1. The Nature of Law
The Resolution of Private Disputes
Business and The Constitution
Business Ethics, Corporate Social
Responsibility, Corporate Governance, and
Critical Thinking
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

2. The Nature of Law
The sacred rights of
mankind . . . are written, as
with a sun beam in the whole
volume of human nature, . . .
and can never be erased or
obscured by mortal power.
Alexander Hamilton
1775
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

3. Learning Objectives
 Types and sources of law
 Important legal doctrines
 Classification of law
 Jurisprudence and legal reasoning
 Statutory interpretation
 Limitations on judicial power
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4. Types and
Classifications of Law
 Federal, state, and tribal level:
 Constitution: establishes governmental
structure, specific rights and duties
 Example: U.S. Constitution
 Statute: enacted by legislative body to
regulate conduct
 Example: Clean Air Act, 42 U.S.C. §§ 7401 et
seq. (1970)
 Counties and municipalities enact
“ordinances” (e.g., zoning ordinance)
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5. Types and
Classifications of Law
 Federal, state, and tribal level:
 Common Law: case law (judge-made)
 Example: Gribben v. Wal-Mart Stores, Inc.
 Administrative Law: agency rules to
implement enforcement of statutes
 Example: U.S. Environmental Protection
Agency’s Identification and Listing of
Hazardous Waste Rule, 40 CFR – Part 261, as
amended, 73 FR 64760
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6. Types and
Classifications of Law
 Issued at the chief executive level:
 Executive Order: under limited powers
 Examples: http://www.whitehouse.gov
/news/orders/
 Treaty: with other nations, by the U.S.
president on behalf of the nation, ratified by
the U.S. Senate
 Example: The Antarctic Treaty
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7. Important Doctrines
 Stare Decisis (let the decision stand) is the
doctrine of precedent applied in common law
 Example: in Gribben v. Wal-Mart Stores, the
Indiana Supreme Court cited Cahoon v.
Cummings for a well-established rule about
intentional first-party spoliation of evidence
 Equity is applied by the judiciary to achieve
justice when legal rules would produce
unfair results
 Examples: injunction or specific performance
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8. Important Doctrines
 Federal supremacy: a rule of priority for
conflicts between laws that holds the U.S.
Constitution is the supreme law of the land
 Supremacy Clause, Article VI, Section 2, of the
U.S. Constitution
 Practical meaning:
 Federal law defeats state law
 A state constitution defeats state legislation
 A statute defeats an administrative regulation
 A statute or regulation defeats common law
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9. Trentadue v. Gorton
 Facts & Procedural History:
 Trial court decided that the common law
discovery rule applied to claims against corporate
defendants for crime of an employee rather than
statute of limitations and appellate court affirmed
 Issue: Does a legislated rule (statute of limitations)
abrogate a common law rule?
 Holding: Yes; plain language of statute indicated
legislative intent to exclude common law rules
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10. Classification of Law
 Criminal law establishes
duties to society
 Government charges and
prosecutes defendant,
who is found guilty or
innocent
 A convicted defendant
will be imprisoned or
fined
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11. Classification of Law
 Civil law establishes
duties between private
parties
 Plaintiff sues defendant
for monetary damages
or equitable relief
 A defendant will be
held liable or not liable
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12. Classification of Law
 Substantive law establishes rights and duties
of people in society
 Example: The act of murder is a crime
 Procedural law establishes how to enforce
those rights and duties
 Example: A defendant charged with murder
has the right to a jury trial
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13. Classification of Law
 Public law refers to the relationship between
governments and private parties
 Examples: constitutional, statutory, and
administrative law
 Private law refers to the regulation of conduct
between private parties
 Examples: contract, tort, and property laws
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14. Jurisprudence
 Jurisprudence refers to the philosophy of
law as well as the collection of laws
 Legal positivism: law is the command of a
recognized political authority
 Just or unjust, law must be obeyed
 Natural law: universal moral rules bind all
people whether written or unwritten
 Unjust positive laws are invalid
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15. Jurisprudence
 Legal realism defines law as the behavior of
the judiciary as they rule on matters within
the legal system
 Thus law in action dominates positive law
 Sociological jurisprudence unites theories that
examine law within its social context
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16. Legal Reasoning
 Basically deductive, with legal rule as major
premise and facts as the minor premise
 Result is product of the two
 Court may stand on precedent or
distinguish prior case from current case
 If precedent inapplicable, new rule
developed
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17. Hagan v. Coca-Cola Bottling Co.
 Facts & Procedural History:
 Florida plaintiffs drank from bottle of Coke, found
foreign object, suffered emotional distress, and
brought suit for negligence
 Jury returned verdict for plaintiffs, judge reduced
jury award, and both parties appealed
 Certified question sent to Florida Supreme Court
 Question: Should the impact rule (physical injury
required to state a claim) be abolished or amended in
Florida?
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18. Hagan v. Coca-Cola Bottling Co.
 Court’s Reasoning:
 Reviewed facts and arguments of parties
 Reviewed application of impact rule within
Florida, including modifications to the rule
 Discussed public policy recognized by the Florida
Supreme Court in Doyle v. Pillsbury Co.
 Noted court decisions in other states
 Holding: Impact rule does not apply where
emotional damages are caused by conduct that is a
freestanding tort (e.g., contaminated food)
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19. Statutory Interpretation
 Plain meaning rule: court applies statute
according to usual meaning of the words
 Courts examine legislative history and purpose
when plain meaning rule is inadequate
 Example A: Why does the Communications
Decency Act offer immunity for some entities?
 Example B: What is meant by a prohibition
against discrimination “because of an
individual’s age?”
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20. General Dynamics Land Systems, Inc
 Facts:
 Collective bargaining agreement
discriminated against workers under 50
years of age; plaintiffs over 40 and under 50
filed a claim under the Age Discrimination in
Employment Act (ADEA)
 Issue:
 Does the ADEA forbid “favoring the old
over the young?”
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21. General Dynamics Land Systems,
Inc. v. Cline
 Reasoning:
 Plain meaning of “age” within the statute not
clear, but legislative history makes clear that
an employer may favor an older employee
over a younger one
 Holding:
 Judgment reversed in favor of employer
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22. Statutory Interpretation
 Courts may interpret a statute in light of a
general public purpose or public policy
 Courts follow prior interpretation of a statute
(precedent) to promote consistency
 Maxims may be used to assist in statutory
interpretation
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23. Statutory Interpretation
 Example of a maxim:
 Ejusdem generis (things of the same type)
 When general words follow specific words,
the general words are limited to the same
things as specific words
 “Automobiles and other vehicles” does not
include airplanes
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24. Limitations on Judicial Power
 Courts limited to deciding existing cases or
controversies
 In other words, the dispute must be current
and not yet resolved
 However, a declaratory judgment allows
parties to determine rights and duties prior
to harm occurring
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25. Limitations on Judicial Power
 Parties must have standing (direct interest in
the outcome) to sue
 Whales, for example,
do not have standing
 The Cetacean
Community v. Bush,
386 F.3d 1169 (9th
Cir. 2004)
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26. Global Business Environment
 Courts may faced with
treaty interpretation “The carrier shall be liable for
damage sustained in the event
 U.S. Supreme Court of the death or wounding of a
passenger or any other bodily
injury suffered by a passenger,
interpreted The Warsaw if the accident which caused
the damage so sustained took
Convention in place on board the aircraft or
in the course of the operations
Olympic Airways v. Husain of embarking or
disembarking.”
 How would you have Warsaw Convention, Art. 17
interpreted the treaty
language?
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27. Test Your Knowledge
 True=A, False = B
 The Constitution, statutes, and case law are
sources of law in the United States
 Agency regulations, presidential orders, and
treaties are sources of law in the United States
 Stare decisis refers to the doctrine of equity
 The Supremacy Clause states that the U.S.
Constitution is the supreme law of the land
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28. Test Your Knowledge
 True=A, False = B
 Civil law establishes the duties an individual
has to keeping a civil society
 Substantive law establishes how to enforce
the rights and duties of people in society
 Jurisprudence refers to the philosophy of law
as well as the collection of laws
 Legal reasoning is basically inductive
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29. Test Your Knowledge
 Multiple Choice
 The plain meaning rule means that the court
applies a statute
(a) according to the unique or special meaning
of words
(b) according to usual meaning of the words
(c) according to public policy and legislative
purpose
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30. Test Your Knowledge
 Multiple Choice
 Courts are:
(a) Limited to hearing existing cases or
controversies
(b) Limited to hearing cases in which plaintiff
has standing (a direct interest in the outcome)
(c) Unlimited in types of cases they may hear
(d) All of the above
(e) Both A & B
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31. Thought Question
 What do you think the authors of the U.S.
Constitution would think about current legal
issues in our society?
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