1: Sources of law

Section 1: Sources of Law

Understanding the origins of legal rules is fundamental to navigating any legal system. In the United States and similar common law jurisdictions, law derives from several primary sources, each with a distinct role and hierarchy. These sources collectively form the framework governing business conduct and societal relations.

The U.S. Constitution stands as the supreme law of the land. It establishes the federal government's structure, allocates powers among branches (legislative, executive, judicial), defines the relationship between federal and state governments, and enshrines fundamental individual rights (e.g., via the Bill of Rights). Any law conflicting with the Constitution is invalid under the Supremacy Clause. State constitutions perform a similar role within their respective jurisdictions, though they remain subordinate to the federal Constitution.

Statutory law is created by elected legislative bodies. At the federal level, Congress enacts statutes (collected in the U.S. Code). State legislatures pass state statutes, while local governments enact ordinances. Statutes address broad societal needs, from criminal codes to commercial regulations like the Uniform Commercial Code (UCC), which governs sales and secured transactions. Legislatures often delegate rule-making authority to administrative agencies but retain ultimate oversight.

Administrative law flows from this delegation. Agencies (e.g., the Securities and Exchange Commission (SEC) or Environmental Protection Agency (EPA)) possess expertise in specific areas. They create detailed regulations (rules) under authority granted by enabling statutes passed by the legislature. These regulations have the full force of law within their defined scope. Agencies also interpret statutes, enforce rules through investigations and hearings, and issue orders resolving disputes within their jurisdiction.

Case law (Common law) is developed by courts through judicial decisions. When courts interpret constitutions, statutes, or regulations, or decide cases where no statute directly applies, they create precedent. The principle of stare decisis (adherence to precedent) requires lower courts to follow the legal interpretations of higher courts within the same jurisdiction. This body of judge-made law fills gaps in statutes, adapts legal principles to new situations, and provides binding interpretations of other legal sources. Landmark cases shape doctrines in areas like contracts, torts, and property.

While not primary law, secondary sources like legal treatises, law review articles, and the American Law Institute's Restatements of the Law summarize and synthesize legal principles. They are persuasive authority, often cited by courts and lawyers to support arguments about what the law is or should be, but they do not create binding legal rules themselves.