MANAGEMT 743 - The Legal Environment of Business

Course Objectives

The world of business today is subject to an increasing number of laws and regulations, some developed over the years by our judicial system and others imposed by federal, state and municipal legislatures and agencies.  These are the standards that govern relationships among individuals and between people and governments.  In its broadest sense, the legal environment of business includes every rule or regulation that affects the way in which individuals and organizations conduct business.  The course proceeds from an assumption that a basic knowledge of this framework would be of value in every student's business curriculum.

As a survey course, it will be impossible and unnecessary to cover the entire "legal environment."  Instead, there will be several objectives.  The foremost goal will be to provide a clear and comprehensive introduction to the nature and functions of our legal system and its importance to business managers.  Major concepts will be placed in their historical and contemporary context, with discussion of what the law ought to be and how it might change in the years ahead.  The course also will attempt to provide a more focused treatment of selected substantive rules dealing with issues of particular importance, in sufficient detail to be useful for future planning purposes.  In all instances, the presentation will attempt to convey the dynamic interplay between business decisions and the ever-changing legal environment.

Material to be Covered: 

This course will focus on both regulatory law, or "public law", involving legal relationships between individuals or entities and the government, and on "private law", dealing with legal transactions.  The latter involves issues of commercial law (e.g. law of contracts, torts, the Uniform Commercial Code, bankruptcy and property). 

Representative topics to be covered will include: how the legal system is structured and alternative mechanisms of dispute resolution; the impact of the Constitution and Bill of Rights on business activity; the elements of contract law, business torts and product liability; how one protects proprietary interests in technology; the standards applied to determine the existence of "unfair labor practices", employment discrimination and enforceable affirmative action programs; legal restrictions on pricing and distribution programs; the standards and possible sanctions for nuisance, trespass and other environmental law violations; and, securities law policies on insider trading and tender offers.

For example: how does the right of privacy restrict employer rights to impose drug testing, genetic screening or lie detector tests on employees; when does the commerce clause and government's exercise of its police powers supersede a corporation's rights of commercial freedom of speech; when can employers lock-out employees over a contract dispute; when is a refusal to hire homosexuals or victims of AIDS illegal; can a software program or a unique living organism be patented; when does anti-trust law prevent a business from undercutting the prices charged by principal competitors; what standard of care is required to reduce exposure to product liability claims; can a business sell its real estate to avoid the costs of a contamination cleanup; and, will the SEC bring criminal charges for trading on a stock tip overheard in public facilities?

Teaching Method

Class sessions will include lectures to review and supplement assigned reading, and interactive consideration of typical problems facing business management in the current legal regulatory environment. 


Grades will be based upon the following: eleven homework assignments (30%) due at the beginning of each class – 10 highest scores count; five take-home problems (60%) due each Monday – first problem is practice and will not count; and, class contribution (10%).


Constance Bagley and Diane Savage, Managers and the Legal Environment (6th edition), West