Unformatted text preview: Finance 3201 Business Law Barbara Danos, J.D. Chapter 1
Legal Reasoning and
the Legal Environment J.D. = Juris Doctor
= University of North Carolina
(Go HEELS) BARS: North Carolina
Massachusetts STUDENTS WITH
GPA OF 3.7 OR
STUDIED OVER 30 HRS. PER WEEK OUT OF
REVIEWED MATERIAL PRIOR TO CLASS
STAYED 1-2 CHAPTERS AHEAD IN TEXT
REVIEWED NOTES AFTER CLASS
STUDIED IN SMALL GROUPS (3-5) SEVERAL
TIMES PER WEEK
ASKED QUESTIONS, ASKED QUESTIONS,
ASKED QUESTIONS!!! STUDENTS WITH
A GPA OF 2.0 OR
STUDIED 8-12 HOURS PER WEEK OUT OF CLASS
DID NOT REVIEW MATERIAL PRIOR TO CLASS
STAYED 1-2 CHAPTERS BEHIND IN READING
RARELY ASKED QUESTIONS
RARELY DISCUSSED INFORMATION WITH
IN EFFECT WERE STILL IN HIGH SCHOOL
FOUR YEAR STUDY, R. B. LANDIS, CALIFORNIA STATE UNIVERSITY, 1995 “You have a pretty good case, Mr. Pitkin.
How much justice can you afford?” Law
VIP for Business Person
• Avoid hassles
Know how to use lawyers
Avoid litigation Natural Law
• Assumes that law, rights and ethics are
based on universal moral principals inherent
in nature discoverable through the human
• The oldest view of jurisprudence dating
back to Aristotle.
• Jefferson’s Declaration assumes “the Laws
of Nature.” Natural Law
Rev. Martin Luther King, Jr.
Letter from the Birmingham Jail, April 16,
1963. “[T]here are two types of laws: just
and unjust laws. . . . A just law is a manmade code that squares with the moral law .
. . . An unjust law is a code that is out of
harmony with the moral law. . . . An unjust
law is a human law that is not rooted in
eternal and natural law.” Legal Positivism
• Law is the supreme will of the State that
applies only to the citizens of that nation at
• Law, and therefore rights and ethics, are not
universal. The morality of a law, or whether
the law is “bad or good,” is irrelevant. Legal Realism
Jurisprudence that holds law is not simply a
result of the written law, but a product of
the views of judicial decision makers, as
well as social,economic, and contextual
influences. §2: The Common Law Tradition
American law is based largely on
English Common Law which was based
largely on traditions, social customs, rules,
and cases developed over hundreds of
years. Courts of Law
• Also called “king’s courts” where judges
were appointed by the king.
• Remedies limited to those provided at law,
i.e., land, chattel, money.
• Judges resolved disputes by application of
rules of law to the facts of the case before
the court. Courts of Equity
Also called courts of chancery in Delaware.
Equitable relief was sometimes available in
instances where a strict application of the
law to the facts of the case compelled a
result that was legal but unjust. Remedies Today
• Today federal and state courts of general
jurisdiction have consolidated remedies at
law and remedies at equity.
• Generally, the same court can fashion a
remedy that includes both damages and
equitable or injunctive relief. Stare Decisis
Stare decisis is a Latin phrase meaning “to
stand on decided cases.”
– Makes the law stable and predictable.
Increases judicial efficiency by relieving courts
of having to reinvent legal principles for each
case brought before them. Stare Decisis and Precedent
• Stare decisis is “judge made law” based on
• Precedents are judicial decisions that give rise to
legal principles that can be applied in future cases
based upon similar facts.
• Precedents and other forms of positive law, such
as statutes, constitutions, and regulations, are
referred to as binding authority and must be
followed Cases of “First Impression”
In cases of “first impression,” a/k/a Res Nova,
where there is no precedent, the court may
refer to positive law, public policy, and
widely held social values in order to craft
the best new precedent. Legal Reasoning
• Method used by judges to reach a decision.
• Many courts and attorneys frame decisions
and briefs using the IRAC format: Issue,
Rule, Application (Analysis), and
• See the Legal Reasoning site. (© Copyright
2000. Lawnerds.com . Used by permission.) Types of Legal Reasoning
• Deductive Reasoning: Makes use of syllogism, a
type of logical relationship involving a major
premise and a minor premise.
• Linear Reasoning: Proceeds from point to point,
with the final point being the conclusion.
• Reasoning by Analogy: Analysis that compares
facts of present case with facts of similar
previously-decided cases. §3: Sources of American Law
• U.S. and State Constitutions.
Statutory Law--federal and state.
Administrative Regulations and Decisions.
Restatements of the Law (ALI).
Case Law and Common Law Doctrines. §4: Classifications of Law
Every type of law will be either:
– Civil or Criminal, and either
– Substantive or Procedural, and either
– Public or Private. Substantive vs. Procedural
• Substantive law defines or creates the rights
and obligations of persons and
• Procedural law provides the steps one must
follow in order to avail oneself of one’s
legal rights or enforce another’s legal
obligations Civil vs. Criminal
• Civil law defines the rights between
individuals or individuals and governments.
• Criminal law defines an individual’s
obligations to society as a whole. Criminal Lawsuit
P = State
D = Person charged with crime
P’s Burden of proof = Beyond reasonable doubt
Outcome =Punishment & Deterrence
- Forfeiture of Liberty
- Fine Civil Lawsuit
P = Injured party
D = Party who caused injury
P’s Burden of proof = Preponderance of
Outcome =Make P. Whole
- Equitable Relief
- Punitive Damages ...
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