislative, executive and judicial Establishes legislative, executive and judicial branches of governmentbranches of government

Each state also has its own constitutionEach state also has its own constitution


Statutory LawStatutory Law

Legislatures create statutory lawFederal LawsState LawsMunicipal Laws

Judges interpretMust pass Constitutional muster


Administrative RegulationsAdministrative Regulations

Congress creates statuteStatute names administrative agencyAgency makes regulationsChapter 6 will study in depth


International Sources of the LawInternational Sources of the Law

Civil Law CountriesFrance, Germany, Italy, Spain, JapanCode LawStatutory InterpretationCommon Law CountriesU.S., Britain, NigeriaJudge-Made LawSee “Sources of Law in Japan”

Religious Law Countries

Middle East, India

Islam, Hinduism,

Communist Law Tradition

China, Cuba

Political Agenda part of the law

State ownership


Classifications of LawClassifications of Law

Public and PrivatePublic- legal relationships between members of society and the government

influence behavior influence behavior

bring about social changebring about social change

Private- legal relationships among members of societyresolves disputes resolves disputes

primarily common law primarily common law


Classifications of LawClassifications of Law

Civil and CriminalCriminal

The guilty can be fined, imprisoned or bothEither a felony or a misdemeanorRequirement: “beyond a reasonable doubt”

CivilWrongdoer pays money, but no jail time!Requirement: “preponderance of the evidence”

Substantive and ProceduralSubstantive

Defines legal rights and regulates behaviorProcedural

How it is to be enforced (the “nuts and bolts”)


Ethics and BusinessEthics and Business

Public perception of business leaders has Public perception of business leaders has fallen, probably from increased expectations & fallen, probably from increased expectations & big horror storiesbig horror stories

More and more focus is on ethicsMore and more focus is on ethics

Not to be confused with rules of lawNot to be confused with rules of law

See Soldano v. O’Daniels

See also United States v. Stanley


Soldano v. O’DanielsSoldano v. O’Daniels

- Gunman enters saloon - pulls gun and threatensGunman enters saloon - pulls gun and threatens to kill Soldano.to kill Soldano.- Patron runs across the street and asks bartender- Patron runs across the street and asks bartender to call police or let him call.to call police or let him call.- O’Daniels refuses and Soldano is killed.- O’Daniels refuses and Soldano is killed.- Ethics or legal violation?- Ethics or legal violation?- What duties do we have to assist others?- What duties do we have to assist others?Held: There are enough legal issues to permit the case Held: There are enough legal issues to permit the case to go forward for trial.to go forward for trial.


Cyberlaw: Online Ethics and Legal Cyberlaw: Online Ethics and Legal ComplianceCompliance

The evolution of computer and the Internet in relation to the law have The evolution of computer and the Internet in relation to the law have created ethical challenges for businessescreated ethical challenges for businesses

Invasion of privacy is an issue in ethical discussions by employers Invasion of privacy is an issue in ethical discussions by employers and employeesand employees

Sexual harassment and obscene e-mails are problems in companiesSexual harassment and obscene e-mails are problems in companies

How do businesses choose to monitor the company computers?How do businesses choose to monitor the company computers?

Does legal and ethics on-line training for employees have benefits?Does legal and ethics on-line training for employees have benefits?


United States v. Stanley United States v. Stanley (1987)(1987)

Stanley, in Army, volunteers to test special clothingStanley, in Army, volunteers to test special clothingInstead, Army gives him LSDInstead, Army gives him LSDYears later, Stanley, suffering mental problems, finds out and Years later, Stanley, suffering mental problems, finds out and sues Army under Federal Tort Claims Actsues Army under Federal Tort Claims ActCourt says “No Go” - you were in the Army, so government not Court says “No Go” - you were in the Army, so government not liableliableHeldHeld: Art. I, Sec. 8 of Constitution gives plenary control over rights : Art. I, Sec. 8 of Constitution gives plenary control over rights of military personnelof military personnel

Dissenting Opinion: Re: Medical trials at Nuremberg--Sue Dissenting Opinion: Re: Medical trials at Nuremberg--Sue the officers, not the gov’t.the officers, not the gov’t.


International Perspective: “What Does International Perspective: “What Does Business Do When A Government Is Business Do When A Government Is Immoral?Immoral?””

Prison labor is used in China to make export productsPrison labor is used in China to make export products

There are international concerns about US companies who have joint There are international concerns about US companies who have joint ventures using prisonersventures using prisoners

Levi Strauss and Timberland have stopped their productions out of Levi Strauss and Timberland have stopped their productions out of ethical considerationsethical considerations

One Theory: “Only the rules of law keep state enterprises from riding One Theory: “Only the rules of law keep state enterprises from riding roughshod over people . . . .”roughshod over people . . . .”

See article: “China Fights Corruption With Slogans, Not Rule of Law” See article: “China Fights Corruption With Slogans, Not Rule of Law”

Documents

1 - 1Visit UMT online at © 2004 UMT Version 07-22-04MGT102 Legal Environment of Business University of Management and Technology 1901 North