Understanding the Legal System and Business Law

Identify the meaning of law and the sources of law.

     Laws are the codified rules of behavior enforced by a society. Statutory law is created by federal, state, and local legislative bodies. Common law is derived from court decisions and interpretations of statutory law. Regulatory (administrative) law is law made by decree of government agencies and commissions.

Describe the structure of the U.S. judicial system.

     The judicial system involves a complex network of courts at the federal, state, and local levels. Trial courts and special courts make initial rulings on most cases. These rulings and those of administrative agencies can be appealed to appellate courts. Rulings at the appellate level, along with selected rulings by state supreme courts, may be appealed to the U.S. Supreme Court, the highest court in the nation.

List the six criteria of a valid contract and three types of torts.

     Contract law involves agreements between two or more parties that are enforceable in court. To be enforceable, a contract must include agreement between the parties, real consent by both parties, capacity (competence) of both parties, consideration to both parties, legality of the agreement, and proper form of the contract. Tort law addresses noncriminal civil injuries Torts can be intentional, negligent, or relate to product liability.

Explain the legal classifications of property, the principal/agent relationship, and the role of the Uniform Commercial Code in regulating the behavior of buyers and sellers.

     Laws governing the use and sale of various types of property affect the businesses that own or seek to buy that property. Rights to tangible real property, intellectual property, personal property, intangible personal property, intellectual property, and new property have all been upheld by the courts. Agency law defines the relationship between an individual (principal) and a person legally authorized to act on the principal's behalf (agent). Numerous regulations define the powers, duties, and responsibilities of both agents and principals. Commercial law outlines the rights of buyers and sellers. The Uniform Commercial Code has largely standardized commercial law in the United States. In particular, it spells out the nature of warranties and the negotiable instruments accepted in transactions.

Describe the conditions under which businesses and individuals use bankruptcy laws.

     Bankruptcy law regulates the circumstances under which people and businesses can file for bankruptcy. Bankruptcy may be voluntary or involuntary. Declaring bankruptcy may involve liquidation reorganization, and/or a repayment plan. Businesses may use any of these options. Reorganization is not an option in personal bankruptcy.