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busi law week 1-2 notes

by: kmb0095

busi law week 1-2 notes ACCT 2700

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Business Law
Robert Hollis Cochran
Class Notes
Busi Law
25 ?




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This 7 page Class Notes was uploaded by kmb0095 on Friday January 15, 2016. The Class Notes belongs to ACCT 2700 at Auburn University taught by Robert Hollis Cochran in Spring 2016. Since its upload, it has received 80 views. For similar materials see Business Law in Accounting at Auburn University.


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Date Created: 01/15/16
Intro to Law 1/15/16 “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable rights, that among these are life, liberty and the pursuit of happiness” –Thomas Jefferson  Problems? o Vague o What is happiness?  Right to do whatever you want as long as its legal?  Right to be left alone? o All ‘men’ are created equal – women?  If written now, would have said ‘all people are created equal’  Inequality then & now but was it oppressive at the time?  Under those standards, that’s just how it was – society in general excluded women  Deficiency in English language  We do not have a lot of ‘all-inclusive’ words  Inclusive words don’t necessarily fit in as well o ‘all men…’ vs. ‘all people…’ o going from ‘chairman’ to ‘chairwoman’ didn’t sound right, so eliminated the sex all together  ‘chair’ o All men are created ‘equal’  men were not equal at that time  Thomas Jefferson was a slave owner at the time  How could he write all were equal if he owned slaves? o Slaves were viewed as property o Ties to religion – God saying slaves in Bible so it was justified  Why would he think its still wrong to own slaves? o Freed his slaves when he died – wanted to right that wrong  Why wait until he died? o He was in the Southern aristocracy, if he freed his slaves he wouldn’t have been in that group anymore (less than 5% owned slaves – too expensive) o Wanted to die with a clear conscience  Can a lifetime of doing wrong be compensated at death? o When created, men were truly created equal; however, at the instant of birth and instant of death mankind were equal & that mankind/society tainted this equality Intro to Law o Monneeeyyyyy  Didn’t want to give up the southern aristocracy, how could he survive without the slaves?  Would’ve had to degrade way of life  Should we excise him from history for his faults? o No?? o We aren’t perfect, neither was he o Concentrate on what is important to us, learn from his mistakes and fix for the future  What is it that we want in equality?  Same opportunities – different than being treated equally  Ex) we don’t want to be equal to a high school drop out  Words have specific meanings in law, if we just throw out those words without dissecting their specific meanings then it becomes chaotic  Ex) Bill Clinton – “answer to the question depends on what the meaning of the word ‘is’ is” o Sensitive to ‘Creator’  We are more sensitive on pushing religion now  Then, it was either Christian or Atheist “Democracy is the worst form of government, except all the others.” – Winston Churchill  7 years after war (1952) what was happening in Britain o coal, food rationing – most homes weren’t heated o railroads weren’t running & most didn’t have cars, if they did they couldn’t drive much bc gas rationing  House of Parliament – Prime Minister question time 1952 o Everyone upset from rationing & issues in Britain at the time o PM said y’all are right, this is the worst we’ve ever had, democracy is the worst form of government, except all others o What’re we going to do? Destroy democracy? No, it’s the worst but its better than everything else; our job is to fix these things, not to bring down the whole country Definition of a Law:  Law is a body of rules of 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 o Applies to all gov’ts o Basically, law is the law & we have to follow it or there’s going to be consequences Intro to Law o Law reflects (at least in ours & Britain’s gov’t) common sense o Who owns the law?  Not congress, not supreme court, not president, nobody has the final say on the law except us as citizens Functions of the Law: - Keeping the peace - Promoting social justice - Facilitating orderly change - Encouraging compromise o If it hasn’t dropped off the list, its damn close to doing so o Ethnicity, educated/not, age, etc. o How will we survive without compromise with all these limits? o IT WONT HAPPEN o We need to elect people who rep our viewpoints regardless and will fight for them but are willing to compromise knowing we wont get everything we want - Shaping moral standards o Immoral to say ‘this is the only moral thing to do’ o Now, we don’t really respond to the moral argument as much as we used to  Sexual abstinence, wait or nah  Does your viewpoint have to match everyone else?  Who are we to impose our morals on others? - Maintaining the status quo - Facilitating planning o Most important function of the law to business people o Business people need to know they have a legal system to protect their investment - Maximizing individual freedom o Are we so focused on our individual freedom that we’ve forgotten our individual responsibility? What are other responsibilities?  Be an informed voter, follow the law, pay taxes (which means make money), be a contributing American citizen 1/20/16 Business Activities and the Legal Environment  Laws & regulations affect virtually all business activities  Knowledge of ‘black-letter’ not enough – business now assumes an ethical dimension  Many different laws man affect a single business transaction  Business decisions are affected by: o Torts, agency law, product liability, intellectual property rights, negotiable instruments, etc.  Sources of American Law o Constitutional law o Statutory law – made by elected reps Intro to Law  Ordinances  Uniform commercial code  Limited, so we wont focus on it o Administrative law  Federal agencies  Put out rules and regulations  State and local agencies  Pretty much invisible to most Americans, despite the ~1000 laws put out by agencies for every 1 law from congress etc. o Case law and common law doctrines – court/judge-made laws  According to Mr. Cochran, the aim of American society is that we all should be equal – False  Business people should let lawyers worry about the law – False  Common Law Tradition o American law is based largely on English common law which was based largely on traditions, social customs, rules, and cases dating back to 1066 AD  William the Conqueror – Normans were brutal but more regulated & uniform  Each village seemed to have different laws/regulations  William established ONE court – Court of Law o Early English courts: at common law, there were two separate court systems o Courts of Law – monetary relief (will the con.)  aka ‘king’s courts’ bc judges appointed by king  judges resolved disputes by application of rules of law to the facts of the case before the court  remedies limited to those provided at law (land, chattel, money) o Courts of Equity – non-monetary relief, based on justice and fairness  Administered by chancellors appointed by the king  Equitable remedies: specific performance, injunctions, rescissions o Law Merchant  Merchants handled their own & developed a system of laws to govern business activities  These laws (Law Merchant laws) were efficient bc of profit motive  Law Merchant slowly became a part of the Common Law & became administered by Legal and Equitable courts o Courts today Intro to Law  Eventually, all Law, Equitable, and Law Merchant Courts were merged into a single system (General Courts)  Stare Decisis o “stand on decided cases” o judge-made law o each decision and interpretation becomes a legal precedent o Stare Decisis and Common Law tradition  Courts are obligated to follow precedents within their jurisdictions  Courts should not overturn their own precedents without compelling reason o S.D. and Legal Stability  S.D. helps courts efficiency and makes laws more predictable  S.D. makes changing the law slow o When there is no precedent, the Courts will decide the case using their best judgment (case of first impression is a case without precedent) o Courts will change or overrule a precedent usually under the fact that:  the precedent is wrong  times have changed & a new precedent is needed 1/22/16 “The indiscriminate denunciation of the rich is mischievous. It perverts the mind, poisons the heart, and furnishes an excuse to crime. No poor man was ever made richer or happier by it. Not what a man has, but what he is, settles his class.” – Benjamin Harrison (23 pres)  If the wealthy has it, then the poor can’t – FALSE in economic sense today  Pure capitalism – Steve Jobs & others have created something at such a high demand that the poor will give their small amount of money for  The wealthy have figured out how to get that infinite amount of money, the poor have not  Poor in spirit, education, motivation, not just money  Indiscriminate meaning – criticize people for the right reasons  Plessy v. Ferguson (1896) o Plessy sues the state of Louisiana bc his kids were not equal with whites, couldn’t go to the same school o Ferguson’s argument – ‘we believe in equal rights under the law, we give the same amount of money per child regardless of their skin color BUT in Louisiana we shouldn’t integrate the races, in the Bible it says we shouldn’t mix the races’ Intro to Law o Plessy says he read every amendment of the constitution and didn’t find anything about separating the races, it isn’t up to the Supreme Court to feed words into the constitution o Supreme Court says oh yeah it doesn’t, if Louisiana gets the same amount of money per child then who are we to say we have to keep the races separate o Upheld this idea of separate but equal, releasing this caused an uproar o Demonstration movement began around this time – led to Civil Rights movement o Also, LA actually wasn’t given an equal amount of money per child o No court ever found ‘separate but equal’ was wrong or that times have changed o 1954 (Brown v. Board of Education)  by this time, times had changed  said constitution doesn’t address it, but it doesn’t not address it  overruled separate but equal, said that is inherently unequal  Cochran said it took until ~1966 to integrate all schools in AL, until ~1975 to fully integrate all schools o All in all, Common Law is not perfect, we can change our laws if need be, and its extremely slow  “Wisdom of the Ages” o people refer to the Common Law as retaining the wisdom of the ages o magnificent perfection of the Common Law, has so much authority bc it has so much review  There is no one ‘right’ answer o Good arguments are made for different sides o Judges have personal beliefs that can affect decisions  Judges have to put aside personal convictions and beliefs, juries do not o Outcomes to lawsuits cannot be predicted with certainty  Most of the time, both lawyers know how that lawsuit should be decided  Just because someone reps a client doesn’t mean that client should win  Common Law today o Common law governs transactions not covered by statutory law  Courts interpret statutes o Law of contracts, family law, busi law almost, not criminal law o 49 of 50 states adopted the English Common Law upon joining the Union (except Louisiana) Intro to Law o In Alabama we adopted the English Common Law in the Code of Alabama : 1-3-1 (first section, third paragraph, first section of the 3d paragraph)  “The common law of England, so far as it is not inconsistent with the Constitution, laws and institutions of this state, shall, together with such institutions and laws, be the rule of decisions, and shall continue in force, except as from time to time it may be altered or repealed by the Legislature”  Common Law of 1819 as of that date was the law of AL unless we change it in AL  whatever the English Common Law said, that’s what we followed  Alabama Common Law consists of all the changes made to the English Common Law since 1819  No matter what the English Common Law says and despite the differences in law between states, the Constitution takes precedent over all Court decisions under the Common Law: affect future cases in many circumstances A court decision from England in 1709: may be the law in some states


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