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vi CONTEN TS
Case Analysis 6.1 Blake v. Giustibelli 115 Chapter 10

■ Digital Update: Revenge Porn and Invasion of Privacy 119 Criminal Law and Cyber Crime 187
Intentional Torts against Property 122
Unintentional Torts—Negligence 124 Civil Law and Criminal Law 187
Case 6.2 Bogenberger v. Pi Kappa Alpha Corporation, Inc. 125 Criminal Liability 189
Defenses to Negligence 128 ■ Digital Update: Using Twitter to Cause Seizures—
Spotlight on the Seattle Mariners A Crime? 189
Case 6.3 Taylor v. Baseball Club of Seattle, LP 129 Case 10.1 United States v. Crabtree 190
■ Managerial Strategy: The Criminalization of American
Chapter 7 Business 192
Strict Liability and Product Liability 134 Types of Crimes 193
Spotlight on White-Collar Crime
Strict Liability 134 Case 10.2 People v. Sisuphan 195
Product Liability 135 Defenses to Criminal Liability 199
Case Analysis 7.1 Schwarck v. Arctic Cat, Inc. 136 Criminal Procedures 201
Strict Product Liability 137 Cyber Crime 204
Case 7.2 Stange v. Janssen Pharmaceuticals, Inc. 140 Case Analysis 10.3 United States v. Warner 205
■ Managerial Strategy: When Is a Warning Legally
Bulletproof? 142 Chapter 11
Defenses to Product Liability 143
International and Space Law 211
Case 7.3 VeRost v. Mitsubishi Caterpillar Forklift America, Inc. 144
International Law 211
Chapter 8 Case 11.1 Rubin v. Islamic Republic of Iran 215
Intellectual Property Rights 150 Doing Business Internationally 217
■ Ethics Today: Is It Ethical (and Legal) to Brew
Trademarks and Related Property 150 “Imported” Beer Brands Domestically? 217
Classic Case 8.1 The Coca-Cola Co. v. The Koke Regulation of Specific Business Activities 219
Co. of America 150 Case 11.2 Changzhou Trina Solar Energy Co., Ltd. v.
Case 8.2 Headspace International, LLC v. Podworks Corp. 152 United States International Trade Commission 220
■ Global Insight: ALEVE versus FLANAX—Same Pain Killer, International Dispute Resolution 222
But in Different Countries 154 U.S. Laws in a Global Context 223
Patents 157 Spotlight on International Torts
Copyrights 159 Case 11.3 Daimler AG v. Bauman 223
Case Analysis 8.3 Winstead v. Jackson 161 Space Law 225
Trade Secrets 164 Unit Two Task-Based Simulation 230
International Protection for Intellectual Property 164 Unit Two Application and Ethics:
One of the Biggest Data Breaches Ever 231
Chapter 9
Internet Law, Social Media, and Privacy 170
Unit Three
Internet Law 170
Spotlight on Internet Porn
The Commercial Environment 235
Case 9.1 Hasbro, Inc. v. Internet Entertainment
Group, Ltd. 173 Chapter 12
Copyrights in Digital Information 174
■ Digital Update: Riot Games, Inc., Protects Its Online Video
Formation of Traditional and E-Contracts 236
Game Copyrights 175 An Overview of Contract Law 236
Case 9.2 BMG Rights Management (US), LLC v. Cox Agreement 240
Communications, Inc. 176 Classic Case 12.1 Lucy v. Zehmer 240
Social Media 178 Case Analysis 12.2 Hinkal v. Pardoe 245
Online Defamation 180 E-Contracts 247
Other Actions Involving Online Posts 181 Consideration 250
Case Analysis 9.3 David v. Textor 182 Spotlight on Nike
Privacy 183 Case 12.3 Already, LLC v. Nike, Inc. 253
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
C ONT E NT S vii
Contractual Capacity 254 Liquidation Proceedings 330

Legality 256 Case 15.2 In re Anderson 336
Case 12.4 Kennedy v. Shave Barber Co. 257 ■ Ethics Today: Should There Be More Relief for Student
Form—The Writing Requirement 259 Loan Defaults? 339
■ Managerial Strategy: Creating Liability Waivers That Are Reorganizations 340
Not Unconscionable 260 Bankruptcy Relief under Chapter 12 and Chapter 13 341
Third Party Rights 261 Case 15.3 In re Chamberlain 343
Unit Three Task-Based Simulation 349
Chapter 13 Unit Three Application and Ethics:
Nondisclosure Agreements 350
Contract Performance, Breach, and
Remedies 265
Unit Four
Voluntary Consent 265
Case 13.1 McCullough v. Allstate Property and Casualty The Business and Employment
Insurance Co. 267 Environment 353
Performance and Discharge 270
Classic Case 13.2 Jacob & Youngs v. Kent 271
Chapter 16
■ Ethics Today: When Is Impossibility of Performance
a Valid Defense? 276 Small Businesses and Franchises 354
Damages 278 General Considerations for Small Businesses 354
Spotlight on Liquidated Damages Sole Proprietorships 355
Case 13.3 Kent State University v. Ford280 Case Analysis 16.1 A. Gadley Enterprises, Inc. v. Department of
Equitable Remedies for Contract Breach 281 Labor and Industry, Office of Unemployment Compensation
Contract Provisions Limiting Remedies 283 Tax Services 356
■ Digital Update: A Sole Proprietorship, Facebook Poker,
Chapter 14 and Bankruptcy 358
Sales and Lease Contracts 287 Partnerships 359
Case 16.2 Harun v. Rashid 359
The Scope of Articles 2 (Sales) and 2A (Leases) 287 Franchises 367
■ Digital Update: Taxing Web Purchases 289 Case 16.3 S&P Brake Supply, Inc. v. Daimler Trucks North
The Formation of Sales and Lease Contracts 290 America, LLC 370
Case 14.1 Toll Processing Services, LLC v. Kastalon, Inc. 291
Classic Case 14.2 Jones v. Star Credit Corp. 296
Chapter 17
Title, Risk, and Insurable Interest 297
■ Managerial Strategy: Commercial Use of Drones 299 Limited Liability Business Forms 375
erformance Obligations in Sales and Lease Contracts 302
P The Limited Liability Company 375
Remedies for Breach of Sales and Lease Contracts 306 Case 17.1 Hodge v. Strong Built International, LLC 377
Spotlight on Baseball Cards LLC Management and Operation 379
Case 14.3 Fitl v. Strek 309 ■ Managerial Strategy: Can a Person Who Is Not a Member
Warranties 311 of a Protected Class Sue for Discrimination? 380
Contracts for the International Sale of Goods 313 Case 17.2 Schaefer v. Orth 381
Appendix to Chapter 14: An Example of a Contract for the Dissociation and Dissolution of an LLC 382
International Sale of Coffee 318 Case Analysis 17.3 Reese v. Newman 383
Limited Liability Partnerships 385
Chapter 15 Limited Partnerships 386
Creditor-Debtor Relations and
Bankruptcy 322 Chapter 18
Corporations 392
Laws Assisting Creditors 322
Mortgages 326 Nature and Classification 392
Case 15.1 Banc of California, N.A. v. Madhok 328 ■ Digital Update: Programs That Predict Employee
Protection for Debtors 329 Misconduct 394
The Bankruptcy Code 329 Case 18.1 Drake Manufacturing Co. v. Polyflow, Inc. 394
viii CONTE NTS
Case 18.2 Greenfield v. Mandalay Shores Community efenses to Employment Discrimination 473
D
Association 398 Affirmative Action 474
Corporate Formation and Powers 399
■ Global Insight: Does Cloud Computing Have a Chapter 22
Nationality? 403
Immigration and Labor Law 478
Piercing the Corporate Veil 403
Corporate Directors and Officers 405 Immigration Law 478
Classic Case 18.3 Guth v. Loft, Inc. 408 Federal Labor Laws 480
Shareholders 410 Union Organization 482
Major Business Forms Compared 415 ■ Managerial Strategy: Union Organizing Using a Company’s
E-Mail System 483
Chapter 19 Case Analysis 22.1 Contemporary Cars, Inc. v. National Labor
Agency Relationships 420 Relations Board 483
Strikes and Lockouts 486
Agency Law 420 Unfair Labor Practices 487
■ Ethics Today: Is It Fair to Classify Uber and Lyft Drivers Case 22.2 Staffing Network Holdings, LLC v. National Labor
as Independent Contractors? 422 Relations Board 488
Formation of the Agency Relationship 423 Case 22.3 Unite Here! Local 5 v. National Labor Relations
Case 19.1 Riedel v. Akron General Health System 424 Board 490
Duties, Rights, and Remedies of Agents and Principals 425 Unit Four Task-Based Simulation 494
Agent’s Authority 429 Unit Four Application and Ethics:
Case 19.2 Dearborn West Village Condominium Association v. Health Insurance and Small Business 495
Makki 430
Liability in Agency Relationships 432
■ Global Insight: Islamic Law and Respondeat Superior 434 Unit Five
Case Analysis 19.3 M.J. v. Wisan 435 The Regulatory Environment 499
Termination of an Agency 437
Chapter 20 Chapter 23
Employment Law 442 Administrative Agencies 500
Employment at Will 442 The Practical Significance of Administrative Law 500
Case 20.1 Caterpillar, Inc. v. Sudlow 443 Agency Creation and Powers 501
Wages, Hours, and Layoffs 445 Case 23.1 Simmons v. Smith 504
■ Ethics Today: Is It Fair to Dock Employees’ Pay The Administrative Process 506
for Bathroom Breaks? 446 Case 23.2 Craker v. Drug Enforcement Administration 509
Case 20.2 Encino Motorcars, LLC v. Navarro 446 Judicial Deference to Agency Decisions 510
Family and Medical Leave 448 Case Analysis 23.3 Olivares v. Transportation Security
Case 20.3 Ballard v. Chicago Park District 449 Administration 511
ealth, Safety, and Income Security 450
H Public Accountability 513
Employee Privacy Rights 453
Chapter 24
Chapter 21 Consumer Protection 517
Employment Discrimination 457
Advertising, Marketing, and Sales 517
Title VII of the Civil Rights Act 457 Case 24.1 POM Wonderful, LLC v. Federal Trade
■ Digital Update: Hiring Discrimination Based on Social Commission 518
Media Posts 461 ■ Digital Update: Regulating “Native” Ads on the
Case Analysis 21.1 Bauer v. Lynch 462 Internet 521
Case 21.2 Young v. United Parcel Service, Inc. 463 Case 24.2 Haywood v. Massage Envy Franchising, LLC 522
Case 21.3 Franchina v. City of Providence 467 Labeling and Packaging Laws 524
Discrimination Based on Age 468 Protection of Health and Safety 525
Discrimination Based on Disability 470 Credit Protection 526
Discrimination Based on Military Status 472 Case Analysis 24.3 Santangelo v. Comcast Corp. 528
C O NT E NT S ix
Chapter 25 Case 27.2 Candelore v. Tinder, Inc. 579

Environmental Law 534 Enforcement and Exemptions 582
Case 27.3 TransWeb, LLC v. 3M Innovative Properties Co. 583
Common Law Actions 534 U.S. Antitrust Laws in the Global Context 584
Federal, State, and Local Regulations 535 ■ Digital Update: The European Union Issues Record Fines
Case Analysis 25.1 Friends of Animals v. Clay 535 against Google in Antitrust Case 586
■ Global Insight: Can a River Be a Legal Person? 538
Air Pollution 538 Chapter 28
Case 25.2 United States v. O’Malley 540
Water Pollution 542
Investor Protection and Corporate
Case 25.3 United States v. Fox 543 Governance 590
Toxic Chemicals and Hazardous Waste 545 The Securities Act of 1933 590
■ Managerial Strategy: The SEC’s Pay-Ratio Disclosure
Chapter 26 Rule 592
Real Property and Land-Use Control 550 ■ Digital Update: Investment Crowdfunding—Regulations
and Restrictions 594
The Nature of Real Property 550 Case 28.1 Omnicare, Inc. v. Laborers District Council
Ownership and Other Interests in Real Property 552 Construction Industry Pension Fund 596
Case 26.1 In the Matter of the Estate of Nelson 553
The Securities Exchange Act of 1934 598
Transfer of Ownership 557 Classic Case 28.2 SEC v. Texas Gulf Sulphur Co. 599
Spotlight on Sales of Haunted Houses
Case 28.3 Singer v. Reali 603
Case 26.2 Stambovsky v. Ackley 558
State Securities Laws 605
Case Analysis 26.3 Montgomery County v. Bhatt 561
Corporate Governance 606
Limitations on the Rights of Property Owners 563 Unit Five Task-Based Simulation 612
■ Ethics Today: Should Eminent Domain Be Used to Promote
Unit Five Application and Ethics:
Private Development? 564
Climate Change 613
Land-Use Control and Zoning 565
Appendices
Chapter 27 A How to Brief Cases and Analyze Case Problems A–1
Antitrust Law 571 B Answers to the Issue Spotters A–4
The Sherman Antitrust Act 571 C Sample Answers for Business Case Problems with
Section 1 of the Sherman Act 572 Sample Answer A–10
Section 2 of the Sherman Act 575
Case Analysis 27.1 McWane, Inc. v. Federal Trade Glossary G–1
Commission 576 Table of Cases TC–1
The Clayton Act 578 Index I–1
Concept Summaries
1.1 Sources of American Law 5 6.2 Intentional Torts against Property 124
1.2 The Common Law Tradition 11 7.1 Defenses to Product Liability 147
1.3 Schools of Jurisprudential Thought 13 10.1 Types of Crimes 199
4.1 Jurisdiction 72 12.1 Types of Contracts 239
4.2 Types of Courts 78 12.2 Methods by Which an Offer Can Be Terminated 244
5.1 Pretrial Procedures 98 14.1 Offer, Acceptance, and Consideration
5.2 Trial Procedures 101 under the UCC 295
5.3 Posttrial Options 103 15.1 Forms of Bankruptcy Relief Compared 345
6.1 Intentional Torts against Persons 121 21.1 Coverage of Employment Discrimination Laws 473
x
Exhibits
1–1 Areas of the Law That Can 15–1 Suretyship and Guaranty Parties 325
Affect Business Decision Making 3 15–2 Collection and Distribution of Property
1–2 Equitable Maxims 7 in Most Voluntary Bankruptcies 337
1–3 Procedural Differences between 16–1 The FTC’s Franchise Rule Requirements 368
an Action at Law and an Action in Equity 7 17–1 Management of an LLC 379
1–4 National Reporter System—Regional/Federal 15 17–2 Provisions Commonly Included in an LLC Operating
1–5 How to Read Citations 17 Agreement 381
1–6 A Sample Court Case 20 17–3 A Comparison of General Partnerships and Limited
2–1 Protections Guaranteed by the Bill of Rights 31 Partnerships 387
2–2 Federal Legislation Relating to Privacy 41 18–1 Results of Cumulative Voting 412
3–1 An Analysis of Ethical Approaches 18–2 Major Forms of Business Compared 415
to the Sample Dilemma 57 19–1 Duties of the Agent 426
4–1 Exclusive and Concurrent Jurisdiction 70 19–2 Duties of the Principal 427
4–2 The State and Federal Court Systems 73 22–1 Good Faith versus Bad Faith in Collective
4–3 Geographic Boundaries of the U.S. Courts Bargaining 485
of Appeals and U.S. District Courts 77 22–2 Basic Unfair Labor Practices 487
4–4 Basic Differences in the Traditional Forms of ADR 80 23–1 Executive Departments and Important
5–1 Stages in a Typical Lawsuit 87 Subagencies 502
5–2 A Typical Complaint 89 23–2 Selected Independent Regulatory Agencies 503
5–3 Pretrial Motions 91 23–3 The Formal Administrative Agency Adjudication
8–1 Forms of Intellectual Property 165 Process 508
10–1 Key Differences between Civil Law 24–1 Selected Areas of Consumer Law Regulated by
and Criminal Law 187 Statutes 518
10–2 Civil (Tort) Lawsuit and Criminal 25–1 Major Federal Environmental Statutes 537
Prosecution for the Same Act 188 25–2 Environmental Impact Statements 539
10–3 Major Procedural Steps in a Criminal Case 203 25–3 Pollution-Control Equipment Standards under
11–1 The Legal Systems of Selected Nations 213 the Clean Air Act and the Clean Water Act 543
11–2 Examples of International Principles and Doctrines 216 26–1 Interests in Real Property 557
12–1 Examples of Agreements That Lack Consideration 252 27–1 Required Elements of a Sherman Act Violation 572
13–1 Mistakes of Fact 266 27–2 Exemptions to Antitrust Enforcement 585
13–2 Discharge by Performance 273 28–1 Exempt Transactions under the 1933 Securities
13–3 Contract Discharge 277 Act 593
13–4 Remedies for Breach of Contract 283 28–2 Comparison of Coverage, Application, and Liability
14–1 The Law Governing Contracts 288 under SEC Rule 10b-5 and Section 16(b) 601
14–2 Major Differences between Contract Law 28–3 Some Key Provisions of the Sarbanes-Oxley
and Sales Law 296 Act Relating to Corporate Accountability 608
xi
Preface
The study of the legal environment of business has (and businesspersons) make ethical decisions. We present
universal applicability. A student entering any field of The IDDR Approach in Chapter 3 (Ethics in Business).
business must have at least a passing understanding This systematic approach provides students with a clear
of the legal environment in order to function in the real step-by-step process to analyze the legal and ethical
world. The Legal Environment of Business, Eleventh Edi- implications of decisions that arise in everyday business
tion, provides the information that students need in an operations.
interesting and contemporary way. The new IDDR Approach uses four logical steps:
Additionally, students preparing for a career in • STEP 1: Inquiry
accounting, government and political science, econom- • STEP 2: Discussion
ics, and even medicine can use much of the information • STEP 3: Decision
they learn in a legal environment course. In fact, every • STEP 4: Review
individual throughout his or her lifetime can benefit Students can remember the first letter of each step easily
from knowledge of contracts, employment law, intellec- by using the phrase: “I Desire to Do Right.”
tual property rights, real property, and other legal envi-
ronment topics. Consequently, we have fashioned this Completely Revised Chapter 3 on Ethics in
text as a useful “tool for living” for all of your students Business A newly revised Chapter 3 details each IDDR
(including those taking the CPA exam). step’s goals and then provides a Sample Scenario to help
The Eleventh Edition of this text is more modern, students apply this new approach to ethical decision mak-
exciting, and visually appealing than ever before. We ing. In addition to introducing the IDDR Approach, we
have added new features, cases, concept summaries, and have made Chapter 3 more current and more practical,
exhibits. The text also contains hundreds of highlighted and reduced the amount of theoretical ethical principles it
and numbered Cases in Point and Examples, as well as presents. The chapter now focuses on real-life application
new case problems and unit-ending Task-Based Simu- of ethical principles.
lations. Special pedagogical elements within the text
focus on legal, ethical, global, and corporate issues while New A Question of Ethics Case Problems
addressing core curriculum requirements. throughout Text After Chapter 3, to reinforce the
application of the IDDR Approach, students are asked
to use its various steps when answering each chapter’s
A Question of Ethics. To challenge students in analyzing
Highlights of the Eleventh Edition the ethical angles in today’s business legal environment,
we have replaced every A Question of Ethics problem
Instructors have come to rely on the coverage, accuracy, throughout the text to be based on a 2017, 2018,
and applicability of The Legal Environment of Business. To or 2019 case.
make sure that our text engages your students, solidifies
their understanding of legal concepts, and provides the
best teaching tools available, we offer the following. A Variety of Exciting Features
The Eleventh Edition of The Legal Environment of Busi-
The IDDR Approach: ness is filled with numerous features specifically designed
to cover current legal topics of high interest.
A New Emphasis on Ethics Each feature is related to a topic discussed in the text
The ability of businesspersons to reason through ethical and ends with Critical Thinking or Business Questions.
issues is now more important than ever. For the Eleventh Suggested answers to all of the Critical Thinking and
Edition of The Legal Environment of Business, we have Business Questions are included in the Answers Manual
created a completely new framework for helping students for this text.
xiii
xiv P refac E
1. Ethics Today. These features focus on the ethical Social media have entered the mainstream and become
aspects of a topic discussed in the text to emphasize a part of everyday life for many businesspersons. In
that ethics is an integral part of a legal environment this special chapter, we give particular emphasis to the
of business course. Examples include the following: legal issues surrounding the Internet, social media, and
• Applying the IDDR Framework (Chapter 3) privacy. We also recognize this trend throughout the text
• Is It Ethical (and Legal) to Brew “Imported” Beer by incorporating the Internet and social media as they
Brands Domestically? (Chapter 11) relate to the topics under discussion.
• Should There Be More Relief for Student Loan
Defaults? (Chapter 15)
• Is It Fair to Classify Uber and Lyft Drivers as
Coverage of Topics
Independent Contractors? (Chapter 19) on the Revised CPA Exam
2. Global Insight. These features illustrate how other In 2016, the American Institute of CPAs (AICPA) issued
nations deal with specific legal concepts to give its final report on “Maintaining the Relevance of the Uni-
students a sense of the global legal environment. form CPA Exam.” In addition to more focus on c ritical
Subjects include the following: thinking, authentic applications, and problem solving,
the content of the exam has changed to some extent.
• Aleve versus Flanax—Same Pain Killer, but in The Eleventh Edition of The Legal Environment of
Different Countries (Chapter 8) Business incorporates information on the new topics on
• Does Cloud Computing Have a Nationality? the CPA exam, specifically addressing the following:
(Chapter 18)
• Islamic Law and Respondeat Superior (Chapter 19) • Agency law (worker classification and duties of
• Can a River Be a Legal Person? (Chapter 25) principals and agents)
• Employment law (Affordable Care Act)
3. Digital Update. These features are designed to • Business organizations (corporate governance issues,
examine cutting-edge cyberlaw topics, such as the including Sarbanes-Oxley compliance and criminal
following: liability for organizations and management)
• Does Everyone Have a Constitutional Right to In addition, the Eleventh Edition continues to cover
Use Social Media? (Chapter 2) topics that are essential to new CPAs who are working
• Should Employees Have a “Right of with sophisticated business clients, regardless of whether
Disconnecting”? (Chapter 3) the CPA exam covers these topics.
• Revenge Porn and Invasion of Privacy (Chapter 6) We recognize that today’s business leaders must often
• Riot Games, Inc., Protects Its Online Video think “outside the box” when making business d ecisions.
Game Copyrights (Chapter 9) For this reason, we strongly emphasize business and
• Hiring Discrimination Based on Social Media critical thinking elements throughout the text. We have
Posts (Chapter 21) carefully chosen cases, features, and problems that are rel-
4. Managerial Strategy. These features emphasize evant to business operations. Almost all of the features
the management aspects of business law and the and cases conclude with some type of critical thinking
legal environment. Topics include the following: question. For those teaching future CPAs, this is con-
sistent with the new CPA exam’s focus on higher-order
• Should You Consent to Have Your Business Case
skills, such as critical thinking and problem solving.
Decided by a U.S. Magistrate Judge? (Chapter 4)
• When Is a Warning Legally Bulletproof? (Chapter 7)
• The Criminalization of American Business Highlighted and Numbered Examples
(Chapter 10)
• Commercial Use of Drones (Chapter 14) and Case in Point Illustrations
• The SEC’s Pay-Ratio Disclosure Rule (Chapter 28) Many instructors use cases and examples to illustrate
how the law applies to business. Students understand
Entire Chapter on Internet Law, legal concepts better in the context of their real-world
application. Therefore, for this edition of The Legal
Social Media, and Privacy Environment of Business, we have expanded the number
The Eleventh Edition again includes a whole chapter of highlighted numbered Examples and Cases in Point in
(Chapter 9) on Internet Law, Social Media, and Privacy. every chapter.
P reface xv
Examples illustrate how the law applies in a specific Cases and Spotlight Case Problems useful to
situation. Cases in Point present the facts and issues of illustrate the legal concepts under discussion, and
an actual case and then describe the court’s decision and students will enjoy studying the cases because they
rationale. These two features are uniquely designed involve interesting and memorable facts. Other
and consecutively numbered throughout each chapter for cases have been chosen as Classic Cases because
easy reference. The Examples and Cases in Point are inte- they establish a legal precedent in a particular area
grated throughout the text to help students better under- of law.
stand how courts apply legal principles in the real world. 2. Critical Thinking Section. Each case concludes
with a Critical Thinking section, which normally
includes two questions. The questions may address
Task-Based Simulations: Legal Environment, E-Commerce, Economic,
A New Unit-Ending Feature Environmental, Ethical, Global, Political, or
A new Task-Based Simulation feature concludes each of the Technological issues, or they may ask What If the
five units in the Eleventh Edition. This feature presents a Facts Were Different? Each Classic Case ends with an
hypothetical business situation and then asks a series of Impact of This Case on Today’s Law discussion and a
questions about how the law applies to various actions Critical Thinking question.
3. Longer Excerpts for Case Analysis. We have also
taken by the firm. To answer the questions, the students
must apply the laws discussed throughout the unit. included one longer case excerpt in many chapters—
In addition, each unit ends with an Application and labeled Case Analysis—followed by three Legal
Ethics feature that provides additional analysis on a topic Reasoning Questions. The questions are designed to
related to that unit and explores its ethics ramifications. guide students’ analysis of the case and build their
Each of the features ends with two questions—a Critical legal reasoning skills. These Case Analysis features
Thinking question and an Ethics Question. Some topics may be used for case-briefing assignments.
covered include the following: Suggested answers to all case-ending questions and case
• One of the Biggest Data Breaches Ever (Unit 2) problems are included in the Answers Manual for this
• Nondisclosure Agreements (Unit 3) text.
• Health Insurance and Small Business (Unit 4)
• Climate Change (Unit 5) Business Case Problem with Sample Answer
Suggested answers to the questions in the new Task-Based In response to those instructors who would like students
Simulation features (and the Application and Ethics fea- to have sample answers available for some of the questions
tures) are included in the Answers Manual for this text. and case problems, we include a Business Case Problem
with Sample Answer in each chapter. The Business Case
Problem with Sample Answer is based on an actual case,
New Cases and Case Problems and students can find a sample answer in Appendix C at
For the Eleventh Edition of The Legal Environment of the end of this text.
Business, we have added thirty-one new cases, thirty-
five new regular case problems, and twenty-eight new A Exhibits and Concept Summaries
Question of Ethics case problems from 2017, 2018, and
2019. The new cases and problems have been carefully We have spent considerable effort developing and design-
selected to illustrate important points of law and to be of ing all of the exhibits and concept summaries in this text
high interest to students and instructors. We have made to achieve better clarity and more visual appeal.
it a point to find recent cases that enhance learning and
are relatively easy to understand. Practice and Review
1. Spotlight Cases and Classic Cases. Certain cases In the Eleventh Edition of The Legal Environment of
and case problems that are exceptionally good Business, we offer a Practice and Review feature at the end
teaching cases are labeled as Spotlight Cases and of every chapter to help solidify students’ understanding
Spotlight Case Problems. Examples include Spotlight of the chapter materials. Each Practice and Review feature
on Beer Labels, Spotlight on Gucci, Spotlight on presents a hypothetical scenario and then asks a series of
Nike, Spotlight on the Seattle Mariners and Spotlight questions that require students to identify the issues and
on Verizon. Instructors will find these Spotlight apply the legal concepts discussed in the chapter.
xvi P refac E
These features are designed to help students review and assessments into a singular Learning Path, Mind-
the chapter topics in a simple and interesting way and Tap guides students through their course with ease and
see how the legal principles discussed in the chapter engagement.
affect the world in which they live. An instructor can Instructors can personalize the experience by cus-
use these features as the basis for in-class discussion or tomizing Cengage Learning resources and adding their
encourage students to use them for self-study prior to own content via apps that integrate into the MindTap
completing homework assignments. Suggested answers framework seamlessly with Learning Management Sys-
to the questions posed in the Practice and Review fea- tems (LMS).
tures can be found in the Answers Manual for this text. The MindTap product provides a four-step Learn-
ing Path, Case Repository, Adaptive Test Prep, and an
Interactive eBook designed to meet instructors’ needs
Issue Spotters while also allowing instructors to measure skills and
At the conclusion of each chapter, we have included a outcomes with ease. Each item is assignable and grad-
special section with two Issue Spotters related to the chap- able. This gives instructors knowledge of class standings
ter’s topics. These questions facilitate student learning and students’ mastery of concepts that may be difficult.
and review of the chapter materials. Sample answers to Additionally, students gain knowledge about where they
the Issue Spotters in every chapter are provided in Appen- stand—both individually and compared to the highest
dix B and in the Answers Manual for this text. performers in class.
Time-Limited Group Assignment Cengage Testing Powered by Cognero

For instructors who want their students to engage in Cengage Testing Powered by Cognero is a flexible, online
group projects, each chapter of the Eleventh Edition system that allows you to do the following:
includes a special Time-Limited Group Assignment. Each • Author, edit, and manage Test Bank content from
activity begins by describing a business scenario and then multiple Cengage Learning solutions.
poses several questions pertaining to the scenario. Each • Create multiple test versions in an instant.
question is to be answered by a different group of stu- • Deliver tests from your LMS, your classroom,
dents based on the information in the chapter. These or wherever you want.
projects may be used in class to spur discussion or as
homework assignments. Suggested answers to the Time-
Start Right Away! Cengage Testing Powered by Cog-
Limited Group Assignments are included in the Answers
nero works on any operating system or browser.
Manual for this text.
• Use your standard browser; no special installs or
downloads are needed.
• Create tests from school, home, the coffee shop—
Supplements/Digital Learning anywhere with Internet access.
Systems
What Will You Find?
The Legal Environment of Business, Eleventh Edition, • Simplicity at every step. A desktop-inspired
provides a comprehensive supplements package designed interface features drop-down menus and familiar
to make the tasks of teaching and learning more enjoy- intuitive tools that take you through content
able and efficient. The following supplements and digital creation and management with ease.
products are offered in conjunction with the text. • Full-featured test generator. Create ideal
assessments with your choice of fifteen question
MindTap for types—including true/false, multiple choice,
opinion scale/Likert, and essay. Multi-language
The Legal Environment of Business support, an equation editor, and unlimited
MindTap™ for The Legal Environment of Business, metadata help ensure your tests are complete and
Eleventh Edition, is a fully online, highly personal- compliant.
ized learning experience built upon Cengage Learning • Cross-compatible capability. Import and export
content. By combining readings, multimedia, activities, content to and from other systems.
P reface xvii
Instructor’s Companion Website Inquiry, Discussion, Decision, and Review.)

There is a new Exhibit and a new Ethics Today
The Instructor’s Companion Website for the Eleventh feature that illustrates how to apply the IDDR
Edition of The Legal Environment of Business contains the framework. The step-by-step IDDR Approach is
following supplements: then reiterated in the problems labeled A Question
• Instructor’s Manual. Includes sections entitled of Ethics that appear in every subsequent chapter.
“Additional Cases Addressing This Issue” at the There are five new Cases in Point, seven new
end of selected case synopses. Examples, a new case, and four new case problems
• Answers Manual. Provides answers to all in the chapter. A Digital Update feature explores
questions presented in the text, including the whether employees have a right to disconnect
questions in each case and feature, the Practice from their electronic devices after work hours.
and Review, the Issue Spotters, the Business The chapter concludes with a new Time-
Scenarios and Case Problems, and the unit-ending Limited Group Assignment on corporate social
Task-Based Simulation and Application and Ethics responsibility.
features. • Chapter 8 (Intellectual Property Rights)—The
• Test Bank. A comprehensive test bank that materials on intellectual property rights have
contains multiple-choice, true/false, and short been thoroughly revised and updated to reflect
essay questions. the most current laws and trends. A new Global
• Case-Problem Cases. Insight feature discusses confusion in the context
• Case Printouts. of trademark infringement. There is a new case,
• PowerPoint Slides. a new Example, and two new case problems.
• Lecture Outlines. • Chapter 9 (Internet Law, Social Media, and
• MindTap Integrated Syllabus. Privacy)— This chapter, which covers legal
issues that are unique to the Internet, has been
thoroughly revised and updated for the Eleventh
Edition. It includes a new case, four new Cases in
For Users of the Previous Edition Point, and a new Digital Update feature on how
copyright law applies to video games.
First of all, we want to thank you for helping make The
• Chapter 11 (International and Space Law)—The
Legal Environment of Business one of the best-selling legal
chapter now includes a section on space law—
environment texts in America today. Second, we want to
international and domestic. There are two new
make you aware of the numerous additions and changes
cases presented, as well as an updated discussion
that we have made in this edition—many in response to
of NAFTA (now called USMCA) and of a United
comments from reviewers.
States Supreme Court decision concerning the
Every chapter of the Eleventh Edition has been revised
Alien Tort Statute. The chapter also includes an
as necessary to incorporate new developments in the law
updated Ethics Today feature on the domestic
or to streamline the presentations. Other major changes
brewing of imported beer brands.
and additions for this edition include the following:
• Chapter 14 (Sales and Lease Contracts)—We
• Chapter 2 (Business and the Constitution)—The have streamlined and simplified our coverage of
chapter has been revised and updated to be more the Uniform Commercial Code and added a new
business oriented. It has a new case, two new case case, a new Example, six new Cases in Point, and
problems, and a new Digital Update feature on a one new case problem.
United States Supreme Court decision concerning • Chapter 20 (Employment Law), Chapter 21
whether everyone has a constitutional right to use (Employment Discrimination), and Chapter 22
social media. (Immigration and Labor Law)—These three
• Chapter 3 (Ethics in Business)—The chapter chapters covering employment law have been
contents have been revised and updated to be thoroughly updated to include discussions of
more practical for businesspersons. A new section legal issues facing employers today. Chapter 20
introduces a systematic approach to resolving a new case, three new Cases in Point, one new
ethical issues called the IDDR Approach. Example, and two new case problems. It also
(“I Desire to Do Right” is a useful mnemonic includes an Ethics Today feature on whether
device for remembering the individual steps: employees should receive paid bathroom breaks.
xviii P refac E
Chapter 21 has a new case, five new Cases in advertising. It has a new case, three new Cases in
Point, a new concept summary, and two new Point, and three new case problems.
case problems. A revised Digital Update feature • Chapter 28 (Investor Protection and Corporate
discusses hiring discrimination based on social Governance)—The contents of this chapter
media posts. Chapter 22 includes a new case and have been thoroughly revised and updated
a Managerial Strategy feature on union organizing in light of the amendments to Regulation A
using company e-mail systems. We discuss (Regulation A1). There is a new Digital Update
relevant United States Supreme Court decisions feature titled Investment Crowdfunding—
affecting employment issues throughout these Regulations and Restrictions, as well as a new
chapters. example and a new exhibit on this topic.
• Chapter 24 (Consumer Protection)—The chapter In addition, there is a new subsection, a new
has been revised and updated and includes a case, three new Cases in Point, and two new case
new subsection on state laws concerning false problems.
Acknowledgments for Previous Editions

Since we began this project many years ago, a sizable number of legal environment of business professors and others
have helped us in revising the book, including the following:
Peter W. Allan Paul F. Dwyer David Redle
Victor Valley College, California Siena College, New York University of Akron, Ohio
William Dennis Ames Nena Ellison Larry A. Strate
Indiana University of Pennsylvania Florida Atlantic University University of Nevada, Las Vegas
Thomas M. Apke Joan Gabel Dawn Swink
California State University, Fullerton Florida State University Minnesota State University
Linda Axelrod Gamewell Gant Brian Terry
Metropolitan State University, Minnesota Idaho State University Johnson and Wales University,
Jane Bennett Jacqueline Hagerott Rhode Island
Orange Coast College, California Franklin University, Ohio John Theis
Robert C. Bird Arlene M. Hibschweiler Colorado Mesa University
University of Connecticut State University of New York at Fredonia William H. Volz
Dean Bredeson Barbara W. Kincaid Wayne State University, Michigan
University of Texas at Austin Southern Methodist University, Texas Michael G. Walsh
Sam Cassidy Marty P. Ludlum Villanova University, Pennsylvania
University of Denver, Colorado Oklahoma City Community College Glynda White
Thomas D. Cavenagh Diane May College of Southern Nevada
North Central College, Illinois Winona State University, Minnesota LeVon E. Wilson
Angela Cerino Marty Salley McGee Western Carolina University,
Villanova University, Pennsylvania South Carolina State University North Carolina
Corey Ciocchetti Robert Mitchum John A. Wrieden
University of Denver, Colorado Arkansas State University Beebe Florida International University
David Cooper Melanie Morris Eric D. Yordy
Fullerton College, California Raritan Valley Community College, New Jersey Northern Arizona University
Steven R. Donley Kathleen A. Phillips Mary-Kathryn Zachary
Cypress College, California University of Houston, Texas State University of West Georgia
P reface xix
As in all past editions, we owe a debt of extreme grat- application of her superb research and editorial skills. We
itude to the numerous individuals who worked directly also wish to thank William Eric Hollowell, who coau-
with us or at Cengage. In particular, we wish to thank thored the Instructor’s Manual and the Test Bank, for his
Vicky True-Baker and Michael Giffen, senior product excellent research efforts. We were fortunate enough to
managers; Joe Sabatino, product director; Martha Con- have the copyediting of Jeanne Yost and the proofreading
way and Julia Chase, senior content managers; and Lisa of Kristi Wiswell. We are grateful for the many efforts of
Elliot, Cengage subject matter expert. We also thank Sarah Vickie Reierson, Roxanna Lee, and Suzanne Jasin, which
Huber and Courtney Wolstoncroft, learning designers; helped to ensure an error-free text.
Jennifer Chinn and Stephen McMillian, digital delivery Through the years, we have enjoyed an ongoing cor-
leads; Christian Wood and Nick Perez, product assistants; respondence with many of you who have found points
Chris Doughman, designer; Carly Belcher, intellectual on which you wish to comment. We continue to wel-
property project manager; and Ashley Maynard, intellec- come all comments and promise to respond promptly.
tual property analyst. We are indebted as well to the staff By incorporating your ideas, we can continue to write a
at SPi Global, our compositor, as well as Ann Borman, legal environment text that is best for you and best for
project manager, for accurately generating pages for this your students.
text and making it possible for us to meet our ambitious
schedule for print and digital products.
We especially wish to thank Katherine Marie Silsbee F.B.C.
for her management of the entire project, as well as for the R.L.M.
To my parents and sisters.
F.B.C.
For Vicky,
We’ve had so many years
working together, and they
have been wonderful,
productive, and exciting.
I have always valued
your professionalism.
R.L.M.
Unit One
The Foundations
1. Law and Legal Reasoning
2. Business and the Constitution
3. Ethics in Business
4. Courts and Alternative Dispute Resolution
5. Court Procedures
C h a p te r 1
Law and Legal Reasoning
O
ne of the most important func- enforceable rules governing relation- Hellix Communications, Inc., wants
tions of law in any society is to ships among individuals and between to buy a competing cellular company.
provide stability, predictability, individuals and their society. In some It also wants to offer unlimited data
and continuity so that people can know societies, these enforceable rules may plans once it has acquired this com-
how to order their affairs. If any society consist of unwritten principles of petitor. Management fears that if
is to survive, its citizens must be able behavior. In other societies, they are the company does not expand, one
to determine what is legally right and set forth in ancient or contemporary of its bigger rivals will put it out of
legally wrong. They must know what law codes. In the United States, our business. But Hellix Communications
sanctions will be imposed on them if rules consist of written laws and cour cannot simply buy its rivals. Nor can
they commit wrongful acts. If they suf- decisions created by modern legislative it just offer a low-cost cell-phone
fer harm as a result of others’ wrong- and judicial bodies. Regardless of how plan to its customers. It has to follow
ful acts, they must know how they can such rules are created, they all have the laws pertaining to its proposed
seek compensation. By setting forth the one feature in common: they establish actions. Some of these laws (or regu-
rights, obligations, and privileges of citi- rights, duties, and privileges that are lations) depend on interpretations
zens, the law enables individuals to go consistent with the values and beliefs by those running various regulatory
about their business with confidence of their society or its ruling group. agencies. The rules that control H ellix
and a certain degree of predictability. In this introductory chapter, we Communications’ actions reflect past
Although law has various defini- look at how business law and the and current thinking about how
tions, they all are based on the gen- legal environment affect business large telecommunications companies
eral observation that law consists of decisions. For instance, suppose that should and should not act.
your critical-thinking and legal-reasoning skills. The laws

1–1 Business Activities and the may change, but the ability to analyze and evaluate the
Legal Environment legal (and ethical) ramifications of situations as they arise
is an invaluable and lasting skill.
Laws and government regulations affect almost all business
activities—from hiring and firing decisions to workplace 1–1a Many Different Laws May Affect
safety, the manufacturing and marketing of products,
business financing, and more. To make good business a Single Business Decision
decisions, a basic knowledge of the laws and regulations As you will note, each chapter in this text covers specific
governing these activities is beneficial—if not essential. areas of the law and shows how the legal rules in each
Realize also that, in today’s business world, knowing area affect business activities. Although compartmental-
what conduct can lead to legal liability is not enough. izing the law in this fashion promotes conceptual clarity,
Businesspersons must develop critical thinking and legal it does not indicate the extent to which a number of dif-
reasoning skills so that they can evaluate how various ferent laws may apply to just one decision. Exhibit 1–1
laws might apply to a given situation and determine the illustrates the various areas of the law that may influence
best course of action. business decision making.
Our goal in this text is not only to teach you about ■ Example 1.1 When Mark Zuckerberg, as a Harvard
specific laws, but also to teach you how to think student, first launched Facebook, others claimed that
about the law and the legal environment and to develop Zuckerberg had stolen their ideas for a social networking
2
C h a p te r 1 Law and Legal Reasoning 3
Exhibit 1–1 Areas of the Law That Can Affect Business Decision Making
Contracts
Environmental Intellectual
Law and Sustainability Property
Business
Internet Law,
Decision
Social Media, Making Torts
and Privacy
Product
Sales Liability
site. They filed a lawsuit against him alleging theft of the types of ethical questions that arise in business. For
intellectual property, fraudulent misrepresentation, and instance, all of the unit-ending Application and Ethics fea-
violations of partnership law and securities law. Facebook tures include an Ethical Connection section that explores the
ultimately paid $65 million to settle those claims out of ethical dimensions of a topic treated within the unit. We
court. Since then, Facebook has been sued repeatedly for have also included Ethical Questions for each unit, as well as
violating users’ privacy (and federal laws) by tracking their within many of the cases presented in this text. Ethics Today
website usage and by scanning private messages for pur- features, which focus on ethical considerations in today’s
poses of data mining and user profiling. Facebook’s busi- business climate, appear in selected chapters, including this
ness decisions have also come under scrutiny by federal chapter. A Question of Ethics case problem is included at the
regulators, such as the Federal Trade Commission (FTC), end of every chapter to introduce you to the ethical aspects
and by international authorities, such as the European of specific cases involving real-life situations.
Union. The company settled a complaint filed by the
FTC alleging that Facebook had failed to keep “friends”
lists and other user information private. ■
1–2 Sources of American Law
1–1b Ethics and Business Decision Making American law has numerous sources. Often, these sources
of law are classified as either primary or secondary.
Merely knowing the areas of law that may affect a busi- Primary sources of law, or sources that establish the
ness decision is not sufficient in today’s business world. law, include the following:
Today, business decision makers need to consider not just
whether a decision is legal, but also whether it is ethical. 1. The U.S. Constitution and the constitutions of the
Ethics generally is defined as the principles govern- various states.
ing what constitutes right or wrong behavior. Often, as 2. Statutory law—including laws passed by Congress,
in several of the claims against Facebook just discussed, state legislatures, or local governing bodies.
disputes arise in business because one party feels that he 3. Regulations created by administrative agencies, such
or she has been treated unfairly. Thus, the underlying as the Federal Trade Commission.
reason for bringing some lawsuits is a breach of ethical 4. Case law and common law doctrines.
duties (such as when a partner or employee attempts to Next, we will describe each of these important sources
secretly take advantage of a business opportunity). of law.
Throughout this text, you will learn about the relation- Secondary sources of law are books and articles that
ship between the law and ethics, as well as about some of summarize and clarify the primary sources of law.
4 Un it One The Foundations
Examples include legal encyclopedias, treatises, articles enforcement officials are supposed to alert federal immi-
in law reviews, and compilations of law, such as the gration authorities when they come into contact with
Restatements of the Law (which will be discussed later). undocumented immigrants, so that the immigrants can
Courts often refer to secondary sources of law for guid- be detained for possible deportation. But a number of
ance in interpreting and applying the primary sources of cities across the United States have adopted either local
law discussed here. ordinances or explicit policies that do not follow this pro-
cedure. Police in these cities often do not ask or report the
immigration status of individuals with whom they come
1–2a Constitutional Law into contact. Other places refuse to detain undocumented
The federal government and the states have separate immigrants who are accused of low-level offenses. ■
written constitutions that set forth the general organiza-
tion, powers, and limits of their respective governments. Uniform Laws During the 1800s, the differences
Constitutional law is the law as expressed in these among state laws frequently created difficulties for busi-
constitutions. nesspersons conducting trade and commerce among
According to Article VI of the U.S. Constitution, the the states. To counter these problems, a group of legal
Constitution is the supreme law of the land. As such, it scholars and lawyers formed the National Conference of
is the basis of all law in the United States. A law in viola- Commissioners on Uniform State Laws, or NCCUSL
tion of the Constitution, if challenged, will be declared (www.uniformlaws.org), in 1892. The NCCUSL still
unconstitutional and will not be enforced, no matter exists today. Its object is to draft uniform laws (model
what its source. statutes) for the states to consider adopting.
The Tenth Amendment to the U.S. Constitution Each state has the option of adopting or rejecting a
reserves to the states all powers not granted to the federal uniform law. Only if a state legislature adopts a uniform
government. Each state in the union has its own consti- law does that law become part of the statutory law of that
tution. Unless it conflicts with the U.S. Constitution or state. Note that a state legislature may adopt all or part
a federal law, a state constitution is supreme within the of a uniform law as it is written, or the legislature may
state’s borders. rewrite the law however the legislature wishes. Hence,
even though many states may have adopted a uniform
law, those states’ laws may not be entirely “uniform.”
1–2b Statutory Law The earliest uniform law, the Uniform Negotiable
Laws enacted by legislative bodies at any level of gov- Instruments Law, was completed by 1896 and adopted in
ernment, such as statutes passed by Congress or by state every state by the 1920s (although not all states used exactly
legislatures, make up the body of law known as statutory the same wording). Over the following decades, other acts
law. When a legislature passes a statute, that statute were drawn up in a similar manner. In all, more than two
ultimately is included in the federal code of laws or the hundred uniform acts have been issued by the NCCUSL
relevant state code of laws. since its inception. The most ambitious uniform act of all,
Statutory law also includes local ordinances—regu- however, was the Uniform Commercial Code.
lations passed by municipal or county governing units
to deal with matters not covered by federal or state law. The Uniform Commercial Code One of the most
Ordinances commonly have to do with city or county important uniform acts is the Uniform Commercial Code
land use (zoning ordinances), building and safety codes, (UCC), which was created through the joint efforts of the
and other matters affecting the local community. NCCUSL and the American Law Institute.1 The UCC
A federal statute, of course, applies to all states. A state was first issued in 1952 and has been adopted in all fifty
statute, in contrast, applies only within the state’s bor- states,2 the District of Columbia, and the Virgin Islands.
ders. State laws thus may vary from state to state. No The UCC facilitates commerce among the states by
federal statute may violate the U.S. Constitution, and no providing a uniform, yet flexible, set of rules governing
state statute or local ordinance may violate the U.S. Con- commercial transactions. Because of its importance in
stitution or the relevant state constitution. the area of commercial law, we cite the UCC frequently
in this text.
Statutory Conflicts Tension may sometimes arise
between federal, state, and local laws. ■ Example 1.2 This
tension is evident in the national debate over so-called 1. This institute was formed in the 1920s and consists of practicing attorneys,
legal scholars, and judges.
sanctuary cities—cities that limit their cooperation with 2. Louisiana has not adopted Articles 2 and 2A (covering contracts for the
federal immigration authorities. Normally, local law sale and lease of goods), however.
1–2c Administrative Law power is less pronounced in regard to independent agen-

Another important source of American law is admin- cies, whose officers serve for fixed terms and cannot be
istrative law, which consists of the rules, orders, and removed without just cause.
decisions of administrative agencies. An administrative
agency is a federal, state, or local government agency State and Local Agencies There are administrative
established to perform a specific function. Administra- agencies at the state and local levels as well. Commonly,
tive law and procedures constitute a dominant element a state agency (such as a state pollution-control agency) is
in the regulatory environment of business. created as a parallel to a federal agency (such as the Envi-
Rules issued by various administrative agencies now ronmental Protection Agency). Just as federal statutes take
affect almost every aspect of a business’s operations. Reg- precedence over conflicting state statutes, federal agency reg-
ulations govern a business’s capital structure and financ- ulations take precedence over conflicting state regulations.
ing, its hiring and firing procedures, its relations with
employees and unions, and the way it manufactures and
markets its products. Regulations enacted to protect the 1–2d Case Law and Common Law Doctrines
environment also often play a significant role in business The rules of law announced in court decisions consti-
operations. tute another basic source of American law. These rules
include interpretations of constitutional provisions, of
Federal Agencies At the national level, the cabinet statutes enacted by legislatures, and of regulations cre-
departments of the executive branch include numerous ated by administrative agencies.
executive agencies. The U.S. Food and Drug Adminis- Today, this body of judge-made law is referred to
tration, for instance, is an agency within the U.S. Depart- as case law. Case law—the doctrines and principles
ment of Health and Human Services. Executive agencies announced in cases—governs all areas not covered by
are subject to the authority of the president, who has the statutory law or administrative law and is part of our
power to appoint and remove their officers. common law tradition. We look at the origins and char-
There are also major independent regulatory agencies acteristics of the common law tradition in some detail in
at the federal level, such as the Federal Trade Commis- the pages that follow.
sion, the Securities and Exchange Commission, and the See Concept Summary 1.1 for a review of the sources
Federal Communications Commission. The president’s of American law.
ETHICS
Concept TODAY1.1
Summary
Sources of American Law
Constitutional Law ● Law as expressed in the U.S. Constitution or state constitutions.

● The U.S. Constitution is the supreme law of the land.
● State constitutions are supreme within state borders to the extent that
they do not conflict with the U.S. Constitution.
Statutory Law ● Statutes (including uniform laws) and ordinances enacted by federal, state,
and local legislatures.
● Federal statutes may not violate the U.S. Constitution.
● State statutes and local ordinances may not violate the U.S. Constitution
or the relevant state constitution.
Administrative Law ● The rules, orders, and decisions of federal, state, and local
administrative agencies.
Case Law and Common ● Judge-made law, including interpretations of constitutional provisions,
Law Doctrines of statutes enacted by legislatures, and of regulations created by
administrative agencies.
and fair dealing—that seeks to supply a remedy when no

1–3 The Common Law Tradition adequate remedy at law is available.
Because of our colonial heritage, much of American law
is based on the English legal system. Knowledge of this Remedies in Equity The remedies granted by the
tradition is crucial to understanding our legal system equity courts became known as remedies in equity, or
today because judges in the United States still apply com- equitable remedies. These remedies include specific per-
mon law principles when deciding cases. formance, injunction, and rescission. Specific performance
involves ordering a party to perform an agreement as
promised. An injunction is an order to a party to cease
1–3a Early English Courts engaging in a specific activity or to undo some wrong or
injury. Rescission is the cancellation of a contractual obli-
After the Normans conquered England in 1066, William gation. We will discuss these and other equitable remedies
the Conqueror and his successors began the process of in more detail in later chapters.
unifying the country under their rule. One of the means As a general rule, today’s courts, like the early
they used to do this was the establishment of the king’s English courts, will not grant equitable remedies unless
courts, or curiae regis. the remedy at law—monetary damages—is inade-
Before the Norman Conquest, disputes had been set- quate. ■ Example 1.3 Ted forms a contract (a legally
tled according to the local legal customs and traditions in binding agreement) to purchase a parcel of land that
various regions of the country. The king’s courts sought he thinks will be perfect for his future home. The seller
to establish a uniform set of customs for the country as breaches (fails to fulfill) this agreement. Ted could sue
a whole. What evolved in these courts was the begin- the seller for the return of any deposits or down pay-
ning of the common law—a body of general rules that ment he might have made on the land, but this is not
applied throughout the entire English realm. Eventually, the remedy he really wants. What Ted wants is to have
the common law tradition became part of the heritage of a court order the seller to perform the contract. In other
all nations that were once British colonies, including the words, Ted will seek the equitable remedy of specific per-
United States. formance because monetary damages are inadequate in
this situation. ■
Courts of Law and Remedies at Law The early
English king’s courts could grant only very limited kinds Equitable Maxims In fashioning appropriate rem-
of remedies (the legal means to enforce a right or redress edies, judges often were (and continue to be) guided by
a wrong). If one person wronged another in some way, the so-called equitable maxims—propositions or general
king’s courts could award as compensation one or more of statements of equitable rules. Exhibit 1–2 lists some
the following: (1) land, (2) items of value, or (3) money. important equitable maxims.
The courts that awarded this compensation became The last maxim listed in the exhibit—“Equity aids
known as courts of law, and the three remedies were the vigilant, not those who rest on their rights”—merits
called remedies at law. (Today, the remedy at law nor- special attention. It has become known as the equitable
mally takes the form of monetary damages—an amount doctrine of laches (a term derived from the Latin laxus,
given to a party whose legal interests have been injured.) meaning “lax” or “negligent”), and it can be used as a
This system made the procedure for settling disputes defense. A defense is an argument raised by the defendant
more uniform. When a complaining party wanted a rem- (the party being sued) indicating why the plaintiff (the
edy other than economic compensation, however, the suing party) should not obtain the remedy sought. (Note
courts of law could do nothing, so “no remedy, no right.” that in equity proceedings, the party bringing a lawsuit is
called the petitioner, and the party being sued is referred
Courts of Equity When individuals could not obtain to as the respondent.)
an adequate remedy in a court of law, they petitioned the The doctrine of laches arose to encourage people to
king for relief. Most of these petitions were decided by an bring lawsuits while the evidence was fresh. What consti-
adviser to the king, called a chancellor, who had the power tutes a reasonable time, of course, varies according to the
to grant new and unique remedies. Eventually, formal circumstances of the case. Time periods for different types
chancery courts, or courts of equity, were established. of cases are now usually fixed by statutes of limitations.
Equity is a branch of law—founded on notions of justice After the time allowed under a statute of limitations has
Exhibit 1–2 Equitable Maxims
1. Whoever seeks equity must do equity. (Anyone who wishes to be treated fairly must treat others fairly.)
2. Where there is equal equity, the law must prevail. (The law will determine the outcome of a controversy in which the
merits of both sides are equal.)
3. One seeking the aid of an equity court must come to the court with clean hands. (The plaintiff must have acted
fairly and honestly.)
4. Equity will not suffer a wrong to be without a remedy. (Equitable relief will be awarded when there is a right to
relief and there is no adequate remedy at law.)
5. Equity regards substance rather than form. (Equity is more concerned with fairness and justice than with legal
technicalities.)
6. Equity aids the vigilant, not those who rest on their rights. (Equity will not help those who neglect their rights for an
unreasonable period of time.)
expired, no action (lawsuit) can be brought, no matter 1–3c The Doctrine of Stare Decisis
how strong the case was originally.
One of the unique features of the common law is that it
is judge-made law. The body of principles and doctrines
1–3b Legal and Equitable Remedies Today that form the common law emerged over time as judges
The establishment of courts of equity in medieval England decided legal controversies.
resulted in two distinct court systems: courts of law and
courts of equity. The courts had different sets of judges Case Precedents and Case Reporters When
and granted different types of remedies. During the nine- possible, judges attempted to be consistent and to base
teenth century, however, most states in the United States their decisions on the principles suggested by earlier
adopted rules of procedure that resulted in the combin- cases. They sought to decide similar cases in a similar
ing of courts of law and equity. A party now may request way, and they considered new cases with care because
both legal and equitable remedies in the same action, and they knew that their decisions would make new law.
the trial court judge may grant either or both forms of Each interpretation became part of the law on the sub-
relief. ject and thus served as a legal precedent. A precedent
The distinction between legal and equitable remedies is a decision that furnishes an example or authority for
remains relevant to students of business law, however, deciding subsequent cases involving identical or similar
because these remedies differ. To seek the proper remedy legal principles or facts.
for a wrong, you must know what remedies are available. In the early years of the common law, there was no
Additionally, certain vestiges of the procedures used when single place or publication where court opinions, or writ-
there were separate courts of law and equity still exist. For ten decisions, could be found. By the fourteenth century,
instance, a party has the right to demand a jury trial in an portions of the most important decisions from each year
action at law, but not in an action in equity. Exhibit 1–3 were being gathered together and recorded in Year Books,
summarizes the procedural differences (applicable in most which became useful references for lawyers and judges. In
states) between an action at law and an action in equity. the sixteenth century, the Year Books were discontinued,
Exhibit 1–3 Procedural Differences between an Action at Law and an Action in Equity
Procedure Action at Law Action in Equity

Initiation of lawsuit By filing a complaint By filing a petition
Decision By jury or judge By judge (no jury)
Result Judgment Decree
Remedy Monetary damages or property Injunction, specific performance, or
rescission
and other forms of case publication became available. feature for a discussion of how courts often defer to case
Today, cases are published, or “reported,” in volumes precedent even when they disagree with the reasoning in
called reporters, or reports—and are also posted online. the case.
We describe today’s case reporting system in detail later Although courts are obligated to follow precedents,
in this chapter. sometimes a court will depart from the rule of precedent
if it decides that the precedent should no longer be fol-
Stare Decisis and the Common Law Tradition lowed. If a court decides that a ruling precedent is sim-
The practice of deciding new cases with reference to for- ply incorrect or that technological or social changes have
mer decisions, or precedents, became a cornerstone of the rendered the precedent inapplicable, the court might rule
English and American judicial systems. The practice contrary to the precedent. Cases that overturn precedent
formed a doctrine known as stare decisis,3 a Latin phrase often receive a great deal of publicity.
meaning “to stand on decided cases.” ■ Case in Point 1.4 The United States Supreme
Under the doctrine of stare decisis, judges are obli- Court expressly overturned precedent in the case of
gated to follow the precedents established within their Brown v. Board of Education of Topeka.4 The Court con-
jurisdictions. The term jurisdiction refers to a geographic cluded that separate educational facilities for whites and
area in which a court or courts have the power to apply blacks, which it had previously upheld as constitutional,5
the law. Once a court has set forth a principle of law as were inherently unequal. The Supreme Court’s departure
being applicable to a certain set of facts, that court must from precedent in this case received a tremendous
apply the principle in future cases involving similar facts. amount of publicity as people began to realize the rami-
Courts of lower rank (within the same jurisdiction) must fications of this change in the law. ■
do likewise. Thus, stare decisis has two aspects: Note that a lower court will sometimes avoid apply-
1. A court should not overturn its own precedents
ing a precedent set by a higher court in its jurisdiction by
unless there is a compelling reason to do so. distinguishing the two cases based on their facts. When
2. Decisions made by a higher court are binding on
this happens, the lower court’s ruling stands unless it is
lower courts. appealed to a higher court and that court overturns the
decision.
Controlling Precedents Precedents that must When There Is No Precedent Occasionally, courts
be followed within a jurisdiction are called controlling must decide cases for which no precedents exist, called
precedents. Controlling precedents are a type of bind- cases of first impression. For instance, as you will read
ing authority. A binding authority is any source of law throughout this text, the Internet and certain other tech-
that a court must follow when deciding a case. Bind- nologies have presented many new and challenging issues
ing authorities include constitutions, statutes, and regu- for the courts to decide.
lations that govern the issue being decided, as well as In deciding cases of first impression, courts often
court decisions that are controlling precedents within look at persuasive authorities—legal authorities that a
the jurisdiction. United States Supreme Court case deci- court may consult for guidance but that are not binding
sions, no matter how old, remain controlling until they on the court. A court may consider precedents from
are overruled by a subsequent decision of the Supreme other jurisdictions, for instance, although those prece-
Court or changed by further legislation or a constitu- dents are not binding. A court may also consider legal
tional amendment. principles and policies underlying previous court deci-
sions or existing statutes. Additionally, a court might
Stare Decisis and Legal Stability The doctrine of look at issues of fairness, social values and customs, and
stare decisis helps the courts to be more efficient because, public policy (governmental policy based on widely held
if other courts have analyzed a similar case, their legal societal values). Today, federal courts can also look at
reasoning and opinions can serve as guides. Stare decisis unpublished opinions (those not intended for publica-
also makes the law more stable and predictable. If the tion in a printed legal reporter) as sources of persuasive
law on a subject is well settled, someone bringing a case authority.6
can usually rely on the court to rule based on what the
law has been in the past. See this chapter’s Ethics Today
4. 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954).
5. See Plessy v. Ferguson, 163 U.S. 537, 16 S.Ct. 1138, 41 L.Ed. 256 (1896).
3. Pronounced stahr-ee dih-si-sis. 6. See Rule 32.1 of the Federal Rules of Appellate Procedure.
Ethics
Today Stare Decisis versus Spider-Man
Supreme Court Justice Elena Kagan, in a recent decision When Kimble sued Marvel for patent infringement,
involving Marvel Comics’ Spider-Man, ruled that, he won. The result was a settlement that involved
“What we can decide, we can undecide. But stare a licensing agreement between Kimble and Marvel
decisis teaches that we should exercise that authority with a lump-sum payment plus a royalty to Kimble of
sparingly.” Citing a Spider-Man comic book, she went 3 percent of all sales of the toy. The agreement did not
on to say that “in this world, with great power there specify an end date for royalty payments to Kimble,
must also come—great responsibility.”a In its decision and Marvel later sued to have the payments stop after
in the case—Kimble v. Marvel Entertainment, LLC— the patent expired, consistent with the Court’s earlier
the Supreme Court applied stare decisis and ruled Brulotte decision.
against Stephen Kimble, the creator of a toy related to A majority of the Supreme Court justices agreed
the Spider-Man figure.b with Marvel. As Justice Kagan said in the opinion,
“Patents endow their holders with certain super
Can a Patent Involving Spider-Man powers, but only for a limited time.” The court
Last Super Long? further noted that the fifty-year-old Brulotte decision
A patent is an exclusive right granted to the creator was perhaps based on what today is an outmoded
of an invention. Under U.S. law, patent owners gener- understanding of economics. That decision, according
ally possess that right for twenty years. Patent holders to some, may even hinder competition and innovation.
can license the use of their patents as they see fit dur- But “respecting stare decisis means sticking to some
ing that period. In other words, they can allow others wrong decisions.”
(called licensees) to use their invention in return for a
fee (called royalties). The Ethical Side
More than fifty years ago, the Supreme Court ruled In a dissenting opinion, Supreme Court Justice Samuel
in its Brulotte decision that a licensee cannot be forced A. Alito, Jr., said, “The decision interferes with the ability
to pay royalties to a patent holder after the patent has of parties to negotiate licensing agreements that reflect
expired.c So if a licensee signs a contract to continue to the true value of a patent, and it disrupts contractual
pay royalties after the patent has expired, the contract expectations. Stare decisis does not require us to retain
is invalid and thus unenforceable. this baseless and damaging precedent. . . . Stare decisis
At issue in the Kimble case was a contract signed is important to the rule of law, but so are correct judicial
between Marvel Entertainment and Kimble, who had decisions.”
invented a toy made up of a glove equipped with a In other words, stare decisis holds that courts should
valve and a canister of pressurized foam. The patented adhere to precedent in order to promote predictability
toy allowed people to shoot fake webs intended to look and consistency. But in the business world, shouldn’t
like Spider-Man’s. In 1990, Kimble tried to cut a deal parties to contracts be able to, for example, allow a
with Marvel Entertainment concerning his toy, but he patent licensee to make smaller royalty payments that
was unsuccessful. Then Marvel started selling its own exceed the life of the patent? Isn’t that a way to reduce
version of the toy. the yearly costs to the licensee? After all, the licensee
may be cash-strapped in its initial use of the patent.
a. Lee, S., Spider-Man: Amazing Fantasy, No. 15 (New York: Marvel Shouldn’t the parties to a contract be the ones to
Comics, 1962). decide how long the contract should last?
b. 576 U.S. __,135 S.Ct. 2401, 192 L.Ed.2d 463 (2015). Also see
Nautilus, Inc. v. ICON Health & Fitness, Inc., 304 F.Supp.3d 552
(W.D.Texas—San Antonio 2018). Critical Thinking When is the Supreme Court justified in
c. Brulotte v. Thys Co., 379 U.S. 29, 85 S.Ct. 176 (1964). not following the doctrine of stare decisis?
1–3d Stare Decisis and Legal Reasoning their decisions with those that have been made before, as
In deciding what law applies to a given dispute and the doctrine of stare decisis requires.
then applying that law to the facts or circumstances of Students of business law and the legal environment
the case, judges rely on the process of legal reasoning. also engage in legal reasoning. You may be asked to pro-
Through the use of legal reasoning, judges harmonize vide answers for some of the case problems that appear
at the end of every chapter in this text. Each problem are ever identical in all respects. Normally, judges
describes the facts of a particular dispute and the legal (and lawyers and law students) try to find cases on
question at issue. If you are assigned a case problem, you point—previously decided cases that are as similar as
will be asked to determine how a court would answer possible to the one under consideration.
that question, and why. In other words, you will need to 4. Conclusion—What conclusion should be drawn?
give legal reasons for whatever conclusion you reach. We This step normally presents few problems. Usually,
look next at the basic steps involved in legal reasoning the conclusion is evident if the previous three steps
and then describe some forms of reasoning commonly have been followed carefully.
used by the courts in making their decisions.
There Is No One “Right” Answer Many people
Basic Steps in Legal Reasoning At times, the believe that there is one “right” answer to every legal ques-
legal arguments set forth in court opinions are relation. In most legal controversies, however, there is no sin-
tively simple and brief. At other times, the arguments gle correct result. Good arguments can usually be made
are complex and lengthy. Regardless of the length of a to support either side of a legal controversy. Quite often,
legal argument, however, the basic steps of the legal rea- a case does not involve a “good” person suing a “bad” per-
soning process remain the same. These steps, which you son. In many cases, both parties have acted in good faith
can also follow when analyzing cases and case problems, in some measure or in bad faith to some degree. Addition-
form what is commonly referred to as the IRAC method ally, each judge has her or his own personal beliefs and
of legal reasoning. IRAC is an acronym formed from philosophy. At least to some extent, these personal factors
the first letters of the words Issue, Rule, Application, and shape the legal reasoning process. In short, the outcome
Conclusion. To apply the IRAC method, you ask the fol- of a particular lawsuit before a court cannot be predicted
lowing questions: with certainty.
1. Issue—What are the key facts and issues? Sup-
pose that a plaintiff comes before the court claiming
assault (words or acts that wrongfully and intention-
1–3e The Common Law Today
ally make another person fearful of immediate phys- Today, the common law derived from judicial decisions
ical harm). The plaintiff claims that the defendant continues to be applied throughout the United States.
threatened her while she was sleeping. Although the Common law doctrines and principles, however, govern
plaintiff was unaware that she was being threatened, only areas not covered by statutory or administrative law. In
her roommate heard the defendant make the threat. a dispute concerning a particular employment practice, for
The legal issue is whether the defendant’s action instance, if a statute regulates that practice, the statute will
constitutes the tort of assault, given that the plaintiff apply rather than the common law doctrine that applied
was unaware of that action at the time it occurred. before the statute was enacted. The common law tradition
(A tort is a wrongful act. As you will see later, torts and its application are reviewed in Concept Summary 1.2.
fall under the governance of civil law rather than
criminal law.) Courts Interpret Statutes Even in areas governed
2. Rule—What rule of law applies to the case? A rule by statutory law, judge-made law continues to be impor-
of law may be a rule stated by the courts in previous tant because there is a significant interplay between
decisions, a state or federal statute, or a state or federal statutory law and the common law. For instance, many
administrative agency regulation. In our hypothetical statutes essentially codify existing common law rules,
case, the plaintiff alleges (claims) that the defendant and regulations issued by various administrative agencies
committed a tort. Therefore, the applicable law is the usually are based, at least in part, on common law prin-
common law of torts—specifically, tort law govern- ciples. Additionally, the courts, in interpreting statutory
ing assault. Case precedents involving similar facts law, often rely on the common law as a guide to what
and issues thus would be relevant. Often, more than the legislators intended. Frequently, the applicability of a
one rule of law will be applicable to a case. newly enacted statute does not become clear until a body
3. Application—How does the rule of law apply to of case law develops to clarify how, when, and to whom
the particular facts and circumstances of this case? the statute applies.
This step is often the most difficult because each case Clearly, a judge’s function is not to make the
presents a unique set of facts, circumstances, and laws—that is the function of the legislative branch of
parties. Although cases may be similar, no two cases government—but to interpret and apply them. From a
ETHICS
Concept TODAY1.2
Summary
The Common Law Tradition
Origins of Common Law The American legal system is based on the common law tradition, which
originated in medieval England.
Legal and Equitable Remedies at law (land, items of value, or money) and remedies in equity
Remedies (including specific performance, injunction, and rescission of a contractual
obligation) originated in the early English courts of law and courts of
equity, respectively.
Case Precedents and In the king’s courts, judges attempted to make their decisions consistent
the Doctrine of with previous decisions, called precedents. This practice gave rise to the
Stare Decisis doctrine of stare decisis. This doctrine, which became a cornerstone of the
common law tradition, obligates judges to abide by precedents established
in their jurisdictions.
Common Law Today The common law governs all areas not covered by statutory law or
administrative laws. Courts interpret statutes and regulations.
practical point of view, however, the courts play a signif-

icant role in defining the laws enacted by legislative bod- 1–4 Schools of Legal Thought
ies, which tend to be expressed in general terms. Judges How judges apply the law to specific cases, including dis-
thus have some flexibility in interpreting and applying putes relating to the business world, depends in part on
the law. It is because of this flexibility that different their philosophical approaches to law. Thus, the study of
courts can, and often do, arrive at different conclusions law, or jurisprudence, involves learning about different
in cases that involve nearly identical issues, facts, and schools of legal thought and how the approaches to law
applicable laws. characteristic of each school can affect judicial decision
making.
Restatements of the Law Clarify and Illustrate
the Common Law The American Law Institute (ALI)
has published compilations of the common law called
Restatements of the Law, which generally summarize the 1–4a The Natural Law School
common law rules followed by most states. There are An age-old question about the nature of law has to do
Restatements of the Law in the areas of contracts, torts, with the finality of a nation’s laws. What if a particular
agency, trusts, property, restitution, security, judgments, law is deemed to be a “bad” law by a substantial number
and conflict of laws. The Restatements, like other second- of the nation’s citizens? Must they obey that law? Accord-
ary sources of law, do not in themselves have the force ing to the natural law theory, a higher, or universal, law
of law, but they are an important source of legal analysis exists that applies to all human beings. Each written
and opinion. Hence, judges often rely on them in making law should reflect the principles inherent in natural law.
decisions. If it does not, then it loses its legitimacy and need not be
Many of the Restatements are now in their second, obeyed.
third, or fourth editions. We refer to the Restatements The natural law tradition is one of the oldest and most
frequently in subsequent chapters of this text, indicat- significant schools of jurisprudence. It dates back to the
ing in parentheses the edition to which we are referring. days of the Greek philosopher Aristotle (384–322 b.c.e.),
For instance, we refer to the third edition of the Restate- who distinguished between natural law and the laws
ment of the Law of Contracts as simply the Restatement governing a particular nation. According to A ristotle,
(Third) of Contracts. natural law applies universally to all humankind.
The notion that people have “natural rights” stems is shaped by social forces and needs. Because the law is a
from the natural law tradition. Those who claim that a human enterprise, this school reasons that judges should
specific foreign government is depriving certain citizens take social and economic realities into account when
of their human rights, for instance, are implicitly appeal- deciding cases.
ing to a higher law that has universal applicability. Legal realists also believe that the law can never be
The question of the universality of basic human rights applied with total uniformity. Given that judges are
also comes into play in the context of international busi- human beings with unique personalities, value systems,
ness operations. U.S. companies that have operations and intellects, different judges will obviously bring differ-
abroad often hire foreign workers as employees. Should ent reasoning processes to the same case. Female judges,
the same laws that protect U.S. employees apply to these for instance, might be more inclined than male judges
foreign employees? This question is rooted implicitly in to consider whether a decision might have a negative
a concept of universal rights that has its origins in the impact on the employment of women or minorities.
natural law tradition. Legal realism strongly influenced the growth of what is
sometimes called the sociological school, which views law
as a tool for promoting justice in society. In the 1960s, for
1–4b The Positivist School instance, the justices of the United States Supreme Court
Positive law, or national law, is the written law of a given helped advance the civil rights movement by upholding
society at a particular time. In contrast to natural law, long-neglected laws calling for equal treatment for all
it applies only to the citizens of that nation or society. Americans, including African Americans and other minor-
Those who adhere to legal positivism believe that there ities. Generally, jurists who adhere to this philosophy of
can be no higher law than a nation’s positive law. law are more likely to depart from past decisions than are
According to the positivist school, there are no “natu- jurists who adhere to other schools of legal thought.
ral rights.” Rather, human rights exist solely because of Concept Summary 1.3 reviews the schools of juris-
laws. If the laws are not enforced, anarchy will result. prudential thought.
Thus, whether a law is “bad” or “good” is irrelevant. The
law is the law and must be obeyed until it is changed—
in an orderly manner through a legitimate lawmaking
process. A judge who takes this view will probably be 1–5 Classifications of Law
more inclined to defer to an existing law than would a
The law may be broken down according to several clas-
judge who adheres to the natural law tradition.
sification systems. One system, for instance, divides law
into substantive law and procedural law. Substantive
1–4c The Historical School law consists of all laws that define, describe, regulate,
and create legal rights and obligations. Procedural law
The historical school of legal thought emphasizes the consists of all laws that outline the methods of enforcing
evolutionary process of law by concentrating on the ori- the rights established by substantive law.
gin and history of the legal system. This school looks to Note that many statutes contain both substantive and
the past to discover what the principles of contemporary procedural provisions. ■ Example 1.5 A state law that
law should be. The legal doctrines that have withstood provides employees with the right to workers’ compensa-
the passage of time—those that have worked in the tion benefits for on-the-job injuries is a substantive law
past—are deemed best suited for shaping present laws. because it creates legal rights. Procedural laws estab-
Hence, law derives its legitimacy and authority from lish the method by which an employee must notify the
adhering to the standards that historical development has employer about an on-the-job injury, prove the injury,
shown to be workable. Followers of the historical school and periodically submit additional proof to continue
are more likely than those of other schools to strictly fol- receiving workers’ compensation benefits. ■
low decisions made in past cases. Other classification systems divide law into federal
law and state law, private law (dealing with relationships
between private entities) and public law (addressing the
1–4d Legal Realism relationship between persons and their governments),
In the 1920s and 1930s, a number of jurists and schol- and national law and international law. Here we look at
ars, known as legal realists, rebelled against the historical still another classification system, which divides law into
approach to law. Legal realism is based on the idea that civil law and criminal law. We also explain what is meant
law is just one of many institutions in society and that it by the term cyberlaw.
ETHICS
Concept TODAY1.3
Summary
Schools of Jurisprudential Thought
Natural Law School One of the oldest and most significant schools of legal thought. Those who believe
in natural law hold that there is a universal law applicable to all human beings.
Positivist School A school of legal thought centered on the assumption that there is no law higher
than the laws created by the government.
Historical School A school of legal thought that stresses the evolutionary nature of law and looks
to doctrines that have withstood the passage of time for guidance in shaping
present laws.
Legal Realism A school of legal thought that advocates a less abstract and more realistic and
pragmatic approach to the law, taking into account customary practices and
the circumstances surrounding the particular transaction.
1–5a Civil Law and Criminal Law modifications of traditional laws that relate to the online
environment. Throughout this book, you will read how
Civil law spells out the rights and duties that exist the law in a given area is evolving to govern specific legal
between persons and between persons and their govern- issues that arise in the online context.
ments, as well as the relief available when a person’s rights
are violated. Typically, in a civil case, a private party sues
another private party who has failed to comply with a
duty. (Note that the government can also sue a party for
a civil law violation.) Much of the law that we discuss in 1–6 How to Find
this text is civil law, including contract law and tort law. Primary Sources of Law
Criminal law, in contrast, is concerned with wrongs
committed against the public as a whole. Criminal acts are This text includes numerous references, or citations, to
defined and prohibited by local, state, or federal govern- primary sources of law—federal and state statutes, the

ment statutes. Criminal defendants are thus prosecuted U.S. Constitution and state constitutions, regulations issued
by public officials, such as a district attorney (D.A.), by administrative agencies, and court cases. A citation iden-
on behalf of the state, not by their victims or other pri- tifies the publication in which a legal authority—such as a
vate parties. Some statutes, such as those protecting the statute or a court decision or other source—can be found.
environment or investors, have both civil and criminal In this section, we explain how you can use citations to find
provisions. primary sources of law. Note that in addition to being pub-
lished in sets of books, as described next, most federal and
state laws and case decisions are available online.
1–5b Cyberlaw
The use of the Internet to conduct business has led to 1–6a Finding Statutory and
new types of legal issues. In response, courts have had
to adapt traditional laws to unique situations. Addition- Administrative Law
ally, legislatures at both the federal and the state levels When Congress passes laws, they are collected in a pub-
have created laws to deal specifically with such issues. lication titled United States Statutes at Large. When state
Frequently, people use the term cyberlaw to refer to legislatures pass laws, they are collected in similar
the emerging body of law that governs transactions con- state publications. Most frequently, however, laws are
ducted via the Internet. Cyberlaw is not really a classifica- referred to in their codified form—that is, the form in
tion of law, though, nor is it a new type of law. Rather, it which they appear in the federal and state codes. In these
is an informal term used to refer to both new laws and codes, laws are compiled by subject.
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DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI
Newala, too, suffers from the distance of its water-supply—at least

the Newala of to-day does; there was once another Newala in a lovely
valley at the foot of the plateau. I visited it and found scarcely a trace
of houses, only a Christian cemetery, with the graves of several
missionaries and their converts, remaining as a monument of its
former glories. But the surroundings are wonderfully beautiful. A
thick grove of splendid mango-trees closes in the weather-worn
crosses and headstones; behind them, combining the useful and the
agreeable, is a whole plantation of lemon-trees covered with ripe
fruit; not the small African kind, but a much larger and also juicier
imported variety, which drops into the hands of the passing traveller,
without calling for any exertion on his part. Old Newala is now under
the jurisdiction of the native pastor, Daudi, at Chingulungulu, who,
as I am on very friendly terms with him, allows me, as a matter of
course, the use of this lemon-grove during my stay at Newala.
FEET MUTILATED BY THE RAVAGES OF THE “JIGGER”
(Sarcopsylla penetrans)
The water-supply of New Newala is in the bottom of the valley,

some 1,600 feet lower down. The way is not only long and fatiguing,
but the water, when we get it, is thoroughly bad. We are suffering not
only from this, but from the fact that the arrangements at Newala are
nothing short of luxurious. We have a separate kitchen—a hut built
against the boma palisade on the right of the baraza, the interior of
which is not visible from our usual position. Our two cooks were not
long in finding this out, and they consequently do—or rather neglect
to do—what they please. In any case they do not seem to be very
particular about the boiling of our drinking-water—at least I can
attribute to no other cause certain attacks of a dysenteric nature,
from which both Knudsen and I have suffered for some time. If a
man like Omari has to be left unwatched for a moment, he is capable
of anything. Besides this complaint, we are inconvenienced by the
state of our nails, which have become as hard as glass, and crack on
the slightest provocation, and I have the additional infliction of
pimples all over me. As if all this were not enough, we have also, for
the last week been waging war against the jigger, who has found his
Eldorado in the hot sand of the Makonde plateau. Our men are seen
all day long—whenever their chronic colds and the dysentery likewise
raging among them permit—occupied in removing this scourge of
Africa from their feet and trying to prevent the disastrous
consequences of its presence. It is quite common to see natives of
this place with one or two toes missing; many have lost all their toes,
or even the whole front part of the foot, so that a well-formed leg
ends in a shapeless stump. These ravages are caused by the female of
Sarcopsylla penetrans, which bores its way under the skin and there
develops an egg-sac the size of a pea. In all books on the subject, it is
stated that one’s attention is called to the presence of this parasite by
an intolerable itching. This agrees very well with my experience, so
far as the softer parts of the sole, the spaces between and under the
toes, and the side of the foot are concerned, but if the creature
penetrates through the harder parts of the heel or ball of the foot, it
may escape even the most careful search till it has reached maturity.
Then there is no time to be lost, if the horrible ulceration, of which
we see cases by the dozen every day, is to be prevented. It is much
easier, by the way, to discover the insect on the white skin of a
European than on that of a native, on which the dark speck scarcely
shows. The four or five jiggers which, in spite of the fact that I
constantly wore high laced boots, chose my feet to settle in, were
taken out for me by the all-accomplished Knudsen, after which I
thought it advisable to wash out the cavities with corrosive
sublimate. The natives have a different sort of disinfectant—they fill
the hole with scraped roots. In a tiny Makua village on the slope of
the plateau south of Newala, we saw an old woman who had filled all
the spaces under her toe-nails with powdered roots by way of
prophylactic treatment. What will be the result, if any, who can say?
The rest of the many trifling ills which trouble our existence are
really more comic than serious. In the absence of anything else to
smoke, Knudsen and I at last opened a box of cigars procured from
the Indian store-keeper at Lindi, and tried them, with the most
distressing results. Whether they contain opium or some other
narcotic, neither of us can say, but after the tenth puff we were both
“off,” three-quarters stupefied and unspeakably wretched. Slowly we
recovered—and what happened next? Half-an-hour later we were
once more smoking these poisonous concoctions—so insatiable is the
craving for tobacco in the tropics.
Even my present attacks of fever scarcely deserve to be taken
seriously. I have had no less than three here at Newala, all of which
have run their course in an incredibly short time. In the early
afternoon, I am busy with my old natives, asking questions and
making notes. The strong midday coffee has stimulated my spirits to
an extraordinary degree, the brain is active and vigorous, and work
progresses rapidly, while a pleasant warmth pervades the whole
body. Suddenly this gives place to a violent chill, forcing me to put on
my overcoat, though it is only half-past three and the afternoon sun
is at its hottest. Now the brain no longer works with such acuteness
and logical precision; more especially does it fail me in trying to
establish the syntax of the difficult Makua language on which I have
ventured, as if I had not enough to do without it. Under the
circumstances it seems advisable to take my temperature, and I do
so, to save trouble, without leaving my seat, and while going on with
my work. On examination, I find it to be 101·48°. My tutors are
abruptly dismissed and my bed set up in the baraza; a few minutes
later I am in it and treating myself internally with hot water and
lemon-juice.
Three hours later, the thermometer marks nearly 104°, and I make
them carry me back into the tent, bed and all, as I am now perspiring
heavily, and exposure to the cold wind just beginning to blow might
mean a fatal chill. I lie still for a little while, and then find, to my
great relief, that the temperature is not rising, but rather falling. This
is about 7.30 p.m. At 8 p.m. I find, to my unbounded astonishment,
that it has fallen below 98·6°, and I feel perfectly well. I read for an
hour or two, and could very well enjoy a smoke, if I had the
wherewithal—Indian cigars being out of the question.
Having no medical training, I am at a loss to account for this state
of things. It is impossible that these transitory attacks of high fever
should be malarial; it seems more probable that they are due to a
kind of sunstroke. On consulting my note-book, I become more and
more inclined to think this is the case, for these attacks regularly
follow extreme fatigue and long exposure to strong sunshine. They at
least have the advantage of being only short interruptions to my
work, as on the following morning I am always quite fresh and fit.
My treasure of a cook is suffering from an enormous hydrocele which
makes it difficult for him to get up, and Moritz is obliged to keep in
the dark on account of his inflamed eyes. Knudsen’s cook, a raw boy
from somewhere in the bush, knows still less of cooking than Omari;
consequently Nils Knudsen himself has been promoted to the vacant
post. Finding that we had come to the end of our supplies, he began
by sending to Chingulungulu for the four sucking-pigs which we had
bought from Matola and temporarily left in his charge; and when
they came up, neatly packed in a large crate, he callously slaughtered
the biggest of them. The first joint we were thoughtless enough to
entrust for roasting to Knudsen’s mshenzi cook, and it was
consequently uneatable; but we made the rest of the animal into a
jelly which we ate with great relish after weeks of underfeeding,
consuming incredible helpings of it at both midday and evening
meals. The only drawback is a certain want of variety in the tinned
vegetables. Dr. Jäger, to whom the Geographical Commission
entrusted the provisioning of the expeditions—mine as well as his
own—because he had more time on his hands than the rest of us,
seems to have laid in a huge stock of Teltow turnips,[46] an article of
food which is all very well for occasional use, but which quickly palls
when set before one every day; and we seem to have no other tins
left. There is no help for it—we must put up with the turnips; but I
am certain that, once I am home again, I shall not touch them for ten
years to come.
Amid all these minor evils, which, after all, go to make up the
genuine flavour of Africa, there is at least one cheering touch:
Knudsen has, with the dexterity of a skilled mechanic, repaired my 9
× 12 cm. camera, at least so far that I can use it with a little care.
How, in the absence of finger-nails, he was able to accomplish such a
ticklish piece of work, having no tool but a clumsy screw-driver for
taking to pieces and putting together again the complicated
mechanism of the instantaneous shutter, is still a mystery to me; but
he did it successfully. The loss of his finger-nails shows him in a light
contrasting curiously enough with the intelligence evinced by the
above operation; though, after all, it is scarcely surprising after his
ten years’ residence in the bush. One day, at Lindi, he had occasion
to wash a dog, which must have been in need of very thorough
cleansing, for the bottle handed to our friend for the purpose had an
extremely strong smell. Having performed his task in the most
conscientious manner, he perceived with some surprise that the dog
did not appear much the better for it, and was further surprised by
finding his own nails ulcerating away in the course of the next few
days. “How was I to know that carbolic acid has to be diluted?” he
mutters indignantly, from time to time, with a troubled gaze at his
mutilated finger-tips.
Since we came to Newala we have been making excursions in all
directions through the surrounding country, in accordance with old
habit, and also because the akida Sefu did not get together the tribal
elders from whom I wanted information so speedily as he had
promised. There is, however, no harm done, as, even if seen only
from the outside, the country and people are interesting enough.
The Makonde plateau is like a large rectangular table rounded off
at the corners. Measured from the Indian Ocean to Newala, it is
about seventy-five miles long, and between the Rovuma and the
Lukuledi it averages fifty miles in breadth, so that its superficial area
is about two-thirds of that of the kingdom of Saxony. The surface,
however, is not level, but uniformly inclined from its south-western
edge to the ocean. From the upper edge, on which Newala lies, the
eye ranges for many miles east and north-east, without encountering
any obstacle, over the Makonde bush. It is a green sea, from which
here and there thick clouds of smoke rise, to show that it, too, is
inhabited by men who carry on their tillage like so many other
primitive peoples, by cutting down and burning the bush, and
manuring with the ashes. Even in the radiant light of a tropical day
such a fire is a grand sight.
Much less effective is the impression produced just now by the
great western plain as seen from the edge of the plateau. As often as
time permits, I stroll along this edge, sometimes in one direction,
sometimes in another, in the hope of finding the air clear enough to
let me enjoy the view; but I have always been disappointed.
Wherever one looks, clouds of smoke rise from the burning bush,
and the air is full of smoke and vapour. It is a pity, for under more
favourable circumstances the panorama of the whole country up to
the distant Majeje hills must be truly magnificent. It is of little use
taking photographs now, and an outline sketch gives a very poor idea
of the scenery. In one of these excursions I went out of my way to
make a personal attempt on the Makonde bush. The present edge of
the plateau is the result of a far-reaching process of destruction
through erosion and denudation. The Makonde strata are
everywhere cut into by ravines, which, though short, are hundreds of
yards in depth. In consequence of the loose stratification of these
beds, not only are the walls of these ravines nearly vertical, but their
upper end is closed by an equally steep escarpment, so that the
western edge of the Makonde plateau is hemmed in by a series of
deep, basin-like valleys. In order to get from one side of such a ravine
to the other, I cut my way through the bush with a dozen of my men.
It was a very open part, with more grass than scrub, but even so the
short stretch of less than two hundred yards was very hard work; at
the end of it the men’s calicoes were in rags and they themselves
bleeding from hundreds of scratches, while even our strong khaki
suits had not escaped scatheless.
NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAHUTA
I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.
MAKONDE LOCK AND KEY AT JUMBE CHAURO

This is the general way of closing a house. The Makonde at Jumbe
Chauro, however, have a much more complicated, solid and original
one. Here, too, the door is as already described, except that there is
only one post on the inside, standing by itself about six inches from
one side of the doorway. Opposite this post is a hole in the wall just
large enough to admit a man’s arm. The door is closed inside by a
large wooden bolt passing through a hole in this post and pressing
with its free end against the door. The other end has three holes into
which fit three pegs running in vertical grooves inside the post. The
door is opened with a wooden key about a foot long, somewhat
curved and sloped off at the butt; the other end has three pegs
corresponding to the holes, in the bolt, so that, when it is thrust
through the hole in the wall and inserted into the rectangular
opening in the post, the pegs can be lifted and the bolt drawn out.[50]
MODE OF INSERTING THE KEY
With no small pride first one householder and then a second

showed me on the spot the action of this greatest invention of the
Makonde Highlands. To both with an admiring exclamation of
“Vizuri sana!” (“Very fine!”). I expressed the wish to take back these
marvels with me to Ulaya, to show the Wazungu what clever fellows
the Makonde are. Scarcely five minutes after my return to camp at
Newala, the two men came up sweating under the weight of two
heavy logs which they laid down at my feet, handing over at the same
time the keys of the fallen fortress. Arguing, logically enough, that if
the key was wanted, the lock would be wanted with it, they had taken
their axes and chopped down the posts—as it never occurred to them
to dig them out of the ground and so bring them intact. Thus I have
two badly damaged specimens, and the owners, instead of praise,
come in for a blowing-up.
The Makua huts in the environs of Newala are especially
miserable; their more than slovenly construction reminds one of the
temporary erections of the Makua at Hatia’s, though the people here
have not been concerned in a war. It must therefore be due to
congenital idleness, or else to the absence of a powerful chief. Even
the baraza at Mlipa’s, a short hour’s walk south-east of Newala,
shares in this general neglect. While public buildings in this country
are usually looked after more or less carefully, this is in evident
danger of being blown over by the first strong easterly gale. The only
attractive object in this whole district is the grave of the late chief
Mlipa. I visited it in the morning, while the sun was still trying with
partial success to break through the rolling mists, and the circular
grove of tall euphorbias, which, with a broken pot, is all that marks
the old king’s resting-place, impressed one with a touch of pathos.
Even my very materially-minded carriers seemed to feel something
of the sort, for instead of their usual ribald songs, they chanted
solemnly, as we marched on through the dense green of the Makonde
bush:—
“We shall arrive with the great master; we stand in a row and have
no fear about getting our food and our money from the Serkali (the
Government). We are not afraid; we are going along with the great
master, the lion; we are going down to the coast and back.”
With regard to the characteristic features of the various tribes here
on the western edge of the plateau, I can arrive at no other
conclusion than the one already come to in the plain, viz., that it is
impossible for anyone but a trained anthropologist to assign any
given individual at once to his proper tribe. In fact, I think that even
an anthropological specialist, after the most careful examination,
might find it a difficult task to decide. The whole congeries of peoples
collected in the region bounded on the west by the great Central
African rift, Tanganyika and Nyasa, and on the east by the Indian
Ocean, are closely related to each other—some of their languages are
only distinguished from one another as dialects of the same speech,
and no doubt all the tribes present the same shape of skull and
structure of skeleton. Thus, surely, there can be no very striking
differences in outward appearance.
Even did such exist, I should have no time
to concern myself with them, for day after day,
I have to see or hear, as the case may be—in
any case to grasp and record—an
extraordinary number of ethnographic
phenomena. I am almost disposed to think it
fortunate that some departments of inquiry, at
least, are barred by external circumstances.
Chief among these is the subject of iron-
working. We are apt to think of Africa as a
country where iron ore is everywhere, so to
speak, to be picked up by the roadside, and
where it would be quite surprising if the
inhabitants had not learnt to smelt the
material ready to their hand. In fact, the
knowledge of this art ranges all over the
continent, from the Kabyles in the north to the
Kafirs in the south. Here between the Rovuma
and the Lukuledi the conditions are not so
favourable. According to the statements of the
Makonde, neither ironstone nor any other
form of iron ore is known to them. They have
not therefore advanced to the art of smelting
the metal, but have hitherto bought all their
THE ANCESTRESS OF
THE MAKONDE
iron implements from neighbouring tribes.
Even in the plain the inhabitants are not much
better off. Only one man now living is said to
understand the art of smelting iron. This old fundi lives close to
Huwe, that isolated, steep-sided block of granite which rises out of
the green solitude between Masasi and Chingulungulu, and whose
jagged and splintered top meets the traveller’s eye everywhere. While
still at Masasi I wished to see this man at work, but was told that,
frightened by the rising, he had retired across the Rovuma, though
he would soon return. All subsequent inquiries as to whether the
fundi had come back met with the genuine African answer, “Bado”
(“Not yet”).
BRAZIER
Some consolation was afforded me by a brassfounder, whom I

came across in the bush near Akundonde’s. This man is the favourite
of women, and therefore no doubt of the gods; he welds the glittering
brass rods purchased at the coast into those massive, heavy rings
which, on the wrists and ankles of the local fair ones, continually give
me fresh food for admiration. Like every decent master-craftsman he
had all his tools with him, consisting of a pair of bellows, three
crucibles and a hammer—nothing more, apparently. He was quite
willing to show his skill, and in a twinkling had fixed his bellows on
the ground. They are simply two goat-skins, taken off whole, the four
legs being closed by knots, while the upper opening, intended to
admit the air, is kept stretched by two pieces of wood. At the lower
end of the skin a smaller opening is left into which a wooden tube is
stuck. The fundi has quickly borrowed a heap of wood-embers from
the nearest hut; he then fixes the free ends of the two tubes into an
earthen pipe, and clamps them to the ground by means of a bent
piece of wood. Now he fills one of his small clay crucibles, the dross
on which shows that they have been long in use, with the yellow
material, places it in the midst of the embers, which, at present are
only faintly glimmering, and begins his work. In quick alternation
the smith’s two hands move up and down with the open ends of the
bellows; as he raises his hand he holds the slit wide open, so as to let
the air enter the skin bag unhindered. In pressing it down he closes
the bag, and the air puffs through the bamboo tube and clay pipe into
the fire, which quickly burns up. The smith, however, does not keep
on with this work, but beckons to another man, who relieves him at
the bellows, while he takes some more tools out of a large skin pouch
carried on his back. I look on in wonder as, with a smooth round
stick about the thickness of a finger, he bores a few vertical holes into
the clean sand of the soil. This should not be difficult, yet the man
seems to be taking great pains over it. Then he fastens down to the
ground, with a couple of wooden clamps, a neat little trough made by
splitting a joint of bamboo in half, so that the ends are closed by the
two knots. At last the yellow metal has attained the right consistency,
and the fundi lifts the crucible from the fire by means of two sticks
split at the end to serve as tongs. A short swift turn to the left—a
tilting of the crucible—and the molten brass, hissing and giving forth
clouds of smoke, flows first into the bamboo mould and then into the
holes in the ground.
The technique of this backwoods craftsman may not be very far
advanced, but it cannot be denied that he knows how to obtain an
adequate result by the simplest means. The ladies of highest rank in
this country—that is to say, those who can afford it, wear two kinds
of these massive brass rings, one cylindrical, the other semicircular
in section. The latter are cast in the most ingenious way in the
bamboo mould, the former in the circular hole in the sand. It is quite
a simple matter for the fundi to fit these bars to the limbs of his fair
customers; with a few light strokes of his hammer he bends the
pliable brass round arm or ankle without further inconvenience to
the wearer.
SHAPING THE POT
SMOOTHING WITH MAIZE-COB
CUTTING THE EDGE

FINISHING THE BOTTOM
LAST SMOOTHING BEFORE

BURNING
FIRING THE BRUSH-PILE

LIGHTING THE FARTHER SIDE OF
THE PILE
TURNING THE RED-HOT VESSEL
NYASA WOMAN MAKING POTS AT MASASI

Pottery is an art which must always and everywhere excite the
interest of the student, just because it is so intimately connected with
the development of human culture, and because its relics are one of
the principal factors in the reconstruction of our own condition in
prehistoric times. I shall always remember with pleasure the two or
three afternoons at Masasi when Salim Matola’s mother, a slightly-
built, graceful, pleasant-looking woman, explained to me with
touching patience, by means of concrete illustrations, the ceramic art
of her people. The only implements for this primitive process were a
lump of clay in her left hand, and in the right a calabash containing
the following valuables: the fragment of a maize-cob stripped of all
its grains, a smooth, oval pebble, about the size of a pigeon’s egg, a
few chips of gourd-shell, a bamboo splinter about the length of one’s
hand, a small shell, and a bunch of some herb resembling spinach.
Nothing more. The woman scraped with the
shell a round, shallow hole in the soft, fine
sand of the soil, and, when an active young
girl had filled the calabash with water for her,
she began to knead the clay. As if by magic it
gradually assumed the shape of a rough but
already well-shaped vessel, which only wanted
a little touching up with the instruments
before mentioned. I looked out with the
MAKUA WOMAN closest attention for any indication of the use
MAKING A POT. of the potter’s wheel, in however rudimentary
SHOWS THE a form, but no—hapana (there is none). The
BEGINNINGS OF THE embryo pot stood firmly in its little
POTTER’S WHEEL
depression, and the woman walked round it in
a stooping posture, whether she was removing
small stones or similar foreign bodies with the maize-cob, smoothing
the inner or outer surface with the splinter of bamboo, or later, after
letting it dry for a day, pricking in the ornamentation with a pointed
bit of gourd-shell, or working out the bottom, or cutting the edge
with a sharp bamboo knife, or giving the last touches to the finished
vessel. This occupation of the women is infinitely toilsome, but it is
without doubt an accurate reproduction of the process in use among
our ancestors of the Neolithic and Bronze ages.
There is no doubt that the invention of pottery, an item in human
progress whose importance cannot be over-estimated, is due to
women. Rough, coarse and unfeeling, the men of the horde range
over the countryside. When the united cunning of the hunters has
succeeded in killing the game; not one of them thinks of carrying
home the spoil. A bright fire, kindled by a vigorous wielding of the
drill, is crackling beside them; the animal has been cleaned and cut
up secundum artem, and, after a slight singeing, will soon disappear
under their sharp teeth; no one all this time giving a single thought
to wife or child.
To what shifts, on the other hand, the primitive wife, and still more
the primitive mother, was put! Not even prehistoric stomachs could
endure an unvarying diet of raw food. Something or other suggested
the beneficial effect of hot water on the majority of approved but
indigestible dishes. Perhaps a neighbour had tried holding the hard
roots or tubers over the fire in a calabash filled with water—or maybe
an ostrich-egg-shell, or a hastily improvised vessel of bark. They
became much softer and more palatable than they had previously
been; but, unfortunately, the vessel could not stand the fire and got
charred on the outside. That can be remedied, thought our
ancestress, and plastered a layer of wet clay round a similar vessel.
This is an improvement; the cooking utensil remains uninjured, but
the heat of the fire has shrunk it, so that it is loose in its shell. The
next step is to detach it, so, with a firm grip and a jerk, shell and
kernel are separated, and pottery is invented. Perhaps, however, the
discovery which led to an intelligent use of the burnt-clay shell, was
made in a slightly different way. Ostrich-eggs and calabashes are not
to be found in every part of the world, but everywhere mankind has
arrived at the art of making baskets out of pliant materials, such as
bark, bast, strips of palm-leaf, supple twigs, etc. Our inventor has no
water-tight vessel provided by nature. “Never mind, let us line the
basket with clay.” This answers the purpose, but alas! the basket gets
burnt over the blazing fire, the woman watches the process of
cooking with increasing uneasiness, fearing a leak, but no leak
appears. The food, done to a turn, is eaten with peculiar relish; and
the cooking-vessel is examined, half in curiosity, half in satisfaction
at the result. The plastic clay is now hard as stone, and at the same
time looks exceedingly well, for the neat plaiting of the burnt basket
is traced all over it in a pretty pattern. Thus, simultaneously with
pottery, its ornamentation was invented.
Primitive woman has another claim to respect. It was the man,
roving abroad, who invented the art of producing fire at will, but the
woman, unable to imitate him in this, has been a Vestal from the
earliest times. Nothing gives so much trouble as the keeping alight of
the smouldering brand, and, above all, when all the men are absent
from the camp. Heavy rain-clouds gather, already the first large
drops are falling, the first gusts of the storm rage over the plain. The
little flame, a greater anxiety to the woman than her own children,
flickers unsteadily in the blast. What is to be done? A sudden thought
occurs to her, and in an instant she has constructed a primitive hut
out of strips of bark, to protect the flame against rain and wind.
This, or something very like it, was the way in which the principle
of the house was discovered; and even the most hardened misogynist
cannot fairly refuse a woman the credit of it. The protection of the
hearth-fire from the weather is the germ from which the human
dwelling was evolved. Men had little, if any share, in this forward
step, and that only at a late stage. Even at the present day, the
plastering of the housewall with clay and the manufacture of pottery
are exclusively the women’s business. These are two very significant
survivals. Our European kitchen-garden, too, is originally a woman’s
invention, and the hoe, the primitive instrument of agriculture, is,
characteristically enough, still used in this department. But the
noblest achievement which we owe to the other sex is unquestionably
the art of cookery. Roasting alone—the oldest process—is one for
which men took the hint (a very obvious one) from nature. It must
have been suggested by the scorched carcase of some animal
overtaken by the destructive forest-fires. But boiling—the process of
improving organic substances by the help of water heated to boiling-
point—is a much later discovery. It is so recent that it has not even
yet penetrated to all parts of the world. The Polynesians understand
how to steam food, that is, to cook it, neatly wrapped in leaves, in a
hole in the earth between hot stones, the air being excluded, and
(sometimes) a few drops of water sprinkled on the stones; but they
do not understand boiling.
To come back from this digression, we find that the slender Nyasa
woman has, after once more carefully examining the finished pot,
put it aside in the shade to dry. On the following day she sends me
word by her son, Salim Matola, who is always on hand, that she is
going to do the burning, and, on coming out of my house, I find her
already hard at work. She has spread on the ground a layer of very
dry sticks, about as thick as one’s thumb, has laid the pot (now of a
yellowish-grey colour) on them, and is piling brushwood round it.
My faithful Pesa mbili, the mnyampara, who has been standing by,
most obligingly, with a lighted stick, now hands it to her. Both of
them, blowing steadily, light the pile on the lee side, and, when the
flame begins to catch, on the weather side also. Soon the whole is in a
blaze, but the dry fuel is quickly consumed and the fire dies down, so
that we see the red-hot vessel rising from the ashes. The woman
turns it continually with a long stick, sometimes one way and
sometimes another, so that it may be evenly heated all over. In
twenty minutes she rolls it out of the ash-heap, takes up the bundle
of spinach, which has been lying for two days in a jar of water, and
sprinkles the red-hot clay with it. The places where the drops fall are
marked by black spots on the uniform reddish-brown surface. With a
sigh of relief, and with visible satisfaction, the woman rises to an
erect position; she is standing just in a line between me and the fire,
from which a cloud of smoke is just rising: I press the ball of my
camera, the shutter clicks—the apotheosis is achieved! Like a
priestess, representative of her inventive sex, the graceful woman
stands: at her feet the hearth-fire she has given us beside her the
invention she has devised for us, in the background the home she has
built for us.
At Newala, also, I have had the manufacture of pottery carried on
in my presence. Technically the process is better than that already
described, for here we find the beginnings of the potter’s wheel,
which does not seem to exist in the plains; at least I have seen
nothing of the sort. The artist, a frightfully stupid Makua woman, did
not make a depression in the ground to receive the pot she was about
to shape, but used instead a large potsherd. Otherwise, she went to
work in much the same way as Salim’s mother, except that she saved
herself the trouble of walking round and round her work by squatting
at her ease and letting the pot and potsherd rotate round her; this is
surely the first step towards a machine. But it does not follow that
the pot was improved by the process. It is true that it was beautifully
rounded and presented a very creditable appearance when finished,
but the numerous large and small vessels which I have seen, and, in
part, collected, in the “less advanced” districts, are no less so. We
moderns imagine that instruments of precision are necessary to
produce excellent results. Go to the prehistoric collections of our
museums and look at the pots, urns and bowls of our ancestors in the
dim ages of the past, and you will at once perceive your error.
MAKING LONGITUDINAL CUT IN
BARK
DRAWING THE BARK OFF THE LOG
REMOVING THE OUTER BARK

BEATING THE BARK
WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

SOFT
MANUFACTURE OF BARK-CLOTH AT NEWALA

To-day, nearly the whole population of German East Africa is
clothed in imported calico. This was not always the case; even now in
some parts of the north dressed skins are still the prevailing wear,
and in the north-western districts—east and north of Lake
Tanganyika—lies a zone where bark-cloth has not yet been
superseded. Probably not many generations have passed since such
bark fabrics and kilts of skins were the only clothing even in the
south. Even to-day, large quantities of this bright-red or drab
material are still to be found; but if we wish to see it, we must look in
the granaries and on the drying stages inside the native huts, where
it serves less ambitious uses as wrappings for those seeds and fruits
which require to be packed with special care. The salt produced at
Masasi, too, is packed for transport to a distance in large sheets of
bark-cloth. Wherever I found it in any degree possible, I studied the
process of making this cloth. The native requisitioned for the
purpose arrived, carrying a log between two and three yards long and
as thick as his thigh, and nothing else except a curiously-shaped
mallet and the usual long, sharp and pointed knife which all men and
boys wear in a belt at their backs without a sheath—horribile dictu!
[51]
Silently he squats down before me, and with two rapid cuts has
drawn a couple of circles round the log some two yards apart, and
slits the bark lengthwise between them with the point of his knife.
With evident care, he then scrapes off the outer rind all round the
log, so that in a quarter of an hour the inner red layer of the bark
shows up brightly-coloured between the two untouched ends. With
some trouble and much caution, he now loosens the bark at one end,
and opens the cylinder. He then stands up, takes hold of the free
edge with both hands, and turning it inside out, slowly but steadily
pulls it off in one piece. Now comes the troublesome work of
scraping all superfluous particles of outer bark from the outside of
the long, narrow piece of material, while the inner side is carefully
scrutinised for defective spots. At last it is ready for beating. Having
signalled to a friend, who immediately places a bowl of water beside
him, the artificer damps his sheet of bark all over, seizes his mallet,
lays one end of the stuff on the smoothest spot of the log, and
hammers away slowly but continuously. “Very simple!” I think to
myself. “Why, I could do that, too!”—but I am forced to change my
opinions a little later on; for the beating is quite an art, if the fabric is
not to be beaten to pieces. To prevent the breaking of the fibres, the
stuff is several times folded across, so as to interpose several
thicknesses between the mallet and the block. At last the required
state is reached, and the fundi seizes the sheet, still folded, by both
ends, and wrings it out, or calls an assistant to take one end while he
holds the other. The cloth produced in this way is not nearly so fine
and uniform in texture as the famous Uganda bark-cloth, but it is
quite soft, and, above all, cheap.
Now, too, I examine the mallet. My craftsman has been using the
simpler but better form of this implement, a conical block of some
hard wood, its base—the striking surface—being scored across and
across with more or less deeply-cut grooves, and the handle stuck
into a hole in the middle. The other and earlier form of mallet is
shaped in the same way, but the head is fastened by an ingenious
network of bark strips into the split bamboo serving as a handle. The
observation so often made, that ancient customs persist longest in
connection with religious ceremonies and in the life of children, here
finds confirmation. As we shall soon see, bark-cloth is still worn
during the unyago,[52] having been prepared with special solemn
ceremonies; and many a mother, if she has no other garment handy,
will still put her little one into a kilt of bark-cloth, which, after all,
looks better, besides being more in keeping with its African
surroundings, than the ridiculous bit of print from Ulaya.
MAKUA WOMEN

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(eTextbook PDF) for The Legal

Environment of Business: Text and

Case Analysis 6.1 Blake v. Giustibelli 115 Chapter 10

Contractual Capacity 254 Liquidation Proceedings 330

Chapter 25 Case 27.2 Candelore v. Tinder, Inc. 579

Time-Limited Group Assignment Cengage Testing Powered by Cognero

Instructor’s Companion Website Inquiry, Discussion, Decision, and Review.)

Acknowledgments for Previous Editions

1. Law and Legal Reasoning

2. Business and the Constitution

4. Courts and Alternative Dispute Resolution

Law and Legal Reasoning

your critical-thinking and legal-reasoning skills. The laws

1–2c Administrative Law power is less pronounced in regard to independent agen-

Constitutional Law ● Law as expressed in the U.S. Constitution or state constitutions.

and fair dealing—that seeks to supply a remedy when no

Exhibit 1–2 Equitable Maxims

Procedure Action at Law Action in Equity

practical point of view, however, the courts play a signif-

Newala, too, suffers from the distance of its water-supply—at least

The water-supply of New Newala is in the bottom of the valley,

NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAKONDE LOCK AND KEY AT JUMBE CHAURO

MODE OF INSERTING THE KEY

With no small pride first one householder and then a second

Some consolation was afforded me by a brassfounder, whom I

SMOOTHING WITH MAIZE-COB

CUTTING THE EDGE

LAST SMOOTHING BEFORE

FIRING THE BRUSH-PILE

TURNING THE RED-HOT VESSEL

NYASA WOMAN MAKING POTS AT MASASI

DRAWING THE BARK OFF THE LOG

REMOVING THE OUTER BARK

WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

MANUFACTURE OF BARK-CLOTH AT NEWALA

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