Introduction to business law

600 Pages·2010·14.658 MB·English

by  Jeffrey F Beatty, Susan S Samuelson

EDITION
3
Introduction
to Business Law
Jeff rey F. Beatty
Boston University
Susan S. Samuelson
Boston University
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Introduction to Business Law, © 2010, 2007 South-Western, a part of Cengage Learning
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Jeff rey F. Beatty and Susan S. Samuelson
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1 2 3 4 5 6 7 13 12 11 10 09
Contents: Overview
Preface xii UNIT 4
  325
UNIT 1 20 Starting a Business:
   1 LLCs and Other Options 326
21 Corporations 344
22 Government Regulation:
1 Introduction to Law 2
Securities and Antitrust 360
2 Business Ethics and Social Responsibility 15
23 Accountants’ Liability 375
3 Courts, Litigation, and
Alternative Dispute Resolution 27
4 Constitutional, Statutory,
Administrative, and Common Law 47 UNIT 5
5 Intentional Torts and Business Torts 66
    391
6 Negligence and Strict Liability 80
7 Criminal Law and Procedure 94
24 Consumer Law 392
8 International Law 111
25 Environmental Law 408
26 Cyberlaw 422
27 Intellectual Property 437
UNIT 2 28 Real Property 451
 127 29 Landlord-Tenant Law 465
30 Personal Property and Bailment 479
31 Estate Planning 492
9 Introduction to Contracts 128
32 Insurance 507
10 Legality, Consent, and Writing 148
11 Conclusion to Contracts 170
Appendix A
12 Sales and Product Liability 191
Th e Constitution of the United States A1
13 Negotiable Instruments 211
14 Secured Transactions 226
Appendix B
15 Bankruptcy 244
Uniform Commercial Code B1
Glossary G1
UNIT 3 Table of Cases T1
    261 Index I1
16 Agency 262
17 Employment Law 279
18 Employment Discrimination 294
19 Labor Law 309
iii
Contents
Preface xii Chapter 3
Courts, Litigation, and
Alternative Dispute Resolution 27
Th ree Fundamental Areas of Law 28
UNIT 1
Litigation versus Alternative
   1 Dispute Resolution 28
Alternative Dispute Resolution 28
Mediation 29
Chapter1
Arbitration 29
Introduction to Law 2
Court Systems 29
Th ree Important Ideas about Law 3
State Courts 29
Power 3
Federal Courts 31
Importance 4
Litigation 33
Fascination 4
Pleadings 33
Sources of Contemporary Law 4
Stinton v. Robin’s Wood, Inc. 37
Constitutions 4
Jones v. Clinton 38
Statutes 5
Trial 39
Common Law and Equity 5
Adversary System 39
Administrative Law 7
Right to Jury Trial 39
Criminal and Civil Law 7
Opening Statements 40
Law and Morality 7
Burden of Proof 40
Working with the Book’s Features 8
Plaintiff ’s Case 40
Analyzing a Case 8
Defendant’s Case 41
Kuehn v. Pub Zone 8
Closing Argument 41
“You Be the Judge” 10
Verdict 41
YOU BE THE JUDGE James v. Meow Media 10
Appeals 42
Appeal Court Options 42
Chapter 2
Business Ethics and Chapter 4
Social Responsibility 15 Constitutional, Statutory,
Why Bother with Ethics? 17 Administrative, and Common Law 47
Society as a Whole Benefi ts from Constitutional Law 48
Ethical Behavior 17 Government Power 48
Money Does Not Buy Happiness 17 Power Granted 48
People Feel Better when YOU BE THE JUDGE Kennedy v. Louisiana 50
Th ey Behave Ethically 18 Protected Rights 50
Unethical Behavior Can Be Very Costly 18 Texas v. Johnson 52
What Is Ethical Behavior? 18 Fifth Amendment: Due Process
Analyzing the Ethics Checklist 19 and the Takings Clause 52
Applying the Ethics Checklist: Fourteenth Amendment: Equal
Making Decisions 20 Protection Clause 54
iv
Contents v
Statutory Law 54 YOU BE THE JUDGE New Jersey Department
Committee Work 55 of Environmental Protection v. Alden Leeds, Inc. 89
Common Law 56
Stare Decisis 57 Chapter 7
Bystander Cases 57 Criminal Law and Procedure 94
Tarasoff v. Regents of Th e University Crime, Society, and Law 95
of California 58 Civil Law/Criminal Law 95
Administrative Law 59 Th e Prosecution’s Case 96
Rule Making 59 Defenses 97
Adjudication 60 YOU BE THE JUDGE Bieber v. People 97
Crimes Th at Harm Business 98
Chapter 5 Larceny 98
Intentional Torts and Computer Crime 98
Business Torts 66 United States v. Dragon 99
Intentional Torts 68 Fraud 99
Defamation 68 Embezzlement 100
Opinion 68 Crimes Committed by Business 101
YOU BE THE JUDGE Yeagle v. Collegiate Times 69 Commonwealth v. Angelo Todesca Corp. 101
Public Personalities 69 Compliance Programs 102
Jane Doe and Nancy Roe v. Lynn Mills 71 RICO 102
Damages 71 Money Laundering 102
Compensatory Damages 71 United States v. Kennard 103
Punitive Damages 72 Th e Criminal Process 104
Boeken v. Philip Morris, Incorporated 73 Warrant 105
Business Torts 74 Search and Seizure 105
Tortious Interference with a Contract 74 Arrest 105
Intrusion 74 Indictment 106
Commercial Exploitation 75 Arraignment 106
Trial and Appeal 106
Chapter 6
Negligence and Strict Liability 80 Chapter 8
Negligence 81 International Law 111
Duty of Due Care 81 MNEs and Power 113
Hernandez v. Arizona Board of Regents 82 Trade Regulation 113
Landowner’s Duty 82 Export Controls 113
Crime and Tort: Landowner’s Liability 83 Import Controls 114
Wiener v. Southcoast Childcare Centers, Inc. 83 Avenues in Leather, Inc. v. U.S. 114
Breach of Duty 84 Regional Agreements 117
Factual Cause and Foreseeable Harm 84 International Sales Agreements 118
Injury 86 What Law Governs the Sale of Goods? 118
Ra v. Superior Court 87 Choice of Forum 119
Damages 87 Final Choices 119
Defenses 87 Letter of Credit 119
Assumption of the Risk 87 Centrifugal Casting Machine Co., Inc.
Contributory and Comparative v. American Bank & Trust Co. 120
Negligence 88 YOU BE THE JUDGE Carnero v. Boston
Strict Liability 89 Scientifi c Corporation 121
Ultrahazardous Activity 89 Foreign Corrupt Practices Act 122
vi Contents
UNIT 2 Contracts in Writing 160
Written Contracts 160
 127
Contracts Th at Must Be in Writing 161
Chapter 9 Baker v. Daves 161
Introduction to Contracts 128 YOU BE THE JUDGE Sawyer v. Mills 163
Th e Purpose of a Contract 130 Promise Made in Consideration of Marriage 164
Judicial Activism versus Judicial Restraint 130 What the Writing Must Contain 164
Issues (and Answers) 131
Contracts Defi ned 131 Chapter 11
Types of Contracts 131 Conclusion to Contracts 170
Bilateral and Unilateral Contracts 131
Th ird Party Benefi ciary 171
Express and Implied Contracts 132
Schauer v. Mandarin Gems of
Demasse v. ITT Corporation 132
California, Inc. 173
Executory and Executed Contracts 133
Assignment and Delegation 174
Valid, Unenforceable, Voidable,
Assignment 174
and Void Agreements 133
Delegation of Duties 175
Remedies Created by Judicial Activism 133
Performance and Discharge 176
Promissory Estoppel 134
Performance 176
Quasi-Contract 134
Good Faith 177
Novak v. Credit Bureau Collection Service 135
Brunswick Hills Racquet Club Inc. v.
Sources of Contract Law 135
Route 18 Shopping Center Associates 178
Common Law 135
Breach 179
Uniform Commercial Code 136
Impossibility 179
Restatement (Second) of Contracts 136
Remedies 179
Agreement 137
Expectation Interest 180
Meeting of the Minds 137
YOU BE THE JUDGE Bi-Economy Market,
Off er 137
Inc. v. Harleysville Ins. Co. of New York 182
Problems with Defi niteness 137
Reliance Interest 183
Baer v. Chase 138
Restitution Interest 183
Termination of Off ers 139
Other Equitable Interests 183
Acceptance 139
Milicic v. Basketball Marketing Company, Inc. 185
Mirror Image Rule 139
UCC and the Battle of Forms 140
Chapter 12
Consideration 141
Illusory Promise 142 Sales and Product Liability 191
YOU BE THE JUDGE Culbertson v. Brodsky 142 Sales 192
Development of the UCC 192
Chapter 10 Contract Formation 194
Legality, Consent, and Writing 148 Jannusch v. Naff ziger 195
Legality 150 Performance and Remedies 198
Restraint of Trade 150 Warranties and Product Liability 199
Sale of a Business 150 Express Warranties 200
Employment 150 YOU BE THE JUDGE Keller v. Inland
King v. Head Start Family Hair Salons, Inc. 151 Metals All Weather Conditioning, Inc. 200
Exculpatory Clauses 152 Implied Warranties 201
Unconscionable Contracts 153 Goodman v. Wenco Foods, Inc. 202
Capacity and Consent 154 Negligence 203
Capacity 154 Strict Liability 203
Reality of Consent 155 Uniroyal Goodrich Tire Company v.
Fimbel v. DeClark 158 Martinez 205
Contents vii
Chapter 13 Bankruptcy Estate 249
Negotiable Instruments 211 Payment of Claims 250
Commercial Paper 212 Discharge 251
Types of Negotiable Instruments 212 In Re: John & Julie Hoff man 253
Th e Fundamental “Rule” of Commercial Paper 213 Chapter 11 Reorganization 253
Negotiability 214 Debtor in Possession 254
YOU BE THE JUDGE Blasco v. Money Creditors’ Committee 254
Services Center 216 Plan of Reorganization 254
Negotiation 217 Confi rmation of the Plan 254
Holder in Due Course 218 Discharge 254
Consumer Exception 220 Small-Business Bankruptcy 254
Scott v. Mayfl ower Home Improvement Corp. 220 Chapter 13 Consumer Reorganizations 255
Beginning a Chapter 13 Case 255
Chapter 14 Plan of Payment 256
Secured Transactions 226 Discharge 256
Secured T ransactions 227
Revised Article 9 229
Attachment of a Security Interest 229 UNIT 3
Agreement 229
Possession 230     261
Value 230
Debtor Rights in the Collateral 230 Chapter 16
Attachment to Future Property 230 Agency 262
Perfection 231 Creating an Agency Relationship 263
Nothing Less Th an Perfection 231 Consent 263
Perfection by Filing 231 Control 264
Corona Fruits & Veggies, Inc. v. Frozsun Fiduciary Relationship 264
Foods, Inc. 233 Duties of Agents to Principals 264
Perfection by Possession 234 Duty of Loyalty 264
Perfection of Consumer Goods 234 Otsuka v. Polo Ralph Lauren
Protection of Buyers 236 Corporation 264
Buyers in Ordinary Course of Business 236 Other Duties of an Agent 266
YOU BE THE JUDGE Conseco Finance Principal’s Remedies when the Agent
Servicing Corp. v. Lee 237 Breaches a Duty 267
Priorities Among Creditors 237 Duties of Principals to Agents 267
Default and Termination 238 Terminating an Agency Relationship 267
Default 238 Liability 268
Termination 239 Principal’s Liability for Contracts 268
Agent’s Liability for Contracts 269
Chapter 15 Principal’s Liability for Torts 270
Bankruptcy 244 Doe v. Liberatore 272
Overview of Bankruptcy 245 Agent’s Liability for Torts 273
Chapter 7 Liquidation 246
Filing a Petition 246 Chapter 17
Voluntary Petition 246 Employment Law 279
Involuntary Petition 247 Introduction 280
Trustee 247 Employment Security 280
Creditors 247 National Labor Relations Act 280
Automatic Stay 248 Family and Medical Leave Act 281
Jackson v. Holiday Furniture 248 COBRA 281
viii Contents
Common Law Protections 281 Duty to Bargain 317
Kozloski v. American Tissue Enforcement 317
Services Foundation 282 Brentwood Medical Associates v.
Whistleblowing 284 United Mine Workers of America 318
Safety and Privacy in the Workplace 285 Concerted Action 318
Workplace Safety 285 Strikes 319
Employee Privacy 286 Replacement Workers 319
YOU BE THE JUDGE Michael A. Picketing 319
Smyth v. the Pillsbury Co. 287 Lockouts 320
Financial Protection 287 Regulating Union Aff airs 320
Fair Labor Standards Act 287
Workers’ Compensation 288
Social Security 288 UNIT 4
  325
Chapter 18
Employment Discrimination 294 Chapter 20
Equal Pay Act of 1963 295 Starting a Business:
Title VII 295 LLCs and Other Options 326
Proof of Discrimination 295
Sole Proprietorships 327
YOU BE THE JUDGE Jespersen v.
Corporations 328
Harrah’s 296
Corporations in General 328
Color 297
Close Corporations 329
Religion 298
S Corporations 330
Defenses to Charges of
Limited Liability Companies 331
Discrimination 298
YOU BE THE JUDGE Ridgaway v. Silk 331
Affi rmative Action 299
Wyoming.com, LLC v. Lieberman 332
Sexual Harassment 299
BLD Products, Ltd. v. Technical Plastics
Procedures and Remedies 300
of Oregon, LLC 333
Pregnancy 300
General Partnerships 334
Age Discrimination 301
Formation 335
Smith v. City of Jackson 301
Taxes 335
Americans with Disabilities Act 302
Liability 335
Management 335
Chapter 19
Terminating a Partnership 336
Labor Law 309
Limited Liability Partnerships 337
Unions Develop 311
Apcar v. Gaus 337
Labor Unions Today 312
Limited Partnerships and Limited
Organizing a Union 312
Liability Limited Partnerships 338
Exclusivity 312
Professional Corporation 339
Organizing 313
What Workers May Do 313 Chapter 21
What Employers May Do 314 Corporations 344
Progressive Electric, Inc. v. Promoter’s Liability 345
National Labor Relations Board 314 Incorporation Process 345
YOU BE THE JUDGE Hoff man Plastic Where to Incorporate? 346
Compounds, Inc. v. National Labor Th e Charter 346
Relations Board 315 After Incorporation 347
Collective Bargaining 316 Directors and Offi cers 347
Subjects of Bargaining 316 Bylaws 348
Contents ix
Death of the Corporation 348 Liability to Th ird Parties 381
Piercing the Corporate Veil 348 Negligence 381
Termination 349 Ellis v. Grant Th ornton 381
Th e Role of Corporate Management 349 Fraud 382
Th e Business Judgment Rule 350 Securities Act of 1933 382
Duty of Loyalty 350 Securities Exchange Act of 1934 382
Lippman v. Shaff er 351 Criminal Liability 383
Duty of Care 352 Other Accountant-Client Issues 384
RSL Communications v. Bildirici 352 Th e Accountant-Client Relationship 384
Th e Role of Shareholders 353 Accountant-Client Privilege 384
Rights of Shareholders 353
Right to Information 353
Right to Vote 354
UNIT 5
Corporate Governance in Publicly
Traded Companies: Sarbanes-Oxley     391
and Stock Exchange Rules 355
Chapter 24
Chapter 22
Government Regulation: Consumer Law 392
Securities and Antitrust 360 Introduction 393
Sales 393
Securities Laws 361
Deceptive Acts or Practices 393
What Is a Security? 361
YOU BE THE JUDGE Federal Trade
Securities Act of 1933 361
Commission v. Business Card Experts, Inc. 394
Securities Exchange Act of 1934 363
Unfair Practices 394
Insider Trading 363
Bait and Switch 395
United States v. O’Hagan 364
Mail or Telephone Order Merchandise 395
Foreign Corrupt Practices Act 365
Telemarketing 396
Blue Sky Laws 365
Unordered Merchandise 396
Antitrust 365
Door-to-Door Sales 396
Th e Sherman Act 366
Consumer Credit 397
Leegin Creative Leather
Truth-in-Lending Act 397
Products, Inc. v. PSKS, Inc. 366
Home Mortgage Loans 397
Th e Clayton Act 368
Fair Credit Billing Act 398
Th e Robinson-Patman Act 369
Fair Credit Reporting Act 398
Chapter 23 Fair and Accurate Credit Transactions Act 398
Accountants’ Liability 375 Fair Debt Collection Practices Act 399
Introduction 376 Equal Credit Opportunity Act 400
Audits 376 Treadway v. Gateway Chevrolet Oldsmobile Inc. 400
Opinions 377 Consumer Leasing Act 401
Congress Responds to Enron: Sarbanes-Oxley 378 Magnuson-Moss Warranty Act 401
Liability to Clients 379 Consumer Product Safety 402
Contract 379
Negligence 379 Chapter 25
YOU BE THE JUDGE Oregon Steel Environmental Law 408
Mills, Inc. v. Coopers & Lybrand, LLP 379 Introduction 409
Fraud 380 Air Pollution 409
Breach of Trust 380 Th e Clean Air Act 409