The Legal Environment Of Business A Critical Thinking Approach 5th Edition

 

The Legal Environment of Business: A Critical Thinking Approach

styles. These styles require student inquiry when completing the tasks the instructor has assigned. Axelrod explains that didactic teaching styles stress either knowledge acquired by memorization, or skill mastery through repetition and practice. Evocative modes stress student inquiry and discovery. A teaching style that encourages critical thinking is an evocative style. Within the category of evocative styles, different teaching styles emphasize different components. Some styles focus on the teacher, some on the learner, and some on the subject matter. A teaching style that stresses critical thinking is an evocative style that focuses on the learner and his or her understanding of course material. Axelrod would call this style a student- centered style rather than an instructor-centered style. A critical thinking approach assumes the teacher will create a classroom environment in which the students

 intellectual development is the focus of classroom attention. A teacher who uses this approach would be likely to say what a  professor in Axelrod

s book says,

I train minds.

 Promoting critical thinking is one way to train

students’

 minds.  Now the question arises as to how instructors will know whether they have created a student- centered classroom that emphasizes intellectual development. First, they will be talking less and listening to their students more. Second, they will be emphasizing on higher-order thinking skills rather than asking their students to recite principles and facts. Third, instructors will be observing how students are doing at grasping the critical thinking model. They should not be watching instructors to see what a good critical thinker they are. Fourth, class time will be spent working with the material, rather than making sure they have

“c

overe

d”

 everything.

Reference

: Joseph Axelrod,

The University Teacher as Artist

(Jossey-Bass, Inc., Publishers 1973).

Chapter Overview, Topic Outline, and Discussion Questions

Chapter Overview 

This book is about the legal environment in which the business community operates today. Although the book concentrates on law and the legal variables that help shape business decisions, it has not overlooked the ethical, political, and economic questions that often arise in business decision making. This chapter is especially concerned with legal variables in the context of critical thinking. In addition, it examines the international dimensions of several areas of law. Instructors who want to encourage students to work with the material in class sometimes realize they cannot always

“c

over 

 all the material in the book. After several years of not covering everything, instructors should be comfortable knowing that the material encourages

Learning Objectives

  1. Distinguish between criminal law and civil law, and understand the roles of plaintiffs and defendants in both criminal and civil cases.
  2. Define a tort, explain tort law, and discuss an intentional tort.

In the case of George McGovern and his Stratford Inn, we saw what sort of legal entanglements could discourage even a veteran lawmaker from pursuing a modest dream of business ownership. What about you? How easily discouraged would you be? Put yourself in the following scenario, which could happen to anybody:


“When you were in high school, you worked part time and over the summers for your father, a house painter. Now that you’re in college, you’ve decided to take advantage of that experience to earn some money during your summer vacation. You set yourself up as a house-painting business and hire your college roommate to help you out. One fine summer day, the two of you are putting a coat of Misty Meadow acrylic latex on the exterior of a two-story Colonial. You’re working on the ground floor around the door of the house while your roommate is working from scaffolding over the garage. Looking up, you notice that, despite several warnings, your roommate has placed his can of paint at his feet rather than fixed it to the ladder bracing the platform. You’re about to say something yet one more time, but it’s too late: He accidentally kicks the bucket (so to speak), which bounces off the homeowner’s red sports car, denting the hood and splattering it with Misty Meadow. As luck would have it, the whole episode is witnessed by the homeowner’s neighbor, who approaches the scene of the disaster just as your roommate has climbed down from the scaffold. “Man, you must be dumber than a bag of hammers,” says the neighbor to your roommate, who’s in no mood for unsolicited opinions, and before you know what’s happening, he breaks the neighbor’s nose with a single well-placed punch.
“The homeowner sues you and your roommate for negligence, and the neighbor sues you and your roommate for assault and battery” (Moran, 2008).

Clearly, being an employer—even of just one person—isn’t nearly as simple as you thought it would be. What should you have known about the basics of employment law in the state where you intended to paint houses? What should you have known about tort law? What about tax law? If you have to pay damages as a result of the homeowner’s negligence claim, can you at least deduct them as business expenses?

Welcome to the legal environment of business—the place where business interacts with the legal system. Besides the fact that these interactions are usually quite complicated, what valuable lessons should you learn from your experience once your case has been adjudicated (resolved in court)? You probably won’t be surprised to learn that your roommate is liable for negligence in kicking over the paint bucket, but you may be dismayed to learn that you are, too. When it comes to the claim of assault and battery, your roommate is also liable for that, but you may be protected from liability. As for the damages that you’ll probably have to pay in order to settle the homeowner’s negligence suit, you’ll be pleased to learn that you can indeed write them off as “ordinary” business expenses (unless they’re paid by your insurance company).

As we work our way through this chapter, we’ll look a little more closely at the types of law involved in your case, but we’ll start by observing that, in at least one respect, your roommate’s predicament can be more instructive than yours. That’s because assault and battery violates statutes established by two different types of law—criminal and civil.

Criminal Law

It’s a crime to make unauthorized and harmful physical contact with another person (battery). In fact, it’s a crime even to threaten such contact (assault). Criminal law prohibits and punishes wrongful conduct, such as assault and battery, murder, robbery, extortion, and fraud. In criminal cases, the plaintiff—the party filing the complaint—is usually a government body acting as a representative of society. The defendant—the party charged in the complaint—may be an individual (such as your roommate) or an organization (such as a business). Criminal punishment includes fines, imprisonment, or both.

Civil Law

Assault and battery may also be a matter of civil law—law governing disputes between private parties (again, individuals or organizations). In civil cases, the plaintiff sues the defendant to obtain compensation for some wrong that the defendant has allegedly done the plaintiff. Thus your roommate may be sued for monetary damages by the homeowner’s neighbor, with whom he made unauthorized and harmful physical contact.

Tort Law

Complaints of assault and battery fall under a specific type of civil law called tort law. A tort is a civil wrong—an injury done to someone’s person or property. The punishment in tort cases is the monetary compensation that the court orders the defendant to pay the plaintiff.

Intentional Torts

In categorizing the offense for which your roommate may be sued, we can get even more specific: assault and battery is usually an intentional tort—an intentional act that poses harm to the plaintiff. Note that intent here refers to the act (directing a blow at another person), not to the harm caused (the broken nose suffered as a result of the blow).

Intentional torts may also pose harm to a party’s property or economic interests (Kubasek, et. al., 2009):

  • Intentional torts against property may take three forms: (1) entering another person’s land or placing an object on another person’s land without the owner’s permission; (2) interfering with another person’s use or enjoyment of personal property; or (3) permanently removing property from the rightful owner’s possession.
  • Intentional torts against economic interests are the most common torts when it comes to disputes in business. The three most important forms are (1) making a false statement of material fact about a business product; (2) enticing someone to breach a valid contract; and (3) going into business for the sole purpose of taking business from another concern (i.e., not for the purpose of making a profit).

On a more personal note, you may want to avoid defamation—communicating to a third party information that’s harmful to someone’s reputation. If you put the information in some permanent form (e.g., write it or present it on TV or on the Internet), it’s called libel; if you deliver it orally, it’s called slander. You can also be held liable for intentional infliction of emotional distress if you direct outrageous conduct at someone who’s likely to suffer extreme emotional pain as a result (Kubasek, et. al., 2009).

Table 16.1 “Categories of Intentional Torts” provides a more complete list of intentional torts, along with the types of compensatory damages normally awarded in each type of case. As we’ll see in the following sections of this chapter, intentional torts comprise just one category of torts. The others are negligence torts and strict liability torts.

Table 16.1 Categories of Intentional Torts

CategoryTypeDefinitionCompensatory Damages Usually Awarded
Against personsAssaultThreatening immediate harm or offensive contactFor medical bills, lost wages, and pain and suffering
BatteryMaking unauthorized harmful or offensive contact with another person
DefamationCommunicating to a third party information that’s harmful to someone’s reputationFor measurable financial losses
Invasion of privacyViolating someone’s right to live his or her life without unwarranted or undesired publicityFor resulting economic loss or pain and suffering
False imprisonmentRestraining or confining a person against his or her will and without justificationFor treatment of physical injuries and lost time at work
Intentional infliction of emotional distressEngaging in outrageous conduct that’s likely to cause extreme emotional distress to the party toward whom the conduct is directedFor treatment of physical illness resulting from emotional stress
Against propertyTrespass to realtyEntering another person’s land or placing an object on another person’s land without the owner’s permissionFor harm caused to property and losses suffered by rightful owner
Trespass to personaltyInterfering with another person’s use or enjoyment of personal propertyFor harm to property
ConversionPermanently removing property from the rightful owner’s possessionFor full value of converted item
Against economic interestsDisparagementMaking a false statement of material fact about a business productFor actual economic loss
Intentional interference with a contractEnticing someone to breach a valid contractFor loss of expected benefits from contract
Unfair competitionGoing into business for the sole purpose of taking business from another concernFor lost profits
MisappropriationUsing an unsolicited idea for a product or marketing method without compensating the originator of the ideaFor economic losses

Source: Adapted from Nancy A. Kubasek, Bartley A. Brennan, and M. Neil Browne, The Legal Environment of Business: A Critical Thinking Approach, 5th ed. (Upper Saddle River, NJ: Pearson Education, 2009), 348.

As we indicated, your roommate may have committed assault and battery in violation of both criminal and civil statutes. Consequently, he may be in double trouble: not only may he be sued for a civil offense by the homeowner’s neighbor, but he may also be prosecuted for a criminal offense by the proper authority in the state where the incident took place. It’s also conceivable that he may be sued but not prosecuted, or vice versa. Everything is up to the discretion of the complaining parties—the homeowner’s neighbor in the civil case and the prosecutor’s office in the criminal case.

Why might one party decide to pursue a case while the other decides not to? A key factor might be the difference in the burden of proof placed on each potential plaintiff. Liability in civil cases may be established by a preponderance of the evidence—the weight of evidence necessary for a judge or jury to decide in favor of the plaintiff (or the defendant). Guilt in criminal cases, however, must be established by proof beyond a reasonable doubt—doubt based on reason and common sense after careful, deliberate consideration of all the pertinent evidence. Criminal guilt thus carries a tougher standard of proof than civil liability, and it’s conceivable that even though the plaintiff in the civil case believes that he can win by a preponderance of the evidence, the prosecutor may feel that she can’t prove criminal guilt beyond a reasonable doubt.

Finally, note that your roommate would be more likely to face criminal prosecution if he had committed assault and battery with criminal intent—with the intent, say, to kill or rob the homeowner’s neighbor or to intimidate him from testifying about the accident with the paint bucket. In that case, in most jurisdictions, his action would be not only a crime but a felony—a serious or “inherently evil” crime punishable by imprisonment. Otherwise, if he’s charged with criminal wrongdoing at all, it will probably be for a misdemeanor—a crime that’s not “inherently evil” but that is nevertheless prohibited by society (Cheesman, 2006).

Table 16.2 “Civil versus Criminal Law” summarizes some of the key differences in the application of criminal and civil law.

Table 16.2 Civil versus Criminal Law

Civil LawCriminal Law
PartiesIndividual or corporate plaintiff vs. individual or corporate defendantLocal, state, or federal prosecutor vs. individual or corporate defendant
PurposeCompensation or deterrencePunishment/deterrence/rehabilitation
Burden of proofPreponderance of the evidenceBeyond a reasonable doubt
Trial by jury/jury voteYes (in most cases)/specific number of votes for judgment in favor of plaintiffYes/unanimous vote for conviction of defendant
Sanctions/penaltiesMonetary damages/equitable remedies (e.g., injunction, specific performance)Probation/fine/imprisonment/capital punishment

Source: Adapted from Henry R. Cheesman, Contemporary Business and Online Commerce Law: Legal, Internet, Ethical, and Global Environments, 5th ed. (Upper Saddle River, NJ: Pearson Education, 2006), 127.

Key Takeaways

  • The legal environment of business is the area in which business interacts with the legal system.
  • Criminal law prohibits and punishes wrongful conduct. The plaintiff—the party filing the complaint—is usually a government body acting as a representative of society. The defendant—the party charged in the complaint—may be an individual or an organization. Criminal punishment includes fines, imprisonment, or both. Civil law refers to law governing disputes between private parties. In civil cases, the plaintiff sues the defendant to obtain compensation for some wrong that the defendant has allegedly done the plaintiff.
  • Tort law covers torts, or civil wrongs—injuries done to someone’s person or property. The punishment in tort cases is the monetary compensation that the court orders the defendant to pay the plaintiff.
  • An intentional tort is an intentional act that poses harm to the plaintiff. Intentional torts may be committed against a person, a person’s property, or a person’s economic interests. In addition to intentional torts, the law recognizes negligence torts and strict liability torts.
  • Liability in civil cases may be established by a preponderance of the evidence—the weight of evidence necessary for a judge or jury to decide in favor of the plaintiff (or the defendant). Guilt in criminal cases must be established by proof beyond a reasonable doubt—doubt based on reason and common sense after careful, deliberate consideration of all the pertinent evidence.
  • A crime may be a felony—a serious or “inherently evil” crime punishable by imprisonment—or a misdemeanor—a crime that’s not “inherently evil” but that is nevertheless prohibited by society.

Exercise

(AACSB) Analysis

You own a moving company. One of your workers let go of a chair he was carrying up a staircase. Unfortunately, a tenant of the building was walking up the stairs at the time and was seriously hurt in the incident. Can your company be sued? Would the case fall under criminal or civil law?

Now, let’s say that your worker was going up the stairs with a chair when the tenant yelled at him for blocking her way. In anger, your worker threw the chair at her and cases serious harm. What actions can be taken against your employee?

References

Cheesman, H. R., Contemporary Business and Online Commerce Law: Legal, Internet, Ethical, and Global Environments, 5th ed. (Upper Saddle River, NJ: Pearson Education, 2006), 126.

Kubasek, N. A., Bartley A. Brennan, and M. Neil Browne, The Legal Environment of Business: A Critical Thinking Approach, 5th ed. (Upper Saddle River, NJ: Pearson Education, 2009), 360–63.

Moran, J. J., Employment Law: New Challenges in the Business Environment (Upper Saddle River, NJ: Pearson Education, 2008), 27.

This is a derivative of Exploring Business by a publisher who has requested that they and the original author not receive attribution, which was originally released and is used under CC BY-NC-SA. This work, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

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