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Brief Contents
Preface xxvii Part VI Business Organizations,
Corporate Governance,
Part I Legal, Ethical, and Digital And Investor Protection . . . 437
Environment . . . . . . . . . . . . . . . . 1 25 Agency Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
1 Legal Heritage and the Digital Age . . . . . . . . . . . . . . . . . 2
26 Small Business, Entrepreneurship, and Partnerships . . 457
2 Constitutional Law for Business and E-Commerce . . . 19
27 Corporate Formation and Financing . . . . . . . . . . . . . . 477
3 Courts and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 40
28 Corporate Governance and Sarbanes-Oxley Act . . . . . 497
4 Judicial, Alternative, Administrative, and E-Dispute
29 Corporate Acquisitions and Multinational
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515
5 Intentional Torts and Negligence . . . . . . . . . . . . . . . . . 85
30 Limited Liability Companies and Limited Liability
6 Criminal Law and Cyber Crimes . . . . . . . . . . . . . . . . . 105 Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531
7 Intellectual Property and Cyber Piracy . . . . . . . . . . . . 130 31 Franchise and Special Forms of Business . . . . . . . . . . 548
8 Ethics and Social Responsibility of Business . . . . . . . . 154 32 Investor Protection, E-Securities, and Wall Street
Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
Part II Contracts and E-Commerce 169
9 Nature of Traditional and E-Contracts . . . . . . . . . . . . 170 Part VII Government Regulation
10 Agreement and Consideration . . . . . . . . . . . . . . . . . . . 183 And Employment Law . . . . . . 587
11 Capacity and Legality . . . . . . . . . . . . . . . . . . . . . . . . . 201 33 Antitrust Law and Unfair Trade Practices . . . . . . . . . . 588
12 Genuineness of Assent and Statute of Frauds . . . . . . . 217 34 Consumer Safety and Environmental Protection . . . . 606
13 Third-Party Rights and Discharge . . . . . . . . . . . . . . . 235 35 Labor, Worker Protection, and Immigration Laws . . . 628
14 Breach of Contract and Remedies . . . . . . . . . . . . . . . . 252 36 Equal Opportunity in Employment . . . . . . . . . . . . . . . 647
15 Digital Law and E-Commerce . . . . . . . . . . . . . . . . . . 270
Part VIII Property, Insurance, and
Part III Sales and Lease Contracts Estates . . . . . . . . . . . . . . . . . . 669
and Product Liability . . . . . . 285 37 Personal Property, Bailment, and Insurance . . . . . . . . 670
16 Formation of Sales and Lease Contracts . . . . . . . . . . . 286 38 Real Property, Landlord–Tenant Law,
17 Title to Goods and Risk of Loss . . . . . . . . . . . . . . . . . 300 and Land Use Regulation . . . . . . . . . . . . . . . . . . . . . . 689
18 Remedies for Breach of Sales and Lease Contracts . . . 312 39 Family Law, Wills, and Trusts . . . . . . . . . . . . . . . . . . 712
19 Warranties and Product Liability . . . . . . . . . . . . . . . . 326
Part IX Accounting Profession . . . . 735
Part IV Negotiable Instruments, 40 Accountants’ Duties and Liability . . . . . . . . . . . . . . . . 736
Banking, and Electronic
Part X Global Environment . . . . . . . 753
Financial Transactions . . . . 347
41 International and World Trade Law . . . . . . . . . . . . . . 754
20 Creation and Transfer of Negotiable Instruments . . . . 348
21 Holder in Due Course and Liability of Parties . . . . . . 366 Appendix The Constitution
22 Banking System and Electronic Financial Of The United States
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 Of America . . . . . . . . . . . 777
Part V Credit, Secured Transactions, Case Index . . . . . . . . . . . . . . . . . . . . . . 785
and Bankruptcy . . . . . . . . . . . 395 Subject Index . . . . . . . . . . . . . . . . . . . 789
23 Credit, Real Property Financing, and Secured
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
24 Bankruptcy and Reorganization . . . . . . . . . . . . . . . . . . 416
vii
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Contents
Preface xxvii Doctrine of Separation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . 21

Checks and Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Supremacy Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Part I Legal, Ethical, and Digital Case 2.1 • U.S. Supreme Court Case • Supremacy Clause •
Mutual Pharmaceutical Company, Inc. v. Bartlett . . . . . . . . . . 23
Environment . . . . . . . . . . . . . . 1 Commerce Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Commerce with Native Americans . . . . . . . . . . . . . . . . . . . . . . . . 24
1 Legal Heritage and the Foreign Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Digital Age�� 2 Interstate Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Landmark U.S. Supreme Court Case • Heart of Atlanta Motel
Introduction to Legal Heritage and The Digital Age . . . . . . 3
v. United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
What Is Law? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
State Police Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Definition of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dormant Commerce Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Functions of the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
E-Commerce and the Constitution . . . . . . . . . . . . . . . . . . 26
Fairness of the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Digital Law • E-Commerce and the Commerce Clause . . . . . . . . . . . 27
Flexibility of the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bill of Rights and other Amendments to
Landmark U.S. Supreme Court Case • Brown v. Board of Education . . 5
the U.S. Constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Schools of Jurisprudential Thought . . . . . . . . . . . . . . . . . . 6
Freedom of Speech . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Natural Law School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fully Protected Speech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Historical School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Case 2.2 • U.S. Supreme Court Case • Free Speech and Violent
Analytical School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Video Games • Brown, Governor of California v. Entertainment
Sociological School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Merchants Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Command School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Limited Protected Speech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Critical Legal Studies School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Unprotected Speech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Law and Economics School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Case 2.3 • U.S. Supreme Court Case • Free Speech • Snyder v. Phelps . . . 31
Global Law • Command School of Jurisprudence of Cuba . . . . . . . . . 8
Freedom of Religion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
History of American Law . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Establishment Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
English Common Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Free Exercise Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Landmark Law • Adoption of English Common Law in America . . . . . 9
Equal Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Global Law • Civil Law System of France and Germany . . . . . . . . . . 10
Standards of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sources of Law in the United States . . . . . . . . . . . . . . . . 10
Case 2.4 • U.S. Supreme Court Case • Equality •
Constitutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
United States v. Windsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Due Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Substantive Due Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Contemporary Environment • How a Bill Becomes Law . . . . . . . . . . 11
Procedural Due Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
State Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Privileges and Immunities . . . . . . . . . . . . . . . . . . . . . . . . 36
Ordinances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Law • Human Rights Violations in Myanmar . . . . . . . . . . . . . 36
Executive Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . . 37
Regulations and Orders of Administrative Agencies . . . . . . . . . . 12
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . . 37
Judicial Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Priority of Law in the United States . . . . . . . . . . . . . . . . . . . . . . . 14
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Digital Law • Law in the Digital Age . . . . . . . . . . . . . . . . . . . . . . . . 14
Critical Legal Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Defining Critical Legal Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3 Courts And Jurisdiction�� 40
Socratic Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Introduction to Courts and Jurisdiction . . . . . . . . . . . . . . 41
IRAC Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 State Court Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
U.S. Supreme Court Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Limited-Jurisdiction Trial Courts . . . . . . . . . . . . . . . . . . . . . . . . . 41
Case 1.1 • U.S. Supreme Court Case • Voting Rights Act • Shelby General-Jurisdiction Trial Courts . . . . . . . . . . . . . . . . . . . . . . . . . 41
County, Texas v. Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Intermediate Appellate Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . . 17 Highest State Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . . 17 Business Environment • Delaware Courts Specialize in
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Business Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Federal Court System . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Special Federal Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Contemporary Environment • Foreign Intelligence
2 Constitutional Law for Business Surveillance Court (FISA Court) . . . . . . . . . . . . . . . . . . . . . . . 46
and E-Commerce �� 19 U.S. District Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Introduction to Constitutional Law for Business and U.S. Courts of Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Supreme Court of The United States . . . . . . . . . . . . . . . . 47
Constitution of the United States of America . . . . . . . . . 20 Contemporary Environment • Process of Choosing
Federalism and Delegated Powers . . . . . . . . . . . . . . . . . . . . . . . . 21 a U.S. Supreme Court Justice . . . . . . . . . . . . . . . . . . . . . . . . . 48
ix
x Contents
Jurisdiction of the U.S. Supreme Court . . . . . . . . . . . . . . . . . . . . 48 Closing Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Decisions of the U.S. Supreme Court . . . . . . . . . . . . . . . . . . . . . . 48 Jury Instructions, Deliberation, and Verdict . . . . . . . . . . . . . . . . . 72
Contemporary Environment • “I’ll Take You to the Entry of Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
U.S. Supreme Court!” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 E-Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Jurisdiction of Federal Courts . . . . . . . . . . . . . . . . . . . . . 50 Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Federal Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Case 4.4 • U.S. Supreme Court Case • Appeal •
Diversity of Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Cavazos, Acting Warden v. Smith . . . . . . . . . . . . . . . . . . . . . . 73
Case 3.1 • U.S. Supreme Court Case • Diversity of Citizenship • Global Law • British Legal System . . . . . . . . . . . . . . . . . . . . . . . . . 74
Hertz Corporation v. Friend . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Alternative Dispute Resolution . . . . . . . . . . . . . . . . . . . . 75
Jurisdiction of State Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Standing to Sue, Jurisdiction, and Venue . . . . . . . . . . . . . 53 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Standing to Sue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Landmark Law • Federal Arbitration Act . . . . . . . . . . . . . . . . . . . . . 76
In Personam Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Arbitration Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Case 3.2 • Federal Court Case • Service of Process • Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Facebook, Inc. v. Banana Ads LLC . . . . . . . . . . . . . . . . . . . . . . 53 Case 4.5 • U.S. Supreme Court Case • Arbitration •
Long-Arm Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Nitro-Lift Technologies, L.L.C. v. Howard . . . . . . . . . . . . . . . . . 77
Landmark U.S. Supreme Court Case • International Shoe Critical Legal Thinking Case • Class Action Waiver •
Company v. State of Washington . . . . . . . . . . . . . . . . . . . . . . 54 AT&T Mobility LLC v. Concepcion . . . . . . . . . . . . . . . . . . . . . . 78
In Rem Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 E-Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Quasi In Rem Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Administrative Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Cabinet-Level Departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Forum-Selection and Choice-of-Law Clauses . . . . . . . . . . . . . . . 56 Federal Administrative Agencies . . . . . . . . . . . . . . . . . . . . . . . . . 80
Jurisdiction in Cyberspace . . . . . . . . . . . . . . . . . . . . . . . 56 Landmark Law • Administrative Procedure Act . . . . . . . . . . . . . . . . 80
Case 3.3 • Federal Court Case • Jurisdiction over an Internet Administrative Law Judge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Seller • Chanel, Inc. v. Banks . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Delegation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Global Law • Judicial System of Japan . . . . . . . . . . . . . . . . . . . . . . 58 State and Local Administrative Agencies . . . . . . . . . . . . . . . . . . . 80
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . . 58 Judicial Review of Administrative Agency Actions . . . . . . . . . . . 81
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . . 59 Global Law • Solving Tribal Disputes, Mali, West Africa . . . . . . . . . . 81
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . . 82
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . . 82
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4 Judicial, Alternative,
Administrative, and E-Dispute
Resolution�� 61 5 Intentional Torts and
Introduction to Judicial, Alternative, Administrative, Negligence�� 85
and E-Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . 62 Introduction to Intentional Torts and Negligence . . . . . . . 86
Pretrial Litigation Process . . . . . . . . . . . . . . . . . . . . . . . 62 Intentional Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Pleadings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Assault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Complaint and Summons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Battery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Answer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 False Imprisonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Cross-Complaint and Reply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Shoplifting and Merchant Protection Statutes . . . . . . . . . . . . . . . 87
Intervention and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Case 5.1 • State Court Case • False Imprisonment • Wal-Mart
Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Stores, Inc. v. Cockrell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Case 4.1 • U.S. Supreme Court Case • Class Action Lawsuit • Misappropriation of the Right to Publicity . . . . . . . . . . . . . . . . . 88
Wal-Mart Stores, Inc. v. Dukes . . . . . . . . . . . . . . . . . . . . . . . . 65 Invasion of the Right to Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Defamation of Character . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Disparagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Deposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Intentional Misrepresentation (Fraud) . . . . . . . . . . . . . . . . . . . . . 89
Interrogatories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Intentional Infliction of Emotional Distress . . . . . . . . . . . . . . . . 90
Production of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Malicious Prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Physical or Mental Examination . . . . . . . . . . . . . . . . . . . . . . . . . 67 Unintentional Torts (Negligence) . . . . . . . . . . . . . . . . . . 91
Case 4.2 • State Court Case • Discovery • 1. Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Averyt v. Wal-Mart Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 67 2. Breach of the Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Pretrial Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Ethics • Ouch! McDonald’s Coffee Is Too Hot! . . . . . . . . . . . . . . . . . 92
Motion for Judgment on the Pleadings . . . . . . . . . . . . . . . . . . . . 68 3. Injury to Plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Motion for Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4. Actual Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Case 4.3 • State Court Case • Summary Judgment • Case 5.2 • State Court Case • Negligence •
Murphy v. McDonald’s Restaurants of Ohio . . . . . . . . . . . . . . . 69 Carter v. Indianapolis Power & Light Company
Settlement Conference . . . . . . . . . . . . . . . . . . . . . . . . . 69 and Indiana Bell Telephone Company, Inc. . . . . . . . . . . . . . . . 94
Contemporary Environment • Cost–Benefit Analysis of a Lawsuit . . . 70 5. Proximate Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Critical Legal Thinking Case • Proximate Cause •
Jury Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Palsgraf v. The Long Island Railroad Company . . . . . . . . . . . . . 95
Opening Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Case 5.3 • Federal Court Case • Duty of Care •
The Plaintiff ’s Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 James v. Meow Media, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
The Defendant’s Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Special Negligence Doctrines . . . . . . . . . . . . . . . . . . . . . 96
Rebuttal and Rejoinder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Professional Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Contents xi
Negligent Infliction of Emotional Distress . . . . . . . . . . . . . . . . . 97 Critical Legal Thinking Case • Exclusionary Rule • Arizona v. Gant . . . . 122
Negligence Per Se . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Fifth Amendment Privilege Against Self-Incrimination . . 123
Res Ipsa Loquitur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Miranda Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Attractive Nuisance Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Attorney–Client Privilege and Other Privileges . . . . . . . . . . . . . 124
Case 5.4 • State Court Case • Negligence • Immunity from Prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Choate v. Indiana Harbor Belt Railroad Company . . . . . . . . . . 98 Other Constitutional Protections . . . . . . . . . . . . . . . . . 125
Good Samaritan Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Fifth Amendment Protection Against Double Jeopardy . . . . . . 125
Defenses Against Negligence . . . . . . . . . . . . . . . . . . . . 100 Sixth Amendment Right to a Public Jury Trial . . . . . . . . . . . . . 125
Superseding or Intervening Event . . . . . . . . . . . . . . . . . . . . . . . 100 Eighth Amendment Protection Against Cruel and
Assumption of the Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Unusual Punishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Case 5.5 • State Court Case • Assumption of the Risk • Global Law • France Does Not Impose the Death Penalty . . . . . . . 126
Lilya v. The Greater Gulf State Fair, Inc. . . . . . . . . . . . . . . . . . 100 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 126
Contributory and Comparative Negligence . . . . . . . . . . . . . . . . 101 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 127
Strict Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 102 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 102
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 7 Intellectual Property and
Cyber Piracy �� 130
Introduction to Intellectual Property and Cyber Piracy . . 131
6 Criminal Law and Cyber Crimes�� 105 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Introduction to Criminal Law and Cyber Crimes . . . . . . . 106 Trade Secret . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Definition of a Crime . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Reverse Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Penal Codes and Regulatory Statutes . . . . . . . . . . . . . . . . . . . . . 106 Civil Trade Secret Law: Misappropriation of a Trade Secret . . . 132
Parties to a Criminal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Criminal Trade Secret Law: Economic Espionage Act . . . . . . . 133
Classification of Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Ethics • Coca-Cola Employee Tries to Sell Trade Secrets
Intent Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 to Pepsi-Cola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Nonintent Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Contemporary Environment • Criminal Acts as U.S. Court of Appeals for the Federal Circuit . . . . . . . . . . . . . . 134
the Basis for Tort Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Patent Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Criminal Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Subject Matter That Can Be Patented . . . . . . . . . . . . . . . . . . . . 134
Arrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Requirements for Obtaining a Patent . . . . . . . . . . . . . . . . . . . . . 135
Indictment or Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Case 7.1 • U.S. Supreme Court Case • Patent • Association for
Arraignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Molecular Pathology v. Myriad Genetics, Inc. . . . . . . . . . . . . . 136
Plea Bargain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Patent Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Criminal Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Provisional Patent Application . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Common Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Patent Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Murder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Design Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Case 6.1 • State Court Case • Murder • State of Ohio v. Wilson . . . 113 Contemporary Environment • Leahy-Smith America
Robbery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Invents Act (AIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Burglary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Copyright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Larceny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Tangible Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Registration of Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Receiving Stolen Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Copyright Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Arson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Civil Copyright Law: Copyright Infringement . . . . . . . . . . . . . 140
Business and White-Collar Crimes . . . . . . . . . . . . . . . . . 115 Critical Legal Thinking Case • Cyber Piracy • BMG Music v. Gonzalez . . . . 141
Forgery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Fair Use Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Embezzlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Case 7.2 • U.S. Supreme Court Case • Copyright •
Bribery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Kirtsaeng v. John Wiley & Sons, Inc. . . . . . . . . . . . . . . . . . . . 142
Extortion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Criminal Copyright Law: No Electronic Theft Act . . . . . . . . . . 142
Criminal Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Digital Law • Digital Millennium Copyright Act . . . . . . . . . . . . . . . 143
Mail Fraud and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Money Laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Registration of a Mark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Racketeer Influenced and Corrupt Organizations Act (RICO) ��117 Types of Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Criminal Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Distinctiveness or Secondary Meaning . . . . . . . . . . . . . . . . . . . . 146
Business Environment • Corporate Criminal Liability . . . . . . . . . . . 118 Trademark Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Cyber Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Case 7.3 • Federal Court Case • Trademark Infringement • Intel
Information Infrastructure Protection Act (IIP Act) . . . . . . . . . 119 Corporation v. Intelsys Software, LLC . . . . . . . . . . . . . . . . . . 146
Digital Law • Internet and Identity Theft . . . . . . . . . . . . . . . . . . . . 119 Generic Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Counterfeit Access Device and Computer Fraud Diluting, Blurring, or Tarnishing Trademarks . . . . . . . . . . . . . . 149
and Abuse Act (CFAA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Case 7.4 • Federal Court Case • Dilution of a Trademark • V Secret
Case 6.2 • Federal Court Case • Computer Crimes • Catalogue, Inc. and Victoria’s Secret Stores,
United States v. Barrington . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Inc. v. Moseley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Fourth Amendment Protection Against Unreasonable Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 150
Search and Seizure . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Global Law • International Protection of Intellectual Property . . . . 151
Exclusionary Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 152
Case 6.3 • U.S. Supreme Court Case • Search • Maryland v. King . . 121 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Searches of Business Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
xii Contents
8 Ethics and Social Responsibility Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Critical Legal Thinking Case • Equity • Romasanta v. Mitton . . . . . . 180
of Business�� 154 Global Law • International Contract Law in India . . . . . . . . . . . . . 180
Introduction to Ethics and Social Responsibility Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 181
of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 181
Ethics and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Case 8.1 • U.S. Supreme Court Case • Business Ethics • Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Wal-Mart Stores, Inc. v. Samara Brothers, Inc. . . . . . . . . . . . 156
Business Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Ethical Fundamentalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 10 Agreement And Consideration �� 183
Critical Legal Thinking Case • Whistleblower Statute • United States
Introduction to Agreement and Consideration . . . . . . . . 184
ex. rel. Estate of George Couto v. Bayer Corporation . . . . . . . 157
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Utilitarianism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Kantian Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Express Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Rawls’s Social Justice Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Implied Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Ethical Relativism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Communication of an Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Ethics • Bernie Madoff Steals Billions of Dollars in Fraudulent
Case 10.1 • Federal Court Case • Contract • Marder v. Lopez . . . . . 186
Investment Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Special Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Social Responsibility of Business . . . . . . . . . . . . . . . . . 160
Advertisements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Maximize Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Ethics • Is the Outsourcing of U.S. Jobs to Foreign
Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Countries Ethical? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Termination of an Offer . . . . . . . . . . . . . . . . . . . . . . . . . 188
Moral Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Revocation of an Offer by the Offeror . . . . . . . . . . . . . . . . . . . . 188
Stakeholder Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Rejection of an Offer by the Offeree . . . . . . . . . . . . . . . . . . . . . 188
Corporate Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Counteroffer by the Offeree . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Ethics • Sarbanes-Oxley Act Requires Public
Case 10.2 • State Court Case • Counteroffer • Ehlen v. Melvin . . . . 189
Companies to Adopt Codes of Ethics . . . . . . . . . . . . . . . . . . 162
Business Environment • Option Contract . . . . . . . . . . . . . . . . . . . . 189
Case 8.2 • Supreme Court Case • Humanitarian Violations •
Termination of an Offer by Operation of Law . . . . . . . . . . . . . . 190
Kiobel v. Royal Dutch Petroleum Company . . . . . . . . . . . . . . 164
Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Global Law • Conducting Business in Russia . . . . . . . . . . . . . . . . 165
Who Can Accept an Offer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 166
Unequivocal Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Mirror Image Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Time of Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Mode of Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Requirements of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 193
Part II Contracts and Gift Promise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
E-Commerce . . . . . . . . . . . . . 169 Case 10.3 • State Court Case • Gifts and Gift Promises •
Cooper v. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Promises That Lack Consideration . . . . . . . . . . . . . . . . 194
9 Nature of Traditional and Illegal Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
E-Contracts�� 170 Illusory Promise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Introduction to Nature of Traditional and E-Contracts . . . 171 Preexisting Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Definition of a Contract . . . . . . . . . . . . . . . . . . . . . . . . 171 Past Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Parties to a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Business Environment • Special Business Contracts . . . . . . . . . . . 196
Elements of a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Defenses to the Enforcement of a Contract . . . . . . . . . . . . . . . . 172 Equity: Promissory Estoppel . . . . . . . . . . . . . . . . . . . . . 196
Sources of Contract Law . . . . . . . . . . . . . . . . . . . . . . . 172 Global Law • Contract Law of China . . . . . . . . . . . . . . . . . . . . . . . 197
Common Law of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 198
Uniform Commercial Code (UCC) . . . . . . . . . . . . . . . . . . . . . . 172 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 198
The Restatement of the Law of Contracts . . . . . . . . . . . . . . . . . 173 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Objective Theory of Contracts . . . . . . . . . . . . . . . . . . . 173 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Case 9.1 • Federal Court Case • Contract • Facebook, Inc. v.
Winklevoss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 11 Capacity and Legality�� 201
Digital Law • Electronic Contracts and Licenses . . . . . . . . . . . . . . 175 Introduction to Capacity and Legality . . . . . . . . . . . . . . 202
Classifications of Contracts . . . . . . . . . . . . . . . . . . . . . 175 Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Bilateral and Unilateral Contracts . . . . . . . . . . . . . . . . . . . . . . . 175 Infancy Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Formal and Informal Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 176 Disaffirmance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Valid, Void, Voidable, and Unenforceable Contracts . . . . . . . . . . 176 Duties of Restoration and Restitution . . . . . . . . . . . . . . . . . . . . 203
Executed and Executory Contracts . . . . . . . . . . . . . . . . . . . . . . 177 Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
Express and Implied Contracts . . . . . . . . . . . . . . . . . . . 177 Parents’ Liability for Their Children’s Contracts . . . . . . . . . . . . 204
Express Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Necessaries of Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Implied-in-Fact Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Contemporary Environment • Special Types of Minors’ Contracts . 204
Case 9.2 • Federal Court Case • Implied-in-Fact Contract • Wrench Mentally Incompetent Persons . . . . . . . . . . . . . . . . . . . 204
LLC v. Taco Bell Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 177 Adjudged Insane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Implied-in-Law Contract (Quasi-Contract) . . . . . . . . . . . . . . . 178 Insane But Not Adjudged Insane . . . . . . . . . . . . . . . . . . . . . . . . 205
Contents xiii
Case 11.1 • State Court Case • Mental Capacity • UCC Statutes of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Campbell v. Carr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Formality of the Writing . . . . . . . . . . . . . . . . . . . . . . . . 228
Intoxicated Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Required Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Integration of Several Writings . . . . . . . . . . . . . . . . . . . . . . . . . 229
Contracts Contrary to Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Interpreting Contract Words and Terms . . . . . . . . . . . . . . . . . . 229
Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Parol Evidence Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Contracts to Commit Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Merger, or Integration, Clause . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Gambling Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Exceptions to the Parol Evidence Rule . . . . . . . . . . . . . . . . . . . . 230
Effect of Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Case 12.3 • State Court Case • Parol Evidence Rule • Yarde
Ethics • Illegal Gambling Contract . . . . . . . . . . . . . . . . . . . . . . . . 208 Metals, Inc. v. New England Patriots Limited Partnership . . . . 230
Contracts Contrary to Public Policy . . . . . . . . . . . . . . . . . . . . . . 208 Equitable Doctrine: Promissory Estoppel . . . . . . . . . . . . 231
Critical Legal Thinking Case • Murder and Life Insurance • Global Law • Seals Used as Signatures in Asia . . . . . . . . . . . . . . . 231
Flood v. Fidelity & Guaranty Life Insurance Company . . . . . . . 209 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 232
Special Business Contracts and Licensing Statutes . . . 209 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 232
Contract in Restraint of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Licensing Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Case 11.2 • District of Columbia Court Case • Licensing Statute •
Sturdza v. United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . 210
Exculpatory Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Case 11.3 • Federal Court Case • Release Contract • 13 Third-Party Rights and
Lin v. Spring Mountain Adventures, Inc. . . . . . . . . . . . . . . . . . 212 Discharge�� 235
Business Environment • Covenants Not to Compete . . . . . . . . . . . 212 Introduction to Third-Party Rights and Discharge . . . . . . 236
Unconscionable Contracts . . . . . . . . . . . . . . . . . . . . . . 213 Assignment of a Right . . . . . . . . . . . . . . . . . . . . . . . . . 236
Elements of Unconscionability . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Case 11.4 • State Court Case • Unconscionable Contract • Personal Service Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Stoll v. Xiong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Assignment of a Future Right . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 214 Contract Where an Assignment Would Materially
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 215 Alter the Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Assignment of a Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Effect of an Assignment of a Right . . . . . . . . . . . . . . . . . . . . . . 238
Notice of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
12 Genuineness Of Assent And Anti-Assignment Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Statute Of Frauds�� 217 Approval Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Introduction to Genuineness of Assent and Statute Successive Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
of Frauds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Delegation of a Duty . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Duties That Can and Cannot Be Delegated . . . . . . . . . . . . . . . 240
Unilateral Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Effect of Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Mutual Mistake of a Material Fact . . . . . . . . . . . . . . . . . . . . . . . 219 Anti-Delegation Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Mutual Mistake of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Assignment and Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 241
Elements of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Intended Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
1. Misrepresentation of a Material Fact . . . . . . . . . . . . . . . . . . . 219 Donee Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
2. Intent to Deceive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Creditor Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
3. Reliance on the Misrepresentation . . . . . . . . . . . . . . . . . . . . . 220 Incidental Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
4. Injury to the Innocent Party . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Case 13.1 • Federal Court Case • Third-Party Beneficiary •
Fraud in the Inception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Does I-XI, Workers in China, Bangladesh, Indonesia,
Fraud in the Inducement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Swaziland, and Nicaragua v. Wal-Mart Stores, Inc. . . . . . . . . 244
Fraud by Concealment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Silence as Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Misrepresentation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Condition Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Innocent Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Condition Precedent Based on Satisfaction . . . . . . . . . . . . . . . . 245
Case 12.1 • State Court Case • Fraud • Krysa v. Payne . . . . . . . . . . 222 Business Environment • “Time Is of the Essence”
Duress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Equitable Doctrine: Undue Influence . . . . . . . . . . . . . . . 223 Condition Subsequent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Statute Of Frauds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Concurrent Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Writing Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Implied Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Contracts Involving Interests in Real Property . . . . . . . . . . . . . . 224 Discharge of Performance . . . . . . . . . . . . . . . . . . . . . . 247
Equitable Exception: Part Performance . . . . . . . . . . . . . . . . . . . 225 Discharge by Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Critical Legal Thinking Case • Doctrine of Part Performance • Discharge by Impossibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Sutton v. Warner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Force Majeure Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
One-Year Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 248
Ethics • Bonus Lost Because of the Statute of Frauds . . . . . . . . . . 226 Global Law • Negotiation of Contracts
Guaranty Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 in Foreign Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Case 12.2 • State Court Case • Guaranty Contract • Page v. Gulf Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 249
Coast Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 250
Agents’ Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
Promises Made in Consideration of Marriage . . . . . . . . . . . . . . 228 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
xiv Contents
14 Breach Of Contract And License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

E-License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Remedies�� 252 Licensing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Introduction to Breach of Contract and
Privacy in Cyberspace . . . . . . . . . . . . . . . . . . . . . . . . . 277
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Electronic Communications Privacy Act . . . . . . . . . . . . . . . . . . 278
Performance and Breach . . . . . . . . . . . . . . . . . . . . . . . 253
Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Complete Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Domain Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Substantial Performance: Minor Breach . . . . . . . . . . . . . . . . . . . 254
Registration of Domain Names . . . . . . . . . . . . . . . . . . . . . . . . . 278
Inferior Performance: Material Breach . . . . . . . . . . . . . . . . . . . . 254
Domain Name Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Case 14.1 • State Court Case • Breach of Contract • Turner
Digital Law • New Top-Level Domain Names . . . . . . . . . . . . . . . . . 279
Broadcasting System, Inc. v. McDavid . . . . . . . . . . . . . . . . . . 255
Country Domain Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Anticipatory Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Cybersquatting on Domain Names . . . . . . . . . . . . . . . . . . . . . . 280
Monetary Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Digital Law • Anticybersquatting Consumer Protection Act . . . . . . 281
Compensatory Damages . . . . . . . . . . . . . . . . . . . . . . . . 256
Case 15.3 • National Arbitration Forum • Domain Name •
Sale of a Good . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
New York Yankees Partnership d/b/a
Construction Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
The New York Yankees Baseball Club . . . . . . . . . . . . . . . . . . 281
Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
Global Law • Internet in Foreign Countries . . . . . . . . . . . . . . . . . . 282
Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . 258
Disclaimer of Consequential Damages . . . . . . . . . . . . . . . . . . . . 258
Nominal Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
Mitigation of Damages . . . . . . . . . . . . . . . . . . . . . . . . . 259
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
Critical Legal Thinking Case • Liquidated Damages •
Uzan v. 845 UN Limited Partnership . . . . . . . . . . . . . . . . . . . 260
Rescission and Restitution . . . . . . . . . . . . . . . . . . . . . . 261 Part III Sales and Lease Contracts
Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 and Product Liability . . . . 285
Case 14.2 • State Court Case • Specific Performance •
Alba v. Kaufmann . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 16 Formation Of Sales And Lease
Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Contracts . . . . . . . . . . . . . . . . . . . 286
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Introduction to Formation of Sales and
Arbitration of Contract Disputes . . . . . . . . . . . . . . . . . . 264
Lease Contracts�� 287
Case 14.3 • Federal Court Case • Arbitration of a
Uniform Commercial Code . . . . . . . . . . . . . . . . . . . . . . 287
Contract Dispute • Mance v. Mercedes-Benz USA . . . . . . . . . 264
Landmark Law • Uniform Commercial Code (UCC) . . . . . . . . . . . . 288
Torts Associated With Contracts . . . . . . . . . . . . . . . . . 265
Article 2 (Sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Intentional Interference with Contractual Relations . . . . . . . . . 265
What Is a Sale? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Breach of the Implied Covenant of Good Faith and
What Are Goods? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Fair Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Goods Versus Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Case 14.4 • State Court Case • Bad Faith Tort •
Case 16.1 • State Court Case • Good or Service •
Mitchell v. Fortis Insurance Company . . . . . . . . . . . . . . . . . . 266
Brandt v. Boston Scientific Corporation and
Sarah Bush Lincoln Health Center . . . . . . . . . . . . . . . . . . . . . 289
Who Is a Merchant? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Article 2A (Leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Definition of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Finance Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Formation of Sales and Lease Contracts: Offer . . . . . . . 291
15 Digital Law And E-Commerce�� 270 Open Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Introduction to Digital Law and E-Commerce . . . . . . . . . 271 Contemporary Environment • UCC Firm Offer Rule . . . . . . . . . . . . . 292
Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
World Wide Web . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Formation of Sales and Lease Contracts:
Email Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Digital Law • Regulation of Email Spam . . . . . . . . . . . . . . . . . . . . 272 Method and Manner of Acceptance . . . . . . . . . . . . . . . . . . . . . . 293
Case 15.1 • Federal Court Case • Email Spam • Facebook, Inc. Contemporary Environment • UCC Permits
v. Porembski . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Additional Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Internet Service Provider (ISP) . . . . . . . . . . . . . . . . . . . . . . . . . 273 Accommodation Shipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
E-Commerce and Web Contracts . . . . . . . . . . . . . . . . . . 273 Business Environment • UCC “Battle of the Forms” . . . . . . . . . . . . 294
Case 15.2 • State Court Case • Web Contract • Hubbert v. Dell Ucc Statute of Frauds . . . . . . . . . . . . . . . . . . . . . . . . . 294
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 Exceptions to the UCC Statute of Frauds . . . . . . . . . . . . . . . . . 295
Digital Law • E-SIGN Act: Statute of Frauds and Business Environment • UCC Written Confirmation Rule . . . . . . . . 295
Electronic Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 When Written Modification Is Required . . . . . . . . . . . . . . . . . . 295
Digital Law • E-SIGN Act: E-Signatures and Parol Evidence Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Electronic Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 Electronic Sales and Lease Contracts . . . . . . . . . . . . . . 297
Counteroffers Ineffectual Against Electronic Agent . . . . . . . . . 275 Global Law • Letters of Credit and International Trade . . . . . . . . . 297
E-Licensing of Software and Information Rights . . . . . . . 276 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 298
Digital Law • Uniform Computer Information Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 298
Transactions Act (UCITA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Contents xv
17 Title To Goods And Risk Of Loss �� 300 Right to Obtain Specific Performance . . . . . . . . . . . . . . . . . . . . 320
Introduction to Title to Goods and Risk of Loss�� 301 Contemporary Environment • Buyer’s and Lessee’s
Identification of Goods and Passage of Title . . . . . . . . . 301 Right to Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Identification of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Right to Replevy Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Passage of Title to Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302 Right to Cancel a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Shipment and Destination Contracts . . . . . . . . . . . . . . . . . . . . . 302 Right to Recover Damages for
Delivery of Goods Without Moving Them . . . . . . . . . . . . . . . . 302 Nondelivery or Repudiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Business Environment • Commonly Used Shipping Terms . . . . . . . 303 Right to Recover Damages for Accepted
Risk of Loss Where There Is No Breach of the Sales Nonconforming Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 Additional Performance Issues . . . . . . . . . . . . . . . . . . . 322
Carrier Cases: Movement of Goods . . . . . . . . . . . . . . . . . . . . . . 304 Assurance of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Noncarrier Cases: No Movement of Goods . . . . . . . . . . . . . . . . 304 Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Goods in the Possession of a Bailee . . . . . . . . . . . . . . . . . . . . . . 305 Agreements Affecting Remedies . . . . . . . . . . . . . . . . . . . . . . . . 323
Risk of Loss Where There Is a Breach of Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
the Sales Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 Ethics • UCC Doctrine of Unconscionability . . . . . . . . . . . . . . . . . . 323
Seller in Breach of a Sales Contract . . . . . . . . . . . . . . . . . . . . . . 305 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 323
Buyer in Breach of a Sales Contract . . . . . . . . . . . . . . . . . . . . . . 305 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 324
Risk of Loss in Conditional Sales . . . . . . . . . . . . . . . . . 305 Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
Sale on Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Global Law • United Nations Convention on Contracts for the
International Sale of Goods (CISG) . . . . . . . . . . . . . . . . . . . . 306 19 Warranties and
Sale or Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306
Consignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 Product Liability�� 326
Risk of Loss in Lease Contracts . . . . . . . . . . . . . . . . . . 307 Introduction to Warranties and
Business Environment • Insuring Goods Against Risk of Loss . . . . 307 Product Liability�� 327
Sale of Goods by Nonowners . . . . . . . . . . . . . . . . . . . . . 308 Express Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Stolen Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 Creation of an Express Warranty . . . . . . . . . . . . . . . . . . . . . . . . 327
Fraudulently Obtained Goods . . . . . . . . . . . . . . . . . . . . . . . . . . 308 Statement of Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Entrustment Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 Damages Recoverable for Breach of Warranty . . . . . . . . . . . . . . 328
Case 17.1 • State Court Case • Entrustment Rule • Implied Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Lindholm v. Brant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 Implied Warranty of Merchantability . . . . . . . . . . . . . . . . . . . . . 328
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 310 Ethics • Implied Warranty of Merchantability . . . . . . . . . . . . . . . . 329
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 310 Implied Warranty of Fitness for a Particular Purpose . . . . . . . . 330
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 Warranty Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Conspicuous Display of Disclaimer . . . . . . . . . . . . . . . . . . . . . . 331
Case 19.1 • State Court Case • Warranty Disclaimer •
Roberts v. Lanigan Auto Sales . . . . . . . . . . . . . . . . . . . . . . . . 332
18 Remedies for Breach of Magnuson-Moss Warranty Act . . . . . . . . . . . . . . . . . . . . . . . . . 332
Sales and Lease Contracts . . . . . 312 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Introduction to Remedies for Breach of Sales Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
and Lease Contracts �� 313 Strict Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Seller and Lessor Performance . . . . . . . . . . . . . . . . . . . 313 Liability Without Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334
Place of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 All in the Chain of Distribution Are Liable . . . . . . . . . . . . . . . . 334
Perfect Tender Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 Parties Who Can Recover for Strict Liability . . . . . . . . . . . . . . 334
Contemporary Environment • Seller’s and Lessor’s Right to Cure . . 314 Damages Recoverable for Strict Liability . . . . . . . . . . . . . . . . . . 335
Installment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 Product Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Destruction of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 Defect in Manufacture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Ethics • UCC Imposes Duties of Good Faith and Reasonableness . 315 Case 19.2 • State Court Case • Defect in Manufacture •
Buyer and Lessee Performance . . . . . . . . . . . . . . . . . . . 315 Shoshone Coca-Cola Bottling Company v. Dolinski . . . . . . . . 336
Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Defect in Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Critical Legal Thinking Case • Strict Liability •
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Domingue v. Cameco Industries, Inc. . . . . . . . . . . . . . . . . . . 337
Revocation of Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Crashworthiness Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Seller and Lessor Remedies . . . . . . . . . . . . . . . . . . . . . 317 Failure to Warn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Right to Withhold Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Case 19.3 • State Court Case • Failure to Warn •
Right to Stop Delivery of Goods in Transit . . . . . . . . . . . . . . . . 317 Patch v. Hillerich & Bradsby Company . . . . . . . . . . . . . . . . . . 339
Right to Reclaim Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Defect in Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Right to Dispose of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Other Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Unfinished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Defenses to Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Right to Recover the Purchase Price or Rent . . . . . . . . . . . . . . . 318 Case 19.4 • Federal Court Case • Generally Known
Right to Recover Damages for Breach of Contract . . . . . . . . . . 318 Danger • Thompson v. Sunbeam Products, Inc. . . . . . . . . . . . 341
Right to Cancel a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Statute of Limitations and Statute of Repose . . . . . . . . . . . . . . . 341
Business Environment • Lost Volume Seller . . . . . . . . . . . . . . . . . 319 Plaintiff Partially at Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Buyer and Lessee Remedies . . . . . . . . . . . . . . . . . . . . . 319 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 343
Right to Reject Nonconforming Goods or Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 343
Improperly Tendered Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Right to Recover Goods from an Insolvent Seller or Lessor . . . 320 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
xvi Contents
Part IV Negotiable Instruments, Secondary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370

Agent’s Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
Banking, and Electronic Liability of Unqualified and Qualified Indorsers . . . . . . . . . . . . 370
Financial Transactions . . . 347 Liability of an Accommodation Party . . . . . . . . . . . . . . . . . . . . 370
Forged Indorsements . . . . . . . . . . . . . . . . . . . . . . . . . . 371
20 Creation and Transfer of Ethics • Imposter Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
Ethics • Fictitious Payee Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
Negotiable Instruments�� 348 Warranty Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372
Introduction to the Creation and Transfer Transfer Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372
of Negotiable Instruments �� 349 Presentment Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372
Negotiable Instruments . . . . . . . . . . . . . . . . . . . . . . . . 349 Defenses Against Payment of Negotiable Instruments . . 373
Article 3 of the UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Universal (Real) Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Functions of Negotiable Instruments . . . . . . . . . . . . . . . . . . . . . 349 Personal Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Types of Negotiable Instruments . . . . . . . . . . . . . . . . . . 350 Case 21.1 • Federal Court Case • Holder in
Draft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 Due Course • Bank of Colorado v. Berwick . . . . . . . . . . . . . . . 374
Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 Contemporary Environment • FTC Rule Limits HDC
Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 Status for Negotiable Instruments Arising from
Certificate of Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 Consumer Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Requirements of a Negotiable Instrument . . . . . . . . . . . 353 Discharge of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Be in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 376
Be Signed by the Maker or the Drawer . . . . . . . . . . . . . . . . . . . 353 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 376
Be an Unconditional Promise or Order to Pay . . . . . . . . . . . . . . 353 Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
State a Fixed Amount of Money . . . . . . . . . . . . . . . . . . . . . . . . 354
Not Require Any Undertaking in Addition to the
Payment of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355 22 Banking System and Electronic
Be Payable on Demand or at a Definite Time . . . . . . . . . . . . . . 355 Financial Transactions �� 378
Be Payable to Order or to Bearer . . . . . . . . . . . . . . . . . . . . . . . . 355
Introduction to the Banking System and Electronic
Case 20.1 • Federal Court Case • Negotiable Instrument •
Financial Transactions�� 379
Las Vegas Sands, LLC, dba Venetian Resort Hotel
The Bank–Customer Relationship . . . . . . . . . . . . . . . . . 379
Casino v. Nehme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356
Uniform Commercial Code Governs Checks and Banking . . . . 379
Prepayment and Acceleration Clauses . . . . . . . . . . . . . . . . . . . . 356
Ordinary Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380
Nonnegotiable Contract . . . . . . . . . . . . . . . . . . . . . . . . 357
Parties to a Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380
Transfer of a Negotiable Instrument by Negotiation . . . . 357
Special Types of Checks . . . . . . . . . . . . . . . . . . . . . . . . 380
Negotiating Order Paper or Bearer Paper . . . . . . . . . . . . . . . . . . 357
Certified Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381
Contemporary Environment • Converting Order and
Cashier’s Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381
Bearer Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358
Honoring Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381
Case 20.2 • State Court Case • Bearer Paper •
Stale Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Gerber & Gerber, P.C. v. Regions Bank . . . . . . . . . . . . . . . . . 358
Incomplete Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Transfer of a Negotiable Instrument by Indorsement . . . 359
Postdated Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Types of Indorsements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359
Stop-Payment Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Blank Indorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359
Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382
Special Indorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
Wrongful Dishonor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
Qualified Indorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
Ethics • Federal Currency Reporting Law . . . . . . . . . . . . . . . . . . . 383
Restrictive Indorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
Forged Signatures and Altered Checks . . . . . . . . . . . . . 383
Misspelled or Wrong Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362
Forged Signature of the Drawer . . . . . . . . . . . . . . . . . . . . . . . . . 383
Multiple Payees or Indorsees . . . . . . . . . . . . . . . . . . . . . . . . . . . 362
Altered Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384
Global Law • Negotiable Instruments Payable
One-Year Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384
in Foreign Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
Series of Forgeries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384
Case 22.1 • State Court Case • Series of Forgeries of Checks •
Spacemakers of America, Inc. v. SunTrust Bank . . . . . . . . . . 385
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
The Collection Process . . . . . . . . . . . . . . . . . . . . . . . . . 386
Federal Reserve System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386
Bank Payment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 386
21 Holder in due Course and Deferred Posting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
Liability of Parties�� 366 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
Introduction to Holder in Due Course and Contemporary Environment • FDIC Insurance of Bank Deposits . . . 387
Liability of Parties �� 367 Electronic Banking and E-Money . . . . . . . . . . . . . . . . . . 388
Holder in Due Course (HDC) . . . . . . . . . . . . . . . . . . . . . 367 Automated Teller Machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Requirements for HDC Status . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Debit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Taking for Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Digital Law • Consumer Electronic Funds Transfers . . . . . . . . . . . 389
Taking in Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 Direct Deposit and Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . 389
Taking Without Notice of Defect . . . . . . . . . . . . . . . . . . . . . . . 368 Online Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
Taking Where There Is No Evidence of Forgery, Digital Law • Commercial Electronic Wire Transfers . . . . . . . . . . . 390
Alteration, or Irregularity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Bank Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
Contemporary Environment • Shelter Principle . . . . . . . . . . . . . . . 369 Landmark Law • Dodd-Frank Wall Street Reform and
Signature Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Consumer Protection Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
Primary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Global Law • Hiding Money in Offshore Banks . . . . . . . . . . . . . . . 391
Contents xvii
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 391 Bankruptcy Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418

Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 392 Bankruptcy Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 418
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Prepetition and Postpetition Counseling . . . . . . . . . . . . . . . . . . 418
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Filing a Bankruptcy Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Attorney Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Order for Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Part V Credit, Secured Transactions, Meeting of the Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
and Bankruptcy . . . . . . . . . 395 Proof of Claim and Proof of Interest . . . . . . . . . . . . . . . . . . . . . 420
Bankruptcy Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
Automatic Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
23 Credit, Real Property Financing, Discharge of Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
and Secured Transactions �� 396 Reaffirmation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
Introduction to Credit, Real Property Financing, Bankruptcy Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
and Secured Transactions �� 397 Ethics • Fraudulent Transfer of Property Prior to Bankruptcy . . . . 422
Unsecured and Secured Credit . . . . . . . . . . . . . . . . . . . 397 Case 24.1 • Federal Court Case • Bankruptcy
Unsecured Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 Fraud • In Re Hoang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422
Secured Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 Exempt Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423
Real Property Financing . . . . . . . . . . . . . . . . . . . . . . . . 398 State Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 Homestead Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424
Note and Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 Ethics • Abusive Homestead Exemptions . . . . . . . . . . . . . . . . . . . 424
Recording Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 Chapter 7—Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . 424
Foreclosure Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 Qualifications for Chapter 7 Bankruptcy . . . . . . . . . . . . . . . . . . 424
Case 23.1 • State Court Case • Mortgages and Statutory Distribution of Property . . . . . . . . . . . . . . . . . . . . . . . 425
Liens • Old Republic National Title Insurance Chapter 7 Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
Company v. Fifth Third Bank . . . . . . . . . . . . . . . . . . . . . . . . . 400 Acts That Bar Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Deficiency Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Contemporary Environment • Discharge of Student Loans in
Antideficiency Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Chapter 13 —Adjustment of Debts of
Business Environment • Construction Liens on Real Property . . . . 402 an Individual with Regular Income . . . . . . . . . . . . . . . . 427
Secured Transactions in Personal Property . . . . . . . . . . 403 Filing a Chapter 13 Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428
Revised Article 9—Secured Transactions . . . . . . . . . . . . . . . . . . 403 Limitations on Who Can File for Chapter 13
Secured Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428
Two-Party Secured Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 404 Property of a Chapter 13 Estate . . . . . . . . . . . . . . . . . . . . . . . . . 428
Three-Party Secured Transaction . . . . . . . . . . . . . . . . . . . . . . . . 404 Chapter 13 Plan of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 428
Personal Property Subject to a Security Agreement . . . . . . . . . . 405 Confirmation of a Chapter 13 Plan of Payment . . . . . . . . . . . . . 429
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 Chapter 13 Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
The Floating Lien Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 Contemporary Environment • Helping Families Save
Perfecting a Security Interest in Personal Property . . . . 406 Their Home Act of 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
Perfection by Filing a Financing Statement . . . . . . . . . . . . . . . . 407 Chapter 11 —Reorganization . . . . . . . . . . . . . . . . . . . . 430
Case 23.2 • State Court Case • Filing a Financing Debtor-in-Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Statement • Pankratz Implement Company v. Creditors’ Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Citizens National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 Automatic Stay in Chapter 11 . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Perfection by Possession of Collateral . . . . . . . . . . . . . . . . . . . . . 408 Executory Contracts and Unexpired Leases in Chapter 11 . . . . 431
Perfection by a Purchase Money Security Interest in Consumer Discharge of Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 Chapter 11 Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . 432
Termination Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 Confirmation of a Chapter 11 Plan of Reorganization . . . . . . . 432
Priority of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 Business Environment • General Motors Bankruptcy . . . . . . . . . . . . . . 433
Buyers in the Ordinary Course of Business . . . . . . . . . . . . . . . . 409 Small Business Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
Digital Law • Electronic Financing Statements and Records . . . . . 410 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 434
Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 435
Business Environment • Artisan’s Liens on Personal Property . . . . 411 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
Surety and Guaranty Arrangements . . . . . . . . . . . . . . . . 411 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
Surety Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Guaranty Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412
Collection Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 412 Part VI Business Organizations,
Key Terms And Concepts . . . . . . . . . . . . . . . . . . . . . . . 413 Corporate Governance,
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 414 And Investor Protection . . 437
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
25 Agency Law�� 438

24 Bankruptcy And Introduction to Agency Law �� 439
Reorganization�� 416 Employment and Agency Relationships . . . . . . . . . . . . . 439
Introduction to Bankruptcy and Reorganization�� 417 Principal–Agent Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Employer–Employee Relationship . . . . . . . . . . . . . . . . . . . . . . . 440
Types of Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Critical Legal Thinking Case • Scope of Employment • Massey v.
Landmark Law • Bankruptcy Abuse Prevention and Consumer Starbucks Corporation ��440
Protection Act of 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418 Principal–Independent Contractor Relationship . . . . . . . . . . . . 441
xviii Contents
Formation of an Agency . . . . . . . . . . . . . . . . . . . . . . . . 441 Other Rights of General Partners . . . . . . . . . . . . . . . . . . . . . . . 464

Express Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464
Contemporary Environment • Power of Attorney . . . . . . . . . . . . . . 442 Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
Implied Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 Duty to Inform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
Agency by Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 Duty of Obedience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
Apparent Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 Right to an Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
Principal’s Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443 Liability of General Partners of a
Contingency Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 General Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
Agent’s Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Tort Liability of General Partners . . . . . . . . . . . . . . . . . . . . . . . 466
Duty to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Contract Liability of General Partners . . . . . . . . . . . . . . . . . . . . 466
Duty to Notify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Liability of Incoming Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 467
Duty to Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 Liability of Outgoing Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 467
Ethics • Agent’s Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . 445 Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
Tort Liability of Principals and Agents . . . . . . . . . . . . . . 445 Revised Uniform Limited Partnership Act . . . . . . . . . . . . . . . . . 468
Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 General Partners and Limited Partners . . . . . . . . . . . . . . . . . . . 468
Case 25.1 • State Court Case • Scope of Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . 469
Employment • Matthews v. Food Lion, LLC . . . . . . . . . . . . . . . 446 Defective Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Frolic and Detour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 Limited Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 469
Coming and Going Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 Share of Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Dual-Purpose Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 Liability of General and Limited Partners of a Limited
Intentional Tort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470
Case 25.2 • State Court Case • Employee’s Management of a Limited Partnership . . . . . . . . . . . . . . . . . . . . 470
Intentional Tort • Burlarley v. Wal-Mart Limited Liability Limited Partnership . . . . . . . . . . . . . . . 471
Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 Liability of General and Limited Partners of an LLLP . . . . . . . 471
Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 Management of an LLLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471
Contract Liability of Principals and Agents . . . . . . . . . . 450 Dissolution of General and Limited Partnerships . . . . . . 472
Fully Disclosed Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Dissolution of a Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472
Partially Disclosed Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Winding Up of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 472
Undisclosed Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473
Independent Contractor . . . . . . . . . . . . . . . . . . . . . . . . 452 Distribution of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473
Factors for Determining Independent Contractor Status . . . . . . 452 Continuation of a Partnership After Dissolution . . . . . . . . . . . . 473
Liability for an Independent Contractor’s Torts . . . . . . . . . . . . . 453 Business Environment • Right of Survivorship of
Liability for an Independent Contractor’s Contracts . . . . . . . . . 453 General Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474
Termination of an Agency . . . . . . . . . . . . . . . . . . . . . . . 453 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 474
Termination of an Agency by an Act of the Parties . . . . . . . . . . 453 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 475
Termination of an Agency by an Unusual Change Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476
in Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
Termination of an Agency by Impossibility of Performance . . . 454
Termination of an Agency by Operation of Law . . . . . . . . . . . . 454 27 Corporate Formation and
Wrongful Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 Financing �� 477
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 455 Introduction to Corporate Formation and Financing�� 478
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 455 Nature of a Corporation . . . . . . . . . . . . . . . . . . . . . . . . 478
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 The Corporation as a Legal “Person” . . . . . . . . . . . . . . . . . . . . . 479
Limited Liability of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 479
Case 27.1 • State Court Case • Shareholder’s Limited Liability •
Menendez v. O’Niell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
26 Small Business, Entrepreneurship, Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
and Partnerships�� 457 Classifications of Corporations . . . . . . . . . . . . . . . . . . . 481
Introduction to Small Business, Private Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
Entrepreneurship, and Partnerships �� 458 Not-for-Profit Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 Government-Owned Corporations . . . . . . . . . . . . . . . . . . . . . . 482
Entrepreneurial Forms of Conducting Business . . . . . . . . . . . . . 458 Domestic, Foreign, and Alien Corporations . . . . . . . . . . . . . . . . 482
Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 Incorporation Procedure . . . . . . . . . . . . . . . . . . . . . . . . 482
Creation of a Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . 459 Selecting a State for Incorporating a Corporation . . . . . . . . . . . 483
Business Environment • “d.b.a.” Trade Name . . . . . . . . . . . . . . . . 459 Selecting a Corporate Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Personal Liability of a Sole Proprietor . . . . . . . . . . . . . . . . . . . . 459 Digital Law • Choosing a Domain Name
Case 26.1 • State Court Case • Sole for a Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Proprietorship • Bank of America, N.A. v. Barr . . . . . . . . . . . . 460 Promoters and Incorporators . . . . . . . . . . . . . . . . . . . . . . . . . . . 484
Taxation of a Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . 461 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484
General Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 Purpose of a Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485
Uniform Partnership Act (UPA) . . . . . . . . . . . . . . . . . . . . . . . . 461 Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
Formation of a General Partnership . . . . . . . . . . . . . . . . . . . . . . 462 Business Environment • Close Corporation Election . . . . . . . . . . . 486
Name of the General Partnership . . . . . . . . . . . . . . . . . . . . . . . . 462 Corporate Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
General Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 463 Organizational Meeting of the Board of Directors . . . . . . . . . . 487
Taxation of General Partnerships . . . . . . . . . . . . . . . . . . . . . . . . 463 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Right to Participate in Management . . . . . . . . . . . . . . . . . . . . . 463 Business Environment • S Corporation Election for
Right to Share in Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 Federal Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Contents xix
Financing the Corporation: Equity Securities . . . . . . . . . 489 29 Corporate Acquisitions

Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490
and Multinational
Redeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 Corporations�� 515
Authorized, Issued, and Outstanding Introduction to Corporate Acquisitions and
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 Multinational Corporations�� 516
Financing the Corporation: Debt Proxy Solicitation and Proxy Contests . . . . . . . . . . . . . 516
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 Federal Proxy Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Types of Debt Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 Antifraud Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
Indenture Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Proxy Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
Business Environment • Delaware Shareholder Resolution . . . . . . . . . . . . . . . . . . . . . . . . 517
Corporation Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Ethics • Coca-Cola Says “No” to a Shareholder
Dissolution and Termination of Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518
Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 519
Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
Winding Up, Liquidation, and Termination . . . . . . . . . . . . . . . . 494 Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 494 Required Approvals for a Merger or Share Exchange . . . . . . . . 519
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 495 Short-Form Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 Sale or Lease of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 Dissenting Shareholder Appraisal Rights . . . . . . . . . . . . . . . . . . 520
Case 29.1 • State Court Case • Dissenting Shareholder
Appraisal Rights • Global GT LP v.
28 Corporate Governance and Golden Telecom, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Sarbanes-Oxley Act �� 497 Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Introduction to Corporate Governance and Williams Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Sarbanes-Oxley Act �� 498 Tender Offer Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Antifraud Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
Shareholders’ Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Fighting a Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Business Judgment Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Global Law • Foreign Acquisitions of U.S. Companies . . . . . . . . . . 524
Straight (Noncumulative) Voting . . . . . . . . . . . . . . . . . . . . . . . . 500 State Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . 525
Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 Business Environment • Delaware Antitakeover Statute . . . . . . . . 525
Supramajority Voting Requirement . . . . . . . . . . . . . . . . . . . . . . 500 Multinational Corporations . . . . . . . . . . . . . . . . . . . . . . 525
Voting Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 International Branch Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
Restrictions on the Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . 501 International Subsidiary Corporation . . . . . . . . . . . . . . . . . . . . . 526
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 Global Law • India’s Multinational Corporations . . . . . . . . . . . . . . 527
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 528
Derivative Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 528
Piercing the Corporate Veil . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529
Case 28.1 • Federal Court Case • Piercing the Corporate Veil • Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530
Northeast Iowa Ethanol, LLC v. Drizin . . . . . . . . . . . . . . . . . . 503
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Resolutions of the Board of Directors . . . . . . . . . . . . . . . . . . . . 504 30 Limited Liability Companies
Digital Law • Corporate E-Communications . . . . . . . . . . . . . . . . . . 505
Selecting Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
and Limited Liability
Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 Partnerships�� 531
Meetings of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . 506 Introduction to Limited Liability Companies
Business Environment • Sarbanes-Oxley Act and Limited Liability Partnerships�� 532
Imposes Duties on Audit Committee . . . . . . . . . . . . . . . . . . . 506 Limited Liability Company (LLC) . . . . . . . . . . . . . . . . . . 532
Corporate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 Uniform Limited Liability Company Act . . . . . . . . . . . . . . . . . 532
Agency Authority of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 Taxation of LLCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Duty of Obedience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 Powers of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 Formation of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
The Business Judgment Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 Articles of Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 Certificate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
Case 28.2 • State Court Case • Fiduciary Duties of Duration of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
Corporate Directors and Officers • Capital Contribution to an LLC . . . . . . . . . . . . . . . . . . . . . . . . 535
McPadden v. Sidhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535
Sarbanes-Oxley Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Conversion of an Existing Business to an LLC . . . . . . . . . . . . . 535
Ethics • Sarbanes-Oxley Act Improves Dividing an LLC’s Profits and Losses . . . . . . . . . . . . . . . . . . . . 535
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Distributional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Global Law • Bribes Paid by Limited Liability of Members of an LLC . . . . . . . . . . . . . 536
U.S. Companies in Foreign Countries . . . . . . . . . . . . . . . . . . 512 Liability of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 512 Members’ Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 513 Case 30.1 • State Court Case • Limited Liability
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 Company • Siva v. 1138 LLC . . . . . . . . . . . . . . . . . . . . . . . . . 537
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 Liability of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538
xx Contents
Liability of Tortfeasors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 32 Investor Protection,

Management of an LLC . . . . . . . . . . . . . . . . . . . . . . . . 538
Member-Managed LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
E-Securities, and Wall
Manager-Managed LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 Street Reform�� 563
Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . 539 Introduction to Investor Protection,
Agency Authority to Bind an LLC E-Securities, and Wall Street Reform�� 564
to Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564
Fiduciary Duties of Members of Landmark Law • Federal Securities Laws . . . . . . . . . . . . . . . . . . . 565
an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Securities and Exchange Commission (SEC) . . . . . . . . . . . . . . 565
Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Reporting Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 Definition of Security . . . . . . . . . . . . . . . . . . . . . . . . . . 566
No Fiduciary Duty Owed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 Initial Public Offering: Securities Act of 1933 . . . . . . . . 567
Business Environment • Advantages of Operating a Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567
Business as an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567
Dissolution of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . 542 Business Environment • Facebook’s IPO . . . . . . . . . . . . . . . . . . . . 568
Payment of Distributional Interest . . . . . . . . . . . . . . . . . . . . . . . 542 Limitations on Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Notice of Disassociation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 Sale of Unregistered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Continuation of an LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543 Regulation A Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570
Winding up an LLC’s Business . . . . . . . . . . . . . . . . . . . . . . . . . 543 Small Company Offering Registration (SCOR) . . . . . . . . . . . . 570
Limited Liability Partnership (LLP) . . . . . . . . . . . . . . . . 543 Contemporary Environment • JOBS Act:
Articles of Limited Liability Partnership . . . . . . . . . . . . . . . . . . 543 Emerging Growth Company (EGC) . . . . . . . . . . . . . . . . . . . . . 570
Taxation of LLPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543 Well-Known Seasoned Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . 571
Limited Liability of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 Civil Liability: Section 11 of the Securities Act of 1933 . . . . . . 571
Business Environment • Accounting Firms Civil Liability: Section 12 of the Securities Act of 1933 . . . . . . 572
Operate as LLPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 SEC Actions: Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . . 572
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 545 Criminal Liability: Section 24 of the Securities Act of 1933 . . . 572
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 545 E-Securities Transactions . . . . . . . . . . . . . . . . . . . . . . . 572
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546 E-Securities Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Edgar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
E-Public Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Digital Law • JOBS Act: Crowd Funding and
31 Franchise and Special Forms Funding Portals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
of Business�� 548 Exempt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Introduction to Franchise and Special Forms of Exempt Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Business�� 549 Nonissuer Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575
Franchise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 Intrastate Offering Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . 575
Types of Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 Private Placement Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . 575
Franchise Disclosure Laws . . . . . . . . . . . . . . . . . . . . . . 551 Small Offering Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576
FTC Franchise Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576
Disclosure of Sales or Earnings Projections Based on Sarbanes-Oxley Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 576
Actual Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Ethics • Sarbanes-Oxley Act Erects Institutional Wall . . . . . . . . . . 577
Disclosure of Sales or Earnings Projections Based on Trading in Securities: Securities
Hypothetical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Exchange Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . . . 577
FTC Franchise Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Section 10(b) and Rule 10b-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . 577
State Disclosure Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 Civil Liability: Section 10(b) of the
Franchise Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 552 Securities Exchange Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . 578
Business Environment • McDonald’s Franchise . . . . . . . . . . . . . . . 552 SEC Actions: Securities Exchange Act of 1934 . . . . . . . . . . . . . 578
Liability of Franchisor and Franchisee . . . . . . . . . . . . . . 554 Criminal Liability: Section 32 of the
Case 31.1 • State Court Case • Franchise Securities Exchange Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . 578
Liability • Rainey v. Domino’s Pizza, LLC . . . . . . . . . . . . . . . . 554 Insider Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578
Case 31.2 • State Court Case • Franchisor Tipper–Tippee Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579
Liability • Martin v. McDonald’s Corporation . . . . . . . . . . . . . 555 Case 32.1 • Federal Court Case • Insider Trading and
Apparent Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 Tipping • United States v. Bhagat . . . . . . . . . . . . . . . . . . . . . 579
Critical Legal Thinking Case • Apparent Misappropriation Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
Agency • Holiday Inns, Inc. v. Shelburne . . . . . . . . . . . . . . . . 556 Aiders and Abettors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
Termination of a Franchise . . . . . . . . . . . . . . . . . . . . . . 557 Ethics • Stop Trading on Congressional Knowledge Act
Breach of the Franchise Agreement . . . . . . . . . . . . . . . . . . . . . . 557 (STOCKS Act) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 Short-Swing Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 Section 16(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Joint Venture Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 SEC Section 16 Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Joint Venture Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 Dodd-Frank Wall Street Reform and
Strategic Alliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 Consumer Protection Act . . . . . . . . . . . . . . . . . . . . . . . 582
Global Law • International Franchising . . . . . . . . . . . . . . . . . . . . . 560 State “Blue-Sky” Laws . . . . . . . . . . . . . . . . . . . . . . . . . 583
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 560 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 583
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 561 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 584
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585
Contents xxi
Part VII Government Regulation And Global Law • United Nations Biosafety Protocol for
Genetically Altered Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
Employment Law . . . . . . . . . 587 Regulation of Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
Regulation of Cosmetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
33 Antitrust Law And Unfair Trade Regulation of Medicinal Devices . . . . . . . . . . . . . . . . . . . . . . . . 611
Practices�� 588 Product and Automobile Safety . . . . . . . . . . . . . . . . . . . 611
Medical and Health Care Protection . . . . . . . . . . . . . . . 611
Introduction to Antitrust Law and Unfair
Landmark Law • Health Care Reform Act of 2010 . . . . . . . . . . . . . 612
Trade Practices�� 589
Unfair and Deceptive Practices . . . . . . . . . . . . . . . . . . . 612
Federal Antitrust Law . . . . . . . . . . . . . . . . . . . . . . . . . . 589
False and Deceptive Advertising . . . . . . . . . . . . . . . . . . . . . . . . 612
Landmark Law • Federal Antitrust Statutes . . . . . . . . . . . . . . . . . . 589
Contemporary Environment • Do-Not-Call Registry . . . . . . . . . . . . . 613
Government Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
Consumer Financial Protection . . . . . . . . . . . . . . . . . . . 613
Private Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
Bureau of Consumer Financial Protection . . . . . . . . . . . . . . . . . 613
Effect of a Government Judgment . . . . . . . . . . . . . . . . . . . . . . . 590
Truth-in-Lending Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614
Section 1 of the Sherman Act: Restraints
Consumer Financial Protection Statutes . . . . . . . . . . . . . . . . . . 614
of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591
Business Environment • Dodd-Frank Wall Street Reform and
Business Environment • Rule of Reason and Per Se Rule . . . . . . . 591
Consumer Protection Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Horizontal Restraints of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Ethics • Credit CARD Act of 2009 . . . . . . . . . . . . . . . . . . . . . . . . . 616
Price Fixing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . 616
Division of Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Environmental Protection Agency . . . . . . . . . . . . . . . . . . . . . . . 616
Group Boycotts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Environmental Impact Statement . . . . . . . . . . . . . . . . . . . . . . . 617
Other Horizontal Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 593
Air Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617
Vertical Restraints of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
National Ambient Air Quality Standards . . . . . . . . . . . . . . . . . . 617
Resale Price Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
Water Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618
Nonprice Vertical Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Point Sources of Water Pollution . . . . . . . . . . . . . . . . . . . . . . . . 618
Case 33.1 • U.S. Supreme Court Case • Contract,
Case 34.2 • U.S. Supreme Court Case • Water Pollution •
Combination, or Conspiracy • American Needle,
Decker, Oregon State Forester v. Northwest
Inc. v. National Football League . . . . . . . . . . . . . . . . . . . . . . 594
Environmental Defense Center . . . . . . . . . . . . . . . . . . . . . . . 618
Unilateral Refusal to Deal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595
Thermal Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Conscious Parallelism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595
Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Noerr Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595
Safe Drinking Water Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Section 2 of the Sherman Act: Monopolization . . . . . . . 595
Ocean Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Attempts and Conspiracies to Monopolize . . . . . . . . . . . . . . . . 597
Ethics • BP Oil Spill in the Gulf of Mexico . . . . . . . . . . . . . . . . . . . 620
Defenses to Monopolization . . . . . . . . . . . . . . . . . . . . . . . . . . . 597
Toxic Substances and Hazardous Wastes . . . . . . . . . . . 620
Section 7 of the Clayton Act: Mergers . . . . . . . . . . . . . 597
Toxic Substances Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620
Horizontal Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598
Insecticides, Fungicides, and Rodenticides . . . . . . . . . . . . . . . . . 621
Vertical Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Market Extension Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Landmark Law • Superfund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Conglomerate Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Nuclear Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622
Defenses to Section 7 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Endangered Species . . . . . . . . . . . . . . . . . . . . . . . . . . . 622
Premerger Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
Critical Legal Thinking Case • Endangered Species •
Section 3 of the Clayton Act: Tying Arrangements . . . . . 600
Tennessee Valley Authority v. Hill,
Section 2 of the Clayton Act: Price Discrimination . . . . 600
Secretary of the Interior . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623
Price Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
State Environmental Protection Laws . . . . . . . . . . . . . . 623
Defenses to Price Discrimination . . . . . . . . . . . . . . . . . . . . . . . . 601
Global Law • International Environmental Protection . . . . . . . . . . 624
Federal Trade Commission Act . . . . . . . . . . . . . . . . . . . 602
Exemptions from Antitrust Law . . . . . . . . . . . . . . . . . . . 602
State Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 602
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626
Global Law • European Union Antitrust Law . . . . . . . . . . . . . . . . . 603
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626
Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 35 Labor, Worker Protection, and
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
Immigration Laws�� 628
Introduction to Labor, Worker Protection, and
34 Consumer Safety and Immigration Laws�� 629
Environmental Protection �� 606 Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . 629
Introduction to Consumer Safety and Workers’ Compensation Insurance . . . . . . . . . . . . . . . . . . . . . . . 630
Environmental Protection�� 607 Employment-Related Injury . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
Food Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
Case 34.1 • Federal Court Case • Adulterated Food • United Case 35.1 • State Court Case • Workers’ Compensation •
States v. LaGrou Distribution Systems, Incorporated . . . . . . . 608 Kelley v. Coca-Cola Enterprises, Inc. . . . . . . . . . . . . . . . . . . . 630
Food, Drugs, and Cosmetics Safety . . . . . . . . . . . . . . . . 609 Occupational Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Landmark Law • Food, Drug, and Cosmetic Act . . . . . . . . . . . . . . . 609 Specific Duty Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Regulation of Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 General Duty Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Food Labeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Fair Labor Standards Act . . . . . . . . . . . . . . . . . . . . . . . 632
Ethics • Restaurants Required to Disclose Child Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632
Calories of Food Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610 Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632
xxii Contents
Overtime Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 Harassment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654

Case 35.2 • U.S. Supreme Court Case • Fair Classification of Harasser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654
Labor Standards Act • IBP, Inc. v. Alvarez . . . . . . . . . . . . . . . 633 Racial and National Origin Harassment . . . . . . . . . . . . . . . . . . 655
Exemptions from Minimum Wage and Overtime Sexual Harassment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655
Pay Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633 Critical Legal Thinking Case • Sexual Harassment •
Family and Medical Leave Act . . . . . . . . . . . . . . . . . . . 634 Pennsylvania State Police v. Suders . . . . . . . . . . . . . . . . . . . 656
Labor Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 Digital Law • Offensive Electronic Communications
Landmark Law • Federal Labor Law Statutes . . . . . . . . . . . . . . . . 635 Constitute Sexual Harassment . . . . . . . . . . . . . . . . . . . . . . . 656
National Labor Relations Board (NLRB) . . . . . . . . . . . . . . . . . 635 Religious Discrimination . . . . . . . . . . . . . . . . . . . . . . . . 657
Organizing a Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 Defenses to a Title VII Action . . . . . . . . . . . . . . . . . . . . 657
Types of Union Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636 Bona Fide Occupational Qualification (BFOQ) . . . . . . . . . . . . 658
Union Solicitation on Company Property . . . . . . . . . . . . . . . . . 636 Equal Pay Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659
Illegal Interference with an Election . . . . . . . . . . . . . . . . . . . . . 636 Criteria That Justify a Differential in Wages . . . . . . . . . . . . . . . 659
Case 35.3 • Federal Court Case • Unfair Age Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659
Labor Practice • National Labor Relations Physically Challenged Person Discrimination . . . . . . . . . 660
Board v. Starbucks Corporation . . . . . . . . . . . . . . . . . . . . . . 637 Landmark Law • Americans with Disabilities Act . . . . . . . . . . . . . . 660
Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . 637 Qualified Individual with a Disability . . . . . . . . . . . . . . . . . . . . 661
Union Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638 Limits on Employer Questions . . . . . . . . . . . . . . . . . . . . . . . . . 661
Business Environment • State Right-to-Work Laws . . . . . . . . . . . . 638 Reasonable Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . 661
Strikes and Picketing . . . . . . . . . . . . . . . . . . . . . . . . . . 639 Undue Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662
Illegal Strikes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 Uncovered Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662
Crossover and Replacement Workers . . . . . . . . . . . . . . . . . . . . . 639 Genetic Information Discrimination . . . . . . . . . . . . . . . . 662
Picketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 Genetic Information Nondiscrimination Act (GINA) . . . . . . . . 663
Secondary Boycott Picketing . . . . . . . . . . . . . . . . . . . . . . . . . . . 640 Protection from Retaliation . . . . . . . . . . . . . . . . . . . . . 663
Critical Legal Thinking Case • Labor Union Case 36.1 • U.S. Supreme Court Case • Employer Retaliation •
Picketing • Sheet Metal Workers’ International Thompson v. North American Stainless, LP . . . . . . . . . . . . . . 663
Association, Local 15, AFL-CIO v. National Labor Affirmative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
Relations Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640 Affirmative Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
Internal Union Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641 Reverse Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
Business Environment • Worker Adjustment and Retraining Contemporary Environment • Veterans and Military Personnel
Notification (WARN) Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641 Employment Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . 664
Immigration Law and Employment . . . . . . . . . . . . . . . . . 641 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 665
H-1B Foreign Guest Worker Visa . . . . . . . . . . . . . . . . . . . . . . . 642 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 665
EB-1 Extraordinary Ability Visa . . . . . . . . . . . . . . . . . . . . . . . . 642 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666
Undocumented Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667
Cobra and Erisa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 643
Government Programs . . . . . . . . . . . . . . . . . . . . . . . . . 643
Unemployment Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 643 Part VIII Property, Insurance,
Social Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 643
and Estates . . . . . . . . . . . . . 669
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 37 Personal Property, Bailment,
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 And Insurance . . . . . . . . . . . . . . . . 670
Introduction to Personal Property, Bailment,
and Insurance �� 671
36 Equal Opportunity in Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 671
Employment . . . . . . . . . . . . . . . . . . 647 Ownership of Personal Property . . . . . . . . . . . . . . . . . . 671
Introduction to Equal Opportunity in Employment �� 648 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 671
Equal Employment Opportunity Commission (EEOC) . . . 648 Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672
Complaint Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648 Other Methods of Acquiring Ownership of
Lilly Ledbetter Fair Pay Act of 2009 . . . . . . . . . . . . . . . . . . . . . 649 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672
Title VII of the Civil Rights Act of 1964 . . . . . . . . . . . . . 649 Mislaid, Lost, and Abandoned Personal
Landmark Law • Title VII of the Civil Rights Act of 1964 . . . . . . . . 649 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673
Scope of Coverage of Title VII . . . . . . . . . . . . . . . . . . . . . . . . . . 650 Mislaid Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673
Disparate-Treatment Discrimination . . . . . . . . . . . . . . . . . . . . . 650 Lost Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674
Disparate-Impact Discrimination . . . . . . . . . . . . . . . . . . . . . . . 650 Abandoned Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674
Remedies for Violations of Title VII . . . . . . . . . . . . . . . . . . . . . 651 Case 37.1 • State Court Case • Mislaid or Abandoned
Race and Color Discrimination . . . . . . . . . . . . . . . . . . . 651 Property • Grande v. Jennings . . . . . . . . . . . . . . . . . . . . . . . . 674
Race Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 Ethics • Estray Statutes Promote Honesty in Finders . . . . . . . . . . 675
Color Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 Bailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675
Landmark Law • Civil Rights Act of 1866 . . . . . . . . . . . . . . . . . . . 652 Elements Necessary to Create a Bailment . . . . . . . . . . . . . . . . . 676
National Origin Discrimination . . . . . . . . . . . . . . . . . . . 652 Case 37.2 • State Court Case • Bailment • Ziva Jewelry,
Contemporary Environment • English-Only Rules Inc. v. Car Wash Headquarters, Inc. . . . . . . . . . . . . . . . . . . . . 676
in the Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 Ordinary Bailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
Gender Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . 653 Duration and Termination of Bailments . . . . . . . . . . . . . . . . . . 678
Gender Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653 Special Bailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 678
Pregnancy Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653 Warehouse Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 678
Contents xxiii
Common Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679 Landlord–Tenant Law . . . . . . . . . . . . . . . . . . . . . . . . . . 702

Case 37.3 • Federal Court Case • Common Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Carrier Shipment • Rykard v. FedEx Ground Tenancy for Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Package System, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 Periodic Tenancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Innkeeper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681 Tenancy at Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681 Tenancy at Sufferance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
Insurable Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 Landlord’s Duties to a Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . 704
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 Implied Warranty of Habitability . . . . . . . . . . . . . . . . . . . . . . . . 704
Duties of Insured and Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 Tenant’s Duties to a Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . 705
Common Clauses in Insurance Policies . . . . . . . . . . . . . . . . . . . 683 Transfer of Leased Property by Landlords . . . . . . . . . . . . . . . . . 705
Ethics • Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 Assignment of a Lease by a Tenant . . . . . . . . . . . . . . . . . . . . . . 705
Types of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 Sublease by a Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705
Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 Government Regulation of Real Property . . . . . . . . . . . . 706
Health and Disability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 684 Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706
Automobile, Vehicle, and Vessel Insurance . . . . . . . . . . . . . . . . . 684 Rent Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 707
Contemporary Environment • No-Fault Automobile Antidiscrimination Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 707
Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708
Homeowners’ and Renters’ Insurance . . . . . . . . . . . . . . . . . . . . . 685 Critical Legal Thinking Case • Eminent Domain • Kelo v. City
Business Environment • Special Forms of Business Insurance . . . . 686 of New London, Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . 708
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 686 Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 709
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 687 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 710
Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711
38 Real Property, Landlord–Tenant

39 Family Law, Wills, and Trusts�� 712
Law, and Land Use Regulation�� 689 Introduction to Family Law, Wills, and Trusts�� 713
Introduction to Real Property, Landlord–Tenant Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
Law, and Land Use Regulation �� 690 Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 Marriage Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
Land and Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 Common Law Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
Subsurface Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 Contemporary Environment • Same-Sex Marriage . . . . . . . . . . . . . 714
Plant Life and Vegetation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 Termination of a Marriage . . . . . . . . . . . . . . . . . . . . . . 715
Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715
Contemporary Environment • Air Rights . . . . . . . . . . . . . . . . . . . . . 691 Divorce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715
Estates in Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 Divorce Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715
Fee Simple Absolute (or Fee Simple) . . . . . . . . . . . . . . . . . . . . . 691 Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716
Fee Simple Defeasible (or Qualified Fee) . . . . . . . . . . . . . . . . . . 692 Contemporary Environment • Prenuptial Agreement . . . . . . . . . . . 716
Life Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692 Division of Assets upon Divorce or Annulment . . . . . . . . 717
Concurrent Ownership . . . . . . . . . . . . . . . . . . . . . . . . . 692 Separate Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
Joint Tenancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693 Marital Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 718
Tenancy in Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693 Division of Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719
Case 38.1 • State Court Case • Concurrent Spousal and Child Support . . . . . . . . . . . . . . . . . . . . . . 719
Ownership • Reicherter v. McCauley . . . . . . . . . . . . . . . . . . . . 693 Spousal Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719
Tenancy by the Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694 Child Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719
Community Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694 Child Custody . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 720
Condominium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 Requirements for Making a Will . . . . . . . . . . . . . . . . . . . . . . . . 721
Future Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 Attestation by Witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
Reversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 Amending and Revoking Wills . . . . . . . . . . . . . . . . . . . . . . . . . 723
Remainder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Joint and Mutual Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723
Transfer of Ownership of Real Property . . . . . . . . . . . . . 696 Special Types of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723
Sale of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Simultaneous Deaths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723
Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Probate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723
Recording Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 Testamentary Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724
Quiet Title Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698 Lineal Descendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724
Marketable Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698 Ademption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725
Adverse Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725
Case 38.2 • State Court Case • Adverse Intestate Succession . . . . . . . . . . . . . . . . . . . . . . . . . . 726
Possession • Whelan v. Loun . . . . . . . . . . . . . . . . . . . . . . . . . 699 Irrevocable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727
Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728
Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 Inter Vivos Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728
Creating an Easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 Testamentary Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728
Case 38.3 • State Court Case • Easement • Living Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
The Willows, LLC v. Bogy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Benefits of a Living Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Funding and Operation of a Living Trust . . . . . . . . . . . . . . . . . . 729
Profit-à-Prendre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
xxiv Contents
Undue Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 Audit Report Sign-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 748

Case 39.1 • State Court Case • Undue Influence • In re Estate Certain Employment Prohibited . . . . . . . . . . . . . . . . . . . . . . . . 748
of Haviland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 748
Living Will and Health Care Directive . . . . . . . . . . . . . . 731 Accountants’ Privilege and Work Papers . . . . . . . . . . . . 749
Living Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731 Accountant–Client Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . 749
Health Care Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731 Accountants’ Work Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 749
Critical Legal Thinking Case • Assisted Suicide • Gonzales, Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 750
Attorney General of the United States v. Oregon . . . . . . . . . . 732 Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 750
Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 732 Ethics Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751
Critical Legal Thinking Cases . . . . . . . . . . . . . . . . . . . . 733 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752
Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734
Part X Global Environment . . . . . 753

Part IX Accounting Profession . . . 735
41 International and
40 Accountants’ Duties World Trade Law�� 754
and Liability . . . . . . . . . . . . . . . . . . 736 Introduction to International and World Trade Law�� 755
Introduction to Accountants’ Duties and Liability �� 737 The United States and Foreign Affairs . . . . . . . . . . . . . . 755
Public Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737 Foreign Commerce Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755
Limited Liability Partnership (LLP) . . . . . . . . . . . . . . . . . . . . . 737 Treaty Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 756
Accounting Standards and Principles . . . . . . . . . . . . . . 738 United Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757
Generally Accepted Accounting Principles (GAAPs) . . . . . . . . 738 General Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757
Generally Accepted Auditing Standards (GAASs) . . . . . . . . . . 738 Security Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757
Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739 Secretariat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757
Auditor’s Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739 United Nations Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758
Disclaimer of Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739 International Court of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . 758
Accountants’ Liability to Their Clients . . . . . . . . . . . . . . 739 European Union (EU) . . . . . . . . . . . . . . . . . . . . . . . . . . 758
Liability to Clients: Breach of Contract . . . . . . . . . . . . . . . . . . . 739 Global Law • International Monetary Fund (IMF) . . . . . . . . . . . . . . 759
Liability to Clients: Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740 Global Law • United Nations Children’s Fund (UNICEF) . . . . . . . . . 760
Liability to Clients: Accounting Malpractice (Negligence) . . . . 740 EU Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 760
Accountants’ Liability to Third Parties . . . . . . . . . . . . . 740 Global Law • World Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 761
Liability to Third Parties: Ultramares Doctrine . . . . . . . . . . . . . 740 Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 762
Case 40.1 • State Court Decision • Ultramares North American Free Trade Agreement (NAFTA) . . . . . . 762
Doctrine • Credit Alliance Corporation Association of Southeast Asian Nations (ASEAN) . . . . . 764
v. Arthur Andersen & Company . . . . . . . . . . . . . . . . . . . . . . . 741 Other Regional Organizations . . . . . . . . . . . . . . . . . . . . 766
Liability to Third Parties: Section 552 of the Organization of the Petroleum
Restatement (Second) of Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 Exporting Countries (OPEC) . . . . . . . . . . . . . . . . . . . . . . . . . . 766
Liability to Third Parties: Foreseeability Standard . . . . . . . . . . . 742 Dominican Republic–Central America
Case 40.2 • Federal Court Case • Accountants’ Liability Free Trade Agreement (DR-CAFTA) . . . . . . . . . . . . . . . . . . . . 766
to a Third Party • Johnson Bank v. George Korbakes & Other Regional Economic Organizations . . . . . . . . . . . . . . . . . 767
Company, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 World Trade Organization (WTO) . . . . . . . . . . . . . . . . . . 767
Critical Legal Thinking Case • Accountants’ Liability • WTO Dispute Resolution��768
Grant Thornton, LLP v. Prospect High Income Fund . . . . . . . . 743 National Courts and International Dispute Resolution . . 768
Judicial Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768
Liability to Third Parties: Fraud . . . . . . . . . . . . . . . . . . . . . . . . . 744
Act of State Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769
Liability to Third Parties: Breach of Contract . . . . . . . . . . . . . . 744
Case 41.1 • Federal Court Case • Act of State Doctrine •
Securities Law Violations . . . . . . . . . . . . . . . . . . . . . . . 744
Glen v. Club Mediterranee, S.A. . . . . . . . . . . . . . . . . . . . . . . 769
Section 11(a) of the Securities Act of 1933 . . . . . . . . . . . . . . . . 744
Doctrine of Sovereign Immunity . . . . . . . . . . . . . . . . . . . . . . . . 770
Section 10(b) of the Securities Exchange Act of 1934 . . . . . . . . 745
Exceptions to the FSIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 770
Section 18(a) of the Securities Exchange Act of 1934 . . . . . . . . 745
International Religious Laws . . . . . . . . . . . . . . . . . . . . . 771
Private Securities Litigation Reform Act of 1995 . . . . . . . . . . . 745
Global Law • Jewish Law and the Torah . . . . . . . . . . . . . . . . . . . . 771
Ethics • Accountants’ Duty to Report a
Global Law • Islamic Law and the Qur’an . . . . . . . . . . . . . . . . . . . 772
Client’s Illegal Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 746
Global Law • Christian and Canon Law . . . . . . . . . . . . . . . . . . . . . 772
Criminal Liability of Accountants . . . . . . . . . . . . . . . . . 746
Global Law • Hindu Law—Dharmasastra . . . . . . . . . . . . . . . . . . . . 773
Criminal Liability: Section 24 of the
Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 746
Criminal Liability: Section 32(a) of the Ethics Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775
Securities Exchange Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . 746 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775
Criminal Liability: Tax Preparation . . . . . . . . . . . . . . . . . . . . . . 747
Criminal Liability: Racketeer Influenced and Appendix The Constitution Of The
Corrupt Organizations Act (RICO) . . . . . . . . . . . . . . . . . . . . . . 747
Criminal Liability: State Securities Laws . . . . . . . . . . . . . . . . . . 747 United States Of America ��777
Sarbanes-Oxley Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 747 Case Index�� 785
Public Company Accounting Oversight Board (PCAOB) . . . . . . 748
Public Accounting Firms Must Register with the PCAOB . . . . . 748 Subject Index�� 789
Audit and Nonaudit Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 748
Another random document with
no related content on Scribd:
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Memorie sulla Storia e Notomia degli Animali senza Vertebre,

1823.
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Histoire Naturelle des Animaux sans Vertèbres, vol. iii. 1816, p. 76.
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Le Règne Animal, 2nd ed. 1830.
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γέφῦρα = a bridge, Ann. Sci. Nat. (3), vol. vii. 1847, p. 340.
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Fischer, Abh. Ver. Hamburg, Bd. xiii. 1895, p. 1.
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Cuénot, Arch. Zool. exp. (2) ix. 1891, p. 593.
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Bull. Mus. Harvard, vol. xxi. 1891, p. 143.
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Conn, Stud. Johns Hopkins Univ. vol. iii. 1884-87, p. 351.
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Arb. Instit. Wien, Bd. v. 1884, p. 61.

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Shipley, Quart. J. Micr. Sci. vol. xxxii. 1891, p. 111.
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Proc. Roy. Soc. Edin. xviii. 1892, p. 17.
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Selenka, Die Sipunculiden. Semper's Reisen im Archipel d.

Philippinen, vol. iv. 1883.
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Stud. Johns Hopkins Univ. vol. iv. 1887-90, p. 389.
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Selenka, Challenger Reports, vol. xiii. 1885.
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Ann. Sci. nat. (7) vol. xx. 1895, p. 1.
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Zool. Anz. ix. 1886, p. 574.
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This is not true of all species.
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Acta Ac. German, Halle, xli. Part II. No. 1, 1879.
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Recueil Zool. Suisse, iii. 1886, p. 313.
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P. Phys. Soc. Edinb. vol. i. 1856, p. 165; and Edinb. New Phil.
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Ann. Sci. Nat. 4th ser. vol. x. 1858, p. 11.
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"Beiträge zur Anatomie der Phoronis," Inaug. Dissert. Prag. 1889,

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P. Linn. Soc. N. S. Wales, 1st ser. vol. vii. 1883, p. 606; and 2nd
ser. vol. vii. 1893, p. 340.
[494]
Quart. J. Micr. Sci. vol. xxx. 1890, p. 125.
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Challenger Reports, vol. xxvii. 1888; and Proc. Roy. Soc. Edinb.
vol. xi. 1882, p. 211.
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Proc. Roy. Soc. London, vol. xxxiv. 1883, p. 371.
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Zapiski Acad. St. Petersb. vol. xi. No. 1, 1867 (Russian). Abstract
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Caldwell, loc. cit. Foettinger, Arch. Biol. vol. iii. 1882, p. 679;
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vol. xxi. 1871, p. 233; J. Müller, Arch. Anat. Jahrgang 1846, p. 101;
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Proc. Roy. Soc. Edinb. vol. xxi. 1896, p. 59; and Zool. Anz. xix.
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[500]
The account given in the following pages has been deliberately

restricted, for the most part, to British species. Our own fauna
contains an assemblage of Polyzoa which is so representative that
it has seemed better to do some justice to the British forms than to
attempt to cover the whole ground in the limited number of pages
devoted to this group. Those who desire to make a wider study of
the subject should refer, for marine forms, to Busk's Catalogue of
Marine Polyzoa in the Collection of the British Museum, Parts I.-III.
1852, 1854, 1875; to the Challenger Reports on Polyzoa, Parts 30
(1884), 50 (1886), and 79 (1888); for references and lists of
species, to Vine's Report on Recent Marine Polyzoa,
Cheilostomata and Cyclostomata (Report, 55th meeting Brit. Ass.
Aberdeen, 1885, pp. 481-680); [and to Nickles and Bassler,
Synopsis Amer. Foss. Bryozoa incl. Bibliography (Bull. U.S. Geol.
Survey, No. 173, 1900)]. References to the literature of the fresh-
water forms will be found below, in Chap. XVIII.
[501]
Hooker, quoted by Landsborough, Hist. Brit. Zoophytes, 1852, p.

346.
[502]
Rare and Remarkable Animals of Scotland, ii. 1848, p. 15.

[503]
Arch. Zool. Exp. 2 sér. x. 1892.
[504]
Kraepelin, Abh. Ver. Hamburg, x. 1887, No. ix. p. 19; κάμπτειν, to

bend; δέρμα, skin.
[505]
Parts of the ectocyst of some calcareous forms are covered by an

external investment of cells, which give rise to secondary
thickenings, ridges, and other growths.
[506]
From the Quart. J. Micr. Sci. xxxiii. 1892.
[507]
Ibid. p. 123.
[508]
Quart. J. Micr. Sci. xxxiii. 1892, p. 147. The experiment was

conducted in a laboratory, and the results may not be perfectly
normal with regard to the time occupied.
[509]
See also Joliet, Arch. Zool. Exp. vi. 1877, p. 202, and explanation
of plate viii. for another series of observations.
[510]
See especially G. J. Allman, Monograph of the Fresh-water

Polyzoa, Ray Society, 1856, p. 41; and H. Nitsche, Zeitschr. wiss.
Zool. xxi. 1871, p. 479.
[511]
Ray Society, 4to, 1856.

[512]
Zoological Researches and Illustrations, v. "On Polyzoa." Cork,

1830.
[513]
"Symbolae Physicae," 1831, and Abh. Ak. Berlin, 1832, i. p. 377,

etc.
[514]
T. cit. p. 92.
[515]
Vol. i. 1880, Introduction, p. cxxxi.
[516]
Élémens de Zoologie, 2nd ed. Animaux sans Vertèbres, 1843, pp.

238, 312. Prof. A. Milne-Edwards has kindly written to me,
informing me that he believes this to have been the first occasion
on which the term was thus used.
[517]
Phil. Trans. vol. cxliii, 1853, p. 62.
[518]
Nitsche, Zeitschr. wiss. Zool. xx. 1870, p. 34.
[519]
πρωκτός, anus; ἐντός, within; ἐκτός, without.
[520]
λοφός, crest or tuft.
[521]
γυμνός, naked; λαιμός, throat.

[522]
φυλάσσω, I guard.
[523]
κύκλος, circle; στόμα, mouth.
[524]
χεῖλος, lip.
[525]
κτείς, κτενός, comb.
[526]
Miss E. C. Jelly, Synonymic Cat. Recent Marine Bryozoa, London,

1889.
[527]
Zeitschr. wiss. Zool. xxi. 1871, p. 421.
[528]
Fischer, Nouv. Arch. Mus. Paris, ii. 1866, p. 293.
[529]
Ehlers, Abh. Ges. Göttingen, xxi. 1876, p. 3, and Joyeux-Laffuie,

(as Delagia) Arch. Zool. Exp. 2 sér. vi. 1888, p. 135.
[530]
Busk, "Challenger" Reports, Parts 30 and 50.
[531]
Hincks, Brit. Marine Polyzoa, Introduction, p. cxxxv.
[532]
Hincks, Brit. Mar. Polyzoa, i. p. 558.

[533]
See Hincks, Brit. Mar. Polyzoa, i. p. lxiv.; and Busk, Cat. of Marine
Polyzoa in the British Museum, part ii. 1854, p. 103.
[534]
J. Linn. Soc. xv. 1881, p. 359.
[535]
"Challenger" Report, part xxx. 1884, pl. ix.
[536]
Hincks, Brit. Mar. Polyzoa, i. p. 58.
[537]
Brit. Mus. Cat. part ii. 1854, p. 106; Hincks, t. cit. p. 181 n.
[538]
p. 475.
[539]
Barentsia Hincks (= Ascopodaria Busk) differs from Pedicellina in

that each stem has a muscular swelling at its base. The genus is
represented by two British species, B. gracilis Sars and B. nodosa
Lomas.
[540]
Arch. Zool. Exp. 2 sér. ix. 1891, p. 91.
[541]
For structure, see Davenport, Bull. Mus. Harvard, xxiv. 1893, p. 1.
[542]
λοξός, oblique; σῶμα, body.

[543]
Quart. J. Micr. Sci. xxvii. 1887, pl. xxi. Fig. 10.
[544]
For a recent account of the Entoprocta, see Ehlers, "Zur Kenntniss

d. Pedicellineen," Abh. Ges. Göttingen, xxxvi. 1890, No. iii.
[An important account of the structure of marine Ectoprocta is

given by Calvet, "Contribution à l'Histoire Naturelle des
Bryozoaires Ectoproctes Marins," Trav. Inst. Zool. Montpellier,
N.S., Mém. No. 8, 1900.]
[545]
Kraepelin, K., "Die deutschen Süsswasser-Bryozoen."—Abh. Ver.

Hamburg, x. 1887, No. 9, p. 95.
[546]
Jullien, Bull. Soc. Zool. France, x. 1885, p. 92.
[547]
Hincks, Brit. Marine Polyzoa, i. p. 132.
[548]
T. cit., p. 167.
[549]
Quoted by Kraepelin, t. cit., p. 83.
[550]
Kraepelin, Abh. Ver. Hamburg, xii. 1893, No. 2, p. 65.
[551]
Zool. Anz., xvi. 1893 (1894), p. 385.

[552]
Hyatt, Proc. Essex Institute (U.S.A.) (reprint from vols. iv., v. 1866-
1868), p. 9.
[553]
Rare and Remarkable Animals of Scotland, ii. 1848, p. 93.
[554]
Trembley, Mém. Hist. Polypes, 1744; iii. Mém., p. 217. The same
processes are described by Baker, Employment for the
Microscope, new ed. 1785, p. 311.
[555]
Oka, J. Coll. Japan, iv. 1891, p. 90.
[556]
Hyatt, t. cit. p. 99.
[557]
Verworn, Zeitschr. wiss. Zool. xlvi. 1888, p. 119.
[558]
Dalyell, t. cit. p. 94.
[559]
Kraepelin, Abh. Ver. Hamburg, x. 1887, No. 9, p. 141.
[560]
Phil. Trans. 1837, p. 396.
[561]
Zeitschr. wiss. Zool. xxi. 1871, p. 426.
[562]
J. Coll. Japan, iv. 1891, p. 113.
[563]
Zool. Anz. xii. 1889, p. 508. This paper contains references to M.

Jullien's writings on the mechanism of protrusion.
[564]
[See P. Cambridge Soc. vol. xi. Part 1, 1901.]
[565]
Zeitschr. wiss. Zool. xlvi. 1888, p. 124.
[566]
Kraepelin, Abh. Ver. Hamburg, xii. 1893, No. 2, p. 47; Braem, Bibl.
Zool. (Bd. ii.) Heft 6, 1890, pp. 66 f.
[567]
Cf. Kraepelin, Abh. Ver. Hamburg, x. 1887, No. 9, pp. 154 f.
[568]
T. cit. p. 83.
[569]
Joliet, Arch. Zool. Exp. vi. 1877, p. 262.
[570]
Kraepelin, Abh. Ver. Hamburg, xii. 1893, No. 2, p. 22.
[571]
Harmer, Quart. J. Micr. Sci. xxxiv. 1893, p. 211.
[572]
Arch. Zool. Exp. 2 sér. x. 1892, p. 557.

[573]
Phil. Trans. 1837, p. 408.
[574]
Brit. Marine Polyzoa, Introduction, pp. lxxxvi, xc.
[575]
Arch. Zool. Exp. vi. 1877, p. 261.
[576]
Recherches sur l'Embryologie des Bryozoaires, 4to Lille, 1877.
[577]
Prouho, loc. cit.
[578]
Arch. Zool. Exp. 2 ser. v. 1887, p. 446.
[579]
Quart. J. Micr. Sci. xxxiv. 1893, p. 199; xxxix. part i. 1896, p. 71.
[580]
Jullien, Mém. Soc. Zool. France, iii. 1890, p. 381.
[581]
Cori, Zeitschr. wiss. Zool. lv. 1893, p. 626.
[582]
Oka, J. Coll. Japan, iv. 1891, p. 109; viii. 1895, p. 339.
[583]
Cf. Seeliger, Zeitschr. wiss. Zool. xlix. 1890, p. 168; and l. 1890, p.
560.
[584]
Cf. Milne-Edwards (H.), Ann. Sci. Nat. 2 ser. vi. 1836, pp. 5, 321.
[585]
See Norman, Ann. Nat. Hist. ser. 6, xiii. 1894, p. 114.
[586]
See Holdsworth, P. Zool. Soc. pt. xxvi. 1858, p. 306.
[587]
Brit. Mar. Polyzoa, Introduction, p. cxxii.
[588]
Ann. Nat. Hist. ser. 5, xx. 1887, p. 91.
[589]
Aetea, Eucratea, and certain other forms were separated off by Mr.
Busk as a distinct division, the Stolonata.
[590]
Most of the writings of this author are referred to on pp. 277, 278
of Miss Jelly's Synonymic Catalogue, referred to on p. 523.
[591]
Catalogue of Marine Polyzoa in the Collection of the British

Museum, parts i.-iii. 1852-1875; and Challenger Reports, Parts 30
(1884) and 50 (1886).
[592]
Trans. and Proc. R. Soc. Victoria, xxiii. 1887, p. 187, and Tr. R.
Soc. Victoria, iv. 1895, p. 1.
[593]
Tr. Zool. Soc. xiii. 1895, p. 223.

[594]
Zittel, Text Book of Palaeontology (Eng. Trans.), 1900, p. 257

(Bryozoa, by E. O. Ulrich).
[595]
Paléontologie Française. Terrains Crétacés, tome v., Bryozoaires,

8vo. Paris, 1850-1851. This great work refers, however, to recent
as well as to fossil species.
[596]
Heteropora, of which recent species exist, is placed by Dr. Gregory

in the Trepostomata.
[597]
Quart. J. Geol. Soc. l. 1894, pp. 72, 79.
[598]
See, however, Vine, Ann. Nat. Hist. ser. 5. xiv. 1884, pp. 87, 88,
and P. Yorksh. Geol. Soc. xii. 1891, p. 74, for possible Palaeozoic
Ctenostomes (Ascodictyon, Rhopalonaria, and Vinella).
[599]
Two vols. 8vo. London (Van Voorst), 1880.
[600]
8vo. London (Dulau), 1889.
[601]
One or two genera of Cheilostomata may be mistaken for

Cyclostomata. In case of doubt, 7 et seq. must be worked through.
[602]
Certain varieties of adherent species occasionally assume an

erect form.
[603]
For Celleporella (colony minute: orifice tubular), see 41 et seq.
[604]
Rhynchozoon (see No. 61), in which the primary orifice becomes

much obscured by the development of a large mucro, is placed in
this section.
[605]
Hincks, J. Linn. Soc. xxi. 1889, p. 123.
[606]
Micropora complanata, Norman, should be placed in the genus

Lepralia. See Hincks, Ann. Nat. Hist. 5 ser. xix. 1887, p. 304.
[607]
See Norman, Ann. Nat. Hist. ser. 6, xiii. 1894, p. 113.
[608]
Hincks, "Marine Polyzoa" (reprints from Ann. Nat. Hist. 1880-91),

Index, p. v. note. (Replacing Rhynchopora, preoccupied for a
Brachiopod.)
[609]
A form of Lepralia pallasiana, in which a mucro is developed, may

be mistaken for Umbonula (see characters given for Lepralia
under No. 59).
[610]
See Arch. Zool. Exp. 2 ser. vi. 1888, p. 135 (as Delagia), and ibid.
x. 1892, p. 594. [See also J. Mar. Biol. Ass. v., 1897-99, p. 51.]
[611]
F. S. Conant, Johns Hopkins Univ. Circ. vol. xv. 1896, p. 82.

[612]
Ibid. vol. xiv. 1896, p. 77.

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Preface  xxvii Doctrine of Separation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . 21

Jurisdiction of the U.S. Supreme Court . . . . . . . . . . . . . . . . . . . . 48 Closing Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

8 Ethics and Social Responsibility Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

14 Breach Of Contract And License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

Part IV Negotiable Instruments, Secondary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370

Key Terms and Concepts . . . . . . . . . . . . . . . . . . . . . . . 391 Bankruptcy Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418

25 Agency Law�������������������������������������� 438

Formation of an Agency . . . . . . . . . . . . . . . . . . . . . . . . 441 Other Rights of General Partners . . . . . . . . . . . . . . . . . . . . . . . 464

Financing the Corporation: Equity Securities . . . . . . . . . 489 29 Corporate Acquisitions

Liability of Tortfeasors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 32 Investor Protection,

Overtime Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632 Harassment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654

Common Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679 Landlord–Tenant Law . . . . . . . . . . . . . . . . . . . . . . . . . . 702

38 Real Property, Landlord–Tenant

Undue Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 730 Audit Report Sign-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 748

Part X Global Environment . . . . . 753

Memorie sulla Storia e Notomia degli Animali senza Vertebre,

Le Règne Animal, 2nd ed. 1830.

Fischer, Abh. Ver. Hamburg, Bd. xiii. 1895, p. 1.

Cuénot, Arch. Zool. exp. (2) ix. 1891, p. 593.

Bull. Mus. Harvard, vol. xxi. 1891, p. 143.

Shipley, Quart. J. Micr. Sci. vol. xxxi. 1890, p. 1.

Stud. Johns Hopkins Univ. vol. iv. 1887-90, p. 389.

Conn, Stud. Johns Hopkins Univ. vol. iii. 1884-87, p. 351.

Arb. Instit. Wien, Bd. v. 1884, p. 61.

Shipley, Quart. J. Micr. Sci. vol. xxxii. 1891, p. 111.

Proc. Roy. Soc. Edin. xviii. 1892, p. 17.

Selenka, Die Sipunculiden. Semper's Reisen im Archipel d.

Stud. Johns Hopkins Univ. vol. iv. 1887-90, p. 389.

Selenka, Challenger Reports, vol. xiii. 1885.

Ann. Sci. nat. (7) vol. xx. 1895, p. 1.

Zool. Anz. ix. 1886, p. 574.

This is not true of all species.

Acta Ac. German, Halle, xli. Part II. No. 1, 1879.

Recueil Zool. Suisse, iii. 1886, p. 313.

Ann. Sci. Nat. 4th ser. vol. x. 1858, p. 11.

"Beiträge zur Anatomie der Phoronis," Inaug. Dissert. Prag. 1889,

Quart. J. Micr. Sci. vol. xxx. 1890, p. 125.

Proc. Roy. Soc. London, vol. xxxiv. 1883, p. 371.

The account given in the following pages has been deliberately

Hooker, quoted by Landsborough, Hist. Brit. Zoophytes, 1852, p.

Rare and Remarkable Animals of Scotland, ii. 1848, p. 15.

Arch. Zool. Exp. 2 sér. x. 1892.

Kraepelin, Abh. Ver. Hamburg, x. 1887, No. ix. p. 19; κάμπτειν, to

Parts of the ectocyst of some calcareous forms are covered by an

From the Quart. J. Micr. Sci. xxxiii. 1892.

Quart. J. Micr. Sci. xxxiii. 1892, p. 147. The experiment was

See especially G. J. Allman, Monograph of the Fresh-water

Ray Society, 4to, 1856.

Zoological Researches and Illustrations, v. "On Polyzoa." Cork,

"Symbolae Physicae," 1831, and Abh. Ak. Berlin, 1832, i. p. 377,

Vol. i. 1880, Introduction, p. cxxxi.

Élémens de Zoologie, 2nd ed. Animaux sans Vertèbres, 1843, pp.

Phil. Trans. vol. cxliii, 1853, p. 62.

Nitsche, Zeitschr. wiss. Zool. xx. 1870, p. 34.

πρωκτός, anus; ἐντός, within; ἐκτός, without.

λοφός, crest or tuft.

γυμνός, naked; λαιμός, throat.

κύκλος, circle; στόμα, mouth.

κτείς, κτενός, comb.

Miss E. C. Jelly, Synonymic Cat. Recent Marine Bryozoa, London,

Zeitschr. wiss. Zool. xxi. 1871, p. 421.

Preface xxvii Doctrine of Separation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . 21

25 Agency Law�� 438