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Chapter 1
Unit 1 – The Legal Environment
Chapter 1 – Introduction to Law*
Chapter Overview
Chapter Theme
The principles discussed in this book are practical. Neither the book nor the course is a theoretical
exercise. The law will affect students, regardless of their careers, whether they want it to or not. The
more students understand the law, the more they can use it productively.
Approaching the Teaching of Law
Whether teaching in an undergraduate or MBA program students generally fall into one of four categories:
(1) those who do not intend law as a career but approach the material with an open mind; (2) those in
whom the course kindles a strong interest in law, who for the first time consider law as a career; (3) those
who enter the course with a strong interest in law and plan to attend law school ; and (4) those who are
in the course only because their program requires it. The instructor’s job is to try to engage students in
all four categories. Students in categories (2) and (3) may be more willing to explore the nuances of legal
principles and see connections between legal topics. Students in categories (1) and (4) may respond most
favorably to practical applications of the law, such as understanding the law governing employment or
landlord/tenant relationships.
Issues for Discussion
It is often frustrating to students, citizens, and even lawyers that law is so complex. Anglo-American legal
history consists, in part, of a clash of powerful, competing interests: property ownership, ethics, raw
power, business practices, personal responsibility, social mores, and the need for predictability, to list a
few. To understand the interplay of these forces is to understand why law is complicated.
A related point is that many students—indeed, many non-lawyers—dislike the law’s ambiguity. They want
to learn “the law” as a set of rules with unvarying application, and are uncomfortable with the “what if”
scenarios through which lawyers learn to apply legal principles. Students must learn that law acquires
meaning only through application. If students, especially those in categories (1) and (4) above, leave the
course with greater understanding of why the law is ambiguous, why a lawyer’s first response to a
question about the law is often “it depends,” then the instructor should consider it a success.
Competing Interests
From a newspaper article about a legal issue, students should identify two or more competing interests.
In an article about tobacco litigation, they might compare the tobacco companies’ property interest in a
profitable commodity, the companies’ obligation to divulge what they knew concerning nicotine, the
personal responsibility of those who chose to smoke, the state’s interest in reducing medical costs, the
*Case citations appear here; footnotes appear in text only.
Unit 1 The Legal Environment
companies’ right to free speech (advertising), the federal government’s interest in regulating smoking,
and the state’s obligation to protect children. The more important the legal issue, the less likely there is
a simple solution to make everyone happy.
Experience with Lawyers
If one is teaching graduate students or others who have actual business experience working with lawyers,
it can be an excellent introduction to the course to elicit the pros and cons of those experiences. One fun
way to do so is to ask students “why lawyers are great” and “why lawyers are frustrating.” Typical reasons
given for “why lawyers are great:” “They help me avoid getting into trouble;” “They help to get me out of
trouble;” and, “I can blame things on them.” Typical reasons given for “why lawyers are frustrating: “They
are expensive;” “They make everything too complicated;” “They are slow;” “They don’t respond to my
questions;” “They tell me what I don’t want to hear;” and, “They don’t know how to give “yes or no”
The strong reach of the law touches nearly everything we do, especially at work. At work, a mid—
level manager might face issues of harassment of a subordinate by a coworker (employment law),
negotiating a contract with a game developer (contract law), researching to see whether similar games
already exist which might diminish her ability to market the new game (intellectual property law), a
worker who may be using drugs (constitutional law and employment law), potential liability for injury
caused by an employee on drugs (tort law and agency law).
Law is also essential. Every society of historical record had some legal system. Our legal system is
largely based upon other English model, but many other societies contributed ideas.
The law is intriguing. When a large verdict is rendered, people ask whether the jury’s decision was
right? Did the jury react emotionally? Or perhaps the anger caused by terrible trauma should be a part of
a court case.
1-1a Sources of Contemporary Law
It would be nice if we could look up “the law” in one book, memorize it, and then apply it but the law is
not that simple. Principles and rules of law come from many different sources. Why?
We inherited a complex structure of laws from England. And ours is a nation born in revolution and
created, in large part, to protect the rights of its people from the government.
Federalism: A double-layered system of government, with the national and state governments each
exercising important but limited powers.
U.S. Constitution: The supreme law of the United States.
United States Constitution
America’s greatest legal achievement was the writing of the U.S. Constitution. Any law that conflicts with
the U.S. Constitution is void. The Federal Constitution establishes:
Branches of Government
The Founding Fathers sought a division of government power, not wanting all power centralized in
anyone. The Constitution divides legal authority into three pieces:
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Chapter 1 Introduction to Law
Legislative power is the ability to create new laws; it is balanced by executive power of the veto and
judicial power of interpretation and determination of validity. Article I creates Congress, comprised of a
Senate and a House of Representatives.
Executive power is the authority to enforce laws; it is balanced by the legislative power to override a veto
and to impeach and the judicial power to interpret. Article II makes the president the Commander-inChief.
Judicial power is the power to interpret laws and determine their validity; it is balanced by the executive
power to appoint justices and legislative power to approve justice nominees. Congress can also amend
the Constitution with the approval of the states. It is often every bit as important as the ability to create
laws in the first place. For instance, the Supreme Court ruled that privacy provisions of the Constitution
protect a woman’s right to abortion, although neither the word “privacy” nor “abortion” appears in the
text of the Constitution.1 At times, courts void laws altogether. In 2016, the Supreme Court struck down
a Texas law regulating abortion clinics and the doctors who worked in them. The Court found that those
rules created an undue burden for Texas women by causing many clinics to close and making abortions
unreasonably difficult to obtain.
Checks and Balances
The authors of the Constitution also wanted to give each part of the government some power over the
other two branches. They wanted to create a system that, without broad agreement, would tend towards
inaction. The president can veto Congressional legislation. Congress can impeach the president. The
Supreme Court can void laws passed by Congress. The president appoints judges, but they must be
approved by the Senate. Congress can override the Supreme Court by amending the Constitution. The
president and Congress influence the Supreme Court by controlling who is placed on the court in the first
place. Many of these checks and balances will be examined in more detail later in the text.
Fundamental Rights
The Constitution also grants many of our most basic liberties, generally found in the amendments to the
Constitution. The First Amendment guarantees the rights of free speech, free press, and the free exercise
of religion. The Fourth, Fifth, and Sixth protect the rights of any person accused of a crime. Other
Amendments ensure that the government treats all people equally, and that it pays for any property it
takes from a citizen.
Statute: A law created by a legislature.
The Constitution gives to the Congress the power to pass laws on various subjects. A proposed law is called
a bill; a bill created by a legislature that has become law is called a statute.
Common Law
Stare decisis: The principle that precedent is binding on later cases.
The collective body of court decisions throughout history comprise the common law. Judges of all courts
below the Supreme Court will refer to previous cases (precedent) to rule on present cases. The principle
that precedent is binding on later cases is called stare decisis, meaning, “let the decision stand.” But
Roe v. Wade, 410 U.S. 113 (1973)
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Unit 1 The Legal Environment
note that precedent is binding only on lower courts, which can be quite beneficial. In 1896, the Supreme
Court decided that segregation was legal under certain conditions.2 In 1954, faced with the same issue,
the court changed its mind.3
Court Orders
Sometimes judges issue court orders on a particular person or entity. This may be an order to do
something or an order to refrain from some action.
Administrative Law
Administrative agencies are created by Congress or by an order of the President. Their purpose is to carry
out the day-to-day work of enforcing the statutes passed by Congress. Agencies have the power to create
regulations, which are as binding as laws.
1-1b Classifications
Criminal and Civil Law
Criminal law: Concerns behavior so threatening that society prohibits it.
Civil law: Regulates the rights and duties between parties.
Criminal law concerns behavior so threatening that society outlaws it altogether. The government itself
prosecutes the wrongdoer. The victim is not in charge of the case, although she may appear as a witness.
The government will seek to punish the defendant with a prison sentence, a fine, or both. If there is a fine,
the money goes to the state, not to the injured party.
Civil law is different, and most of this book is about civil law. The civil law regulates the rights and duties
between parties. It does not involve guilt or punishment, two legal concepts with which students are likely
most familiar Chapter 6 addresses criminal law. Some conduct involves both civil and criminal law, as we
will see in the Pub Zone case.
Law and Morality
Law and morality are clearly different yet obviously related. Often the law duplicates what all of us would
regard as a moral position. But we have had laws that we now clearly regard as immoral. Finally, there are
legal issues where the morality is less clear.
We have had laws that we now clearly regard as immoral. Seventy-five years ago, a factory owner could
legally fire a worker for any reason at all, including, for example, her religion.
Finally, there are legal issues where the morality is not so clear. Suppose you serve alcohol to a guest who
becomes intoxicated and then causes an automobile accident, seriously injuring a pedestrian? Should you,
the social host, be liable? This is an issue of tort liability which we will examine in Chapter 9. Students will
have the opportunity to re=examine their own moral beliefs, when we cover Chapter 2 on ethics.
Plessy v. Ferguson, 163 U.S. 537 (1896).
Brown v. Board of Education of Topeka, 347 UJ.S. 483 (1954).
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Chapter 1 Introduction to Law
1-1c Working with the Book’s Features
Analyzing a Case
A law case is the decision a court has made in a civil lawsuit or criminal prosecution. Cases are the heart
of the law and an important part of this book. Reading them effectively takes practice. This chapter’s
opening scenario is fictional, but the following real case involves a similar situation. Who can be held liable
for the assault?
Plaintiff: The party who is suing.
Defendant: The party being sued.
Holding: A court’s decision
Reverse: To declare the lower court’s ruling wrong and voice
Remand: To send a case back down to a lower court.
Affirm: To uphold a lower court’s ruling.
The case name is “Kuehn v. Pub Zone.” Karl Kuehn is the plaintiff, who is suing. The Pub Zone is the
defendant, and is being sued. The next line gives the legal citation, which indicates where to find the case
in a law library. We explain in the footnote how to locate a book if you plan to do research.4
Case: Kuehn v Pub Zone, C364 N.J. Super, 301, Court of New Jersey, 2003
Facts: Maria Kerkoulas owned the Pub Zone bar, frequented by many motorcycle gangs, and knew from
her own experience and conversations with police that some of the gangs, including the Pagans, were
dangerous and prone to attack customers for no reason. Kerkoulas posted a sign prohibiting any
motorcycle gangs from entering the bar while wearing “colors,” that is, gang insignia. Based on her
experience, she believed that gangs without their colors were less prone to violence.
Rhino, Backdraft, and several other Pagans pushed past the bouncer wearing colors and approached the
bar. Although she saw their colors, Kerkoulas served them one drink. They later moved towards the back
of the pub, and Kerkoulas believed they were departing. In fact, they followed a customer named Karl
Kuehn to the men’s room, where without any provocation they savagely beat him, causing serious injuries.
Kuehn sued the Pub Zone. The jury awarded him $300,000 in damages. The trial court judge overruled
the jury’s verdict and granted judgment for the Pub Zone, meaning that the tavern owed nothing. The
judge ruled that the pub’s owner could not have foreseen the attack on Kuehn, and had no duty to protect
him from an outlaw motorcycle gang. Kuehn appealed.
Issue: Did the Pub Zone have a duty to protect Kuehn from the Pagans’ attack?
Holding: Yes. Whether a duty exists depends upon an evaluation of a number of factors including the
nature of the underlying risk of harm, the opportunity and ability to exercise care to prevent the harm,
If you want to do legal research, you need to know where to find particular legal decisions. A citation is the case’s
“address,” which guides you to the official book in which it is published. [See the text for the entire footnote.]
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Unit 1 The Legal Environment
the comparative interests of, and the relationships between or among the parties, and, based on
considerations of public policy and fairness, the societal interest in the proposed solution.
Since the possessor [of a business] is not an insurer of the visitor’s safety, he is ordinarily under no duty
to exercise any care until he knows or has reason to know that the acts of the third person are occurring,
or are about to occur. He may, however, know or have reason to know, from past experience, that there
is a likelihood of conduct on the part of third persons in general which is likely to endanger the safety of
the visitor, even though he has no reason to expect it on the part of any particular individual.
The totality of the circumstances presented in this case give rise to a duty on the part of the Pub Zone to
have taken reasonable precautions against the danger posed by the Pagans as a group. There was no
reason to suspect any particular Pagan of violent conduct, but Kerkoulas knew the gang collectively had
engaged in random violence. Thus, Kerkoulas had knowledge, as the result of past experience and from
other sources, that there was a likelihood of conduct on the part of third persons in general that was likely
to endanger the safety of a patron at some unspecified future time. A duty to take precautions against
the endangering conduct thus arose.
Question: What kind of case is this, civil or criminal?
Answer: Civil.
Question: What is the difference?
Answer: In a civil suit, one party is suing the other. In a criminal prosecution, the government is
seeking to punish someone for conduct that society will not tolerate.
Question: Who is the plaintiff (the party who is suing) and who the defendant (the party being
Answer: Kuehn is the plaintiff and Pub Zone is the defendant.
Question: What is the key issue in this civil suit?
Answer: Whether Pub Zone had a duty to protect Kuehn.
Question: Why does Pub Zone claim it had no duty to Kuehn?
Answer: Pub Zone argued that the attack was unforeseeable and that Pub Zone was not responsible
for guaranteeing the personal safety of its patrons.
Question: What did the trial court conclude?
Answer: Although the jury found in favor of Kuehn and awarded him $300,000 in damages, the trial
court judge overruled the verdict and damage award and granted judgment for Pub Zone.
Question: What did the appellate court decide?
Answer: That Pub Zone did have a duty to protect Kuehn. The court reinstated the jury verdict and
damage award.
Question: Why did the court decide that Pub Zone had a duty?
Answer: Kerkoulas’ sign prohibiting patrons from wearing gang colors, and the Pub Zone’s practice
of calling police when patrons violated this rule, showed the Pub’s awareness of the risk of violence
of such gangs. Kerkoulas also knew that the Pagans had participated in past acts of random violence.
Thus, Pub Zone had a duty to take precautions against such violence.
Question: What should Pub Zone have done to satisfy its duty?
Answer: Enforce its existing rules. Despite Pub Zone’s policy against gang colors, Kerkoulas allowed
the Pagans to remain in the bar and drink. Train bouncers and all other staff to be aware of patrons
from whom such violence is foreseeable. If such patrons refuse to leave the club when asked, Pub
Zone should be consistent in calling the police to address the problem.
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Chapter 1 Introduction to Law
Exam Strategy
This feature gives the student practice analyzing cases the way lawyers do – and the way they must on
tests. Law exams are different from most others because you must determine the issue from the facts
provided. See below for an example.
You Be the Judge
Many cases involve difficult decisions for juries and judges. Often both parties have legitimate, opposing
arguments. Most chapters will have a feature called, “You Be the Judge,” in which the facts of a case are
presented, but not thte court’s holding. We leave it to the students to debate and decide which position
is stronger, or add their own arguments to those given.
You Be the Judge: Del Lago Partners, Inc. v. Smith5
Note: There are two reasons for using this case. First is to introduce students to the “You Be the Judge”
feature. There is one such case in almost every chapter. The text provides the facts and issue and then,
in place of the court’s holding, gives competing arguments for the two sides. The text’s authors wrote the
arguments, often based on majority and/or dissenting opinions in the case. Since students do not have
the “answer …
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