CONTENTS
Preface Table of Cases Table of Illustrations
xiv xviii xxii
PART 1
The Legal Environment of Business 1 Introduction to Law
1 3
50
Alternative Dispute Resolution Chapter Summary Cases Questions Problems
55 57 59 65 65
4 Constitutional Law
67
Nature of Law
3
Basic Principles of Constitutional Law
67
ClassiďŹ cation of Law
4
Powers of Government
69
Sources of Law
6
Limitations on Government Chapter Summary Cases Questions Problems
72 76 77 87 87
Legal Analysis Chapter Summary Cases Questions
10 11 12 13
2 Business Ethics and the Social Responsibility of Business 14 Ethical Theories
15
Law versus Ethics
15
Ethical Standards in Business
18
Ethical Responsibilities of Business Chapter Summary Cases Questions Problems Business Ethics Cases
19 23 24 24 24 26
3 Civil Dispute Resolution
vi
Civil Procedure
43
5 Administrative Law Operation of Administrative Agencies Limits on Administrative Agencies Chapter Summary Cases Questions Problems
6 Criminal Law
90 91 93 96 96 103 103
106
Nature of Crimes
106
White-Collar Crime
108
Crimes Against Business
110
Defenses to Crimes
112
Criminal Procedure Chapter Summary Cases Questions Problems
112 115 116 121 121
7 Intentional Torts
124
The Court System
43
The Federal Courts
43
State Courts
45
Jurisdiction
46
Subject Matter Jurisdiction
46
Jurisdiction over the Parties
48
Intent
125
Civil Dispute Resolution
50
Harm to the Person
125
Contents
vii
Harm to the Right of Dignity
127
Harm to Property
129
Harm to Economic Interests
130
Defenses to International Torts Chapter Summary Cases Questions Problems
132 133 134 142 142
8 Negligence and Strict Liability
Variant Acceptances Chapter Summary Cases Questions Problems
11 Conduct Invalidating Assent
193 194 195 200 200
204
Duress
204
Undue Influence
205
145
Fraud
205
Negligence
145
Nonfraudulent Misrepresentation
207
Breach of Duty of Care
145
Factual Cause
150
Scope of Liability (Proximate Cause)
150
Harm
152
Mistake Chapter Summary Cases Questions Problems
208 209 210 219 219
Defenses to Negligence
152
12 Consideration
223
Strict Liability
153
Legal Sufficiency
223
Activities Giving Rise to Strict Liability
153
Bargained-For Exchange
227
Defenses to Strict Liability Chapter Summary Cases Questions Problems
155 155 157 165 165
Contracts without Consideration Chapter Summary Cases Questions Problems
228 230 231 238 238
13 Illegal Bargains
PART 2
Contracts 9 Introduction to Contracts
169 171
Development of the Law of Contracts
171
Definition of a Contract
172
Requirements of a Contract
173
Classification of Contracts
173
Promissory Estoppel
176
Quasi Contracts Chapter Summary Cases Questions Problems
176 177 178 184 184
10 Mutual Assent
186
241
Violations of Statutes
241
Violations of Public Policy
242
Effect of Illegality Chapter Summary Cases Questions Problems
245 246 247 253 253
14 Contractual Capacity
256
Minors
256
Incompetent Persons
258
Intoxicated Persons Chapter Summary Cases Questions Problems
259 259 260 267 267
Offer
186
Essentials of an Offer
187
15 Contracts in Writing
271
Duration of Offers
189
Statute of Frauds
271
Acceptance
191
Contracts within the Statute of Frauds
271
Communication of Acceptance
192
Compliance with the Statute of Frauds
277
viii
Contents
Effect of Compliance
278
Creation of Agency
352
Parol Evidence Rule
278
Duties of Agent to Principal
354
The Rule
278
Duties of Principal to Agent
357
Situations to which the Rule Does Not Apply
279
Supplemental Evidence
279
Interpretation of Contracts Chapter Summary Cases Questions Problems
281 281 283 290 291
Termination of Agency Chapter Summary Cases Questions Problems
358 360 362 370 370
16 Third Parties to Contracts
295
20 Relationship with Third Parties
373
Relationship of Principal and Third Persons
373
Contract Liability of the Principal
373
Assignment of Rights
295
Tort Liability of the Principal
379
Delegation of Duties
298
Criminal Liability of the Principal
382
Third-Party Beneficiary Contracts Chapter Summary Cases Questions Problems
299 301 303 309 309
Relationship of Agent and Third Persons
382
Contract Liability of Agent
383
Tort of Liability of Agent
385
Rights of Agent against Third Person Chapter Summary Cases Questions Problems
385 385 387 394 394
17 Performance, Breach, and Discharge
313
Conditions
313
Discharge by Performance
315
Discharge by Breach
315
Discharge by Agreement of the Parties
316
PART 4
Discharge by Operation of Law Chapter Summary Cases Questions Problems
317 319 321 325 326
Sales
397
21 Introduction to Sales and Leases
399
Nature of Sales and Leases
399
Definitions
400
329
Fundamental Principles of Article 2 and Article 2A 401
Interests Protected by Contract Remedies
329
Formation of Sales and Lease Contracts
Monetary Damages
329
Manifestation of Mutual Assent
404
Remedies in Equity
333
Consideration
408
Restitution
334
Limitations on Remedies Chapter Summary Cases Questions Problems
335 336 338 346 346
Form of the Contract Chapter Summary Cases Questions Problems
408 410 412 419 419
18 Contract Remedies
19 Relationship of Principal and Agent Nature of Agency
422
Performance by the Seller
422
349
Performance by the Buyer
426
351
Obligations of Both Parties Chapter Summary Cases
429 431 433
PART 3
Agency
22 Performance
403
351
Contents
Questions Problems
23 Transfer of Title and Risk of Loss
ix
439 439
443
Transfer of Title
443
Risk of Loss
447
Sales of Goods in Bulk Chapter Summary Cases Questions Problems
451 451 452 458 458
24 Products Liability: Warranties and Strict Liability in Tort
27 Transfer
529
Negotiation
529
Indorsements Chapter Summary Cases Questions Problems
531 535 536 542 543
28 Holder in Due Course
545
Requirements of a Holder in Due Course
545
Holder in Due Course Status
550
The Preferred Position of a Holder in Due Course 550
461
Warranties
461
Types of Warranties
461
Obstacles to Warranty Actions
464
Strict Liability in Tort
467
Requirements of Strict Liability
468
Obstacles to Recovery
470
Restatement of Torts (Third): Products Liability Chapter Summary Cases Questions Problems
472 474 476 484 484
Limitations upon Holder in Due Course Rights Chapter Summary Cases Questions Problems
553 556 557 564 564
29 Liability of Parties
567
Contractual Liability
567
Signature
567
Liability of Primary Parties
568
Liability of Secondary Parties
569
Termination of Liability
572
Liability Based on Warranty
573
488
Warranties on Transfer
573
Remedies of the Seller
488
Remedies of the Buyer
492
Contractual Provisions Aecting Remedies Chapter Summary Cases Questions Problems
496 498 500 507 508
Warranties on Presentment Chapter Summary Cases Questions Problems
574 577 578 586 586
30 Bank Deposits, Collections, and Funds Transfers
588
25 Sales Remedies
PART 5
Bank Deposits and Collections
588
Negotiable Instruments
511
Collection of Items
588
26 Form and Content
513
Relationship Between Payor Bank and Its Customer
592
Electronic Funds Transfers
594
Types of Electronic Funds Transfers
595
Consumer Funds Transfers
595
Wholesale Funds Transfers Chapter Summary Cases
596 599 601
Negotiability
513
Types of Negotiable Instruments
514
Format Requirements of Negotiable Instruments Chapter Summary Cases Questions Problems
516 522 523 526 526
x
Contents
Questions Problems
608 608
PART 6
Unincorporated Business Associations
613
33 Limited Partnerships and Limited Liability Companies
663
Limited Partnerships
663
Limited Liability Companies
668
Other Types of Unincorporated Business Associations
672
Chapter Summary Cases Questions Problems
673 677 682 682
31 Formation and Internal Relations of General Partnerships
615
Choosing a Business Association
615
Factors Aecting the Choice
615
Forms of Business Associations
617
PART 7
Formation of General Partnerships
618
Corporations
685
Nature of Partnership
619
Formation of a Partnership
619
34 Nature, Formation, and Powers
687
Relationships among Partners
623
Duties among Partners
623
Rights among Partners Chapter Summary Cases Questions Problems
625 628 630 634 634
32 Operation and Dissolution of General Partnerships
636
Nature of Corporations
688
Corporate Attributes
688
ClassiďŹ cation of Corporations
689
Formation of a Corporation
691
Organizing the Corporation
691
Formalities of Incorporation
693
Recognition or Disregard of Corporateness
695
Defective Incorporation
695
Piercing the Corporate Veil
696
Corporate Powers
697
Sources of Corporate Powers
697
Ultra Vires Acts
698
Liability for Torts and Crimes Chapter Summary Cases Questions Problems
698 699 701 706 707
Relationship of Partnership and Partners with Third Parties
636
Contracts of Partnership
636
Torts and Crimes of Partnership
638
Notice to a Partner
639
Liability of Incoming Partner
639
Dissociation and Dissolution of General Partnerships under RUPA
640
Dissociation
640
35 Financial Structure
710
Dissolution
641
Debt Securities
710
Dissociation without Dissolution
643
Authority to Use Debt Securities
710
Dissolution of General Partnerships under UPA
645
Types of Debt Securities
711
Dissolution
645
Equity Securities
711
Winding Up
646
Issuance of Shares
711
Continuation after Dissolution Chapter Summary Cases Questions Problems
647 648 651 659 659
Classes of Shares
714
Dividends and Other Distributions
716
Types of Dividends and Other Distributions
716
Legal Restrictions on Dividends and Other Distributions
717
Contents
Declaration and Payment of Distributions
xi
719
Liability for Improper Dividends and Distributions 719 Chapter Summary 720 Cases 722 Questions 728 Problems 728
36 Management Structure
731
Rights of Surety
798
Defenses of Surety and Principal Debtor Chapter Summary Cases Questions Problems
799 801 804 810 810
39 Bankruptcy
813
Corporate Governance
731
Federal Bankruptcy Law
813
Role of Shareholders
732
Case Administration—Chapter 3
814
Voting Rights of Shareholders
733
Creditors, the Debtor, and the Estate—Chapter 5
816
Enforcement Rights of Shareholders
737
Liquidation—Chapter 7
821
Role of Directors and Officers
738
Reorganization—Chapter 11
824
Function of the Board of Directors
739
Adjustments of Debts of Individuals—Chapter 13
826
Election and Tenure of Directors
740
Exercise of Directors’ Functions
740
Creditors’ Rights and Debtor’s Relief Outside of Bankruptcy
828
Officers
742
Creditors’ Rights
828
Duties of Directors and Officers Chapter Summary Cases Questions Problems
742 746 748 759 759
Debtor’s Relief Chapter Summary Cases Questions Problems
829 830 832 838 838
37 Fundamental Changes
762
PART 9
Charter Amendments
762
Regulation of Business
841
Combinations
763
Dissolution Chapter Summary Cases Questions Problems
766 768 770 777 777
40 Protection of Intellectual Property
843
PART 8
Debtor and Creditor Relations
779
38 Secured Transactions and Suretyship
781
Trade Secrets
843
Trade Symbols
844
Trade Names
847
Copyrights
847
Patents Chapter Summary Cases Questions Problems
850 851 853 860 860
Secured Transactions in Personal Property
781
Essentials of Secured Transactions
781
Classification of Collateral
782
Sherman Act
863
Attachment
784
Clayton Act
868
Perfection
786
Robinson-Patman Act
870
Priorities among Competing Interests
790
Default
794
Suretyship
796
Nature and Formation
796
Federal Trade Commission Act Chapter Summary Cases Questions Problems
871 872 874 885 885
41 Antitrust
863
xii
Contents
888
Trespass to Land
State and Federal Consumer Protection Agencies
888
Strict Liability for Abnormally Dangerous
Consumer Purchases
891
Activities
991
Consumer Credit Transactions
894
Problems Common to Private Causes of Action
991
Creditors’ Remedies Chapter Summary Cases Questions Problems
898 899 901 910 910
Federal Regulation of the Environment
991
The National Environmental Policy Act
991
The Clean Air Act
993
The Clean Water Act
995
913
Hazardous Substances
996
Labor Law
913
Employment Discrimination Law
915
Employee Protection Chapter Summary Cases Questions Problems
920 924 926 941 941
International Protection of the Ozone Layer Chapter Summary Cases Questions Problems
44 Securities Regulation
945
Jurisdiction over Actions of Foreign Governments 1015
Securities Act of 1933
946
Transacting Business Abroad
1016
Definition of a Security
946
Registration of Securities
947
Exempt Securities
948
Exempt Transactions for Issuers
949
Forms of Multinational Enterprises Chapter Summary Cases Questions Problems
1019 1020 1022 1028 1028
Exempt Transactions for Non-Issuers
952
PART 10
Liability
952
Property
1031
Securities Exchange Act of 1934
954
Disclosure
955
Liability Chapter Summary Cases Questions Problems
958 964 965 973 973
48 Introduction to Property, Property Insurance, Bailments, and Documents of Title
1033
42 Consumer Protection
43 Employment Law
47 International Business Law The International Environment
991
1000 1000 1002 1011 1011
1013 1013
Introduction to Property and Personal Property
1033
Kinds of Property
1033
976
Transfer of Title to Personal Property
1034
Common Law
976
Property Insurance
1036
Federal Securities Law Chapter Summary Cases Questions Problems
979 981 983 987 987
Fire and Property Insurance
1037
Nature of Insurance Contracts
1038
Bailments and Documents of Title
1039
Bailments
1039
990
Documents of Title Chapter Summary Cases Questions Problems
1043 1045 1048 1053 1053
45 Accountants’ Legal Liability
46 Environmental Law Common Law Actions for Environmental Damage
990
Nuisance
990
Contents
xiii
1057
Creation of Trusts
1097
Freehold Estates
1057
Termination of a Trust
1098
Leasehold Estates
1059
Decedents’ Estates
1098
Concurrent Ownership
1063
Wills
1099
Nonpossessory Interests Chapter Summary Cases Questions Problems
1065 1067 1068 1075 1075
Intestate Succession
1102
Administration of Estates Chapter Summary Cases Questions Problems
1103 1104 1105 1111 1111
49 Interests in Real Property
50 Transfer and Control of Real Property
1078
Transfer of Real Property
1078
Contract of Sale
1078
Deeds
1079
Secured Transactions
1081
Adverse Possession
1082
Public and Private Controls
1082
Zoning
1082
Eminent Domain
1083
Private Restrictions upon Land Use Chapter Summary Cases Questions Problems
1084 1085 1087 1092 1092
51 Trusts and Decedents’ Estates
1095
Trusts
1095
Types of Trusts
1095
Appendices
[1]
Appendix A The Constitution of the United States of America
[3]
Appendix B Uniform Commercial Code (Selected Provisions)
[10]
Appendix C Uniform Partnership Act
[105]
Appendix D Revised Uniform Partnership Act (Selected Provisions)
[111]
Appendix E Revised Model Business Corporation Act
[121]
Appendix F Dictionary of Legal Terms
[154]
Index
[175]