Edinburgh Summer Program in Business Law: 2008

1. Edinburgh Summer Program in Business Law: 2008 • Roll • Course requirements / grading • exams • participation • briefing cases • powerpoint • Today

2. Sources of Law What is law? Rules that govern behavior, assign rights and responsibilities between people, between people and government. What does law have to do with business? • facilitates business transactions, how? • constrains or restricts business, how?

3. Sources of Law • TODAY sources of law • Terminology / classifications of law • Common law: how it works • Statutory law and legislation • The Constitution • Government agencies / Administrative Law • International Law

4. Classifications of Law Criminal Law “Civil” Law vs. • Dangerous behavior outlawed by society • Government prosecutes accused • Guilt is determined • Punishment or fine is imposed • Regulates rights and duties of parties • Victim, not govern-ment brings suit • Guilt not determined • Compensation is ordered

5. Classifications of Law (cont’d) Substantive Law Procedural Law vs. • Defines the rights of the people • Establishes processes for settling disputes Public Law Private Law vs. • Sets the duties of government to its citizens • Regulates duties between individuals

6. Classifications of Law Common Law Systems “Civil” Code Systems vs. • Rules emerge from individual decisions • Judge seeks to resolve disputes; not make rules governing future behavior • All legal rules emanate from statutes • No judge-made law, except …

7. Courts Federal Courts State Courts U.S. Supreme CourtSupreme Court Circuit Courts of AppealAppellate Level U.S. District CourtTrial Courts How do we determine which courts have jurisdiction over which kinds of cases?

8. Trials • Plaintiff/prosecutor complaint/indictment • Defendant  answer / plea – motion to dismiss • Discovery  depositions, interrogatories document production – summary judgment • Settlement • Trial: • plaintiff/prosecution case first, defendant second • directed verdict • rules of evidence • Verdict  j.n.o.v. • Appeals

9. ADR • Arbitration • Mediation

10. The Common Law: what is it?

11. The Common Law: what is it? • Judge-made law; made up of all the decisions made by appellate courts. • Two hundred years ago, almost all law was common law; most new law is statutory. • Common law predominates in tort, contract, and agency law; it is important in property and employment law. • Based on stare decisis, meaning “let the decision stand” (previous decisions are generally upheld in similar cases.) • Incorporates predictability and flexibility.

12. The Common Law: what is it? • Decisions are made case-by-case. • Decision rules come from prior cases. • Courts/judges look for “precedent”

13. Precedent • Earlier case deciding same issue • “Controlling precedent” is a decision on the issue made by a higher court • Precedent can be: • Followed • Distinguished, or • Overruled: Beattie v. Beattie

14. Find the Rule What number comes next? 2, 3, 5, . . . ?

16. Finding Common Law RulesJudges decide cases and resolve disputes. They don’t always announce general decision rules. Others must look at prior cases and try to discern the rules that apply. • Why not establish general rules for others to follow?

17. Flexibility & StabilityStare decisis makes common law stable.Common law evolves slowly when precedent is distinguished and overruled, rather than followed. ADVANTAGES:

18. Statutory Law Most new law is statutory, that is, it is legislation passed by either a state legislature or the Congress of the United States. Citizens who vote have some control over statutory law. We elect the state congressional representatives and the United States Senators and Representatives. Does legislation represent the “majority will”?

19. How New Laws are Made Any member of Congress (Senator or Representative) can initiate a bill, or proposed law. A bill is debated in a committee in the house where it was introduced. From the committee, it goes to the full house for a vote. If it passes both houses this way, it goes to the President for his signature. A President’s signature turns a bill into law.

20. LEGISLATION EXERCISE Each of you represents a constituency, AND Each of you is a member of a political party, either the majority party or the minority party Your goal is to try to score points by securing the outcome that best suits your constituents (according to the rules of the game)

21. LEGISLATION EXERCISE • Only options: • Bill without either amendment • Bill with CO2 amendment only • Bill with both the CO2 and Tradeable Permit amendments • Your goal: try to achieve the outcome that yield the most points for you (i.e., makes your constituents happiest).

23. “Cycling” in Legislatures Three coalitions: 1, 2, 3 Three alternative policies: A, B, and C Preference distribution Coalition 1 Coalition 2 Coalition 3 A B C B C A C A B

24. Statutory Interpretation “Logrolling”  Is there such a thing as a proper legislative intent and an improper intent? Should courts be faithful to improper legislative intent? How do courts decide what Congress meant when the meaning of the statute is debatable?

25. Statutory Interpretation Sometimes wording is ambiguous, either by oversight, or intentional -- as a compromise. Why might ambiguity be intentional? When a statute has more than one possible meaning, what factors should guide the court in its interpretation? • Dictionary definitions • Report of legislative committee • Individual legislators’ comments about meaning of statute • Intent of enacting Congress? Current Congress? • Purpose of statute • Public policies

26. Who Decides What Statutes Mean? Congress and the President enact a law The law charges an administrative agency with the task of implementing the statute Disputes over the meaning of the statute are resolved by courts

28. Constitutional Law The ultimate “source” of American law is the Constitution, which delineates the powers of governmental actors and the people.

29. Division of power in both Constitutions—vertical and horizontal • Separation of Powers– Horizontal division of federal government power • Federal government is divided into three branches -- Executive, Legislative, and Judicial. • Federalism-- the U.S. national government’s power is limited to only the issues listed in Article I, §8. Remainder reserved to states. The courts can rule a law unconstitutional, but... Congress can pass statutes, but... The President can appoint federal judges, but... The President can veto a bill, but... Congress has to approve the President’s nominee... Congress can override a veto, but... • Individual Rights -- rights of citizens against government.

30. Federalism & the Commerce Clause: Article I, Section 8 • “The Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes . . .” • Congressional regulations of areas traditionally within state “police power” must be tied to the regulation of commerce. • Substantial Effect Rule -- Congress may regulate any activity which has a substantial economic effect on interstate commerce.

31. The “Dormant” Commerce Clause States may regulate commerce in its own borders, but what if a state tries to regulate commerce across state borders? • Garbage cases • Granholm v. Heald Why do courts interpret the U.S. Constitution to limit state power in this way?

32. Federalism and the Supremacy Clause: Article VI “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land . . .”

33. Conflict between national and local law: EXAMPLE Company A wants to build a hazardous waste incinerator in Mobile Alabama. The people of Mobile don’t want the incinerator there, but the Company has obtained the required permit for hazardous waste incinerators from the U.S. Environmental Protection Agency. The Mobile City Council passes an ordinance banning hazardous waste incinerators within the city limits.

34. Executive Power • Article II defines the powers and responsibilities of the President -- in general he is to enforce the nation’s laws. • Appointment -- The president nominates federal judges (including Supreme Court Justices) and heads of most administrative agencies. • Legislation -- The president and his advisors can propose bills to Congress and the president can veto bills from Congress. • Foreign Policy -- The president coordinates international efforts, negotiates treaties and is the Commander in Chief of the military, but he may not declare war.

35. Protected Rights: Free Speech The First Amendment of the U.S. Constitution states, “Congress shall make no law… abridging the freedom of speech.” • Speech includes non-verbal communication, such as signs, symbols and acts (like flag-burning). • Political speech -- about a politician or political process is protected, and can be found illegal only if it is intended and likely to promote lawless conduct. Reasonable “time, place and manner” regulation is permitted.

36. Protected Rights: Free Speech • Obscenity is not protected by the Constitution. • Commercial speech -- designed to propose a commercial transaction -- is regulated more strictly than other speech and may be outlawed if false or misleading. • Bad Frog Brewery v. NYS Liquor Auth.

37. Property Rights 5th Amendment prohibits taking private property for public use without providing “just compensation.” • Regulatory takings • Penn Central test and the Lucas test

39. Administrative Law Federal agencies such as the Federal Aviation Agency (FAA) and the Federal Trade Commission (FTC) and the Bureau of Land Management, all have the power to make regulations which affect citizens and businesses. Agencies were -- and are -- created to fulfill a need. Someone needs to oversee changing technologies and practices and their effects on society. An agency is created when Congress passes enabling legislation, which describes a problem and defines the agency’s powers. Agencies often have considerable power in their areas of specialty, sometimes leading to controversy. The Administrative Procedure Act regulates how agencies operate, in an attempt to reduce the controversy.

40. Administrative Law • Rulemaking • Hemp Industries v. DEA • Adjudication • Judicial deference to agency decisions • US v. Mead Corp.

41. International Law What is international law? • Treaties (e.g., Law of the Sea; GATT), and • Rules developed by international organizations created by treaties (e.g., U.N.; WTO) How is international law enforced? Is it different in some fundamental way from other “sources” of law like constitutions, statutes, regulations, and common law?

42. International Law • GATT/WTO • Regional Agreements • NAFTA – free trade • EU – trade plus “ever closer union” Do member states give away their sovereignty when they join arrangements like these? If so, how?

43. International Law Unlike federal or state statutory law, judge-made common law, or administrative law, international law is not created by a sovereign. That is, international laws are not effective until ratified by sovereign national governments. However, their indirect effect (through national enforcement) can be significant and profound.

44. International Law Act of state doctrine Sovereign immunity