Business Law and Legal Environment

What is “Law”?
•Law consists of rules that regulate the conduct of individuals, businesses, and other organizations within society. It is intended to protect persons and their property from unwanted interference from others.
•Enforceable rules governing relationships among individuals and between individuals and their society
Functions of the law
•Keeping the peace
•Shaping moral standards
•Promoting social justice
•Maintaining the statusquo
•Facilitating orderly change
•Facilitating planning
•Providing a basis of compromise
•Maximizing individual freedom
Basic Sources of Law
*. Customs & usages
*. Constitution
*. Statutes and Ordinances
*. Decided cases and Precedents
*. Foreign Laws
*. Miscellaneous
Administrative Law
Treaties
Executive Orders
•Constitution establishes the structure of the government (legislative, Executive, Judicial )
•A treaty- compact made between two or more nations.
•Statutes- written law enacted by the legislative branches of union and state governments
•Ordinances- law enacted by local government bodies
•An executive order- anorder issued by a member of the executive branch of government.
•Administrative Law- legislative and executive branches of union and state governments establish administrative agenciesto enforce and interpret statutes enacted by union and state legislatures.
•A judicial decision- decision about an individual case issued by a court.
Classification of Law
•Substantive or Procedural Law
•Public and Private Law
•Civil or Criminal Law
EXPLANATIONS
•Substantive law deals with whether the defendant is guilty or liable
•Procedural law deals with the rules of the court under which litigation takes place
•Public Law- involves the govt.- Labor law, securities, criminal law
•Private law involves disputes among citizens- Contract law, torts, corporation law
•Civil law involves mainly private law disputes-contract law, torts, property law
•In criminal law, the state prosecutes a defendant for violating a criminal statute
Doctrine of Stare Decisis
•Stare decisis—Latin for “to stand by the decision”—means adherence to precedent.
•Based on the common law tradition, past court decisions becomeprecedent for deciding future cases.
•Precedent is a rule of law established in a court decision. Lower courts must follow theprecedent established by higher courts.
•Judges use precedent (decisions in previous cases) to determine the outcome of a current case
•Functions of stare decisis: efficiency, uniformity, stability, and predictability
•However, some cases are “cases of first impression.”
BUSINESS AND ITS LEGAL ENVIRONMENT
•With the growing strength of consumer movements and rising levels of awareness among stakeholders, corporations are realizing that stakeholders and consumers are no longer indifferent to unethical practices like financial irregularities, tax-evasion, poor quality products and services, kick-backs, non-compliance with environmental issues, and hazardous workingconditions.Many Indian companies too have recognized the importance of integrity,transparency, and opencommunications. They believe that the goodwill resulting from adopting and successfully implementing a code ofbusiness ethics will, in the long run, translate into economic gains.Today, investors want to ensure that the companies they invest in are not only managed properly, but also have proper corporate governance. They regard corporate governance as a controlmechanism that ensures the optimum use of the human, physical and financial resources of an enterprise.
•Companies have now begun to integrate ethics into their corporate cultures and concentrate on putting appropriate corporate governance mechanisms in place.