Businesses must be familiar with the legal environment in which their business operates. A working understanding of the legal environment of business begins with the answering of certain fundamental questions, including:

• What major types of law apply to business activities and help shape business decisions?

• What ways of examining and evaluating law may serve as useful perspectives from which to view the legal environment in which businesses operate?

• What role do courts play in making or interpreting law that applies to businesses and to employees of those firms, and what methods of legal reasoning do courts utilize?

• What is the relationship between legal standards of behavior and notions of ethical conduct?

CONCEPT REVIEW:

Law is divided into several types and classifications, including civil law and criminal law, substantive and procedural law, and public and private law. Law also comes from numerous sources, including constitutions, statutes, treaties, and common law. Doctrines such as federal supremacy dictate how these laws interact when there is a conflict among them. Jurisprudence, or the philosophy of law, helps to provide a general description of all laws.

Read the case below and answer the questions provided.

Suppose that you are a manager at MKT Corp. (see introductory problem). One of your salespeople, Rick Fischer, leaves the office at 2:00pm to meet a client for a sales call. Fischer drives a company car, with your permission. After the sales call ends, instead of driving directly back to the office as required by company policy, Fischer stops at a local bar to meet some friends. At 4:00pm, after several beers, he gets back into his car and starts driving back to the office. A few blocks from the bar, Fischer is involved in a collision with a vehicle driven by Joy Smith, who was seriously injured. Fischer's negligence caused the accident.

Smith sued Fischer because his negligence caused the accident. However, because Fischer was driving a car owned by MKT Corp., Smith also sues your company, alleging that MKT is liable for Fischer's negligence under the common law doctrine of respondeat superior. (You will learn about respondeat superior in Part 8). The doctrine of respondeat superior holds an employer liable for an employee's intentional or negligent wrongdoing, if the employee committed the wrong while acting "within the scope of their employment." Not all states agree as to when an employee has acted "within the scope of their employment."