BUS205 Study Guide

Unit 1: The Nature and Sources of Law

1a. Identify sources of law in the United States

  • What is the law?
  • What are primary and secondary sources of law?

Nature and Sources of Law

The law is a body of societal rules that regulates conduct. Laws are critical to society because they promote stability by establishing rights and duties parties owe to each other.

There are primary and secondary sources of law. Primary sources are those which embody the substantive rules of law. Examples of primary law include the United States Constitution, case law, and administrative regulations. Secondary legal sources provide an overview of the law. They help to explain, interpret, and/or analyze the law. Examples of secondary law include legal encyclopedias, law reviews, and restatements of law.

Constitutional Law

In the United States, there are two sources of constitutional law: the United States Constitution and state governments. The United States Constitution is the supreme law of the land. It established the three branches of government (executive, legislative, and judicial). It also granted each branch-specific powers in order to establish checks and balances so that no one branch of government becomes too powerful.

The first ten amendments to the United States Constitution are called the Bill of Rights. The Bill of Rights protects citizens (and sometimes business organizations) from certain government actions. For example, both citizens and business organizations have the right to be free of unreasonable searches and seizures by the government.

Statutory Law

Statutory law is drafted by legislative bodies, such as the United States Congress or state legislatures. Federal statutory law is superior to state law. Therefore, federal law generally supersedes conflicting state law.

Administrative Agency Regulation

Administrative agencies assist the legislative branch of government in the implementation of laws. Congress creates administrative agencies through enabling legislation that sets forth the agency's purpose and the scope of its regulatory powers. Administrative agencies have three primary functions:

  1. Issue rules that have the effect of law
  2. Conduct investigations to ensure compliance with agency rules and take administrative action against violators
  3. Adjudicate disputes through formal hearings

Common Law

Common law is judge-made law. To promote stability and predictability, courts abide by similar rulings issued by other courts or a higher court within the same jurisdiction. Stare decisis means "to let the decision stand"; this is how precedent is formed. If there is no case precedent, a state may exercise its police power to regulate areas like health, welfare, and safety of citizens, as elements of public policy.

To review these topics, see Sources of Law and Rule of Law.


1b. Describe the function and role of courts in the US legal system, and identify types of jurisdiction

  • How are the state and federal courts structured?
  • How does the Supreme Court do its work?
  • What are the primary differences between trial and appellate courts?
  • What are the types of jurisdiction? How would you describe each type?

An Overview of the U.S. State Court System

State courts are typically comprised of trial courts, intermediate appellate courts, and supreme courts. Trial courts are known as courts of original jurisdiction because they are where lawsuits are commenced. Trial courts may have general jurisdiction or subject matter jurisdiction. Trial courts with general jurisdiction can hear both civil and criminal cases. Subject matter jurisdiction restricts the types of cases a trial court can hear. For example, a trial court may only be allowed to hear family law or small claims cases.

State intermediate appellate courts review trial court proceedings. The primary focus of their review involves questions of law and procedure.

Supreme Courts are typically the highest court in a state. As the highest court in the state, the supreme court's judgments regarding state law are final. It is important to note that the highest state court names differ from state to state. The highest state court may be called a superior court, circuit court, or district court. For example, New York's trial courts are referred to as supreme courts; whereas, the New York Court of Appeals is the name designated for New York's highest court.

An Overview of the U.S. Federal Court System

The federal court system is comprised of U.S. district courts, U.S. courts of appeals, and the United States Supreme Court. The U.S. district courts are trial courts; they have the power to hear cases involving federal law or diversity of citizenship. Federal question cases are those that concern the U.S. Constitution or federal law. Federal district courts can exercise diversity jurisdiction over civil cases involving state law because diversity cases are subject to both federal and state court jurisdiction (concurrent jurisdiction). When an out-of-state plaintiff feels he or she cannot receive a fair trial in state court, he or she may petition to have the case transferred to a federal district court (this is called "removal"). Diversity of jurisdiction requires that all plaintiffs and defendants be citizens of different states and that the amount in controversy exceeds $75,000.

The federal court system consists of thirteen intermediate appeals courts. These intermediate appellate courts are called U.S. circuit courts, and they have jurisdiction over appeals from district courts within their designated circuits. Most cases are disposed of at the circuit court level since an appeal to the U.S. Supreme Court is rarely granted.

The United States Supreme Court is the highest court in the land. It has both original and appellate jurisdiction. The Supreme Court has original jurisdiction over disputes between states. At its discretion, the Supreme Court hears appeals from lower courts in matters regarding constitutional law. If the Supreme Court decides to review a case, it will issue an order called a writ of certiorari. This is a formal order that requires the lower court to submit the case record for the Supreme Court review.

How Trial Courts Differ from Appellate Courts

Unlike appellate courts, trial courts are triers of fact. The judge or jury determines the facts of the case by closely examining witness testimony and evidence presented by the parties.

Appellate courts review the trial court's ruling. Appellate courts examine questions of law or legal errors, and they do not have trials. Appellate courts cannot examine or call upon new or old witnesses to testify.

To review the court system, read Trial and Appellate Courts.


Unit 1 Vocabulary

This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Try to think of the reason why each term is included.

  • common law
  • jurisdiction
  • rule of law
  • stare decisis
  • precedent
  • police power
  • enabling legislation
  • federalism
  • Bill of Rights
  • statutory law
  • US Constitution
  • subject matter jurisdiction
  • federal question
  • original jurisdiction
  • diversity jurisdiction
  • general jurisdiction
  • subject matter jurisdiction
  • questions of law
  • diversity of citizenship
  • removal
  • writ of certiorari