CONTENTS: OVERVIEW
Preface
UNIT 1
xxi
The Legal Environment
1
1 2 3 4
2 24 42
5 6 7 8 9
Introduction To Law Business Ethics and Social Responsibility Dispute Resolution Common Law, Statutory Law, and Administrative Law Constitutional Law Intentional Torts and Business Torts Negligence and Strict Liability Crime International Law
UNIT 2
Contracts
10 11 12 13 14 15 16 17 18 19
Introduction to Contracts The Agreement: Offers and Acceptances Consideration Legality Voidable Contracts: Capacity and Consent Written Contracts Third Parties Performance and Discharge Remedies Practical Contracts
UNIT 3
Commercial Transactions
20 21 22 23
Introduction to Sales Ownership and Risk Warranties and Product Liability Performance and Remedies
UNIT 4
Additional CPA Topics
24 Secured Transactions 25 Creating a Negotiable Instrument
75 102 130 156 178 206
229 230 251 275 295 316 339 361 381 403 427
451 452 480 505 531
557 558 593
26 Liability for Negotiable Instruments 27 Accountants’ Liability
UNIT 5
Agency and Employment Law
28 Agency Law 29 Employment Law 30 Labor Law
UNIT 6
Business Organizations
31 Starting a Business: LLCs and Other Options 32 Partnerships 33 Life and Death of a Corporation 34 Corporate Management 35 Shareholders 36 Securities Regulation 37 Bankruptcy
UNIT 7
618 644
669 670 698 733
761 762 787 815 839 862 891 922
Government Regulation
949
38 Antitrust 39 Consumer Law 40 Environmental Law
950 976 1005
UNIT 8
Property and Cyberlaw
41 Cyberlaw 42 Intellectual Property 43 Real Property and Landlord-Tenant Law 44 Personal Property and Bailment 45 Planning for the Future: Wills, Trusts, and Insurance
1033 1034 1059 1087 1119 1140 iii
iv
CONTENTS: OVERVIEW
Appendix A
The Constitution of the United States
Appendix B
Uniform Commercial Code
A1
B1
Glossary
G1
Table of Cases
T1
Index
I1
CONTENTS
Preface
UNIT 1
xxi
The Legal Environment
1
Chapter 1 Introduction To Law
2
Three Important Ideas about Law Power Importance Fascination Origins of Our Law English Roots The Oculist’s Case (1329) Law in the United States Sources of Contemporary Law United States Constitution Statutes Common Law Court Orders Administrative Law Treaties Classifications Criminal and Civil Law Law and Morality Jurisprudence Legal Positivism Natural Law Legal Realism Working with the Book’s Features Analyzing a Case Kuehn v. Pub Zone Devil’s Advocate Exam Strategy You Be the Judge You Be the Judge: Soldano v. O’Daniels
3 3 4 4 5 5 6 7 7 7 9 9 9 10 10 10 10 12 12 12 13 13 14 14 14 16 17 17
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
19 19 21 22 23
18
Chapter 2 Business Ethics and Social Responsibility
Introduction Why Bother to Act Ethically at All? Society as a Whole Benefits from Ethical Behavior People Feel Better When They Behave Ethically Unethical Behavior Can Be Very Costly Utilitarian vs. Deontological Ethics Utilitarian Ethics Deontological Ethics Ethics Case: HIV Treatment Applying Personal Ethics in the Workplace Ethics Case: No Sheen on Sheen Stakeholder Ethics Definitions The Debate The Organization’s Responsibility to Its Employees Ethics Case: The Storm After the Storm An Organization’s Responsibility to Its Customers Ethics Case: Fanning Customer Wrath Organization’s Responsibility to Overseas Contract Workers Ethics Case: The Dragon’s Den When, If Ever, is Lying Acceptable? Ethics Case: Truth (?) in Borrowing
24
25 26 26 26 27 27 28 28 29 29 30 30 31 31 31 32 32 32 34 34 36 36
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
37 37 38 39 40
Chapter 3 Dispute Resolution
42
Three Fundamental Areas of Law Litigation versus Alternative Dispute Resolution Court Systems State Courts Landmark Case: International Shoe Co. v. State of Washington Federal Courts
43 43 43 43 46 48
v
vi
CONTENTS
Litigation Pleadings Stinton v. Robin’s Wood, Inc. Jones v. Clinton Trial Adversary System Right to Jury Trial Voir Dire Pereda v. Parajon Opening Statements Burden of Proof Plaintiff’s Case Rules of Evidence Motion for Directed Verdict Defendant’s Case Closing Arguments Jury Instructions Verdict Motions after the Verdict Appeals Appeals Court Options Alternative Dispute Resolution Negotiation Mediation Arbitration
51 51 57 59 61 61 61 62 62 63 63 64 64 65 65 66 66 66 66 66 67 68 68 68 69
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
70 70 72 73 74
Chapter 4 Common Law, Statutory Law, and Administrative Law
75
Common Law Stare Decisis Bystander Cases Tarasoff v. Regents of the University of California Statutory Law Bills Discrimination: Congress and the Courts Debate Statutory Interpretation Landmark Case: Griggs v. Duke Power Co. Changing Times Voters’ Role Congressional Override
76 76 77
78 79 80 80 81 83 85 85 86 86
Administrative Law Background Classification of Agencies Power of Agencies Rulemaking Investigation Landmark Case: United States v. Biswell Limits on Agency Power Statutory Control Political Control Judicial Review Fox Television Stations, Inc. v. Federal Communications Commission Informational Control and the Public Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 5 Constitutional Law
Government Power One in a Million Overview Separation of Powers Individual Rights Power Granted Congressional Power Executive Power Judicial Power Kennedy v. Louisiana Protected Rights Incorporation First Amendment: Free Speech Texas v. Johnson Citizens United v. Federal Election Commission Salib v. City of Mesa Fifth Amendment: Due Process and the Takings Clause Kelo v. City of New London, Connecticut Fourteenth Amendment: Equal Protection Clause Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
87 88 88 89 89 91 92 93 93 93 93 94 95 97 97 99 100 101
102
103 103 103 104 104 105 105 108 108 109 111 112 112 112 113 115 117 120 122 124 124 126 127 128
CONTENTS
Chapter 6 Intentional Torts and Business Torts
Intentional Torts Defamation False Imprisonment Intentional Infliction of Emotional Distress Jane Doe and Nancy Roe v. Lynn Mills Battery and Assault Trespass, Conversion, and Fraud Damages Compensatory Damages Punitive Damages Landmark Case: State Farm v. Campbell You Be the Judge: Boeken v. Philip Morris, Incorporated Tort Reform and The Exxon Valdez Business Torts Tortious Interference with Business Relations Tortious Interference with a Contract Tortious Interference with a Prospective Advantage Carvel v. Noonan Privacy and Publicity Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
130 132 132 134
135 135 136 137 138 138 140 141
170 170
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
172 172 174 176 177
Chapter 8 Crime
178
157
157 158 159 162 163
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
145 145 147 147 148 149 150 152 153 154
Chapter 7 Negligence and Strict Liability 156
Negligence Landmark Case: Palsgraf v. Long Island Railroad Duty of Due Care Hernandez v. Arizona Board of Regents Breach of Duty Causation You Be the Judge: Griffith v. Valley of Sun Recovery, Inc. Damages Ra v. Superior Court Defenses Contributory and Comparative Negligence Assumption of the Risk Truong v. Nguyen
Strict Liability Ultrahazardous Activity New Jersey Department of Environmental Protection v. Alden Leeds, Inc.
The Differences between a Civil and Criminal Case Criminal Procedure Conduct Outlawed State of Mind Gathering Evidence: The Fourth Amendment You Be the Judge: Ohio v. Smith The Case Begins Landmark Case: Miranda v. Arizona Right to a Lawyer After Arrest Ewing v. California Crimes that Harm Business Larceny Fraud Skilling v. United States Arson Embezzlement Crimes Committed by Business Commonwealth v. Angelo Todesca Corp. Selected Crimes Committed by Business Punishing a Corporation
142 143 144
165 166 166 167 167 169 169
vii
Chapter 9 International Law
Trade Regulation: The big picture Export Controls Import Controls You Be the Judge: Totes-Isotoner Co. v. United States
171
179 180 180 181 181 183 185 186 187 187 189 191 191 191 192 194 194 194 195 196 199 200 200 202 203 204
206
207 207 208 208
viii
CONTENTS
Treaties United States—Import Prohibition of Certain Shrimp and Shrimp Products International Sales Agreements The Sales Contract Centrifugal Casting Machine Co., Inc. v. American Bank & Trust Co. International Trade Issues Repatriation of Profits Expropriation Foreign Corrupt Practices Act United States v. King Extraterritoriality You Be the Judge: Carnero v. Boston Scientific Corporation
210
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
223 224 226 227 228
UNIT 2
Contracts
Chapter 10 Introduction to Contracts
Contracts Elements of a Contract Other Important Issues All Shapes and Sizes Contracts Defined Development of Contract Law Davis v. Mason Types of Contracts Bilateral and Unilateral Contracts Executory and Executed Contracts Valid, Unenforceable, Voidable, and Void Agreements Mr. W Fireworks, Inc. v. Ozuna Express and Implied Contracts You Be the Judge: DeMasse v. ITT Corporation Promissory Estoppel and Quasi-Contracts Norton v. Hoyt Sources of Contract Law Common Law Uniform Commercial Code Fallsview Glatt Kosher Caterers, Inc. v. Rosenfeld
210 213 214 216 218 218 218 219 220 222 222
229 230
231 231 231 232 232 233 233 234 234 235 235 236 237 237 238 239 242 242 242 243
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 11 The Agreement: Offers and Acceptances
Meeting of the Minds Offer Statements that Usually do not Amount to Offers Landmark Case: Carlill v. Carbolic Smoke Ball Company Problems with Definiteness Baer v. Chase The UCC and Open Terms Termination of Offers Nadel v. Tom Cat Bakery Acceptance Mirror Image Rule UCC and the Battle of Forms Clickwraps And Shrinkwraps Specht v. Netscape Communications Corporation Communication of Acceptance Soldau v. Organon, Inc. Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 12 Consideration
What is Consideration? What Is Value? Landmark Case: Hamer v. Sidway You Be the Judge: Kim v. Son Adequacy of Consideration Illusory Promises Applications of Consideration The UCC: Consideration in Requirements and Output Contracts Preexisting Duty You Be the Judge: Citizens Trust Bank v. White Settlement of Debts Liquidated Debt
244 244 247 248 249
251
252 253 253 255 257 257 259 260 260 262 262 263 264 265 267 268 268 269 271 272 273
275
276 276 277 278 278 280 280 280 282 283 284 285
CONTENTS
Unliquidated Debt: Accord and Satisfaction Henches v. Taylor Consideration: Trends Employment Agreements Snider Bolt & Screw v. Quality Screw & Nut Promissory Estoppel and “Moral Consideration”
288
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
289 289 291 292 294
Chapter 13 Legality
295
Contracts that Violate a Statute Wagers Insurance Licensing Statutes Authentic Home Improvements v. Mayo Usury American Express Travel Related Services Company, Inc. v. Assih Contracts that Violate Public Policy Restraint of Trade: Noncompete Agreements King v. Head Start Family Hair Salons, Inc. Exculpatory Clauses You Be the Judge: Ransburg v. Richards Unconscionable Contracts Worldwide Insurance v. Klopp Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 14 Voidable Contracts: Capacity and Consent
Capacity Minors Mentally Impaired Persons Landmark Case: Babcock v. Engel Reality of Consent Fraud Hess v. Chase Manhattan Bank, USA, N.A. Mistake Donovan v. RRL Corporation
285 286 287 287 287
296 296 297 297 298 299
299 300 301 303 304 305 307 308 310 310 312 313 315
316 317 317 319 320 321 322 325 327 328
Duress You Be the Judge: In Re RLS Legal Solutions, L.L.C. Undue Influence Sepulveda v. Aviles Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 15 Written Contracts
Landmark Case: The Lessee of Richardson v. Campbell Common Law Statute of Frauds: Contracts That Must Be in Writing Agreements for an Interest in Land Agreements That Cannot Be Performed within One Year You Be the Judge: Sawyer v. Mills Promise to Pay the Debt of Another Promise Made by an Executor of an Estate Promise Made in Consideration of Marriage The Common Law Statute of Frauds: What the Writing Must Contain Signature Reasonable Certainty Electronic Contracts and Signatures The UCC’s Statute of Frauds UCC §2-201(1)—The Basic Rule UCC §2-201(2)—The Merchants’ Exception Seton Co. v. Lear Corp. UCC §2-201(3)—Special Circumstances Parol Evidence Mayo v. North Carolina State University Exception: An Incomplete or Ambiguous Contract Fraud, Misrepresentation, or Duress Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 16 Third Parties
Third Party Beneficiary Intended Beneficiaries
ix
330 331 331 332 333 333 335 337 338
339 340 342 342 344 345 345 346 346 347 347 347 349 349 350 350 351 352 353 354 354 355 355 355 357 358 360
361
362 362
x
CONTENTS
Schauer v. Mandarin Gems of California, Inc. Incidental Beneficiaries Unite Here Local 30 v. California Department of Parks and Recreation Assignment and Delegation Assignment Tenet Healthsystem Surgical, L.L.C. v. Jefferson Parish Hospital Service District No. 1 You Be the Judge: Wells Fargo Bank Minnesota v. BrooksAmerica Mortgage Corporation Delegation of Duties Rosenberg v. Son, Inc.
363 364
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
375 375 377 378 380
Chapter 17 Performance and Discharge
Conditions How Conditions Are Created Types of Conditions American Electronic Components, Inc. v. Agere Systems, Inc. You Be the Judge: Anderson v. Country Life Insurance Co. Performance Strict Performance and Substantial Performance Personal Satisfaction Contracts Good Faith Brunswick Hills Racquet Club Inc. v. Route 18 Shopping Center Associates Time of the Essence Clauses Breach Material Breach O’Brien v. Ohio State University Anticipatory Breach Statute of Limitations Impossibility True Impossibility Commercial Impracticability and Frustration of Purpose Chapter Conclusion Exam Review
364 365 365 367 371 371 374
381
382 383 384 384 386 387 387 389 390 390 392 392 393 393 394 394 394 394 395 397 397
Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 18 Remedies
Breaching A Contract Identifying the “Interest” to Be Protected Expectation Interest Landmark Case: Hawkins v. McGee Direct Damages Consequential Damages Landmark Case: Hadley v. Baxendale You Be the Judge: Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York Incidental Damages The UCC and Damages Reliance Interest Promissory Estoppel Toscano v. Greene Music Restitution Interest Restitution in Cases of a Voidable Contract Putnam Construction & Realty Co. v. Byrd Restitution in Cases of a Quasi-Contract Other Remedies Specific Performance Injunction Milicic v. Basketball Marketing Company, Inc. Reformation Special Issues Mitigation of Damages Nominal Damages Liquidated Damages Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 19 Practical Contracts
The Lawyer Lawyers and Clients Hiring a Lawyer The Contract Who Drafts It? How to Read a Contract Mistakes Quake Construction v. American Airlines
399 400 401
403
404 404 405 405 407 407 407 409 409 410 412 412 412 413 414 414 415 416 416 417 417 419 419 419 419 419 421 421 423 425 426
427
428 429 429 430 430 430 430 431
CONTENTS
Cipriano v. Patrons Mutual Insurance Company of Connecticut You Be the Judge: Heritage Technologies v. Phibro-Tech The Structure of a Contract LeMond Cycling, Inc. v. PTI Holding, Inc. Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
UNIT 3
433 435 437 440 446 447 449 450 450
Commercial Transactions
451
Chapter 20 Introduction to Sales
452
Development of Commercial Law Harold and Maude, Revisited This Unit and This Chapter UCC Basics Code’s Purpose Scope of Article 2 Mixed Contracts Merchants Good Faith and Unconscionability Contract Formation Formation Basics: Section 2-204 Jannusch v. Naffziger Statute of Frauds Delta Star, Inc. v. Michael’s Carpet World Added Terms: Section 2-207 Superior Boiler Works, Inc. v. R. J. Sanders, Inc. Open Terms: §§2-305 and 2-306 Mathis v. Exxon Corporation You Be the Judge: Lohman v. Wagner Modification
453 455 455 456 456 456 457 457 457 458 458 459 460 461 462 465 466 467 469 470
Chapter Conclusion Exam Review Multiple-Choice questions Essay Questions Discussion Questions
473 473 476 476 478
Chapter 21 Ownership and Risk
480
Legal Interest Identification, Title, and Insurable Interest
481 482
xi
Existence and Identification Passing of Title Circuit City Stores, Inc. v. Commissioner of Revenue Insurable Interest Valley Forge Insurance Co. v. Great American Insurance Co. Imperfect Title Bona Fide Purchaser Bakalar v. Vavra Entrustment Lindholm v. Brant Creditor’s Rights Ordinary Sales Returnable Goods Risk of Loss Shipping Terms When the Parties Fail to Allocate the Risk Harmon v. Dunn
487 487 487 489 490 491 492 493 493 494 494 495 498
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
499 499 501 502 503
Chapter 22 Warranties and Product Liability
Express Warranties Affirmation of Fact or Promise Description of Goods Sample or Model Basis of Bargain Rite Aid Corp. v. Levy-Gray Implied Warranties Implied Warranty of Merchantability Goodman v. Wenco Foods, Inc. Implied Warranty of Fitness for a Particular Purpose Two Last Warranties: Title and Infringement Disclaimers and Defenses Disclaimers CCB Ohio, LLC v. Chemque, Inc. Remedy Limitations Privity Reed v. City of Chicago Buyer’s Misuse Statute of Limitations and Notice of Breach Negligence You Be the Judge: Boumelhem v. Bic Corp.
482 484 485 486
505
506 506 507 507 507 508 509 510 511
511 512 513 513 514 515 517 518 519 519 520 521
xii
CONTENTS
Strict Liability Tort Reform Time Limits: Statutes of Limitations in Tort Cases Other Legislation Lemon Laws Consumer Protection Laws
522 524
UNIT 4
524 525 525 525
Chapter 24 Secured Transactions
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
526 526 527 528 530
Chapter 23 Performance and Remedies
Obligation on All Parties: Good Faith Seller’s Rights and Obligations Perfect Tender Rule Restrictions on the Perfect Tender Rule Zion Temple First Pentecostal Church of Cincinnati, Ohio, Inc. v. Brighter Day Bookstore & Gifts You Be the Judge: United Aluminum Corporation v. Linde, Inc. Buyer’s Rights and Obligations Inspection and Acceptance Lile v. Kiesel Seller’s Remedies Stop Delivery Identify Goods to the Contract Resale Damages for Non-Acceptance Action for the Price Buyer’s Remedies Incidental Damages and Consequential Damages Smith v. Penbridge Associates, Inc. Specific Performance Cover Hessler v. Crystal Lake Chrysler-Plymouth, Inc. Non-Delivery Acceptance of Non-Conforming Goods Liquidated Damages Chapter Conclusion Exam Review Multiple-Choice Questions Discussion Questions Discussion Questions
531
532 532 533 533 535
537 539 539 540 541 541 541 542 543 543 544 544 545 545 546 546 547 548 548 549 549 552 553 554
Additional CPA Topics
Article 9: Terms and Scope Article 9 Vocabulary Scope of Article 9 Attachment of a Security Interest Agreement Control and Possession In Re CFLC, Inc. Value Debtor Rights in the Collateral Attachment to Future Property Perfection Nothing Less than Perfection Perfection by Filing Corona Fruits & Veggies, Inc. v. Frozsun Foods, Inc. Perfection by Possession or Control Layne v. Bank One Perfection of Consumer Goods Perfection of Movable Collateral and Fixtures Protection of Buyers Buyers in Ordinary Course of Business You Be the Judge: Conseco Finance Servicing Corp. v. Lee Buyers of Consumer Goods Buyers of Chattel Paper, Instruments, and Documents Liens Priorities Among Creditors Filing versus Control or Possession Priority Involving a Purchase Money Security Interest In Re Roser Default and Termination Default Termination Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 25 Creating a Negotiable Instrument Commercial Paper Types of Negotiable Instruments
557 558
559 559 560 562 563 563 564 565 565 566 566 566 567 568 570 572 573 574 576 576 577 578 579 579 581 582 582 583 584 584 587 587 587 590 591 592
593
594 595
CONTENTS
Negotiability Requirements for Negotiability Interpretation of Ambiguities You Be the Judge: Blasco v. Money Services Center Negotiation Holder in Due Course Requirements for Being a Holder in Due Course Buckeye Check Cashing, Inc. v. Camp Hartford Accident & Indemnity Co. v. American Express, Co. Shelter Rule Defenses against a Holder in Due Course Consumer Exception Antuna v. Nescor, Inc.
607 608 608 611 611
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
612 612 615 616 617
Chapter 26 Liability for Negotiable Instruments
618
Introduction The Contract versus the Instrument Enforcing an Instrument Primary versus Secondary Liability The Payment Process Signature Liability Maker Drawer Drawee Harrington v. MacNab Indorser Accommodation Party In Re Couchot Agent Warranty Liability Basic Rules of Warranty Liability Transfer Warranties You Be the Judge: Quimby v. Bank of America Comparison of Signature Liability and Transfer Warranties Presentment Warranties Other Liability Rules Conversion Liability Impostor Rule
597 598 600 601 601 603 604 605
619 619 619 620 620 621 621 621 622 622 623 624 625 625 627 627 628
629 630 631 632 632 633
xiii
Fictitious Payee Rule Employee Indorsement Rule Negligence You Be the Judge: Gulf States Section, PGA, Inc. v. Whitney National Bank of New Orleans Crimes Discharge Discharge of the Obligor Discharge of an Indorser or Accommodation Party
633 633 634
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
637 637 640 642 643
Chapter 27 Accountants’ Liability
644
Introduction Audits Opinions Congress Responds to Enron: Sarbanes-Oxley Liability to Clients Contract Negligence Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP Common-law Fraud Breach of Trust Fiduciary Duty Leber v. Konigsberg Liability to Third Parties Negligence Gary Ellis v. Grant Thornton Fraud Liability for Qualified Opinions Securities Act of 1933 You Be the Judge: Amorosa v. Ernst & Young LLP Securities Exchange Act of 1934 Landmark Case: Ernst & Ernst v. Hochfelder Criminal Liability Other Accountant-Client Issues The Accountant-Client Relationship Accountant-Client Privilege Chapter Conclusion Exam Review Multiple-Choice Questions
634 635 636 636 637
646 646 647 648 649 649 649 650 651 651 651 652 653 654 656 657 657 657 658 659 659 661 661 661 662 663 663 666
xiv
CONTENTS
Essay Questions Discussion Questions
UNIT 5
Agency and Employment Law
Chapter 28 Agency Law
Creating an Agency Relationship Consent Control Fiduciary Relationship Elements Not Required for an Agency Relationship Duties of Agents to Principals Duty of Loyalty Otsuka v. Polo Ralph Lauren Corporation Abkco Music, Inc. v. Harrisongs Music, Ltd. Other Duties of an Agent Principal’s Remedies when the Agent Breaches a Duty Duties of Principals to Agents Duty to Cooperate Terminating an Agency Relationship Termination by Agent or Principal Principal or Agent Can No Longer Perform Required Duties Change in Circumstances Effect of Termination Liability Principal’s Liability for Contracts Authority Ratification Subagents Agent’s Liability for Contracts Fully Disclosed Principal Unidentified Principal Undisclosed Principal Unauthorized Agent Principal’s Liability for Torts Employee Scope of Employment You Be the Judge: Zankel v. United States of America Intentional Torts Doe v. Liberatore Physical or Non-Physical Harm Agent’s Liability for Torts Chapter Conclusion Exam Review
667 668
669 670
671 671 672 672 672 673 673 673 674 676 678 678 679 679 680
680 681 681 682 682 682 684 684 684 685 685 685 686 687 687 688 689 690 690 691 692 692 692
Multiple-Choice Questions Essay Questions Discussion Questions
695 696 697
Chapter 29 Employment Law
698
Introduction Employment Security National Labor Relations Act Family and Medical Leave Act Health Insurance Common-Law Protections Kozloski v. American Tissue Services Foundation Whistleblowing Safety and Privacy in the Workplace Workplace Safety Employee Privacy Financial Protection Fair Labor Standards Act: Minimum Wage, Overtime, and Child Labor Workers’ Compensation Social Security Pension Benefits Employment Discrimination Equal Pay Act of 1963 Title VII You Be the Judge: Jespersen v. Harrah’s Landmark Case: Griggs v. Duke Power Co. Teresa Harris v. Forklift Systems, Inc. Age Discrimination Reid v. Google, Inc. Americans with Disabilities Act Genetic Information Nondiscrimination Act
699 700 700 700 700 701 703 706 707 707 708 711 711 711 711 712 712 712 713 714 715 719 721 722 723 724
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
726 726 729 731 732
Chapter 30 Labor Law
733
Unions Develop … and the Law Responds 734 Pro-Union Statutes 735 Labor Unions Today 737 Organizing a Union 738 Exclusivity 738 You Be the Judge: Emporium Capwell Co. v. Western Additional Community Organization 738
CONTENTS
Organizing: Stages Organizing: Actions Progressive Electric, Inc. v. National Labor Relations Board Appropriate Bargaining Unit Collective Bargaining Subjects of Bargaining Duty to Bargain Landmark Case: NLRB v. Truitt Manufacturing Co. Enforcement Brentwood Medical Associates v. United Mine Workers of America Concerted Action Strikes Replacement Workers Citizens Publishing and Printing Company v. National Labor Relations Board Picketing Lockouts
751 752 752
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
754 754 757 757 759
UNIT 6
Business Organizations
Chapter 31 Starting a Business: LLCs and Other Options
Sole Proprietorships Corporations Corporations in General S Corporations Close Corporations Limited Liability Companies You Be the Judge: Ridgaway v. Silk Wyoming.com, LLC v. Lieberman BLD Products, LTC v. Technical Plastics of Oregon, LLC Tzolis v. Wolff Benefit Corporations and LLCs General Partnerships Limited Liability Partnerships Limited Partnerships and Limited Liability Limited Partnerships Professional Corporations
739 740 741 743 744 744 746 746 747 748 749 749 750
761 762
Joint Ventures Franchises National Franchisee Association v. Burger King Corporation
778 779
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
782 782 783 784 785
Chapter 32 Partnerships
Introduction Creating a Partnership Factors that Matter You Be the Judge: Nadel v. Starkman Partnership by Estoppel Relationship between Partners and Outsiders Liability of the Partnership to Outsiders Paying the Debts of the Partnership Relationship Among Partners Financial Rights Banker v. Estate of Banker Management Rights Management Duties Moren v. Jax Restaurant Marsh v. Gentry Terminating a Partnership Dissociation Continuation of the Partnership Business Termination of the Partnership Business Jefferson Insurance Co. v. Curle
763 764 764 766 767 768 769 770
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
771 772 774 774 776
Before the Corporation Is Formed Promoter’s Liability Defective Incorporation You Be the Judge: GS Petroleum, Inc. v. R and S Fuel, Inc. Incorporation Process Where to Incorporate? Charter’s Required Provisions
776 778
xv
Chapter 33 Life and Death of a Corporation
781
787
788 788 789 790 791 792 792 793 795 795 796 797 798 799 800 802 802 804 805 807 808 808 811 812 813
815
816 816 817
818 819 819 820
xvi
CONTENTS
Charter’s Optional Provisions Rodriguez v. Loudeye Corporation After Incorporation Directors and Officers Bylaws In Re Bigmar Shareholder Agreements Issuing Debt Foreign Corporations Death of the Corporation Piercing the Corporate Veil Brooks v. Becker Termination
824 825 826 826 828 828 829 830 830 831 831 833 834
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
834 834 836 837 838
Chapter 34 Corporate Management
Managers Versus Shareholders: The Fundamental Conflict Landmark Case: Unocal Corp. v. Mesa Petroleum Co. Resolving the Conflict: The Business Judgment Rule Duty of Loyalty Lippman v. Shaffer Anderson v. Bellino Duty of Care RSL Communications v. Bildirici More Conflict: Takeovers Federal Regulation of Tender Offers: The Williams Act State Regulation of Takeovers You Be the Judge: Airgas, Inc. v. Air Products and Chemicals, Inc.
839 840 842 843 843 845 846 847 849 850 851 852 854
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
856 857 858 859 860
Chapter 35 Shareholders
862
Introduction Rights of Shareholders Right to Information
863 864 864
You Be the Judge: Chopra v. Helio Solutions, Inc. Right to Vote Brehm v. Eisner Right to Dissent Right to Protection from Other Shareholders eBay Domestic Holdings, Inc. v. Newmark Right to Monitor Enforcing Shareholder Rights Derivative Lawsuits In Re eBay, Inc. Shareholders Litigation Direct Lawsuits
865 866 875 876 876 877 879 880 880 881 884
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
884 885 887 888 889
Chapter 36 Securities Regulation
Introduction The Securities and Exchange Commission What Is a Security? Securities Act of 1933 General Exemption Exempt Securities Exempt Transactions Public Offerings You Be the Judge: EBC I, Inc. v. Goldman Sachs & Co. Sales of Restricted Securities Liability Under the 1933 Act Securities Exchange Act of 1934 General Provisions of the 1934 Act Liability Under the 1934 Act Matrixx Initiatives, Inc. v. Siracusano Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. Insider Trading Landmark Case: Chiarella v. United States Sarbanes-Oxley Dodd-Frank Blue Sky Laws Exemption from State Regulation State Regulation Facilitating State Regulation Chapter Conclusion Exam Review Multiple-Choice Questions
891
892 892 893 893 894 894 894 898 899 900 900 902 902 904 906 908 909 910 913 913 914 914 914 914 915 915 918
CONTENTS
Essay Questions Discussion Questions
919 920
Chapter 37 Bankruptcy
922
Overview of the Bankruptcy Code 923 Rehabilitation 923 Liquidation 924 Chapter Description 924 Goals 924 Chapter 7 Liquidation 925 Filing a Petition 925 Trustee 927 Creditors 927 Automatic Stay 927 Jackson v. Holiday Furniture 927 Bankruptcy Estate 928 Payment of Claims 930 Discharge 932 In Re Stern 933 In Re: Grisham 936 Chapter 11 Reorganization 937 Debtor in Possession 937 Creditors’ Committee 937 Plan of Reorganization 938 Confirmation of the Plan 938 In Re Fox 938 Discharge 939 Small-Business Bankruptcy 939 Chapter 13 Consumer Reorganizations 940 You Be the Judge: Marrama v. Citizens Bank of Massachusetts 940 Beginning a Chapter 13 Case 941 Plan of Payment 942 Discharge 942 Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
UNIT 7
Government Regulation
Chapter 38 Antitrust
In The Beginning Sherman Act Chicago School
942 943 944 945 946
949 950 951 951 952
xvii
Overview of Antitrust Laws Cooperative Strategies Horizontal Cooperative Strategies Landmark Case: United States v. Trenton Potteries Company Fears v. Wilhelmina Model Agency, Inc. Vertical Cooperative Strategies You Be the Judge: Feesers, Inc. v. Michael Foods, Inc. Mergers and Joint Ventures Landmark Case: United States v. Waste Management, Inc. Aggressive Strategies Monopolization Predatory Pricing Tying Arrangements Controlling Distributors and Retailers Resale Price Maintenance Leegin Creative Leather Products, Inc. v. PSKS, Inc.
953 954 954
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
970 970 973 974 974
Chapter 39 Consumer Law
Introduction Federal Trade Commission Consumer Financial Protection Bureau Sales Deceptive Acts or Practices Federal Trade Commission v. Direct Marketing Concepts, Inc. Unfair Practices Additional Sales Rules Consumer Credit Truth in Lending Act—General Provisions Home Loans Credit Cards Gray v. American Express Co. Debit Cards Credit Reports Debt Collection You Be the Judge: Brown v. Card Service Center Equal Credit Opportunity Act
955 956 958 960 960 961 962 962 965 966 967 968 969
976
977 977 977 978 978 978 979 980 982 982 984 985 988 989 990 992 993 994
xviii
CONTENTS
Treadway v. Gateway Chevrolet Oldsmobile Inc. Consumer Leasing Act Magnuson-Moss Warranty Act Consumer Product Safety Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
Chapter 40 Environmental Law
Introduction Environmental Protection Agency Air Pollution Clean Air Act You Be the Judge: Central Arizona Water Conservation District v. EPA Greenhouse Gases and Global Warming Soot Particles Air Toxics Water Pollution Clean Water Act Entergy Corporation v. Riverkeeper, Inc. Other Water Pollution Statutes Waste Disposal Resource Conservation and Recovery Act Superfund Chemicals Federal Insecticide, Fungicide, and Rodenticide Act Federal Food, Drug, and Cosmetic Act Food Quality Protection Act of 1996 Toxic Substances Control Act Natural Resources National Environmental Policy Act You Be the Judge: Winter v. Natural Resources Defense Council, Inc. Endangered Species Act Gibbs v. Babbitt Chapter Conclusion Exam Review Mulitple-Choice Questions Essay Questions Discussion Questions
994 995 996 997
UNIT 8
Property and Cyberlaw
1033
Chapter 41 Cyberlaw
1034
1008 1009 1011 1011 1012 1013
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
1053 1053 1055 1056 1057
1013 1016 1017
Chapter 42 Intellectual Property
997 998 1001 1002 1004
1005 1006 1006 1007 1007
1017 1019 1020 1020 1021 1021 1021 1021 1021 1022 1023 1025 1026 1027 1029 1030 1031
Privacy 1036 Tracking Tools 1036 Regulation of Online Privacy 1037 You Be the Judge: Juzwiak v. John/Jane Doe 1038 United States of America v. Angevine 1039 United States of America v. Warshak 1040 You Be the Judge: Scott v. Beth Israel Medical Center Inc. 1043 Spam 1045 Internet Service Providers and Web Hosts: Communications Decency Act of 1996 1046 Carafano v. Metrosplash.com, Inc. 1047 Crime on the Internet 1049 Hacking 1049 Fraud 1050
Introduction Patents Types of Patents Requirements for a Patent Patent Application and Issuance Copyrights Lapine v. Seinfeld Copyright Term Infringement First Sale Doctrine Fair Use Digital Music and Movies Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. International Copyright Treaties Trademarks Types of Marks Ownership and Registration Valid Trademarks Infringement You Be the Judge: Network Automation, Inc. v. Advanced Systems Concepts, Inc.
1059 1060 1060 1060 1062 1063 1066 1067 1068 1068 1069 1069 1070
1071 1073 1074 1074 1074 1075 1076 1077
CONTENTS
Federal Trademark Dilution Act of 1995 Domain Names International Trademark Treaties Trade Secrets Pollack v. Skinsmart Dermatology and Aesthetic Center P.C.
1078 1078 1080 1080 1081
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
1082 1082 1083 1084 1086
Chapter 43 Real Property and LandlordTenant Law 1087
Nature of Real Property Freeman v. Barrs Estates in Real Property Concurrent Estates Jackson v. Estate of Green Future Interests Nonpossessory Interests Easements Profit License Mortgage Adverse Possession Entry and Exclusive Possession Open and Notorious Possession A Claim Adverse to the Owner Continuous Possession for the Statutory Period Ray v. Beacon Hudson Mountain Corp. Land Use Regulation Nuisance Law Zoning Eminent Domain Landlord-Tenant Law Three Legal Areas Combined Lease Types of Tenancy Tenancy for Years Periodic Tenancy Tenancy at Will Tenancy at Sufferance Elwell v. Minor Landlord’s Duties Duty to Deliver Possession Quiet Enjoyment
1088 1089 1090 1090 1091 1094 1094 1094 1096 1097 1097 1097 1097 1098 1098
1098 1099 1099 1099 1100 1101 1101 1102 1102 1102 1102 1102 1103 1103 1103 1104 1104 1105
xix
Duty to Maintain Premises Mishkin v. Young Tenant’s Duties Duty to Pay Rent Duty to Use Premises for Proper Purpose Duty Not to Damage Premises Duty Not to Disturb Other Tenants Injuries Tenant’s Liability Landlord’s Liability
1106 1107 1108 1108 1110 1110 1110 1111 1111 1111
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
1112 1112 1115 1116 1117
Chapter 44 Personal Property and Bailment
Gifts Intention to Transfer Ownership Delivery Inter Vivos Gifts and Gifts Causa Mortis Acceptance You Be the Judge: Albinger v. Harris Found Property Landmark Case: Armorie v. Delamirie Accession Wrongful Accessions Mistaken Accessions Bailment Control Rights of the Bailee Duties of the Bailee You Be the Judge: Johnson v. Weedman Exculpatory Clauses Tannenbaum v. New York Dry Cleaning, Inc. Rights and Duties of the Bailor Liability for Defects Common Carriers and Contract Carriers Innkeepers GNOC Corp. v. Powers Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
1119
1120 1120 1121 1121 1122 1122 1124 1125 1125 1125 1126 1126 1126 1127 1127 1129 1129
1130 1131 1131 1131 1132 1132 1133 1133 1136 1137 1138
xx
CONTENTS
Chapter 45 Planning for the Future: Wills, Trusts, and Insurance
Introduction to Estate Planning Definitions Purpose Probate Law Wills Requirements for a Valid Will Legal Technicalities Spouse’s Share Children’s Share In re Estate of Josiah James Treloar, Jr. Amending a Will Intestacy Power of Attorney Probate Property Not Transferred by Will Anatomical Gifts Living Wills Trusts Advantages and Disadvantages Types of Trusts Trust Administration Paradee v. Paradee Termination Introduction to Insurance Insurance Contract Offer and Acceptance Limiting Claims by the Insured
1140 1141 1141 1142 1142 1142 1143 1143 1144 1144 1145 1147 1147 1147 1147 1148 1148 1148 1149 1150 1151 1151 1152 1153 1153 1154 1154 1155
Bad Faith by the Insurer Goodson v. American Standard Insurance Company of Wisconsin Types of Insurance Property Insurance Life Insurance Health Insurance Disability Insurance Liability Insurance You Be the Judge: Metropolitan Property and Casualty Insurance Company v. Marshall Automobile Insurance
1161 1161
Chapter Conclusion Exam Review Multiple-Choice Questions Essay Questions Discussion Questions
1162 1162 1164 1165 1166
Appendix A
The Constitution of the United States
Appendix B
Uniform Commercial Code
1156 1157 1158 1158 1158 1160 1160 1160
A1 B1
Glossary
G1
Table of Cases
T1
Index
I1