Chapter 1. Legal, Business, and E-Commerce Environment

Chapter Objectives
Define law.
List and describe the functions of law.
Describe the flexibility of the law.
List and describe the schools of jurisprudential thought.
Explain the development of the US legal system.
Explain how English common law was adopted in the US.
List and describe the sources of law in the US.
Define the doctrine of stare decisis.
Describe other countries' legal systems.
Describe the development of E-Commerce and Internet law.
Apply critical legal thinking in analyzing judicial decisions.

Definition of law
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 consequences is a law.

• Keeping the peace
• Shaping moral standards
• Promoting social justice
• Maintaining the status quo
• Facilitating orderly change
• Facilitating planning
• Providing a basis for compromise
• Maximizing individual freedom

Flexibility of the law
Law responds to cultural, technological, economic, and social changes. Laws that are no longer viable are often repealed, although it may take years for that to happen. Sometimes, because of error or misuse, the law does not reach a fair result.

• Natural Law School—believes law is based on what is correct. Emphasizes that law should be based on morality and ethics
• Historical School—believes that law is an aggregate of social traditions and customs
• Analytical School—believes that law is shaped by logic
• Sociological School—believes law is a means of achieving and advancing certain sociological goals
• Command School—believes law is a set of rules developed, communicated, and enforced by the ruling party
• Critical Legal Studies School-believes legal rules are unnecessary and legal disputes should be solved by applying arbitrary rules based on fairness
• Law and Economics School—believes that promoting market efficiency should be the central concern of legal decision making
• Feminist School—believes that the female perspective should be taken into account when legislators and judges develop, interpret, and apply law

Development of the US legal System
The US court system developed from English common law. Under traditional English common law, there were three types of courts:
Law courts—courts that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror. Legal procedure was emphasized over merits
Chancery (equity) courts—courts that granted relief based on fairness
Merchant courts—courts established to administer the "law of merchants"

Adoption of English common law in the US All states except Louisiana base their legal systems primarily on English common law.
Because of its French heritage, Louisiana bases its legal system on civil law.

• Constitution of the US—supreme law of the US
• Treaties—compacts made between two or more nations
• Codified law
• Statutes—written law enacted by the legislative branch of federal and state governments that establishes certain courses of conduct that must be adhered to by covered parties
• Ordinances—laws of local government bodies
• Executive orders—orders issued by a member of the executive branch of government
• Judicial decisions—decisions about an individual lawsuit issued by federal or state courts
• Administrative agency regulations and orders—rules and regulations adopted by agencies created by the legislative and executive branches of government

Doctrine of stare decisis
Precedent is a rule of law established in a court decision. Lower courts must follow the precedent established by higher courts. The doctrine of stare decisis means "to stand by the decision" or adherence to precedent.

Other countries' legal systems
There are other major legal systems in addition to the Anglo-American common law system. Major systems include:

• Romano-Germanic civil law system
• Sino-Soviet Socialist law system
• Hindu law system
• Islamic law system

E-commerce and Internet Law
Our legal system has adapted to the reality of e-commerce and the Internet. For example, contracts on the Internet are treated as any contract is treated under the law. However, there are many issues, such as taxation of sales on the Internet, pornography, intellectual property, etc., that still need to be addressed.

Critical Legal Thinking Critical legal thinking is the process of specifying the issue presented by a case, identifying the key facts in the case and applicable law, and then applying the law to the facts to come to a conclusion that answers the issue presented. Use the "case for briefing" exercise at the end of the chapter as a tool to teach students critical legal thinking.

• case brief—a summary of each of the following items of a case: case name and citation, key facts, issue presented, holding of the court, court's reasoning
• common law—Developed by judges who issued their opinions when deciding a case. The principles announced in these cases became precedent for later judges deciding similar cases.
• Constitution of the United States of America—The supreme law of the United States.
• court of chancery—Court that granted relief based on fairness. Also called equity court.
• critical legal thinking—the process of specifying the issue presented by a case, identifying the key facts in the case and applicable law, and then applying the law to the facts to come to a conclusion that answers the issue presented.
• executive order—An order issued by a member of the executive branch of the government.
• judicial decision—A decision about an individual lawsuit issued by federal and state courts.
• jurisprudence—The philosophy or science of law.
• law court—A court that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror, legal procedure was emphasized over merits at this time.
• law—That which must be obeyed and followed by citizens subject to sanctions or legal consequences; a body of rules of action or conduct prescribed by controlling authority, and having binding legal force.
• merchant court—The separate set of courts established to administer the "law of merchants."
• ordinances—Laws enacted by local government bodies such as cities and municipalities, counties, school districts, and water districts.
• precedent—A rule of law established in a court decision. Lower courts must follow the precedent established by higher courts.
• stare decisis—Latin: "to stand by the decision." Adherence to precedent.
• statute—Written law enacted by the legislative branch of the federal and state governments that establishes certain courses of conduct that must be adhered to be covered parties.
• treaty—A compact made between two or more nations.

Internet Links
Legal history: www.jurist.law.pitt.edu/sg_hist.htm
Government: whitehouse.gov
Legal profession: abanet.org