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Business Law Discussion- USE COURSE MATERIALS ONLY

During a meeting with Winnie, Ralph, the GC owners, and you, the owners asked several questions about their potential liability for negligence. Winnie and Ralph asked you to respond to the following question.

Could GC be liable to a potential customer injured when she slips and falls on ice directly in front of the entry door while attempting to enter GC public offices during business hours? Why or why not?

https://saylordotorg.github.io/text_advanced-business-law-and-the-legal-environment/s10-introduction-to-tort-law.html

https://www.youtube.com/watch?v=_KHIWhwj5as

https://www.nolo.com/legal-encyclopedia/what-premises-liability.html

https://injury.findlaw.com/accident-injury-law/elements-of-a-negligence-case.html

https://www.diffen.com/difference/Civil_Law_vs_Criminal_Law

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This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without

attribution as requested by the work’s original creator or licensee.

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Preface Our goal is to provide students with a textbook that is up to date and comprehensive in its coverage of

legal and regulatory issues—and organized to permit instructors to tailor the materials to their particular

approach. This book engages students by relating law to everyday events with which they are already

familiar (or with which they are familiarizing themselves in other business courses) and by its clear,

concise, and readable style. (An earlier business law text by authors Lieberman and Siedel was hailed “the

best written text in a very crowded field.”)

This textbook provides context and essential concepts across the entire range of legal issues with which

managers and business executives must grapple. The text provides the vocabulary and legal acumen

necessary for businesspeople to talk in an educated way to their customers, employees, suppliers,

government officials—and to their own lawyers.

Traditional publishers often create confusion among customers in the text selection process by offering a

huge array of publications. Once a text is selected, customers might still have to customize the text to meet

their needs. For example, publishers usually offer books that include either case summaries or excerpted

cases, but some instructors prefer to combine case summaries with a few excerpted cases so that students

can experience reading original material. Likewise, the manner in which most conventional texts

incorporate video is cumbersome because the videos are contained in a separate library, which makes

access more complicating for instructors and students.

This model eliminates the need for “families” of books (such as the ten Miller texts mentioned below) and

greatly simplifies text selection. Instructors have only to select between our Business Law and Legal

Environment volumes of the text and then click on the features they want (as opposed to trying to

compare the large number of texts and packages offered by other publishers). In addition to the features

inherent in any publication, this book offers these unique features:

• Cases are available in excerpted and summarized format, thus enabling instructors to easily “mix and

match” excerpted cases with case summaries.

• Links to forms and uniform laws are embedded in the text. For example, the chapters on contract law

incorporate discussion of various sections of the Uniform Commercial Code, which is available

at http://www.law.cornell.edu/ucc/ucc.table.html.

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• Likewise, many sample legal forms are readily available online. For example, the chapter on

employment law refers to the type of terms commonly found in a standard employment agreement,

examples of which can be found athttp://smallbusiness.findlaw.com/employment-

employer/employment-employer-hiring/employment-employer-hiring-contract-samples.html.

• Every chapter contains overviews that include the organization and coverage, a list of key terms, chapter

summaries, and self-test questions in multiple-choice format (along with answers) that are followed by

additional problems with answers available in the Instructors’ Manual.

• In addition to standard supplementary materials offered by other texts, students have access to

electronic flash cards, proactive quizzes, and audio study guides.

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Chapter 1 Introduction to Law and Legal Systems

L E A R N I N G O B J E C T I V E S

After reading this chapter, you should be able to do the following:

1. Distinguish different philosophies of law—schools of legal thought—and explain their

relevance.

2. Identify the various aims that a functioning legal system can serve.

3. Explain how politics and law are related.

4. Identify the sources of law and which laws have priority over other laws.

5. Understand some basic differences between the US legal system and other legal

systems.

Law has different meanings as well as different functions. Philosophers have considered issues of justice

and law for centuries, and several different approaches, or schools of legal thought, have emerged. In this

chapter, we will look at those different meanings and approaches and will consider how social and

political dynamics interact with the ideas that animate the various schools of legal thought. We will also

look at typical sources of “positive law” in the United States and how some of those sources have priority

over others, and we will set out some basic differences between the US legal system and other legal

systems.

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1.1 What Is Law?

Law is a word that means different things at different times. Black’s Law Dictionary says that law is “a

body of rules of action or conduct prescribed by controlling authority, and having binding legal force. That

which must be obeyed and followed by citizens subject to sanctions or legal consequence is a law.” [1]

Functions of the Law In a nation, the law can serve to (1) keep the peace, (2) maintain the status quo, (3) preserve individual

rights, (4) protect minorities against majorities, (5) promote social justice, and (6) provide for orderly

social change. Some legal systems serve these purposes better than others. Although a nation ruled by an

authoritarian government may keep the peace and maintain the status quo, it may also oppress minorities

or political opponents (e.g., Burma, Zimbabwe, or Iraq under Saddam Hussein). Under colonialism,

European nations often imposed peace in countries whose borders were somewhat arbitrarily created by

those same European nations. Over several centuries prior to the twentieth century, empires were built by

Spain, Portugal, Britain, Holland, France, Germany, Belgium, and Italy. With regard to the functions of

the law, the empire may have kept the peace—largely with force—but it changed the status quo and

seldom promoted the native peoples’ rights or social justice within the colonized nation.

In nations that were former colonies of European nations, various ethnic and tribal factions have

frequently made it difficult for a single, united government to rule effectively. In Rwanda, for example,

power struggles between Hutus and Tutsis resulted in genocide of the Tutsi minority. (Genocide is the

deliberate and systematic killing or displacement of one group of people by another group. In 1948, the

international community formally condemned the crime of genocide.) In nations of the former Soviet

Union, the withdrawal of a central power created power vacuums that were exploited by ethnic leaders.

When Yugoslavia broke up, the different ethnic groups—Croats, Bosnians, and Serbians—fought bitterly

for home turf rather than share power. In Iraq and Afghanistan, the effective blending of different groups

of families, tribes, sects, and ethnic groups into a national governing body that shares power remains to be

seen.

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Law and Politics In the United States, legislators, judges, administrative agencies, governors, and presidents make law,

with substantial input from corporations, lobbyists, and a diverse group of nongovernment organizations

(NGOs) such as the American Petroleum Institute, the Sierra Club, and the National Rifle Association. In

the fifty states, judges are often appointed by governors or elected by the people. The process of electing

state judges has become more and more politicized in the past fifteen years, with growing campaign

contributions from those who would seek to seat judges with similar political leanings.

In the federal system, judges are appointed by an elected official (the president) and confirmed by other

elected officials (the Senate). If the president is from one party and the other party holds a majority of

Senate seats, political conflicts may come up during the judges’ confirmation processes. Such a division

has been fairly frequent over the past fifty years.

In most nation-states (as countries are called in international law), knowing who has power to make

and enforce the laws is a matter of knowing who has political power; in many places, the people or groups

that have military power can also command political power to make and enforce the laws. Revolutions are

difficult and contentious, but each year there are revolts against existing political-legal authority; an

aspiration for democratic rule, or greater “rights” for citizens, is a recurring theme in politics and law.

K E Y T A K E A W A Y

Law is the result of political action, and the political landscape is vastly different from

nation to nation. Unstable or authoritarian governments often fail to serve the principal

functions of law.

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E X E R C I S E S

1. Consider Burma (named Myanmar by its military rulers). What political rights do you

have that the average Burmese citizen does not?

2. What is a nongovernment organization, and what does it have to do with government?

Do you contribute to (or are you active in) a nongovernment organization? What kind of

rights do they espouse, what kind of laws do they support, and what kind of laws do they

oppose?

[1] Black’s Law Dictionary, 6th ed., s.v. “law.”

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1.2 Schools of Legal Thought

L E A R N I N G O B J E C T I V E S

1. Distinguish different philosophies of law—schools of legal thought—and explain

their relevance.

2. Explain why natural law relates to the rights that the founders of the US political-

legal system found important.

3. Describe legal positivism and explain how it differs from natural law.

4. Differentiate critical legal studies and ecofeminist legal perspectives from both

natural law and legal positivist perspectives.

There are different schools (or philosophies) concerning what law is all about. Philosophy of law is also

called jurisprudence, and the two main schools are legal positivism and natural law. Although

there are others (see Section 1.2.3 "Other Schools of Legal Thought"), these two are the most influential in

how people think about the law.

Legal Positivism: Law as Sovereign Command

As legal philosopher John Austin concisely put it, “Law is the command of a sovereign.” Law is only law,

in other words, if it comes from a recognized authority and can be enforced by that authority,

or sovereign—such as a king, a president, or a dictator—who has power within a defined area or

territory. Positivism is a philosophical movement that claims that science provides the only knowledge

precise enough to be worthwhile. But what are we to make of the social phenomena of laws?

We could examine existing statutes—executive orders, regulations, or judicial decisions—in a fairly

precise way to find out what the law says. For example, we could look at the posted speed limits on most

US highways and conclude that the “correct” or “right” speed is no more than fifty-five miles per hour. Or

we could look a little deeper and find out how the written law is usually applied. Doing so, we might

conclude that sixty-one miles per hour is generally allowed by most state troopers, but that occasionally

someone gets ticketed for doing fifty-seven miles per hour in a fifty-five miles per hour zone. Either

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approach is empirical, even if not rigorously scientific. The first approach, examining in a precise way

what the rule itself says, is sometimes known as the “positivist” school of legal thought. The second

approach—which relies on social context and the actual behavior of the principal actors who enforce the

law—is akin to the “legal realist” school of thought (see Section 1.2.3 "Other Schools of Legal Thought").

Positivism has its limits and its critics. New Testament readers may recall that King Herod, fearing the

birth of a Messiah, issued a decree that all male children below a certain age be killed. Because it was the

command of a sovereign, the decree was carried out (or, in legal jargon, the decree was “executed”).

Suppose a group seizes power in a particular place and commands that women cannot attend school and

can only be treated medically by women, even if their condition is life-threatening and women doctors are

few and far between. Suppose also that this command is carried out, just because it is the law and is

enforced with a vengeance. People who live there will undoubtedly question the wisdom, justice, or

goodness of such a law, but it is law nonetheless and is generally carried out. To avoid the law’s impact, a

citizen would have to flee the country entirely. During the Taliban rule in Afghanistan, from which this

example is drawn, many did flee.

The positive-law school of legal thought would recognize the lawmaker’s command as legitimate;

questions about the law’s morality or immorality would not be important. In contrast, the natural-law

school of legal thought would refuse to recognize the legitimacy of laws that did not conform to natural,

universal, or divine law. If a lawmaker issued a command that was in violation of natural law, a citizen

would be morally justified in demonstrating civil disobedience. For example, in refusing to give up her

seat to a white person, Rosa Parks believed that she was refusing to obey an unjust law.

Natural Law

The natural-law school of thought emphasizes that law should be based on a universal moral order.

Natural law was “discovered” by humans through the use of reason and by choosing between that which is

good and that which is evil. Here is the definition of natural law according to the Cambridge Dictionary of

Philosophy: “Natural law, also called the law of nature in moral and political philosophy, is an objective

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norm or set of objective norms governing human behavior, similar to the positive laws of a human ruler,

but binding on all people alike and usually understood as involving a superhuman legislator.” [1]

Both the US Constitution and the United Nations (UN) Charter have an affinity for the natural-law

outlook, as it emphasizes certain objective norms and rights of individuals and nations. The US

Declaration of Independence embodies a natural-law philosophy. The following short extract should

provide some sense of the deep beliefs in natural law held by those who signed the document.

The Unanimous Declaration of the Thirteen United States of America

July 4, 1776

When in the Course of human events, it becomes necessary for one people to dissolve the political bands

which have connected them with another, and to assume among the powers of the earth, the separate and

equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the

opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their

Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the

consent of the governed.…

The natural-law school has been very influential in American legal thinking. The idea that certain rights,

for example, are “unalienable” (as expressed in the Declaration of Independence and in the writings of

John Locke) is consistent with this view of the law. Individuals may have “God-given” or “natural” rights

that government cannot legitimately take away. Government only by consent of the governed is a natural

outgrowth of this view.

Civil disobedience—in the tradition of Henry Thoreau, Mahatma Gandhi, or Martin Luther King Jr.—

becomes a matter of morality over “unnatural” law. For example, in his “Letter from Birmingham Jail,”

Martin Luther King Jr. claims that obeying an unjust law is not moral and that deliberately disobeying an

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unjust law is in fact a moral act that expresses “the highest respect for law”: “An individual who breaks a

law that conscience tells him is unjust, and who willingly accepts the penalty of imprisonment in order to

arouse the conscience of the community over its injustice, is in reality expressing the highest respect for

law.…One who breaks an unjust law must do so openly, lovingly, and with a willingness to accept the

penalty.” [2]

Legal positivists, on the other hand, would say that we cannot know with real confidence what “natural”

law or “universal” law is. In studying law, we can most effectively learn by just looking at what the written

law says, or by examining how it has been applied. In response, natural-law thinkers would argue that if

we care about justice, every law and every legal system must be held accountable to some higher standard,

however hard that may be to define.

It is easier to know what the law “is” than what the law “should be.” Equal employment laws, for example,

have specific statutes, rules, and decisions about racial discrimination. There are always difficult issues of

interpretation and decision, which is why courts will resolve differing views. But how can we know the

more fundamental “ought” or “should” of human equality? For example, how do we know that “all men

are created equal” (from the Declaration of Independence)? Setting aside for the moment questions about

the equality of women, or that of slaves, who were not counted as men with equal rights at the time of the

declaration—can the statement be empirically proven, or is it simply a matter of a priori knowledge? (A

priori means “existing in the mind prior to and independent of experience.”) Or is the statement about

equality a matter of faith or belief, not really provable either scientifically or rationally? The dialogue

between natural-law theorists and more empirically oriented theories of “what law is” will raise similar

questions. In this book, we will focus mostly on the law as it is, but not without also raising questions

about what it could or should be.

Other Schools of Legal Thought

The historical school of law believes that societies should base their legal decisions today on the examples

of the past. Precedent would be more important than moral arguments.

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The legal realist school flourished in the 1920s and 1930s as a reaction to the historical school. Legal

realists pointed out that because life and society are constantly changing, certain laws and doctrines have

to be altered or modernized in order to remain current. The social context of law was more important to

legal realists than the formal application of precedent to current or future legal disputes. Rather than

suppose that judges inevitably acted objectively in applying an existing rule to a set of facts, legal realists

observed that judges had their own beliefs, operated in a social context, and would give legal decisions

based on their beliefs and their own social context.

The legal realist view influenced the emergence of the critical legal studies (CLS) school of thought. The

“Crits” believe that the social order (and the law) is dominated by those with power, wealth, and influence.

Some Crits are clearly influenced by the economist Karl Marx and also by distributive justice theory

(see Chapter 2 "Corporate Social Responsibility and Business Ethics"). The CLS school believes the

wealthy have historically oppressed or exploited those with less wealth and have maintained social control

through law. In so doing, the wealthy have perpetuated an unjust distribution of both rights and goods in

society. Law is politics and is thus not neutral or value-free. The CLS movement would use the law to

overturn the hierarchical structures of domination in the modern society.

Related to the CLS school, yet different, is the ecofeminist school of legal thought. This school

emphasizes—and would modify—the long-standing domination of men over both women and the rest of

the natural world. Ecofeminists would say that the same social mentality that leads to exploitation of

women is at the root of man’s exploitation and degradation of the natural environment. They would say

that male ownership of land has led to a “dominator culture,” in which man is not so much a steward of

the existing environment or those “subordinate” to him but is charged with making all that he controls

economically “productive.” Wives, children, land, and animals are valued as economic resources, and legal

systems (until the nineteenth century) largely conferred rights only to men with land. Ecofeminists would

say that even with increasing civil and political rights for women (such as the right to vote) and with some

nations’ recognizing the rights of children and animals and caring for the environment, the legacy of the

past for most nations still confirms the preeminence of “man” and his dominance of both nature and

women.

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K E Y T A K E A W A Y

Each of the various schools of legal thought has a particular view of what a legal system

is or what it should be. The natural-law theorists emphasize the rights and duties of both

government and the governed. Positive law takes as a given that law is simply the

command of a sovereign, the political power that those governed will obey. Recent

writings in the various legal schools of thought emphasize long-standing patterns of

domination of the wealthy over others (the CLS school) and of men over women

(ecofeminist legal theory).

E X E R C I S E S

1. Vandana Shiva draws a picture of a stream in a forest. She says that in our society the

stream is seen as unproductive if it is simply there, fulfilling the need for water of

women’s families and communities, until engineers come along and tinker with it,

perhaps damming it and using it for generating hydropower. The same is true of a forest,

unless it is replaced with a monoculture plantation of a commercial species. A forest may

very well be productive—protecting groundwater; creating oxygen; providing fruit, fuel,

and craft materials for nearby inhabitants; and creating a habitat for animals that are

also a valuable resource. She criticizes the view that if there is no monetary amount that

can contribute to gross domestic product, neither the forest nor the river can be seen as

a productive resource. Which school of legal thought does her criticism reflect?

2. Anatole France said, “The law, in its majesty, forbids rich and poor alike from sleeping

under bridges.” Which school of legal thought is represented by this quote?

3. Adolf Eichmann was a loyal member of the National Socialist Party in the Third Reich and

worked hard under Hitler’s government during World War II to round up Jewish people

for incarceration—and eventual extermination—at labor camps like Auschwitz and

Buchenwald. After an Israeli “extraction team” took him from Argentina to Israel, he was

put on trial for “crimes against humanity.” His defense was that he was “just following

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orders.” Explain why Eichmann was not an adherent of the natural-law school of legal

thought.

[1] Cambridge Dictionary of Philosophy, s.v. “natural law.”

[2] Martin Luther King Jr., “Letter from Birmingham Jail.”

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1.3 Basic Concepts and Categories of US Positive Law

L E A R N I N G O B J E C T I V E S

1. In a general way, differentiate contract law from tort law.

2. Consider the role of law in supporting ethical norms in our society.

3. Understand the differing roles of state law and federal law in the US legal system.

4. Know the difference between criminal cases and civil cases.

Most of what we discuss in this book is positive law—US positive law in particular. We will also consider

the laws and legal systems of other nations. But first, it will be useful to cover some basic concepts and

distinctions.

Law: The Moral Minimums in a Democratic Society The law does not correct (or claim to correct) every wrong that occurs in society. At a minimum, it aims to

curb the worst kind of wrongs, the kinds of wrongs that violate what might be called the “moral

minimums” that a community demands of its members. These include not only violations of criminal law

(see Chapter 6 "Criminal Law") but also torts (see Chapter 7 "Introduction to Tort Law") and broken

promises (see (Reference mayer_1.0-ch08 not found in Book)). Thus it may be wr