Discuss the nature of law and sources of law in the United States
Law is a body of rules prescribed by a controlling authority (government) with binding legal force. The law consists of rules that regulate the conduct of individuals, businesses, and other organizations within societies. The law is intended to protect people against unwanted interference from others. In the United States, there are 8 main sources of law and regulations.
Describe the United States’ judicial system
The US has two different sets of courts: federal and state. There are three levels of the federal court system: District Courts, Appellate Courts, and the US Supreme Court. Most state court systems have three levels: Trial Courts of Limited Jurisdiction or General Jurisdiction, Intermediate Appellate Courts, and Highest State Court. The Federal courts have limited jurisdiction, because they can only hear two types of cases- federal question and diversity.
Describe legal issues affecting businesses
Some legal issues that affect businesses are-Businesses are legally required to at least pay the minimum wage set by Congress or by their state’s legislature; Businesses have an array of tax obligations to meet; The OSHA puts forth workplace safety rules that must be followed; Numerous employee protection laws must be followed when hiring, training, and firing employees; Businesses must abide by truth-in-advertising laws; Antitrust laws are in place to prevent monopolies; Specific industries (banking, retail, etc.) are regulated by at least one federal government agency. Some industries, especially banking and finance, are heavily regulated and must comply with thousands of different rules.
Identify the basic torts relating to business enterprises
A tort is a wrongful act, whether intentional or unintentional, that results in injury to another party. Torts include assault, battery, fraud, slander, false imprisonment, and trespassing to private property. Business torts are civil wrongs committed by or against an organization. These involve harm done to a business’s intangible assets, such as intellectual property or relationships with clients. Another type of tort is a breach of fiduciary duty. A fiduciary is a party who is charged with acting in the best interest of any party. If a fiduciary to a adversely to other party’s best interest, a tort has occurred. Businesses that commit a tort can be taken to court and be sued.
Describe the nature of legally binding contracts
A contract is an agreement between 2 or more parties to do, or refrain from doing, some action. A contract must have 3 things: an offer, acceptance, and consideration. One party must make a clearly stated offer to another party. The offer must be accepted. Something of value must be promised in exchange for a specific action or non-action.
Discuss the nature of debtor-creditor relationships
A creditor is an entity to whom the money is owed. A creditor is an entity that owes the money to the creditor. Debtor-creditor relationships may be either voluntary or involuntary.
Explain the nature of agency relationships
This deals with principal-agent relationships. The principal grants authority for the agent to act on their behalf. The agent agrees to act under the control of the principal. The principal is liable for the consequences of acts that the agent has been directed to perform.
Describe the nature of legal procedure
Legal procedure involves the methods and mechanics of the legal process. Procedural law is the name for the set of rules governing all aspects of how a court case is conducted. This body of law applies to both criminal and civil cases. The purpose of procedural law is to make certain that every case is treated justly and consistently. Procedural law differs from substantive law, which is the body of law that creates, defines, and regulates rights. As described above, procedural law prescribes the formal steps to be taken in enforcing legal rights.
Discuss the nature of environmental law
Environmental law encompasses the body of rules, regulations, orders, and statuses concerned with the maintenance and protection of the natural environment of a country. It provides the basis for measuring and apportioning liability in cases of environmental crime. Not every business will be subject to environmental protection laws. However, if the company does anything that affects the natural environment, it almost certainly will be subject to environmental regulations. Environmental protection laws and regulations are enforced by the EPA.
Discuss the role of administrative law
Administrative law is the body of rules, regulations, and orders formulated by a governmental body responsible for carrying out laws. Administrative agencies create and carry out administrative law.
Explain types of business ownership
A business is a legally recognized organization designed to provide goods and/or services to customers. There are 5 types of business ownerships (Sole proprietorships, partnerships, C Corporations, Limited Liability Company, S Corporations).
These firms are owned by one person, usually the individual who has day-to-day responsibilities for running the business. Sole proprietors also own the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law, the owner is one in the same with the business.
A partnership is a business endeavor in which 2 or more people start a business to obtain a profit. Profits from partnerships are “passed through” the owners and filed on their personal income tax statements. Two main types of partnerships exist- General Partnerships (All partners have unlimited liability and are personally liable for their partnership debts) and Limited Partnerships (There must be at least one general partner and one limited partner. General partners actively participate in the management of a business and face unlimited liability. Limited partners do not take an active role in day-to-day business activities, and their liability is limited to their capital contribution.)
Formally known as a C Corporation, a Corporation is a separate legal entity from those who own it. C Corporations are taxed at the corporate level but may have the option to take advantage of a number of tax deductions. One of the big disadvantages to forming as a corporation is being subject to double taxation. Corporations pay taxes on net profits and then stockholders pay taxes on the earnings that the corporation has distributed to them. The owners of a corporation are its shareholders, and the shareholders elect a board of directors to make major decisions. Forming a corporation has a number of advantages, such as, limited liability to the extent of personal investment, perpetual existence even after owners leave, unlimited growth potential through the growth of stock, and no limit on the number of shareholders.
Limited Liability Company
The LLC provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. In an LLC, liability is limited to the members’ capital contribution. Profits are “passed through” the members and filed on personal income tax statements. Therefore, LLCs are taxed on the personal level, not the corporate level.
A subchapter S corporation is a firm that meets the requirements for and has elected to be taxed under Subchapter S of the IRS code. The primary benefit of S Corporations is the avoidance of double taxation. In an S Corporation, net profits are divided among and “passed through” shareholders. The shareholders then report that income on the personal tax statement. Profits are only taxed once.
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