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5-14 Law, Business & Government [CH 5

Specialized Courts
State governments have created specialized courts hear certain types of cases. To
illustrate, small claims courts hear cases involving disputes over small amounts of money,

and each state has varied the amount from as low as $3,500 (AZ) to a high of $15,000.
(GA.) Each state has also established divorce courts, juvenile courts, and traffic courts.
Specialized courts on the federal level include the U.S. Tax Court (for tax cases) and the
U.S. Court of Federal Claims (for claims against the government).

Laws affect Business

Under our system, laws are written specifically to affect sole proprietorships,
partnerships, and corporations differently. The legal interests of the automobile industry are
different from those of a real estate investment trust or the airline industry even though the
business law principle foundations are the same. When the term business law is used one need know
Those aspects of law that
most directly and that it applies to all of the legal aspects of business and the business environment, realizing
specifically influence and that specific legal emphasis may vary for each business form and industry.
regulate management of Everybody is subject to income tax, and everybody pays taxes in one form or another to
various types of business local, state and federal government. The Internal Revenue Code is a body of federal law
activity. that affects everyone and every business uniformly in all states. However, there are
numerous federal laws that regulate only one industry, such as transportation or broadcast

television communications and cable television. The Federal Cigarette Labeling and
Advertising Act of 1967 requires written health warnings on cigarette packages, and the
Public Health Cigarette Smoking Act of 1971 prohibits tobacco advertising on radio and
television. This is an example of Federal laws regulating only the tobacco industry. Print
advertisements for cigarettes, such as the one in Illustration 5.1, must include a warning

that smoking may pose health risks.
Laws that affect and regulate business operations are found in municipalities, in county
and state government. Laws are written affecting hours of operation; Worker compensation
laws are written at the federal, state and municipal level, and these laws affect and regulate
payment for work, and govern payments to workers for injuries incurred on the job. As an
example; California’s workers compensation system is one that has gone out of control in

comparison to the other 49 states. It has been the center of great abuse, controversy, and
has raised the insurance premiums, which are paid by the employer (a cost that is passed
onto the consumer) rose more than 300% in less than four years. The enormity of this cost
has been a stated cause for businesses to leave the state for more business-friendly states.

Local municipal ordinances deal with specific business activities such as regulating
hours of operation, size and location of advertising signs on your store, and business
SURGEON GENERAL’S WARNING: Cigarette locations (zoning ordinances)
Smoke Contains Carbon Monoxide
Health warning for cigarette and Major Components of Business Law
advertising packaging as required Everyone engaged in business has an obligation to know those laws that specifically
under the Federal Cigarette Labeling affect business and be aware of the legislation being proposed and pending; this applies
and Advertising Act of 1967
locally, and in state legislatures and federal congress. Most laws do affect business in some
manner, either directly or indirectly. The costs associated with those laws and regulations
are always passed onto the consumer in the form of higher prices.
The following discussions will center on the following twelve apostles of business law:
contract law, sales law, the Uniform Commercial Code, negotiable instruments, property

law, agency law, tort law, bankruptcy law, patents, trademarks, and copyrights; and tax
law.

contract Law Contract Law
Legal foundation on which
normal business dealings Contract law affects all aspects of any business transaction. It is the foundation in the
are conducted. conduct of business dealings. A contract is an agreement between two or more people
regarding a specific act or thing and is legally enforceable.

contract Contract Requirements. There are four pillars to any and all contracts and for a
Legally enforceable contract to be enforceable, all four contract pillars MUST BE PRESENT; if any one pillar is
agreement between two or missing then the contract is void (never existed). The four pillars are agreement,
more parties regarding a
specified act or thing.

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