The Legal Environment Explained
The legal environment of business encompasses the issues, laws, and parameters by which a particular business entity must function. Virtually every aspect of a business is governed by law, from the day-to-day transactions of employees and customers to the regulations with which companies must comply. Outsourcing to vendor partners and foreign countries adds to the complexity and requires even more diligence and monitoring to make sure that third parties do not subject your company to unknowingly forfeiting intellectual property or committing international trade violations.
Banks, financial forecasting companies, insurance companies, lenders, government agencies , and industry advisors are all resources a company can utilize to navigate the complicated legal environment in which it operates. However, the standard means of accessing that information often tended to be with different glossaries, articles, and direct consultations with counsel. Through The Legal Environment of Business 13th edition, the continued effort has been made to bring all of that information together to provide a practical understanding of the legal environment that businesses operate under.
The 13th edition of The Legal Environment of Business builds on the previous edition and provides new and more sophisticated ways for students to learn about and understand the legal environment of business.
Features of The Legal Environment in Business
The 13th edition introduces a new collection of "Using the Law in Business" vignettes to emphasize real-world applications of the law. It includes the following key concepts and issues:
Contracts – Loosely defined, a contract is an agreement between two or more parties that is enforceable by law. Real-world situations involve contract formation (elements of a contract), enforcing contracts, defenses to enforcement of contracts, and remedies.
Liability – A legal system of determining the rights or wrongs of people, and of affixing the responsibility for wrongs that result in injury, damage, or other type of harm to persons or property.
Business Ethics – The principles of right conduct or systems of morality applied in the context of business relationships.
Common Law – Body of principles and doctrines having a contemporary binding effect on the basis of statements made in the past by state and federal courts, precedents which assist in resolving cases by analogy.
Equity – Any body of principles or rules of civil law which were developed and administered in equity or in accordance with conscience, as opposed to rules derived from strict or common law.
Regulatory Process – Legal process established by administrative agencies for oversight and enforcement of statutes by rulemaking, adjudication (formal hearings), and enforcement inspection or investigation.
Litigation – A legal proceeding in a court for settling a dispute.
New to the 13th Edition
As with every new edition of The Legal Environment of Business, the 13th includes a number of updates and revisions to reflect the most recent developments in business law. New features added in the 13th edition include greater emphasis on international law as it applies to business exemption provisions of the antitrust law; state regulation of the Internet; and issues related to corporations, LLCs, and other forms of business organizations as they apply to current business law topics. In addition, the 13th edition incorporates new cases, and includes national business events through May 2013 and case notes through early September 2012. The 13th edition of The Legal Environment of Business incorporates an updated "On the Internet" box into each chapter. These boxes feature substantial updates related to e-commerce which reflect the explosive growth of international and social network websites. The 13th edition also contains several new cases, including cases concerning the 10b-5 statute of the Securities Exchange Act of 1934, intellectual property, and cybersquatting.
Why Study Business Law?
Understanding Business Law: The Benefits for Students and Professionals
Students and professionals often ask me, "What’s the practical value of studying business law?" Though proven course materials provide rigorous theory to build upon, what can put us on the practical side of the fence? As we look inside "Business Law: Text and Cases, 13th Edition," I think you will be surprised at just how helpful this knowledge can be to your future.
The Rise of Legal Literacy One of the greatest skills you can possess in business both as a student and professional is an understanding of the major principles of business law. This rise in legal literacy in the United States means that even the most common business transactions have legal implications and are subject to case law and statutory regulation. Law provides a system where people can properly evaluate and assess options that lead to solid decision-making. In business, laws serve as ground rules that help to keep people honest and establish norms for appropriate behavior. In fact, law can provide leverage and opportunities.
Practical Application This section will show you above all else that all business is legal in nature/can be affected by the law. "Decisions must be made with legal principles in mind."
Managing Risks Understanding the legal environment of business allows students and professionals to manage risks. "Knowledge [of these principles] helps avoid and minimize risks," such as avoiding unsafe work conditions, false representations, fraudulent activities, improper sales of securities, or breaches of contractual agreements. These types of litigation can be costly and impact various aspects of business.
One way to mitigate risks in business is to make better, more informed decisions about the legal implications of your actions. "Legal risks include litigation, cost, ethics, production, and competition." Sometimes, it may be necessary to consult an attorney and embark on a course of action that lessens your risk.
Management and Jurisdiction "Private legislation" is another tool that can help manage risks by enforcing compliance. Companies can rely on legal departments to handle a multitude of responsibilities regarding management, customer accounts, contracts, and problematic dealings. To stay in compliance with the law, businesses can rely on the courts to adjudicate disputes and make determinations.
In our next few sections, we will take a closer look at case law, topics related to electronic commerce, ethical dilemmas, regulatory compliance, and more. With this knowledge, students and professionals can avoid and minimize potential risks while more effectively managing their business transactions.
How Business Law is Applied
The concepts explored in the 13th edition of "The Legal Environment of Business: A Managerial Approach: Text and Cases" can be applied practically in any number of real-world business situations. Consider for example Title VII, one of the major laws that relate to employment law. When a company gets into a lawsuit due to employment discrimination, the first thing it will do is hire a labor attorney, and the main focus of the attorney’s case will be convincing the jury that the company did not fire the worker for a discriminatory reason.
Practically, this means a company should not intervene when an employee leaves the company voluntarily. The most important thing a company can do to avoid litigation is to create a paper trail for voluntary resignations. Employers can create this paper trail by asking for a resignation letter from the departing employee, and by documenting who was present when the termination of employment occurred .
Another way that employment law can be implemented in the business world is through contract negotiation. For example, a person negotiating a contract with a potential employer should carefully read through the entire contract. If they have any understanding problems, they should request clarification. If they wish to make any changes to the language, they should do so in writing. This way, if the new employee is later let go, the company will have a written contract that a judge will recognize that demonstrates that the company did not fire the employee for a discriminatory reason.
The legal environment of business thus demonstrates how companies can benefit from understanding the law and how it interacts with everyday activities that the company may engage in.
Studying The Legal Environment of Business
In the rapidly evolving and often perplexing field of business law, students must navigate a dense thicket of complex terminologies and theories. Here, we provide strategic insights to help you decode these legal concepts and excel in your studies.
1. Mastering Complex Legal Terms
The unique aspect of business law is that it has its own language. The terms we use to describe the law of this field can sound foreign even to students. The best approach for mastering the language of business law is simple: pay close attention to how we have defined each word used throughout our textbook. Then try and describe the concept without using the legalese. It may take time but you will eventually make this terminology your own and interpreting the law will become second nature.
2. Interpreting Legal Complexities
Business law often describes an amorphous and fluid structure and understanding how to identify the starting point of the law in a given area is crucial. Often times, the law is imprecise and could conceivably fall under multiple areas of practice. The key to identifying the correct source is to focus on the underlying facts of a situation. For instance, the potential liability of an employee and the corporation for workplace sexual harassment could easily fit the statutes defining tort law, criminal law, contract law, and administrative law. However, it is most commonly pursued as a civil action for a tort law violation – wrongful behavior which leads to legal liability.
3. Applying Concepts to Exams
When applying key concepts to exam hypotheticals, remember to first identify the relevant rule or doctrine of law. Next ask yourself the following questions in order to fulfill an essential element needed to apply the law: a) what are the critical facts that give rise to the claim / violation / situation; b) which legal doctrines are applicable and why are they applicable? Once you have identified the areas of law, you can then narrow in and discuss how the law would impact a certain circumstance or act by the defendant.
4. Bridging Law and Business
Remember that the entire body of business law is meant to structure the way private businesses operate. It should help keep commerce from devolving into violence, coercion, and manipulation. Therefore, the best way to study the law – and thus the business law textbook – is to always connect it back to real life. Would you want to live in a world without privacy, intellectual property rights, or civil rights? We think not. Human beings are social creatures and we must interact with one another legally and ethically.
Helpful Resources
Additionally, other resources will aid in the understanding of Business Law and highlight the foundational role of Law in the Business Community. Some of these resources are:
• Online resources – Zief Briefs (available through our E-Library), Upchurch’s International Business Law and Its Environment website, The Penn State Berks Business Department website, and the Internet Public Library among others.
• Books – Business Law by James Marson and Katy Ferris, Business Law for Entrepreneurs: 10 Most Common Legal Mistakes Startups Make by Daniel Sitarz, and The Legal Environment of Business by Daniel W . Hanser et al are a few suggestions that can help when reviewing complex areas that are in The Legal Environment of Business: A Global Perspective, 13th edition.
• Software – Microsoft Office Access 2007 with Business Law Database Solutions 2.0, Microsoft Office Project 2007 with Business Law Database Solutions 2.0, and Microsoft Office Excel 2007 with Business Law Database Solutions 2.0 are analytical tools that help provide a better understanding of Business Law.
Several websites also provide additional information on various Business Law topics, such as Who What When, specific case law related to Business Law issues and the current law.