Foundations of the Legal Environment of Business

547 Pages·2008·11.965 MB·English

by  Marianne M. Jennings

Marianne Moody Jennings
Arizona State University
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Foundations of the Legal Environment © 2010South-Western, Cengage Learning
of Business
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To my roots, my mother and father, and to my branches, sprouts, gardeners,
and inspiration, my husband and children, Terry, Sarah,
Sam, John, and our beloved Claire
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Brief Contents
PART 1
12. Financing of Sales and Leases: Credit and
Disclosure Requirements 264
Business: Its Legal, Ethical, and Judicial
Environment 1 13. Forms of Doing Business 288
14. Securities Law 318
1. Introduction to Law 2
15. Business Property 344
2. Business Ethics and Social Responsibility 20
PART 4
3. The Court System and Dispute Resolution 48
PART 2 The Legal Environment of Business
Relationships 363
Business: Its Regulatory Environment 85
16. Trade Practices: Antitrust 364
4. Business and the Constitution 86
17. Management and Employee Rights and Laws 384
5. Administrative Law 110
18. Employment Discrimination 416
6. International Law 132
19. Environmental Regulation 440
7. Business Crime 150
8. Business Torts 178 Appendix The United States Constitution A-1
9. Product Advertising and Liability 198 Glossary G-1
PART 3 Table of Cases T-1
Table of Products, People and Companies T-7
The Legal Environment of Business
Index I-1
Operations 221
10. Contracts and Sales: Introduction and
Formation 222
11. Contracts and Sales: Performance
and Remedies 246
v
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Contents
Preface xv
About the Author xxv
Acknowledgements xxvii
part 1
Business: Its Legal, Ethical, and Judicial Environment 1
CHAPTER 1
Uniform International Laws 16
The European Union 16
Introduction to Law 2
REDFLAGSFORMANAGERS 16
DEFINITIONOFLAW 3 SUMMARY 17
CLASSIFICATIONSOFLAW 3 QUESTIONSANDPROBLEMS 18
Public versus Private Law 3
CHAPTER 2
Criminal versus Civil Law 4
Substantive versus Procedural Law 4
Business Ethics and Social Responsibility 20
Common versus Statutory Law 4
Law versus Equity 5 WHATISETHICS? 22
PURPOSESOFLAW 5 WHATISBUSINESSETHICS? 24
Keeping Order 5 WHATARETHECATEGORIESOFETHICALDILEMMAS? 24
Influencing Conduct 5
Taking Things That Don’t Belong to You 24
Honoring Expectations 5
Saying Things You Know Are Not True 25
Promoting Equality 6
Giving or Allowing False Impressions 25
Law as the Great Compromiser 6
Buying Influence or Engaging in Conflict of Interest 26
CHARACTERISTICSOFLAW 6 Hiding or Divulging Information 27
Flexibility 6 Taking Unfair Advantage 27
Consistency 6 Committing Acts of Personal Decadence 27
Pervasiveness 6 Perpetrating Interpersonal Abuse 27
Permitting Organizational Abuse 27
THETHEORYOFLAW: JURISPRUDENCE 10
Violating Rules 28
SOURCESOFLAW 11 Condoning Unethical Actions 28
Constitutional Law 11 Balancing Ethical Dilemmas 28
Statutory Law at the Federal Level 11
RESOLUTIONOFBUSINESSETHICALDILEMMAS28
Statutory Law at the State Level 12
Blanchard and Peale 28
Private Laws 13
The Front-Page-of-the-Newspaper Test 29
Court Decisions 13
Laura Nash and Perspective 29
INTRODUCTIONTOINTERNATIONALLAW 13 The Wall Street Journal Model 30
Custom 14 Other Models 30
Treaties 14
WHYWEFAILTOREACHGOODDECISIONSINETHICAL
Private Law in International Transactions 14
DILEMMAS30
International Organizations 15
“Everybody Else Does It” 31
Act of State Doctrine 15
“If We Don’t Do It, Someone Else Will” 31
Trade Law and Policies 15
vii
viii Contents
“That’s the Way It Has Always Been Done” 31 Peer Review 53
“We’ll Wait until the Lawyers Tell Us It’s Wrong” 32 WHATIFADR DIDN’TWORKORSUITTHESITUATION?
“It Doesn’t Really Hurt Anyone” 32 ANOVERVIEWOFCOURTSANDTHEIRROLES53
“I Was Just Following Orders” 32
Trial Courts: First Stop in the Judicial System 53
“If You Think This Is Bad, You Should Have Seen...” 32
Appellate Courts and Judicial Review 53
“It’s a Gray Area” 32
WHATARETHETYPESOFCOURTSANDWHATDETERMINES
SOCIALRESPONSIBILITY: ANOTHERLAYEROFBUSINESS
WHICHCOURTHEARSWHATCASES? 57
ETHICS33
The Concept of Jurisdiction 57
WHYBUSINESSETHICS? 33
Subject Matter Jurisdiction of Courts: The Authority
Personal Accountability and Comfort: Business Ethics Over Content 57
for Personal Reasons 34 The Federal Court System 57
IMPORTANCEOFVALUESINBUSINESSSUCCESS36 The Structure of the Federal Court System 59
Ethics as a Strategy 37 The State Court Systems 62
The Value of a Good Reputation 38 WHEREWOULDTHECOURTBELOCATED? INPERSONAM
Leadership’s Role in Ethical Choices 38 JURISDICTIONOFCOURTS? 64
CREATIONOFANETHICALCULTUREINBUSINESS40 Ownership of Property within the State 65
The Tone at the Top and an Ethical Culture 40 Volunteer Jurisdiction 65
Sarbanes-Oxley, Sentencing, and an Ethical Culture 40 Presence in the State 65
Reporting Lines: An Anonymous Ethics Line for WHATWOULDITBELIKEIFABUSINESS
an Ethical Culture 41 WENTTOCOURT? 68
ETHICALISSUESININTERNATIONALBUSINESS41 THEPARTIESINCOURT68
REDFLAGSFORMANAGERS 43 People Who Bring Suit: Plaintiffs 68
SUMMARY43 People Who Defend Against Suits: Defendants 68
People Who Help People: Lawyers 68
QUESTIONSANDPROBLEMS45
People in Charge: Judges 69
CHAPTER 3 People: Others Names of Parties 70
THETRIALPROCESS70
The Court System and Dispute Resolution 48
The Complaint (Petition) 71
INTRODUCTION 49 The Summons 71
The Answer 71
WHATARETHEWAYSFORRESOVLINGABUSINESS
Ending a Case Early: Judges and Motions 73
DISPUTE? TRYINGALTERNATIVESTOLITIGATION50
Discovery 73
Arbitration 50
The Trial Itself 75
Mediation 52
Medarb 52 THEINTERNATIONALCOURTS80
The Minitrial 52 REDFLAGSFORMANAGERS 80
Rent-a-Judge 52 SUMMARY81
Summary Jury Trials 53
QUESTIONSANDPROBLEMS82
Early Neutral Evaluation 53
part 2
Business: Its Regulatory Environment 85
CHAPTER 4
The Bill of Rights 88
Business and the Constitution 86 THEROLEOFJUDICIALREVIEWANDTHE
CONSTITUTION88
THEU.S. CONSTITUTION87
CONSTITUTIONALLIMITATIONSOFECONOMIC
An Overview of the U.S. Constitution 87
REGULATIONS89
Articles I, II, and III—The Framework for Separation
The Commerce Clause 89
of Powers 87
Constitutional Standards for Taxation of Business 94
Other Articles 88
Contents ix
STATEVERSUSFEDERALREGULATIONOFBUSINESS— Contracts for the International Sale of
CONSTITUTIONALCONFLICTS: PREEMPTIONANDTHE Goods (CISG) 134
SUPREMACYCLAUSE96 Treaties, Trade Organizations, and Controls
APPLICATIONOFTHEBILLOFRIGHTSTOBUSINESS97 on International Trade 134
Trust, Corruption, Trade, and Economics 137
Commercial Speech and the First Amendment 97
First Amendment Protection for Advertising 98 RESOLUTIONOFINTERNATIONALDISPUTES141
First Amendment Rights and Profits from PRINCIPLESOFINTERNATIONALLAW141
Sensationalism 100 Sovereign Immunity 141
First Amendment Rights and Corporate Protections for U.S. Property and Investment
Political Speech 101 Abroad 143
Eminent Domain: The Takings Clause 102 Repatriation 143
Procedural Due Process 105 Forum Non Conveniens, or “You Have the
Substantive Due Process 106 Wrong Court” 144
THEROLEOFCONSTITUTIONSININTERNATIONALLAW106 Conflicts of Law 144
REDFLAGSFORMANAGERS 107 PROTECTIONSININTERNATIONALCOMPETITION144
SUMMARY107 Antitrust Laws in the International Marketplace 144
QUESTIONSANDPROBLEMS108 Tariffs 145
Protections for Intellectual Property 145
CHAPTER 5
Criminal Law Protections 146
Administrative Law 110 REDFLAGSFORMANAGERS 147
SUMMARY147
WHATAREADMINISTRATIVEAGENCIES? 111 QUESTIONSANDPROBLEMS148
ROLESOFADMINISTRATIVEAGENCIES112
CHAPTER 7
Specialization 112
Due Process 112 Business Crime 150
Social Goals 114
LAWSGOVERNINGADMINISTRATIVEAGENCIES114 WHATISBUSINESSCRIME? THECRIMESWITHIN
Administrative Procedures Act 114 ACORPORATION151
Freedom of Information Act 114 WHOISLIABLEFORBUSINESSCRIME? 155
Federal Privacy Act 114 Federal Laws Targeting Officers and Directors
Government in the Sunshine Act 115 for Criminal Accountability 156
Federal Register Act 115
THEPENALTIESFORBUSINESSCRIME156
THEFUNCTIONSOFADMINISTRATIVEAGENCIES
Reforming Criminal Penalties 157
ANDBUSINESSINTERACTION116
Corporate Sentencing Guidelines: An Ounce
Providing Input When Agencies Are Promulgating of Prevention Means a Reduced Sentence 158
Regulations 116
ELEMENTSOFBUSINESSCRIME159
BUSINESSRIGHTSINAGENCYENFORCEMENTACTION125
Mens Rea 159
Licensing and Inspections 125 Mens Rea, Conscious Avoidance, and Corporate
Enforcement 125 Officers 161
REDFLAGSFORMANAGERS 127 Actus Reus 162
SUMMARY128 EXAMPLESOFBUSINESSCRIMES162
QUESTIONSANDPROBLEMS129 Theft and Embezzlement 162
CHAPTER 6 Obstruction of Justice 162
Computer Crime 163
International Law 132 Criminal Fraud 166
Commercial Bribery 166
SOURCESOFINTERNATIONALLAW133 Racketeer Influenced and Corrupt Organizations
(RICO) Act 166
Types of International Law Systems 133
Business Crime and the USA Patriot Act 166
The Roots of Commerce and Law: Nonstatutory
Federal Crimes 167
Sources of International Law 134