1.6 Concluding Thoughts
This chapter provides an introduction to the legal environment of business. Knowledge of the legal environment of business is essential to successful business practices. This involves understanding what the law is, where it comes from, and specifically how it relates to business. Moreover, different philosophies of law exist. Approaching a problem from different perspectives allows for multiple outcomes to be explored. Additionally, when people approach the same problem from different legal philosophies, reasonable minds can disagree on the outcome. Familiarity with government structure and an understanding of rule of law are essential to successful business operations. Ultimately, businesspeople should be able to recognize legal situations, minimize liability exposure, and know when to consult an attorney.
As you embark on your study of the legal and ethical environment of business, try to remain oriented. Ask yourself questions like these: “Where does this piece of law fit in the business world?” and “Why is it important for me to know this?” Studying the law can, at times, seem like studying pieces of a very large jigsaw puzzle. You may not immediately see how individual pieces fit together, but with protracted study, it will become clear.
Additionally, it is very helpful if you try to find contemporary examples of the concepts that are discussed in this book. When surfing the internet, watching movies, or reviewing current events, try to “issue spot.” In other words, try to identify the legal issue raised by the particular problem presented. Try to figure out which jurisdiction would have authority over the issue. State government? Federal government? Both? Try to determine which type of law would control or be determinative of the outcome. Is it a statutory issue? A constitutional issue? A regulatory issue?
Also, try to ask yourself why the dispute was raised. Will the parties involved be able to work it out on their own? If not, why not? Has the issue entered into litigation? How could the issue have been avoided with better planning and greater familiarity with the legal environment?
This little game can give you practice in orienting yourself as you gain footing in the study of law and the legal environment of business. We wish you every success in your course!
For Further Reading
Events Leading up to the Elizabeth Holmes Trial
Carreyrou, J. (2018). Bad Blood: Secrets and Lies in a Silicon Valley Startup. New York: Alfred A. Knopf.
Jarvis, R. (Host). (2021). Podcast: The Dropout: Elizabeth Holmes on Trial. https://podcasts.apple.com/us/podcast/the-dropout/id1449500734
Concerning China’s Surveillance State
Strittmatter, K. (2020). We Have Been Harmonized: Life in China’s Surveillance State. New York: Custom House.
Concerning Parental Rights to Refuse Medical Intervention for Their Children
Offit, P. (2015). Bad Faith: When Religious Belief Undermines Modern Medicine. New York: Basic Books.
U.S. Supreme Court Cases in the Traditional Business Sub-Disciplines
Accounting
Former President Trump sued an accounting firm alleging the firm was not required to comply with a subpoena issued by a committee of the House of Representatives. Trump v. Mazars USA, LLP, 140 S. Ct. 2019, 207 L. Ed. 2d 951 (2020)
Management
An employer violates Title VII, which makes it unlawful to discriminate against an individual “because of” the individual's sex, by firing an individual for being homosexual or being a transgender person; when an employer fires a person for traits or actions that the employer would not have questioned in members of a different sex, then sex plays a necessary and undisguisable role in the decision, which is exactly what Title VII forbids. Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020)
Finance
Federal Housing Finance Agency (FHFA) was exercising its powers under Housing and Economic Recovery Act (HERA), as conservator for Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), when it agreed to variable dividend formula that would transfer nearly all of the companies’ net worth to federal government, and thus, shareholders’ claim that FHFA exceeded its statutory powers was barred by HERA’s anti-injunction clause, which prohibited courts from taking any action to restrain or affect the exercise of FHFA’s powers or functions as conservator; HERA allowed FHFA, as conservator, to aim to rehabilitate companies in a way that, while not in best interests of companies or their shareholders, was beneficial to FHFA and, by extension, the public it served, and FHFA could have reasonably concluded that the agreement was in best interests of members of public who relied on stable secondary mortgage market. Collins v. Yellen, 141 S. Ct. 1761, 210 L. Ed. 2d 432 (2021)
Marketing
Speech in aid of pharmaceutical marketing is a form of expression protected by the Free Speech Clause of the First Amendment. Sorrell v. IMS Health Inc., 564 U.S. 552, 131 S. Ct. 2653, 180 L. Ed. 2d 544 (2011)