1.1 What is and Why Study Law

The materials in this text are created for future business managers and leaders, shaping a foundation for understanding legal issues that those in these career paths will encounter in the workplace. The overarching goal of any course in Business Law is to develop the critical thinking skills that those in business professions will need to navigate and resolve legal conflicts.

As a basic text in Business Law, these materials will focus mostly on aspects of the law that impact business and commercial transactions. Because many areas of the law touch on business transactions, so, too, will these materials, in terms of topical coverage, in terms of examples, and in terms of questions and exercises. An important outcome in any Business Law course is one of protection. Knowing what is and isn’t lawful, and where to get accurate and credible sources of legal information, is paramount to protecting one’s products, one’s employer, and one’s employees. On the other hand, being unaware of the boundaries of lawful conduct can cause a manager to run afoul of the law, and expose the organization to complaints, lawsuits, and costly damage awards.

With this in mind, look for this course and these materials to provide knowledge and inquiry to aid in shaping the business leader you want to become. In order to start this journey, these materials assume no prior knowledge and start with very basic information about the law and the U.S. legal system.

What is Law?

Black’s Law Dictionary may well be the most popular and widely used legal dictionary in the United States. 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.” Simply put, law is a system of rules that we, as members of society, live by.

To recognize a rule of law, there are several things that you can look for to help distinguish law from some other type of rule in our society. Determine where the rule comes from. Laws will come from a “controlling authority” such as a government body. Ask yourself if you can find the rule written somewhere. Laws that we must abide by are written down since law must be predictable. Finally, figure out if there is a consequence to not following the rule. If there is a consequence or detriment to ignoring or refusing to follow the rule that can be enforced by the government, you are likely dealing with a law.

Most likely, your favorite retail establishment has a return policy. That policy may be enforced without exception at that store, but that policy isn’t a law because it isn’t created by a controlling authority. If you go to another retail shop, the return policy may be different, or there may be no policy, leaving a store clerk to decide on a case by case request for a return. A business establishment that makes policies for its operations would not be making law. Contrast that example with a customer smoking inside your favorite retail establishment. In New Jersey, this would be a violation of a law because the New Jersey Smoke Free Air Act (the “Act”) states that “Smoking is prohibited in an indoor public place or workplace …” Written and voted on in our state legislature, signed by Governor Codey in 2006, subjecting smokers to fines for violating the Act – this is a good example of a law that impacts business.

Functions of the Law

Generally, 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 are able to serve these purposes better than others. Still other legal systems might rebalance or remove one or more of these functions. For instance, there are some nations that do not have as a legal priority the function of preserving individual rights. Outside of the United States, some legal systems may incorporate other functions to promote a particular way of life, such as the maintenance of authoritarian rule, or to incorporate religious doctrine within the rule of law.