1
“Where there is no law, there is no freedom.”
John Locke
I. Teacher to Teacher Dialogue
One of the most common dilemmas facing instructors of business law is the issue of topic
choice. By the very nature of the subjects we teach, the breadth of materials is so wide that
choosing what to focus on in the limited classroom time we have with our students can be a most
daunting task. This problem is especially exacerbated when the topics we are dealing with are all
of deep interest and can stand alone as separate courses.
In this chapter, for example, we are asked to introduce students to topics ranging from the
definitions and purposes of law to how our system affects business decisions, to some of the most
important provisions found in the U.S. Constitution. Any one of these subparts can provide the
raw materials for an entire course at the law school level. Our job must start with a self-evident,
but sometimes forgotten, point: this is not law school. We are here not to train future lawyers but
rather students who need to know enough about these issues to recognize that they are issues. The
technical legal problems they may be facing later will ultimately need to be resolved using law
and other practitioners.
The plus side of this dilemma is that because we have such a diverse menu to select from, we
are able to pick and choose our areas of emphasis. For example, if your particular teaching and
research interests lie in the area of ethics and the schools of jurisprudential thought from which
they are derived, then by all means, run with it! Rather than trying to be all things to all people,
it is better to focus your efforts on your strengths. This does not mean that you can shortchange
the other material. All key objectives of the chapter should be fully outlined and incorporated in
both your lecture and materials outline. But if you have a particular interest and expertise in, for
example, the Law and Economics School of jurisprudential thought, then use them as focal points
of comparison in the evolutionary process that seeks to distinguish the older schools of
jurisprudence from newer approaches to these issues. In any event, remember that philosophical
studies of what law is and what its role is in the larger scheme of things have always posed
questions virtually impossible to answer. As mentioned in the student study guide, this chapter
represents attempts by great thinkers to answer the unanswerable. It would be far too
presumptuous for us to think that we can teach, in a few hours, what the great philosophers of the
world have tried to do over hundreds of years. Perhaps this is an early lesson in what wisdom is
really all about: the more we know of history, the more we know of our own limitations. If we
can get that point across, the course is off to a good start.
LEGAL HERITAGE
AND THE DIGITAL AGE
1

Chapter 1
2
II. Chapter Objectives
• Define law.
• Describe the functions of law.
• Explain the development of the US legal system.
• List and describe the sources of law in the United States.
• Discuss the importance of the U.S. Supreme Court’s decision in Brown v. Board of
Education.
III. Key Question Checklist
• What is law?
• Once you have identified the kind of societal expectation of behavior, what standard of
behavior is most appropriate? Does law codify the standard? Do one or more of the
schools of jurisprudence support the standard?
• What are the sources of law in the United States?
• What body of law and/or ethical standards apply?
• How would you apply these standards to the facts?
IV. Text Materials
The first chapter’s objective is an introduction to the historical underpinnings of jurisprudential
thought. This would include not only the functions of law listed in the summary, but also an early
opportunity to introduce the role of ethics based on the various schools of jurisprudence
discussed.
What is Law?
Laws consist of rules that regulate the conduct of individuals, businesses, and organizations,
forbidding undesirable activities.
Definition of Law – Law is a group of rules promulgated by a controlling authority, with legal
consequences for lack of compliance.
Functions of the Law – Laws are created to keep the peace, shape morals, promote social
policies, maintain the status quo, facilitate change or planning, promote compromise, and/or to
maximize individual freedoms.
Fairness of the Law – The American legal system is, overall, a comprehensive and fair system.
Yet it is occasionally misused and abused.
Flexibility of the Law – U.S. law has evolved and grown as a reflection of changes in society,
technology, and commerce. The same general principles that we were established on still exist.
The modifications exhibit the flexibility and maturity of our system to be able to adapt to the
changing commercial, social, and ethical environments.
Landmark U.S. Supreme Court Case: Brown v. Board of Education

Legal Heritage and the Digital Age
3
This box discusses the application of law where the Supreme Court overturned the “separate buy
equal” doctrine that condoned separate schools for black children and white children.
Case Questions
Critical Legal Thinking: The states must treat all individuals in the same manner as others that
are in similar positions or situations, without favoring residents or any other group. Equal
application is the important idea here.
Ethics: Separate but equal cannot be applied when it comes to education, so the decision in
Plessy v. Ferguson was wrong. The Plessy decision was based on the idea of granting political
and civil equality to African Americans, but left out social equality.
Contemporary Business: The US Constitution was drafted to reflect changing social, economic,
technical, and intellectual ideas. This is what makes the Constitution unique, as it slowly adapts to
the changing world around us.
Schools of Jurisprudential Thought
There are several different philosophies about how the law developed, ranging from the classical
natural theory to modern theories of law and economics and critical legal studies.
The different schools jurisprudential thought include the Natural Law School, based on the moral
theory of law; the Historical School, with its recognition of the social traditions and customs that
have developed over time; the Analytical School where law is shaped by logic; the Sociological
School where law is applied to advance sociological goals; the Command School whose laws are
established by the ruling party rather than the society as a whole; the Critical Legal Studies
School who claim that laws are there only to maintain the status quo; and the Chicago School, or
Law and Economics School, which promotes market efficiency.
International Law: Command School of Jurisprudence of North Korea
North Korea—the Democratic People’s Republic of Korea (or DPRK)—is a one party communist
dictatorship that has been ruled by one family since 1948. North Korea’s legal system is based on
communist theory and the Command School of jurisprudence. There is no judicial review of
government-enacted laws or activities.
History of American Law
English Common Law – English common law, the primary basis for U.S. law, was based on
judges issuing opinion when deciding a case. These opinions became the basis for precedent used
by later judges.
The historical underpinning of U.S. law can be further reinforced with some discussion of the tie-
ins between the country’s political history with that of the legal traditions of England and other
countries. This portion of the chapter material can be used to introduce students to a broad
overview of the roles that the world’s major legal systems play in the world economy. For
example, the role of the Law Merchant and its influence on international trade is critical to
understanding most international rules on import/export laws today. The origins of the Law
Merchant, in turn, are traceable in large part to the Roman civil law. In the end, the U.S. legal
system represents the “Cuisinart” effect. There are ingredients from English common law, Roman
civil law, and Judeo-Christian canon law all thoroughly processed into a bread of law. The
individual ingredients are all present, but each is no longer independently identifiable.

Chapter 1
4
Law Courts – These were established following the Norman Conquest of England in
1066 to administer laws in a uniform method. Law Courts emphasized form over
substance.
Chancery Courts – These courts were established to serve when Law Courts provided
inadequate remedies; they provided equitable solutions. These courts reviewed the merits
of the case, rather than the procedural aspects.
Merchant Courts- Law Merchant courts were developed as a separate entity to solve
commercial disputes in the Middle Ages. They were not merged into the regular court
system in England until the early 1900s.
International Law: Adoption of English Common Law in America
All the states of the United States of America except Louisiana base their legal systems primarily
on the English common law. Currently, the law of the United States is a combination of law
created by the judicial system and by congressional legislation.
International Law: The Civil Law System of France and Germany
The Romano-Germanic civil law system dates back to 450 B.C., when Rome adopted a set of
laws based on civil codes that applied to all Romans. The sole source of civil law in a country is
the application of code or statutes. Court decisions do not have the force of law.
Sources of Law in the United States
Constitutions – One of the goals of this chapter is to introduce students to the role of the U.S.
Constitution and its pivotal role in the ultimate distribution of powers between the federal
government and the states vis-à-vis the control of business conduct in the U.S. This section also
explains the three branches of the federal government: the legislative, executive, and judicial
branches.
Treaties – The Constitution establishes that only the president, upon the advice and consent of
the Senate, can enter into treaties with foreign powers.
Federal Statutes – Statutes are written laws that establish and enforce certain courses of conduct.
Congress enacts federal statutes, whilst state legislatures enact state statutes. Ordinances are
adopted by local governmental bodies.
Contemporary Environment: How a Bill Becomes Law
The U.S. Congress is composed of two chambers, the U.S. House of Representatives and the U.S.
Senate. Thousands of bills are introduced in the U.S. Congress each year, but only a small
percentage of them become law. First, a bill must be sponsored by a member of the U.S. House of
Representative or the U.S. Senate. Then, it is referred to the appropriate committee for review and
study. Bills that receive the vote of a committee are reported to the full chamber, where they are
debated and voted on. If the bill receives majority vote from the full chamber, and a subsequent
second chamber, then it is forwarded to the president’s desk. The bill becomes law when it is
signed by the president.
State Statutes – State legislatures enact state statutes. Such statutes are placed in code books.
State statutes can be assessed in these hardcopy code books or online.

Legal Heritage and the Digital Age
5
Ordinances – State legislatures often delegate lawmaking authority to local government bodies,
including cities and municipalities, counties, school districts, water districts, and such. These
governmental units are empowered to adopt ordinances. Ordinances are also codified.
Executive Orders – The executive branch of the government is empowered to issue executive
orders.
Regulations and Order of Administrative Agencies – Agencies are created to interpret and
enforce statutes enacted by both federal and state Congresses.
Judicial Decisions – Judges issue written decisions explaining their legal reasoning. Doctrine of
stare decisis establishes past court decisions as a precedent for future decisions.
Priority of Law in the United States – The U.S. Constitution and treaties take precedence over
all other laws, followed by federal statutes and federal regulations. Federal law takes precedence
over conflicting state law, which has precedence over local laws. Similarly, state constitutions
take precedence over state statutes and regulations.
International Law: Immigrants Who Came Through Ellis Island
One of the major strengths of the United States is its cultural diversity. Ellis Island was the
primary entry point for immigrants entering the United States from the late 1800s until 1954.

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Chapter 1
8
• Statute—Written law enacted by the legislative branch of the federal and state
governments that establishes certain courses of conduct that covered parties must adhere
to.
• Subcommittee—Studies bills sent by the committee. After review the subcommittee may
either let the bill die or report it back to the full committee.
• Treaty—A compact made between two or more nations.
• U.S. Congress—Branch of the government that creates federal law by enacting statutes.
• U.S. House of Representatives—A chamber of the U.S. Congress.
• U.S. Senate—A chamber of the U.S. Congress.

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9
“I was never ruined but twice: once when I lost a lawsuit, and once when I won one.”
Voltaire
I. Teacher to Teacher Dialogue
Twenty-first century technological advances have provided our students with all kinds of
instant access to information. These devices have provided the students with a variety of
preconceptions.
Among these is the average undergraduate’s notion of how trials are conducted and the role
of attorneys in that process. Invariably these perceptions center on popular television series such
as “Law and Order” and “Court TV”. This is not all bad. Current media focus on numerous law-
related issues has generated a whole new wave of public interest in the workings of our legal
system. The downside is that the media has created many myths on the folklore of law and
lawyers. In the world of pop culture, no one knows until the end who really did it until a surprise
witness shows up to identify the bad guy. In more modern versions, the attorney first has a
business relationship with the client and then proceeds to get him or her acquitted. Regardless of
the outcome, the process is always full of glamour and intrigue.
The problem is that a trial rarely resembles the goings on found in the entertainment media.
Trials are long, tedious, emotionally and financially draining processes for all parties concerned.
In many ways, a trial represents a failure by the parties to reach some sort of satisfactory solution
of the issue beforehand. Rarely do the parties actually want to go through a labyrinth of
pleadings, motions, and the like, feeling all the while totally dependent on the sometimes
questionable competence of their attorneys. Unlike the make-believe world of entertainment, the
job of an attorney is to keep his or her client out of court. (This often needs some reinforcement
with the student.) The attorney’s professional advice should anticipate and resolve potential legal
problems before, rather than after, the fact if at all possible.

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Class Notes for Business Law, 8th Edition

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