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13th Edition
Business Law
Today
Standard Edition
Text & Summarized Cases
Roger LeRoy Miller

Institute for University Studies
Arlington, Texas
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Summarized Cases 13th Edition
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Roger LeRoy Miller
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Contents in Brief
Unit 1 The Legal Environment of Business 1 Unit 5 Business Organization 651
1 Law and Legal Reasoning 2 26 Sole Proprietorships and Franchises 652
2 Constitutional Law 31 27 All Forms of Partnership 668
3 Ethics in Business 56 28 Limited Liability Companies and Special Business Forms 691
4 Courts and Alternative Dispute Resolution 85 29 Corporation 708
5 Tort Law 119 30 Investor Protection, Insider Trading, and Corporate
6 Product Liability 146 Governance 743
7 Intellectual Property Rights 166
8 Internet Law, Social Media, and Privacy 192 Unit 6 Government Regulation 771
9 Criminal Law and Cyber Crime 214
31 Antitrust Law and Promoting Competition 772
32 Consumer and Environmental Law 794
Unit 2 Contracts and E-Contracts 243 33 Liability of Accountants and Other Professionals 822
10 Nature and Classification 244
11 Agreement 262 Unit 7 Property and Its Protection 845
12 Consideration, Capacity, and Legality 285
34 Personal Property and Bailments 846
13 Defenses to Contract Enforceability 310
35 Real Property and Landlord-Tenant Law 868
14 Third Party Rights and Discharge 333
36 Insurance, Wills, and Trusts 891
15 Breach and Remedies 357
APPENDICES
Unit 3 Commercial Transactions 377
A How to Brief Cases and Analyze Case Problems A–1
16 Sales and Lease Contracts 378
B The Constitution of the United States A–3
17 Performance and Breach of Sales and Lease Contracts 408
C The Uniform Commercial Code (Excerpts) A–3
18 Negotiable Instruments 438
D Answers to Issue Spotters A–4
19 International and Space Law 469
E Sample Answers for Business Case Problems
20 Banking 490 with Sample Answer A–10
21 Security Interests and Creditors’ Rights 512
22 Bankruptcy 540 Glossary G–1
Table of Cases TC–1
Unit 4 Agency and Employment Law 567 Index I–1
23 Agency Relationships in Business 568
24 Employment, Immigration, and Labor Law 596
25 Employment Discrimination 624
iii
Contents
Unit 1 The Legal Environment of Business 1

Chapter 1 Privacy Rights 49
■■ Cybersecurity and the Law: Should Apple Help
Law and Legal Reasoning 2 Law Enforcement? 49
Business Activities and the Legal Environment 3

Sources of American Law 4
Chapter 3
The Common Law 8 Ethics in Business 56
■■ Managerial Strategy: The Power of Precedent 10
■■ Landmark in the Law: Equitable Maxims 15 Ethics and the Role of Business 57
■■ Business Web Log: Bogus Bank and Credit Card Accounts
Classifications of Law 15
at Wells Fargo Bank 58
Appendix to Chapter 1 21 ■■ Adapting the Law to the Online Environment: Should
Finding and Analyzing the Law 21 Employees Have a “Right of Disconnecting”? 60
Finding Statutory and Administrative Law 21 Case 3.1: Al-Dabagh v. Case Western Reserve University 62
Finding Case Law 22 Ethical Principles and Philosophies 63
Reading and Understanding Case Law 24 ■■ Managerial Strategy: The Stakeholder Capitalism Movement 68
Exhibit 1A–3 A Sample Court Case 28 Sources of Ethical Issues in Business Decisions 68
Adelman’s Truck Parts Corp. v. Jones Transport 28 Case 3.2: Watson Laboratories, Inc. v. State of Mississippi 69
■■ Business Law Analysis: Case Briefing and IRAC Legal Reasoning 29 Making Ethical Business Decisions 72
■■ Business Law Analysis: Applying the IDDR Framework 76
Chapter 2 Business Ethics on a Global Level 76
Appendix to Chapter 3: 84
Constitutional Law 31 Costco Code of Ethics 84
The Constitutional Powers of Government 32
Case 2.1: Classy Cycles, Inc. v. Panama City Beach 33 Chapter 4
■■ Landmark in the Law: Gibbons v. Ogden (1824) 35
Classic Case 2.2: Heart of Atlanta Motel v. United States 36 Courts and Alternative
Business and the Bill of Rights 38 Dispute Resolution 85
■■ Adapting the Law to the Online Environment:
The Judiciary’s Role in American Government 86
Social Media and the Constitution 40
■■ Landmark in the Law: Marbury v. Madison (1803) 86
Spotlight on Beer Labels: Case 2.3: Bad Frog Brewery, Inc. v.
New York State Liquor Authority 43 Basic Judicial Requirements 87
■■ Business Law Analysis: Determining When Public Spotlight on Gucci: Case 4.1: Gucci America, Inc. v. Wang Huoqing 92
Religious Displays Violate the Establishment Clause 45 The State and Federal Court Systems 93
Due Process and Equal Protection 47 Case 4.2: Oxford Tower Apartments, LP v. Frenchie’s Hair Boutique 95
iv
Contents v
Following a State Court Case 98 Chapter 7

Using Social Media for Service of Process 99 Intellectual Property Rights 166
Case 4.3: Klipsch Group, Inc. v. ePRO E-Commerce Limited 104
Trademarks 167
Courts Online 107 ■■ Managerial Strategy: Trademarks and Service Marks 167
Alternative Dispute Resolution 108 Classic Case 7.1: Coca-Cola Co. v. Koke Co. of America 168
■■ Business Web Log: Samsung and Forced Arbitration 111 ■■ Business Web Log: Amazon Faces Fake Products 173
Patents 175
Chapter 5 ■■ Business Law Analysis: The Impact of Patent Time Limits 175
Copyrights 178
Tort Law 119 Case 7.2: LEGO A/S v. ZURU Inc. 180
The Basis of Tort Law 119 ■■ Adapting the Law to the Online Environment: Beyoncé,
Intentional Torts against Persons 121 Sampling, and a $20 Million Lawsuit 183
■■ Business Law Analysis: Analyzing Intentional Infliction Case 7.3: Oracle USA, Inc. v. Rimini Street, Inc. 184
of Emotional Distress Claims 123 Trade Secrets 185
Case 5.1: Sky v. Van Der Westhuizen 125 International Protections 186
Revenge Porn and Invasion of Privacy 128
Chapter 8
Intentional Torts against Property 132
Negligence 134 Internet Law, Social Media, and
Case 5.2: Bogenberger v. Pi Kappa Alpha Corporation, Inc. 135 Privacy 192
■■ Landmark in the Law: Palsgraf v. Long Island
Railroad Co. (1928) 138 Internet Law 193
Spotlight on the Seattle Mariners: Case 5.3: Taylor v. Spotlight on Internet Porn: Case 8.1: Hasbro, Inc. v. Internet
Baseball Club of Seattle, L.P. 140 Entertainment Group, Ltd. 196
Strict Liability 141 Copyrights in Digital Information 197
■■ Landmark in the Law: The Digital Millennium Copyright Act 198
■■ Adapting the Law to the Online Environment: Riot Games,
Chapter 6 Inc., Protects Its Online Video Game Copyrights 199
Product Liability 146 Case 8.2: BMG Rights Management (US), LLC v. Cox
Communications, Inc. 200
Product Liability Claims 146 Social Media 201
■■ Business Web Log: Johnson & Johnson Faces
Online Defamation 204
Continuing Lawsuits Over Its Talcum Powder 147
■■ Business Law Analysis: Immunity of ISPs under the
■■ Landmark in the Law: MacPherson v. Buick Motor Co.
Communications Decency Act 206
(1916) 148
Privacy 206
Case 6.1: Primal Vantage Co. v. O’Bryan 149
Case 8.3: Campbell v. Facebook, Inc. 207
Strict Product Liability 150
■■ Cybersecurity and the Law: The Internet of Things 151
■■ Business Law Analysis: How State Legislation Can Limit Chapter 9
Recovery for Design Defects 153
Case 6.2: Stange v. Janssen Pharmaceuticals, Inc. 155
Criminal Law and Cyber Crime 214
■■ Managerial Strategy: When Is a Warning Legally Bulletproof? 156 Civil Law and Criminal Law 214
Defenses to Product Liability 158 Criminal Liability 217
Spotlight on Injuries from Vaccinations: Case 6.3: Bruesewitz v. ■■ Adapting the Law to the Online Environment: Should
Wyeth, LLC 159 Bitcoin Be Illegal? 217
vi Contents
Case 9.1: United States v. Crabtree 218 Defenses to Criminal Liability 228
■■ Managerial Strategy: The Criminalization of American Constitutional Safeguards 230
Business 220
Cyber Crime 233
Types of Crimes 221 ■■ Landmark in the Law: Miranda v. Arizona (1966) 234
Spotlight on White-Collar Crime: Case 9.2: People v. Sisuphan 224 ■■ Cybersecurity and the Law: Counter-Strike: Global Offensive 236
Unit 2 Contracts and E-Contracts 243

Chapter 10 ■■ Landmark in the Law: Hamer v. Sidway (1891) 286
Case 12.1: Cincinnati Reds, L.L.C. v. Testa 287
Nature and Classification 244 Spotlight on Nike: Case 12.2: Already, LLC v. Nike, Inc. 292
An Overview of Contract Law 244 Promissory Estoppel 293
Elements of a Contract 246 Contractual Capacity 294
Case 10.1: Credible Behavioral Health, Inc. v. Johnson 247 Legality 297
Types of Contracts 248 ■■ Business Law Analysis: Determining If a Contract with an
Unlicensed Party Is Enforceable 298
Case 10.2: Boswell v. Panera Bread Co. 250
Case 12.3: Kennedy v. Shave Barber Co. 300
Quasi Contracts 253
■■ Managerial Strategy: Creating Liability Waivers
■■ Business Law Analysis: Deciding If a Court Would Impose
That Are Not Unconscionable 303
a Quasi Contract 254
The Effect of Illegality 304
Interpretation of Contracts 255
Spotlight on Columbia Pictures: Case 10.3: Wagner v.
Columbia Pictures Industries, Inc. 256 Chapter 13
Chapter 11
Defenses to Contract Enforceability 310
Mistakes 310
Agreement 262 Fraudulent Misrepresentation 313
Offer 262 Case 13.1: McCullough v. Allstate Property and Casualty
Classic Case 11.1: Lucy v. Zehmer 263 Insurance Co. 314
Spotlight on Amazon.com: Case 11.2: Basis Technology
Corp. v. Amazon.com, Inc. 265 The Problem of “Contract Cheating” 317
■■ Business Law Analysis: Offers of a Reward 267 Undue Influence and Duress 318
Acceptance 269 The Writing Requirement 319
■■ Adapting the Law to the Online Environment: Can Your E-Mails Case 13.2: Sloop v. Kiker 320
Create a Valid Contract? 270 The Parol Evidence Rule 325
E-Contracts 273 Case 13.3: Habel v. Estate of Capelli 326
Case 11.3: Bailey v. Kentucky Lottery Corp. 276
The Uniform Electronic Transactions Act 279
Chapter 14
Chapter 12 Third Party Rights and Discharge 333
Assignments
Consideration, Capacity, and 333
Delegations 337
Legality 285 Case 14.1: Mirandette v. Nelnet, Inc. 339
Consideration 285 Third Party Beneficiaries 339
Contents vii
Case 14.2: Bozzio v. EMI Group, Ltd. 340 ■■ Landmark in the Law: Hadley v. Baxendale (1854) 362
Contract Discharge 343 Spotlight on Liquidated Damages: Case 15.2: Kent State
■■ Business Law Analysis: Determining When a Breach Is Material 347 University v. Ford 364
Case 14.3: Chalk Supply LLC v. Ribbe Real Estate LLC 348 Equitable Remedies 365
■■ Business Law Analysis: Enforceability of Liquidated
Damages Provisions 365
Chapter 15 Case 15.3: Cipriano Square Plaza Corp. v. Munawar 366
Breach and Remedies 357 Recovery Based on Quasi Contract 369
Contract Provisions Limiting Remedies 370
Damages 358
■■ Cybersecurity and the Law: Arby’s Restaurant Group, Inc. 359
Case 15.1: HDAV Outdoor, LLC v. Red Square Holdings, LLC 361
Unit 3 Commercial Transactions 377

Chapter 16 Warranties 425
Classic Case 17.3: Webster v. Blue Ship Tea Room, Inc. 428
Sales and Lease Contracts 378 ■■ Business Law Analysis: Implied Warranties 430
■■ Landmark in the Law: The Uniform Commercial Code 379
The Scope of Articles 2 and 2A 379 Chapter 18
Taxing Web Purchases 381 Negotiable Instruments 438
The Formation of Sales and Lease Contracts 383
Formation of Negotiable Instruments 439
Case 16.1: Toll Processing Services, LLC v. Kastalon, Inc. 384
■■ Adapting the Law to the Online Environment: Pay with Your
■■ Business Law Analysis: Additional Terms between Merchants 388 Smartphone 441
Classic Case 16.2: Jones v. Star Credit Corp. 393 Case 18.1: OneWest Bank, FSB v. Nunez 445
Title and Risk of Loss 394 ■■ Business Law Analysis: Deciding If an Instrument Is
■■ Managerial Strategy: Commercial Use of Drones 396 Negotiable 446
Case 16.3: Total Quality Logistics, LLC v. Balance Case 18.2: Collins Asset Group, LLC v. Alialy 447
Transportation, LLC 398 Transfer of Instruments 450
Contracts for the International Sale of Goods 401 Holder in Due Course (HDC) 452
Case 18.3: Jarrell v. Conerly 454
Signature and Warranty Liability 456
Chapter 17
Defenses, Limitations, and Discharge 461
Performance and Breach of
Sales and Lease Contracts 408 Chapter 19
Obligations of the Seller or Lessor 409
Case 17.1: All the Way Towing, LLC v. Bucks County
International and Space Law 469
International, Inc. 411 International Law 469
Obligations of the Buyer or Lessee 414 Case 19.1: Rubin v. Islamic Republic of Iran 473
Remedies of the Seller or Lessor 416 ■■ Business Law Analysis: Sovereign Immunity Claims 474
Remedies of the Buyer or Lessee 419 Doing Business Internationally 475
Spotlight on Baseball Cards: Case 17.2: Fitl v. Strek 423 Regulation of Specific Business Activities 477
viii Contents
Case 19.2: Changzhou Trina Solar Energy Co. v. International Trade Spotlight on Wedding Rings: Case 21.1: Royal Jewelers, Inc. v. Light 514
Commission 479 ■■ Adapting the Law to the Online Environment: Secured
U.S. Laws in a Global Context 481 Transactions Online 515
Spotlight on International Torts: Case 19.3: Daimler AG v. Bauman 482 ■■ Business Law Analysis: Perfecting a Security Interest 517
Space Law 483 Scope of a Security Interest 521
■■ Cybersecurity and the Law: Safe Satellites 484 Priorities, Rights, and Duties 523
Case 21.2: Lewis v. Chris Carbine, Inc. 524
Chapter 20 Default 526
Case 21.3: SunTrust Bank v. Monroe 528
Banking 490 Other Laws Assisting Creditors 530
Checks and the Bank-Customer Relationship 491
The Bank’s Duty to Honor Checks 493 Chapter 22
Case 20.1: Legg v. West Bank 494
Case 20.2: Horton v. JPMorgan Chase Bank, N.A. 497
Bankruptcy 540
The Bank’s Duty to Accept Deposits 499 The Bankruptcy Code 540
■■ Landmark in the Law: Check Clearing for the 21st Century ■■ Business Web Log: Online Competition, Bankruptcy,
Act (Check 21) 500 and the “Retail Apocalypse” 541
Electronic Fund Transfers 502 ■■ Landmark in the Law: The Bankruptcy Abuse Prevention
and Consumer Protection Act 542
Case 20.3: Binns v. Truist Bank 504
Chapter 7—Liquidation 543
Banking in the Digital Age 505
■■ Business Law Analysis: Violations of the Automatic Stay 547
■■ Adapting the Law to the Online Environment: Open Banking 506
Case 22.1: In re Anderson 552
Case 22.2: In re Dykes 555
Chapter 21 Chapter 11—Reorganization 556
Security Interests and Creditors’ Rights Bankruptcy Relief under Chapter 13 and Chapter 12 559
512 Case 22.3: In re Chamberlain 561
Creating and Perfecting a Security Interest 512
Unit 4 Agency and Employment Law 567

Chapter 23 ■■ Business Law Analysis: Liability of Disclosed Principals 582
■■ Landmark in the Law: The Doctrine of
Agency Relationships in Business 568 Respondeat Superior 585
Case 23.3: Simon v. Farm Bureau Insurance Co. 587
Agency Law 569
Termination of an Agency 588
Formation of an Agency 572
Duties of Agents and Principals 574
Spotlight on Taser International: Case 23.1: Taser
International, Inc. v. Ward 576
Chapter 24
Agent’s Authority 578 Employment, Immigration, and
Case 23.2: Dearborn West Village Condominium
Association v. Makki 580
Labor Law 596
Liability in Agency Relationships 582 Employment at Will 597
Contents ix
Wages, Hours, and Leave 598 Chapter 25

Case 24.1: Encino Motorcars, LLC v. Navarro 600
Health, Safety, Income Security, and Privacy 602 Employment Discrimination 624
Case 24.2: Packers Sanitation Services, Inc. v. Occupational Safety Title VII of the Civil Rights Act 625
and Health Review Commission 603 ■■ Adapting the Law to the Online Environment: Hiring
■■ Business Law Analysis: Workers’ Compensation Claims 605 Discrimination Based on Social Media Posts 629
■■ Adapting the Law to the Online Environment: Case 25.1: Young v. United Parcel Service, Inc. 630
Social Media in the Workplace Come of Age 609 ■■ Business Law Analysis: Retaliation Claims 634
Immigration Law 610 Case 25.2: Franchina v. City of Providence 635
Labor Law 612 Discrimination Based on Age,
■■ Managerial Strategy: Union Organizing Using a Company’s Disability, or Military Status 636
E-Mail System 615 Case 25.3: Kassa v. Synovus Financial Corp. 641
Case 24.3: Contemporary Cars, Inc. v. National Labor
Defenses to Employment Discrimination 643
Relations Board 616
Affirmative Action 645
Unit 5 Business Organizations 651

Chapter 26 Dissociation and Termination 678
Case 27.3: Guenther v. Ryerson 681
Sole Proprietorships and Limited Liability Partnerships 682
Franchises 652 Limited Partnerships 683
Sole Proprietorships 653
Case 26.1: Port Orchard Airport, Inc. v. Wagner 653 Chapter 28
“Doing Business As” a Sole Proprietor 655 Limited Liability Companies and
Franchises 656 Special Business Forms 691
The Franchise Contract 658
The Limited Liability Company 691
■■ Cybersecurity and the Law: Brinker International, Inc. 660
■■ Landmark in the Law: Limited Liability Company
Franchise Termination 661 (LLC) Statutes 692
Case 26.2: S&P Brake Supply, Inc. v. Daimler Trucks Case 28.1: Nesset, Inc. v. Jones 695
North America, LLC 661
LLC Operation and Management 696
Spotlight on Holiday Inns: Case 26.3: Holiday Inn ■■ Managerial Strategy: Can a Person Who Is Not a
Franchising, Inc. v. Hotel Associates, Inc. 663 Member of a Protected Class Sue for Discrimination? 697
Case 28.2: Schaefer v. Orth 698
Chapter 27 Dissociation and Dissolution of an LLC 699
Case 28.3: Reese v. Newman 700
All Forms of Partnership 668 ■■ Business Law Analysis: When Will a Court Order the
Basic Partnership Concepts 669 Dissolution of an LLC? 701
Case 27.1: Harun v. Rashid 670 Special Business Forms 702
Formation and Operation 672
Classic Case 27.2: Meinhard v. Salmon 675
x Contents
Chapter 29 Chapter 30
Corporations 708 Investor Protection, Insider Trading,
Nature and Classification 708 and Corporate Governance 743
Case 29.1: Wulf v. Bravo Brio Restaurant Group, Inc. 710 Securities Act of 1933 744
Case 29.2: Greenfield v. Mandalay Shores Community Case 30.1: Securities and Exchange Commission v. Scoville 744
Association 714
■■ Adapting the Law to the Online Environment: Investment
Formation and Powers 715 Crowdfunding—Regulations and Restrictions 748
■■ Cybersecurity and the Law: The CLOUD Act 720 ■■ Landmark in the Law: Changes to Regulation A: “Reg A+” 749
■■ Business Law Analysis: Piercing the Corporate Veil 722 Securities Exchange Act of 1934 752
Directors and Officers 722 Classic Case 30.2: Securities and Exchange Commission v. Texas Gulf
Classic Case 29.3: Guth v. Loft, Inc. 727 Sulphur Co. 754
Shareholders 728 Case 30.3: Singer v. Reali 758
Major Business Forms Compared 735 State Securities Laws 760
Corporate Governance 761
Unit 6 Government Regulation 771

Chapter 31 Case 32.2: Haywood v. Massage Envy Franchising, LLC 798
Protection of Health and Safety 802
Antitrust Law Credit Protection 805
and Promoting Competition 772 Case 32.3: Manuel v. Merchants and Professional Bureau, Inc. 808
The Sherman Antitrust Act 773 Protecting the Environment 809

■■ Landmark in the Law: The Sherman Antitrust Act 773 Air and Water Pollution 811
Case 31.1: United States v. Vega-Martínez 775 Toxic Chemicals and Hazardous Waste 814
Section 1 of the Sherman Act 775
Section 2 of the Sherman Act 779 Chapter 33
The Clayton Act 782
Liability of Accountants
Big Tech’s Monopoly Problem 782 and Other Professionals 822
Case 31.2: Candelore v. Tinder, Inc. 784
Potential Liability to Clients 823
Enforcement and Exemptions 786
Case 33.1: Suarez v. Fernandez 827
Case 31.3: TransWeb, LLC v. 3M Innovative Properties Co. 787
Potential Liability to Third Parties 828
U.S. Antitrust Laws in the Global Context 788
Liability of Accountants under Federal Laws 830
Case 33.2: Laccetti v. Securities and Exchange Commission 832
Chapter 32 Potential Criminal Liability 836
Consumer and Environmental Law 794 Confidentiality and Privilege 837

Case 33.3: Commonwealth of Pennsylvania v. Schultz 838
Advertising, Marketing, Sales, and Labeling 795
Spotlight Case 32.1: POM Wonderful, LLC v. Federal Trade Commission 796
Contents xi
Unit 7 Property and Its Protection 845

Chapter 34 Transfer of Ownership 876
Spotlight on Sales of Haunted Houses: Case 35.2:
Personal Property and Bailments 846 Stambovsky v. Ackley 877
■■ Business Law Analysis: When Possession of Property Is
Personal Property versus Real Property 846
Not “Adverse” 880
Acquiring Ownership of Personal Property 848
Case 35.3: A2 Creative Group, LLC v. Anderson 881
Landlord-Tenant Relationships 883
The Exploding World of Digital Property 848
■■ Business Law Analysis: Effective Gift of a Brokerage Account 850
Classic Case 34.1: In re Estate of Piper 851 Chapter 36
Mislaid, Lost, and Abandoned Property 853
Case 34.2: Zephier v. Agate 855
Insurance, Wills, and Trusts 891
Bailments 855 Insurance 891
Case 34.3: Zissu v. IH2 Property Illinois, L.P. 860 Case 36.1: Breeden v. Buchanan 894
Wills 899
Case 36.2: In the Matter of the Estate of Thorn 902
Chapter 35
■■ Adapting the Law to the Online Environment: Online
Real Property and Asset Estate Planning 905
Landlord-Tenant Law 868 Trusts 907

Case 36.3: Dowdy v. Dowdy 909
The Nature of Real Property 868
Ownership Interests and Leases 870
Case 35.1: In the Matter of the Estate of Nelson 871
Appendices
A How to Brief Cases and Analyze Case Problems A–1
B The Constitution of the United States A–3
C The Uniform Commercial Code (Excerpts) A–3
D Answers to Issue Spotters A–4
E Sample Answers for Business Case Problems

with Sample Answer A–10
Glossary G–1
Table of Cases TC–1
Index I–1
Preface
T he present world landscape poses numerous challenges for students planning careers
in the business world. It also offers limitless opportunities. To take advantage of those
opportunities, prospective entrepreneurs—whether they aspire to work on Wall Street
or Main Street—need to have a solid understanding of business law and the legal environ-
ment of corporate America. The most up-to-date text on the market, Business Law Today:
Standard Edition, Thirteenth Edition, provides the perfect platform to achieve this goal.
Instructors have come to rely on the coverage, accuracy, and applicability of Business
Law Today. This best-selling text engages your students, solidifies their understanding of
legal concepts, and provides the best teaching tools available. Working on this edition, my
objective was to make its pages more interesting, to the point, and visually compelling than
ever before. I put particular focus on pedagogical devices within the text that focus on legal,
ethical, and corporate issues, while never losing sight of the course’s core curriculum.
The Thirteenth Edition incorporates the latest legal developments, from United States
Supreme Court decisions to state-level legislation. It also includes nearly forty new and
updated features and more than thirty new cases from 2019 and 2020, over one hundred
new Examples and Case Examples, along with an extensive array of exhibits, Focus Questions,
margin definitions, and case problems.
New and Updated Features

The Thirteenth Edition of Business Law Today: Standard Edition is filled with stimulating new
and updated features designed to cover current high-interest legal topics.
1. Entirely new Cybersecurity and the Law features shed light on the risks that go with
the many rewards offered by technology in the global marketplace. These features
recount how some of the most important brands in corporate America are protecting
themselves and their customers from the threats lurking in cyberspace. Some topics
include:
• Should Apple Help Law Enforcement? (Chapter 2)
• Counter Strike: Global Offensive (Chapter 9)
• The CLOUD Act (Chapter 29)
2. Entirely new hypotheticals in selected chapter introductions provide a real-world
link that generates student interest and highlights specific legal concepts that will be
discussed in the chapter. These hypotheticals—often based on real cases or business
situations—help to introduce and illustrate legal issues facing managers, companies,
and even industries.
3. Business Web Log features underscore the importance of the text material to real-
world businesses. Each of these features discusses a major U.S. company that is
engaged in a dispute involving a topic covered in the chapter. Some topics include
• Samsung and Forced Arbitration (Chapter 4)
• Johnson & Johnson Faces Continuing Lawsuits over Its Talcum Powder (Chapter 6)
• Online Competition, Bankruptcy, and the “Retail Apocalypse” (Chapter 22)
xiii
xiv Preface
4. Adapting the Law to the Online Environment features examine cutting-edge cyberlaw
topics, such as:
• The Problem of “Contract Cheating” (Chapter 13)
• Open Banking (Chapter 20)
• Big Tech’s Monopoly Problem (Chapter 31)
5. Business Law Analysis features appear in numerous chapters of the text. These
features are useful tools to help students master the legal analysis skills that they
will need to answer questions and case problems in the book, on exams, and in
everyday business situations. Topics include:
• The Impact of Patent Time Limits (Chapter 7)
• Deciding If a Court Would Impose a Quasi Contract (Chapter 10)
• Workers’ Compensation Claims (Chapter 24)
6. Ethical Issue features focus on the ethical aspects of a topic being discussed in order
to emphasize that ethics is an integral part of a business law course. Examples
include:
• Even Though Corporation Can Restrict the Speech of Their Employees, Should They
Do So? (Chapter 2)
• Does the Gig Economy Take Advantage of Independent Contractors? (Chapter 23)
• Does Corporate America Need Board Of Director Gender Quotas? (Chapter 30)
7. Managerial Strategy features emphasize the management aspects of business law
and the legal environment. Topics include:
• The Power of Precedents (Chapter 1)
• The Stakeholder Capitalism Movement (Chapter 3)
• Can a Person Who Is Not a Member of a Protected Class Sue for Discrimination?
(Chapter 28)
8. Landmark in the Law features discuss a landmark case, statute, or development that
has significantly affected business law. Examples include:
• Palsgraf v. Long Island Railroad Co. (Chapter 5)
• The Digital Millennium Copyright Act (Chapter 8)
• Federal Trade Commission Rule 433 (Chapter 18)
Making Ethical Business Decisions—The IDDR Approach

The Thirteenth Edition of Business Law Today boasts its own framework for helping students
(and businesspersons) make ethical decisions—the IDDR Approach, which is presented in
Chapter 3. This systematic approach provides students with a clear step-by-step process to
analyze the legal and ethical implications of decisions that are in everyday business opera-
tions. The IDDR Approach uses four logical steps:
• Step 1: Inquiry
• Step 2: Discussion
• Step 3: Decision
• Step 4: Review
Students can remember the first letter of each step easily by using the phrase “I Desire to
Do Right.” Material in Chapter 3 (Ethics in Business) details the goals of each IDDR step
and then provides a Sample Scenario to show students how to apply this new approach to
ethical decision making. The text now focuses on real-life application of ethical principles.
Preface xv
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. In addition, the
Thirteenth Edition retains the Ethical Issue feature in most chapters, several of which have
been refreshed with timely topics involving the ever-evolving technologies and trends in
business.
New Cases and Case Problems

The Thirteenth Edition of Business Law Today has new cases and case problems from 2019
and 2020 in nearly every chapter. The new cases have been carefully selected to illustrate
important points of law and to be of high interest to students and instructors. I have made it a
point to find recent cases that enhance learning and are straightforward enough for business
law students to understand. At the end of each chapter, additional scenarios are presented as
case problems that require students to apply concepts learned from the text.
Certain cases and case problems have been carefully chosen as good teaching cases and are
designated as Spotlight Cases and Spotlight Case Problems. Some examples include Spotlight
on Gucci, Spotlight on Beer Labels, Spotlight on Nike, and Spotlight on the Seattle Mariners.
Instructors will find these Spotlight decisions useful to illustrate the legal concepts under
discussion, and students will enjoy studying the cases because they involve interesting and
memorable facts. Other cases have been chosen as Classic Cases because they establish a
legal precedent in a particular area of law.
Each case concludes with a section, called Critical Thinking, which includes at least one
question. Each question is labeled Ethical, Economic, Legal Environment, Political, Social, or
What If the Facts Were Different? In addition, Classic Cases include an Impact of This Case on
Today’s Law section that clarifies how the case has affected the legal environment. Suggested
answers to all case-ending questions can be found in the Answers Manual for this text.
Many New Highlighted and Numbered Case Examples

Many instructors use cases and examples to illustrate how the law applies to business. This
edition of Business Law Today offers hundreds of new 2019 and 2020 highlighted and con-
secutively numbered Examples and Case Examples. Examples illustrate how the law applies
in a specific situation, and Case Examples present the facts and issues of an actual case and
then describe the court’s decision and rationale.
In addition, this edition presents Spotlight Case Examples, which deal with especially
high-interest cases, and Classic Case Examples, which discuss older, landmark decisions.
The numbered Examples and Case Examples features are integrated throughout the text to
help students better understand how courts apply legal principles in the real world.
Critical Thinking and Legal Reasoning Elements

For this edition of Business Law Today, I have included a discussion of legal reasoning in
Chapter 1. The Business Law Analysis features that can be found throughout the text empha-
size legal reasoning skills as well. Critical Thinking questions conclude most of the features
and cases in this text. At the end of each chapter, a Debate This question requires students
to think critically about the rationale underlying the law on a particular topic.
Answers to all Critical Thinking questions, as well as to the Business Scenarios and Case
Problems at the end of every chapter, are presented in the Thirteenth Edition’s Answers Man-
ual. In addition, the answers to one case problem in each chapter, called the Business Case
Problem with Sample Answer, appear in Appendix E.
The chapter-ending materials also include a separate section of questions that focus on
critical thinking and writing. This section always includes a Time-Limited Group Assignment
and may also include a Critical Legal Thinking question requiring students to think critically
xvi Preface
about some aspect of the law discussed in the chapter or a Business Law Writing question
requiring students to compose a written response.
Other Pedagogical Devices within Each Chapter

• Focus Questions (questions listed at the beginning of each chapter and repeated
in the margins of the text provide a framework of main chapter concepts for the
student).
• Margin definitions of each boldfaced Key Term.
• Know This (margin features).
• Exhibits (in most chapters).
• Photographs (with critical-thinking questions).
Chapter-Ending Pedagogy
• Practice and Review (in every chapter).
• Debate This (a statement or question at the end of Practice and Review).
• Key Terms (with appropriate page references to their margin definitions).
• Chapter Summary (in table format).
• Issue Spotters (in every chapter with answers in Appendix D).
• Business Scenarios and Case Problems (including in every chapter, a Business
Case Problem with Sample Answer that is answered in Appendix E; in selected
chapters, a Spotlight Case Problem; and in every chapter, a A Question of Ethics
that applies this textbook’s unique IDDR Approach to business ethics).
• Critical Thinking and Writing Assignments (including a Time-Limited Group
Assignment in every chapter, and a Business Law Writing or a Critical Legal
Thinking question in selected chapters).
Unit-Ending Pedagogy
Each of the seven units in the Thirteenth Edition of Business Law Today concludes with a
Task-Based Simulation. This feature presents a hypothetical business situation and then
asks a series of questions about how the law applies to various actions taken by the firm.
To answer the questions, the student must apply the laws discussed throughout the unit.
(Answers are provided in the Answers Manual.)
Supplements
Business Law Today, Thirteenth Edition, provides a comprehensive supplements package
designed to make the tasks of teaching and learning more enjoyable and efficient. The fol-
lowing supplements are available for instructors.
MindTap Business Law for Business Law Today,

Thirteenth Edition
Today’s leading digital platform, MindTap, gives you complete control of your course—
equipping you to craft unique learning experiences that challenge students, build confidence
and elevate performance.
Preface xvii
Use MindTap as-is or customize it to meet your specific needs. You can even integrate it
easily into your institution’s Learning Management System (LMS).
A streamlined learning path and redesigned assessments minimize reader distraction,
while dual-pane assignments for students pair readings side-by-side with assessments. Mind-
Tap presents complex concepts using a blend of engaging narrative and media assets clearly
linked to assessments. So, students can start applying concepts to real-world situations from
the beginning of your course with content that progresses from understanding core concepts
to critical thinking and, ultimately, application.
Exclusive Instructor Tools allow you to customize course content to your needs and
tailor assessments to match the specific language and style of your course. New Instructor
Reports provide actionable insights into student performance and present opportunities for
just-in-time intervention.
Product Features
MindTap’s outcomes-based learning design propels students from memorization to mastery.
It’s the only platform today that gives you complete ownership of your course. With Mind-
Tap you can challenge every student, build confidence and empower today’s learners to be
unstoppable.
Anchor Learning With Improved Learning Path Design

MindTap helps students focus by dividing the Learning Path into groups of bite-size activi-
ties that are anchored to a single concept. MindTap presents concepts by pairing instructional
content with assessment in a visually captivating side-by-side format.
Provide Learning on the Go

Offer your students the flexibility they need to fit learning into their day—wherever they
are and using whatever approach works best for them. Bite-size content and activities that
students can complete on a smartphone or tablet keep learning engaging, even on the go.
Quick Lesson Videos Present Complex Topics Visually

MindTap contains a variety of new and existing Quick Lesson Videos, placed within Learn
It activities and in the Additional Resources, Quick Lessons folder in the MindTap, to reach
all types of learners.
Access Everything You Need in One Place

Cut down on prep with preloaded, organized course materials in MindTap. Teach more effi-
ciently with interactive multimedia, assignments, quizzes and focused resources all on one
screen. With MindTap you give your students the power to read, listen and study on their
phones—so they can learn on their own terms.
Empower Students to Reach Their Potentials

Gain actionable insights into student engagement with MindTap’s twelve distinct metrics.
Identify topics troubling your entire class and instantly communicate with struggling stu-
dents. You can track your class’ performance down to the learning objective and curate your
lectures in real-time to respond to distinct class-wide needs. Students can track their scores
and take the guesswork out of studying with performance reports and personalized study
materials that help them progress toward their goals.
xviii Preface
Control Your Course, Your Content

Only MindTap gives you complete control of your course. You have the flexibility to reorder
textbook chapters, add your own notes and embed a variety of content, including OER. Per-
sonalize course content to your students’ needs by editing question text or answer choices.
They can even read your notes, add their own and highlight key text to aid their progress.
Count on Our Dedicated Team, Whenever You Need Them

MindTap is not simply a comprehensive tool—it’s a network of support from a personalized
team eager to further your success. We’re ready to help—from setting up your course to
tailoring MindTap resources to meet your specific objectives. You’ll be ready to make an
impact from day one. And, we’ll be right here to help you and your students throughout the
semester—and beyond.
MindTap Table of Contents

Why Does [Topic] Matter to Me?
Immediately engage students with new activities that connect the upcoming chapter to an
authentic, real-world scenario designed to pique engagement and emphasize relevance. Use
these activities to ensure students read material before class and to trigger lively in-class
discussion.
Chapter-Level Ebook
Immediately engage students with a dynamic eBook that brings the value, concepts and
applications of the printed text to life. Students open an active learning experience as each
chapter provides opportunities to interact with content using the approach that’s best for
the individual learner.
Learn It Activities
Easily add multimedia instruction to your course to supplement textbook learning. Mind-
Tap’s Learn It activities offer small sections of instruction in the form of narrative, images,
and/or Quick Lesson Videos that highlight the most important concepts in each chapter.
Learn It activities reinforce the text’s instruction and even approach concepts in a different
way to promote student choice and autonomy with personalizing learning. You can assign
Learn It activities to ensure that students have read and understand key concepts before class.
Check Your Understanding—Chapter Quizzes

Use MindTap’s Check Your Understanding quizzes to assess student performance and imme-
diately identify class-wide learning needs.
Apply It Activities
Assign any of MindTap’s carefully designed, practically focused application activities to
ensure your students know how to make business decisions through the lens of the law.
• Case Problem Analyses offer a multi-step activity that asks students to
identify the facts in a scenario through a series of questions that promote a
Preface xix
critical-thinking process so that students can arrive at the decision of the court.
In the second part, the facts are changed, and students apply the same critical-
thinking process on their own.
• Brief Hypotheticals help students spot the issue and apply the law in the context
of a short, fictional scenario.
Additional Resources (found at the part level)

• Business Cases develop students’ skills to apply critical-thinking and legal
reasoning through relevant real-world business scenarios.
• Quick Lesson Videos highlight the most important concepts in each chapter.
• PowerPoint Slides edited for student use offer visual outlines of each chapter.
Cengage Testing Powered by Cognero

Cengage Testing Powered by Cognero is a flexible online system that allows instructors to
do the following:
• Author, edit, and manage Test Bank content from multiple Cengage Learning
solutions.
• Create multiple test versions in an instant.
• Deliver tests from their Learning Management System (LMS), classroom, or
wherever they want.
Start Right Away! Cengage Testing Powered by Cognero works on any operating system or
browser.
• Use your standard browser; no special installs or downloads are needed.
• Create tests from school, home, the coffee shop—anywhere with Internet access.
What Instructors Will Find

• Simplicity at every step. A desktop-inspired interface features drop-down menus
and familiar, intuitive tools that take instructors through content creation and
management with ease.
• Full-featured test generator. Create ideal assessments with a choice of fifteen
question types—including true/false, multiple choice, opinion scale/Likert, and
essay. Multi-language support, an equation editor, and unlimited metadata help
ensure instructor tests are complete and compliant.
• Cross-compatible capability. Import and export content into other systems.
Instructor Companion Website

The Instructor’s Companion Website is an all-in-one resource for class preparation, presen-
tation, and testing. Accessible through www.cengage.com/login with your faculty account,
you will find available for download:
• Instructor’s Manual. Includes activities and assessments for each chapter and
their correlation to specific learning objectives, an outline, key terms with
definitions, a chapter summary, and several ideas for engaging with students with
discussion questions, ice breakers, case studies, and social learning activities that
may be conducted in an on-ground, hybrid, or online modality.
xx Preface
• Answers Manual. Provides answers to all questions presented in the text,

including the Focus Questions, the questions in each case and feature, the Issue
Spotters, the Business Scenarios and Case Problems, Critical Thinking and Writing
Assignments, and the unit-ending Task-Based Simulation features.
• Test Bank. A comprehensive test bank, offered in Blackboard, Moodle,
Desire2Learn, and Canvas formats, contains learning objective-specific true-false,
multiple-choice and essay questions for each chapter. Import the test bank into
your LMS to edit and manage questions, and to create tests.
• PowerPoint Slides. Presentations are closely tied to the Instructor Manual,
providing ample opportunities for generating classroom discussion and
interaction. They offer ready-to-use, visual outlines of each chapter, which may
be easily customized for your lectures.
• Guide to Teaching Online. Presents technological and pedagogical considerations
and suggestions for teaching the Business Law course when you can’t be in the
same room with students.
• Transition Guide. Highlights all of the changes in the text and in the digital
offerings from the previous edition to this edition.
• Educator Guide. Walks you through what the unique activities are in the
MindTap, where you’ll find them and how they’re built for easier curriculum
integration.
Acknowledgments
S ince I began this project many years ago, numerous business law professors and users
of Business Law Today have been kind enough to help me revise the book and digital
offerings, including the following:
John J. Balek Bradley D. Childs Joseph L. Flack Joseph D. Marcus

Morton College, Illinois Belmont University, Tennessee Washtenaw Community College, Michigan Prince George’s Community College, Maryland
John Jay Ballantine Corey Ciocchetti Jerry Furniss Woodrow J. Maxwell
University of Colorado, Boulder University of Denver, Colorado University of Montana Hudson Valley Community College,
New York
Lorraine K. Bannai Peter Clapp Joan Gabel
Western Washington University St. Mary’s College, California Florida State University Diane May
Winona State University, Minnesota
Marlene E. Barken Dale Clark Elizabeth J. Guerriero
Ithaca College, New York Corning Community College, New York Northeast Louisiana University Beverly McCormick
Phil Harmeson Morehead State University, Kentucky
Laura Barnard Tammy W. Cowart
Lakeland Community College, Ohio University of Texas, Tyler University of South Dakota William J. McDevitt
Nancy L. Hart Saint Joseph’s University, Pennsylvania
Denise A. Bartles, J.D. Stanley J. Dabrowski
Missouri Western State University Hudson County Community College, Midland College, Texas John W. McGee
New Jersey Mo Hassan Aims Community College, Colorado
Daryl Barton
Sandra J. Defebaugh Cabrillo College, California
Eastern Michigan University James K. Miersma
Eastern Michigan University Andy E. Hendrick Milwaukee Area Technical Institute, Wisconsin
Merlin Bauer
Patricia L. DeFrain Coastal Carolina University, South Carolina
Mid State Technical College, Wisconsin Susan J. Mitchell
Glendale College, California Janine S. Hiller Des Moines Area Community College, Iowa
Donna E. Becker
Virginia Polytechnic Institute & State University
Frederick Community College, Maryland M. Yvonne Demory, Jim Lee Morgan
Richard J. Bennet J.D., LL.M. Karen A. Holmes West Los Angeles College, California
George Mason University Hudson Valley Community College, New York
Three Rivers Community College, Connecticut Jack K. Morton
Julia G. Derrick Fred Ittner University of Montana
Dr. Anne Berre College of Alameda, California
Brevard Community College, Florida
Schreiner University, Texas Annie Laurie I. Myers
Joe D. Dillsaver Susan S. Jarvis Northampton Community College,
Robert C. Bird University of Texas, Pan American Pennsylvania
Northeastern State University, Oklahoma
University of Connecticut
Claude W. Dotson Jack E. Karns Solange North
Bonnie S. Bolinger East Carolina University, North Carolina Fox Valley Technical Institute, Wisconsin
Northwest College, Wyoming
Ivy Tech Community College, Wabash Valley
Region, Indiana Larry R. Edwards Sarah Weiner Keidan Jamie L. O’Brien
Tarrant County Junior College, South Campus, Texas Oakland Community College, Michigan South Dakota State University
Brad Botz
Garden City Community College, Kansas Jacolin Eichelberger Richard N. Kleeberg Ruth R. O’Keefe
Hillsborough Community College, Florida Solano Community College, California Jacksonville University, Florida
Teresa Brady
Holy Family College, Pennsylvania George E. Eigsti Bradley T. Lutz Robert H. Orr
Kansas City, Kansas, Community College Hillsborough Community College, Florida Florida Community College at Jacksonville
Dean Bredeson
University of Texas at Austin Florence E. Elliott-Howard Diane MacDonald George Otto
Stephen F. Austin State University, Texas Pacific Lutheran University, Washington Truman College, Illinois
Lee B. Burgunder
California Polytechnic University, Tony Enerva Darlene Mallick Thomas L. Palmer
San Luis Obispo Lakeland Community College, Ohio Anne Arundel Community College, Maryland Northern Arizona University
Thomas D. Cavenagh Benjamin C. Fassberg John D. Mallonee David W. Pan
North Central College, Illinois Prince George’s Community College, Maryland Manatee Community College, Florida University of Tulsa, Oklahoma
xxi
xxii Acknowledgments
Victor C. Parker, Jr. William M. Rutledge Elisabeth “Lisa” Sperow Whitney B. Westrich
North Georgia College and State University Macomb Community College, Michigan California Polytechnic State University, University of Cincinnati
San Luis Obispo
Jane Patterson Roberto Sandoval Clark W. Wheeler
Ozarks Technical Community College and University of Texas at El Paso Catherine A. Stevens Santa Fe Community College, Florida
Missouri State University College of Southern Maryland
Martha Wright Sartoris Lori Whisenant
Donald L. Petote North Hennepin Community College, Nicole Forbes Stowell, University of Houston, Texas
Genesee Community College, New York Minnesota Esquire Kay O. Wilburn
University of Southern Florida, St. Petersburg The University of Alabama at Birmingham
Francis D. Polk Kurt M. Saunders
Ocean County College, New Jersey Andrea Studzinski
California State University, John G. Williams, J.D.
Northridge College of DuPage Northwestern State University, Louisiana
Gregory Rabb
Jamestown Community College, New York Maurice Tonissi
Anne W. Schacherl Shallin S. Williams
Madison Area Technical College, Quinsigamond Community College, Massachusetts Tri-County Technical College
Brad Reid
Abilene Christian University, Texas Wisconsin James D. Van Tassel James L. Wittenbach
Edward F. Shafer Mission College, California University of Notre Dame, Indiana
Anne Montgomery
Ricketts Rochester Community College, Minnesota Russell A. Waldon Abby A. Wood, Esq.
University of Findlay, Ohio College of the Canyons, California Mt. San Antonio College
Lance Shoemaker, J.D.,
Donald A. Roark M.C.P., M.A. Frederick J. Walsh Margaret M. Wright,
University of West Florida West Valley College, California Franklin Pierce College, New Hampshire
J.D. LL.M.
Joey Robertson Lou Ann Simpson James E. Walsh, Jr. University of Illinois, Urbana-Champaign
Sam Houston State University Drake University, Iowa Tidewater Community College, Virginia Eric D. Yordy
Hugh Rode Anthony A. Smith Randy Waterman Northern Arizona University
Utah Valley State College Ithaca College Richland College, Texas Joseph Zavaglia, Jr.
Gerald M. Rogers Denise Smith Jerry Wegman Brookdale Community College, New Jersey
Front Range Community College, Colorado Missouri Western State College University of Idaho Alexandria Zylstra,
Dr. William J. Russell Hugh M. Spall Edward L. Welsh, Jr. J.D., LL.M.
Northwest Nazarene University, Idaho Central Washington University Phoenix College, Arizona George Mason University
In addition, I give my thanks to the staff at Cengage especially Abbie Schultheis, Associate
Product Manager; Joe Sabatino, Product Director; Julia Chase, Senior Content Manager;
Cazzie Reyes and Liz Harnage, Learning Designers; Lisa Elliot, Subject Matter Expert;
Steven McMillian, Digital Delivery Lead; Nick Perez, Product Assistant; Ashley Maynard,
Permissions Analyst; and Nick Barrows, Permissions Project Manager. I also thank Andrew
Stock in Marketing. Additionally, I would like to thank my project manager Ann Borman
at SPi Global, the compositor, for accurately generating pages for the text and making it
possible for me to meet my ambitious schedule for the print and digital products.
I give special thanks to Katherine Marie Silsbee for managing the project and providing
exceptional research and editorial skills. I also thank William Eric Hollowell, co-author of the
Answers Manual for his excellent research efforts. I am grateful for the copyediting services of
Beverly Peavler and proofreading services of Maureen Johnson. I also thank Vickie Reierson
and Suzanne Jasin for their many efforts on this project.
Roger LeRoy Miller
Dedication
To Lorraine,
The journey continues to more delightful times.

It’s nice to be part of it with you.
R.L.M.
Unit 1
The Legal
Environment of
Business
1 Law and Legal Reasoning

2 Constitutional Law
3 Ethics in Business
4 Courts and Alternative Dispute Resolution
5 Tort Law
6 Product Liability
7 Intellectual Property Rights
8 Internet Law, Social Media, and Privacy
Sergii Gnatiuk/Shutterstock.com
9 Criminal Law and Cyber Crime
Andrey_Popov/Shutterstock.com
Focus Questions
1 Law and Legal Reasoning
“Laws should be like In the chapter-opening quotation, Clarence Darrow asserts
The four Focus Questions below clothes. They should that law should be created to serve the public. Because
are designed to help improve your you are part of that public, the law is important to you. In
understanding. After reading this chapter, be made to fit the particular, those entering the world of business will find
you should be able to answer the following people they are themselves subject to numerous laws and government reg-
questions:
meant to serve.” ulations. A basic knowledge of these laws and regulations
1. What are four primary is beneficial—if not essential—to anyone contemplating a
Clarence Darrow
sources of law in the United 1857–1938
successful career in today’s business environment.
States? (American lawyer) Although the law has various definitions, all of them
are based on the general observation that law consists of
2. What is a precedent? When
enforceable rules governing relationships among individuals and between individuals and
might a court depart from
their society. In some societies, these enforceable rules consist of unwritten principles of
precedent?
behavior. In other societies, they are set forth in ancient or contemporary law codes. In
3. What is the difference the United States, our rules consist of written laws and court decisions created by modern
between remedies at law and legislative and judicial bodies. Regardless of how such rules are created, they all have one
remedies in equity? feature in common: they establish rights, duties, and privileges that are consistent with the
4. What are some important values and beliefs of a society or its ruling group.
differences between civil law In this introductory chapter, we look at how business law and the legal environment
and criminal law? affect business decisions. For instance, suppose that Mototron, Inc., plans to introduce
a driverless car equipped with lidar, a radar system that relies on lasers, and artificially
intelligent cameras. Even if its technicians put the vehicles through two million miles of
testing on closed courses and deem them low risk, Mototron cannot simply start selling
Law A body of enforceable rules
governing relationships among rides to consumers. The company must first test the cars on public roads, which requires
individuals and between individuals permission from state governments. It must also establish safety rules with federal regula-
and their society. tors and negotiate sustainable insurance rates. At each step, Mototron will have to adjust
CHAPTER 1: Law and Legal Reasoning 3
its bottom line to take account of the legal costs of introducing cutting-edge but potentially
dangerous technology into the American marketplace.
Our goal in this text is not only to teach you about specific laws, but also to teach you
how to think about the law and legal environment, and to develop your critical-thinking
and legal reasoning skills. The laws may change, but the ability to analyze and evaluate the
legal (and ethical) ramifications of situations as they arise is an invaluable and lasting skill.
1–1 Business Activities and the Legal Environment

Laws and government regulations affect almost all business activities—from hiring and fir-
ing decisions to workplace safety, the manufacturing and marketing of products, business
financing, and more. To make good business decisions, businesspersons need to understand
the laws and regulations governing these activities.
Realize also that in today’s business world, simply being aware of what conduct can lead
to legal liability is not enough. Businesspersons must develop critical-thinking and legal Liability The state of being legally
reasoning skills so that they can evaluate how various laws might apply to a given situation responsible (liable) for something,
and determine the best course of action. Businesspersons are also pressured to make ethical such as a debt or obligation.
decisions. Thus, the study of business law necessarily involves an ethical dimension.
As you will note, each chapter in this text covers a specific area of the law and shows how
the legal rules in that area affect business activities. Although compartmentalizing the law
in this fashion facilitates learning, it does not indicate the extent to which many different
laws may apply to just one transaction. Exhibit 1–1 illustrates the various areas of the law
that may influence business decision making.
Exhibit 1–1 Areas of the Law That May Affect Business Decision Making
Contracts
Courts and Sales and

Court Procedures E-Commerce
Environmental Negotiable
Laws Instruments
Business
Business Creditors’
Decision
Organizations Rights
Making
Intellectual
Agency Property
Torts Professional
Liability
Product
Liability
4 UNIT ONE: The Legal Environment of Business
Example 1.1 Soon after it launched, YouTube faced a potentially catastrophic $1 billion
copyright infringement lawsuit. Entertainment conglomerate Viacom claimed that the
video-hosting platform was not taking sufficient steps to remove unlicensed use of Viacom’s
content on its site. A federal judge ensured YouTube’s survival by ruling that the company
was in compliance with federal copyright law as long as it responded reasonably to “take-
down” requests from Viacom and other content providers.
Not surprisingly, with five hundred hours of video uploaded to its site each minute, You-
Tube has remained under constant legal pressure ever since. Liberal and conservative groups
have sued the company for discriminating against their political viewpoints. It has faced
regulatory scrutiny for, among other things, failing to protect users from sexual and racist
harassment and hosting misleading election-related video content. At one point, the Federal
Trade Commission fined the company $170 million for collecting personal information from
children without their parents’ consent. ■
1–2 Sources of American Law

Primary Source of Law A There are numerous sources of American law. A source that establishes the law on a particular
source that establishes the issue is called a primary source of law. Primary sources include the following:
law on a particular issue, such
as a constitution, a statute, an • The U.S. Constitution and the constitutions of the various states.
administrative rule, or a court • Statutory law—including laws passed by Congress, state legislatures, and local
decision.
governing bodies.
• Regulations created by administrative agencies, such as the federal Food and
Focus Question 1 Drug Administration.
What are four primary • Case law (court decisions).
sources of law in the United
States? We describe each of these important primary sources of law in the following pages. (See
the appendix at the end of this chapter for a discussion of how to find statutes, regulations,
and case law.)
Secondary Source of Law A A secondary source of law is a book or article that summarizes and clarifies a primary source
publication that summarizes or of law. Legal encyclopedias, compilations (such as Restatements of the Law, which summa-
interprets the law, such as a legal rize court decisions on a particular topic), official comments to statutes, treatises, articles
encyclopedia, a legal treatise, or an
in law reviews published by law schools, and articles in other legal journals are examples
article in a law review.
of secondary sources of law. Courts often refer to secondary sources of law for guidance in
interpreting and applying the primary sources of law discussed here.
1–2a Constitutional Law

The federal government and the states have written constitutions that set forth the general
Constitutional Law The body of organization, powers, and limits of their respective governments. Constitutional law, which
law derived from the U.S. Constitution deals with the fundamental principles by which the government exercises its authority, is
and the constitutions of the various the law as expressed in these constitutions.
states.
The U.S. Constitution is the basis of all law in the United States. It provides a framework
for statutes and regulations, and thus is the supreme law of the land. A law in violation of the
U.S. Constitution, if challenged, will be declared unconstitutional and will not be enforced,
no matter what its source.
The Tenth Amendment to the U.S. Constitution reserves to the states all powers not
granted to the federal government. Each state in the union has its own constitution. Unless
it conflicts with the U.S. Constitution or a federal law, a state constitution is supreme within
that state’s borders.
1–2b Statutory Law

Laws enacted by legislative bodies at any level of government, such as the statutes passed by
Congress or by state legislatures, make up the body of law generally referred to as statutory Statutory Law The body of law
law. When a legislature passes a statute, that statute ultimately is included in the federal code enacted by legislative bodies (as
of laws or the relevant state code of laws. opposed to constitutional law,
administrative law, or case law).
Whenever a particular statute is mentioned in this text, we usually provide a footnote
showing its citation (a reference to a publication in which a legal authority—such as a statute Citation A reference to a
or a court decision—or other source can be found). In the appendix following this chapter, publication in which a legal
we explain how you can use these citations to find statutory law. authority—such as a statute or a
court decision—or other source can
Local Ordinances Statutory law also includes local ordinances. An ordinance is a regu- be found.
lation passed by a municipal or county governing unit to deal with matters not covered
Ordinance A regulation enacted by
by federal or state law. Ordinances commonly have to do with city or county land use a city or county legislative body that
(zoning ordinances), building and safety codes, and other matters affecting only the local becomes part of that city’s or county’s
governing unit. statutory law.
Applicability of Statutes A federal statute, of course, applies

to all states. A state statute, in contrast, applies only within the
state’s borders. State laws thus may vary from state to state. No
federal statute may violate the U.S. Constitution, and no state
statute or local ordinance may violate the U.S. Constitution or
the relevant state constitution.
Example 1.2 The tension between federal, state, and local laws
is evident in the national debate over so-called sanctuary c ities—
cities that limit their cooperation with federal immigration
authorities. Normally, law enforcement officials are supposed
to alert federal immigration authorities when they come into
Michael Dwyer/Alamy
contact with an undocumented immigrant. Then, immigration

officials request the state and local authorities to detain the indi-
vidual for possible deportation.
But a number of cities across the United States have adopted
either local ordinances or explicit policies that do not follow this
How have local “sanctuary cities” frustrated federal immigration
procedure. Police in these cities often do not ask or report the
procedures?
immigration status of individuals with whom they come into
contact. Other places refuse to detain undocumented immi-
grants who are accused of low-level offenses. ■
Uniform Laws During the 1800s, the differences among state laws frequently created dif-
ficulties for businesspersons conducting trade and commerce among the states. To counter
these problems, a group of legal scholars and lawyers formed the National Conference of
Commissioners on Uniform State Laws (NCCUSL, online at www.uniformlaws.org) in 1892
to draft uniform laws (“model statutes”) for the states to consider adopting. The NCCUSL still Uniform Laws Model laws
exists today and continues to issue uniform laws. developed by the National
Each state has the option of adopting or rejecting a uniform law. Only if a state legislature Conference of Commissioners on
Uniform State Laws for the states to
adopts a uniform law does that law become part of the statutory law of that state. Furthermore, consider enacting into statute.
a state legislature may choose to adopt only part of a uniform law or to rewrite the sections
that are adopted. Hence, even though many states may have adopted a uniform law, those
laws may not be entirely “uniform.”
The Uniform Commercial Code (UCC) One of the most important uniform acts is the
Uniform Commercial Code (UCC), which was created through the joint efforts of
the NCCUSL and the American Law Institute.1 The UCC was first issued in 1952 and has
been adopted in all fifty states,2 the District of Columbia, and the Virgin Islands.
The UCC facilitates commerce among the states by providing a uniform, yet flexible, set
of rules governing commercial transactions. Because of its importance in the area of com-
mercial law, we cite the UCC frequently in this text. From time to time, the NCCUSL revises
the articles contained in the UCC and submits the revised versions to the states for adoption.
1–2c Administrative Law

Administrative Law The body Another important source of American law is administrative law, which consists of the rules,
of law created by administrative orders, and decisions of administrative agencies. An administrative agency is a federal, state, or
agencies in order to carry out their local government agency established to perform a specific function.
duties and responsibilities.
Rules issued by various administrative agencies affect almost every aspect of a business’s
Administrative Agency A federal, operations. Regulations govern a business’s capital structure and financing, its hiring and
state, or local government agency firing procedures, its relations with employees and unions, and the way it manufactures
created by the legislature to perform and markets its products.
a specific function, such as to make
and enforce rules pertaining to the Federal Agencies At the national level, numerous executive agencies exist within the
environment.
c abinet departments of the executive branch. The Food and Drug Administration, for exam-
ple, is an agency within the U.S. Department of Health and Human Services. Executive
agencies are subject to the authority of the president, who has the power to appoint and
remove their officers.
There are also major independent regulatory agencies at the federal level, including the
Federal Trade Commission, the Securities and Exchange Commission, and the Federal Com-
munications Commission. The president’s power is less pronounced in regard to independent
agencies, whose officers serve for fixed terms and cannot be removed without just cause.
State and Local Agencies There are administrative agencies at the state and local levels
as well. Commonly, a state agency (such as a state pollution-control agency) is created as a
parallel to a federal agency (such as the Environmental Protection Agency).
Just as federal statutes take precedence over conflicting state statutes, so do federal agency
regulations take precedence over conflicting state regulations. Because the rules of state and
local agencies vary widely, we focus here exclusively on federal administrative law.
Agency Creation Because Congress cannot possibly oversee the actual implementation of
all the laws it enacts, it delegates such tasks to agencies. Congress creates an administrative
Enabling Legislation A statute agency by enacting enabling legislation, which specifies the name, composition, purpose, and
enacted by Congress that authorizes powers of the agency being created.
the creation of an administrative Example 1.3 The Federal Trade Commission (FTC) was created in 1914 by the Federal
agency and specifies the name,
composition, purpose, and powers of
Trade Commission Act.3 This act prohibits unfair and deceptive trade practices. It also
the agency being created. describes the procedures the agency must follow to charge persons or organizations with
violations of the act, and it provides for judicial review (review by the courts) of agency
orders.
Other portions of the act grant the agency powers to “make rules and regulations for the
Adjudicate To render a judicial purpose of carrying out the Act,” and to conduct investigations of business practices. In
decision. Adjudication is the
addition, the FTC can obtain reports from interstate corporations concerning their business
trial-like proceeding in which an
administrative law judge hears practices, investigate possible violations of the act, publish findings of its investigations, and
and resolves disputes involving an recommend new legislation. The act also empowers the FTC to hold trial-like hearings and
administrative agency’s regulations. to adjudicate (resolve judicially) certain kinds of disputes involving its regulations.
1. This institute was formed in the 1920s and consists of practicing attorneys, legal scholars, and judges.
2. Louisiana has adopted only Articles 1, 3, 4, 5, 7, 8, and 9.
3. 15 U.S.C. Sections 45–58.
Note that the powers granted to the FTC incorporate functions associated with the legis- Administrative Process The
lative branch of government (rulemaking), the executive branch (investigation and enforce- procedure used by administrative
ment), and the judicial branch (adjudication). Taken together, these functions constitute agencies in fulfilling their three basic
functions: rulemaking, enforcement,
the administrative process, which is the administration of law by administrative agencies. The and adjudication.
administrative process involves rulemaking, enforcement, and adjudication. ■
Rulemaking A major function of an administrative agency is rulemaking—

formulating new regulations or amending old ones. When Congress enacts an
agency’s enabling legislation, it confers the power to make legislative rules, or
substantive rules, which are legally binding on all businesses.
The Administrative Procedure Act (APA)4 imposes strict procedural require-
ments that agencies must follow in legislative rulemaking and other functions.
Example 1.4 The Occupational Safety and Health Act authorized the Occupational
Safety and Health Administration (OSHA) to develop and issue rules governing
safety in the workplace. When OSHA wants to formulate rules regarding safety
TerryJ/iStock/Getty Images Plus

in the steel industry, it has to follow specific procedures outlined by the APA. If
an agency fails to follow the APA’s rulemaking procedures, the resulting rule may
not be binding. ■
Legislative Rules. Legislative rulemaking under the APA typically involves the
following three steps (referred to as notice-and-comment rulemaking).
Which federal agency oversees worker
1. Notice of the proposed rulemaking. The notice must be published in the safety?
Federal Register, a daily publication of the U.S. government.
2. A comment period. The agency must allow ample time for interested parties to
comment in writing on the proposed rule. The agency takes these comments into Rulemaking The process by which
consideration when drafting the final version of the regulation. an administrative agency formally
adopts a new regulation or amends
3. The final rule. Once the agency has drafted the final rule, it is published in the an old one.
Federal Register. (See the appendix at the end of this chapter for an explanation of
how to find agency regulations.) Legislative Rules Administrative
agency rules that carry the same
Interpretive Rules. Administrative agencies also issue interpretive rules that are not legally weight as congressionally enacted
binding but simply indicate how an agency plans to interpret and enforce its statutory statutes.
authority. The APA does not apply to interpretive rulemaking. Example 1.5 The Equal Employ- Interpretive Rules Nonbinding
ment Opportunity Commission periodically issues interpretive rules indicating how it plans rules or policy statements issued by
to interpret the provisions of certain statutes, such as the Americans with Disabilities Act. an administrative agency that explain
These informal rules provide enforcement guidelines for agency officials. ■ how it interprets and intends to apply
the statutes it enforces.
Enforcement and Investigation Agencies often enforce their own rules and have both
investigatory and prosecutorial powers. Agencies investigate a wide range of activities,
including coal mining, automobile manufacturing, and the industrial discharge of pollut-
ants into the environment.
In an investigation, an agency can request that individuals or organizations hand over
specified books, papers, electronic records, or other documents. In addition, agencies may
conduct on-site inspections, although a search warrant is normally required for such inspec-
tions.5 Sometimes, a search of a home, an office, or a factory is the only means of obtaining
evidence needed to prove a regulatory violation.
After investigating a suspected rule violation, an agency may decide to take action against
an individual or a business. Most administrative actions are resolved through negotiated
4. 5 U.S.C. Sections 551–706.

5. In some heavily regulated industries, such as the sale of firearms or liquor, agencies can conduct searches without obtaining a warrant.
settlement at their initial stages without the need for formal adjudication. If a settlement
cannot be reached, though, the agency may issue a formal complaint and proceed to
adjudication.
Administrative Law Judge Adjudication Agency adjudication involves a trial-like hearing before an administrative law
(ALJ) One who presides over an judge (ALJ). Hearing procedures vary widely from agency to agency. After the hearing, the
administrative agency hearing and ALJ renders a decision in the case. The ALJ can fine the charged party or prohibit the party
has the power to administer oaths,
from carrying on some specified activity.
take testimony, rule on questions of
evidence, and make determinations Either the agency or the charged party may appeal the ALJ’s decision to the commission
of fact. or board that governs the agency. If the party fails to get relief there, appeal can be made
to a federal court. Courts give significant weight (deference) to an agency’s judgment and
interpretation of its rules, though, and typically uphold the ALJ’s decision unless it is unrea-
sonable. If neither side appeals the case, the ALJ’s decision becomes final.
Ethical Issue Do administrative agencies exercise too much authority?

Administrative agencies, such as the Federal Trade Commission,
combine in a single governmental entity functions normally divided among the three branches of
government. They create rules, conduct investigations, and prosecute and pass judgment on viola-
tors. Yet administrative agencies’ powers often go unchecked by the other branches. Some busi-
nesspersons have suggested that it is unethical for agencies—which are not even mentioned in the
U.S. Constitution—to wield so many powers.
Although agency rulemaking must comply with the requirements of the Administrative Proce-
dure Act (APA), the act applies only to legislative, not interpretive, rulemaking. In addition, the APA
is largely procedural and aimed at preventing arbitrariness. It does little to ensure that the rules
passed by agencies are fair or correct—or even cost-effective. On those rare occasions when an
agency’s ruling is challenged and later reviewed by a court, the court cannot reverse the agency’s
decision unless the agency exceeded its authority or acted arbitrarily. Courts typically are reluctant
to second-guess an agency’s rules, interpretations, and decisions. Moreover, once an agency has
final regulations in place, it is difficult to revoke or alter them.
1–2d Case Law and Common Law Doctrines

The rules of law announced in court decisions constitute another basic source of American
law. These rules of law include interpretations of constitutional provisions, of statutes enacted
Case Law The rules of law by legislatures, and of regulations created by administrative agencies.
announced in court decisions. Case
Today, this body of judge-made law is referred to as case law. Case law—the doctrines and
law interprets statutes, regulations,
and constitutional provisions, and principles announced in cases—governs all areas not covered by statutory law or administra-
governs all areas not covered by tive law and is part of our common law tradition. We look at the origins and characteristics
statutory or administrative law. of the common law tradition in some detail in the discussion that follows.
1–3 The Common Law

Because of our colonial heritage, much American law is based on the English legal system.
Knowledge of this system is crucial to understanding our legal system today because judges
in the United States still apply common law principles when deciding cases.
1–3a Early English Courts

After the Normans conquered England in 1066, William the Conqueror and his successors
began the process of unifying the country under their rule. One of the means they used
to do this was the establishment of the king’s courts, or curiae regis. Before the Norman
Conquest, disputes had been settled according to the local legal customs and traditions in
various regions of the country. The king’s courts sought to establish a uniform set of rules
for the country as a whole. What evolved in these courts was the beginning of the common Common Law The body of law
law—a body of general rules that applied throughout the entire English realm. Eventually, developed from custom or judicial
the common law tradition became part of the heritage of all nations that were once British decisions in English and U.S. courts,
not attributable to a legislature.
colonies, including the United States.
Courts developed the common law rules from the principles underlying judges’ decisions
in actual legal controversies. Judges attempted to be consistent, and whenever possible, they Focus Question 2
based their decisions on the principles suggested by earlier cases. They sought to decide sim-
What is a precedent? When
ilar cases in a similar way and considered new cases with care because they knew that their
might a court depart from
decisions would make new law. Each interpretation became part of the law on the subject and
precedent?
served as a legal precedent—that is, a court decision that furnished an example or authority
for deciding subsequent cases involving identical or similar legal principles or facts.
In the early years of the common law, there was no single place or publication where court Precedent A court decision that
opinions, or written decisions, could be found. Beginning in the late thirteenth and early furnishes an example or authority for
fourteenth centuries, however, portions of significant decisions from each year were gath- deciding subsequent cases involving
ered together and recorded in Year Books. The Year Books were useful references for lawyers identical or similar facts.
and judges. In the sixteenth century, the Year Books were discontinued, and other reports of
cases became available. (See the appendix to this chapter for a discussion of how cases are
reported, or published, in the United States today.)
1–3b Stare Decisis

The practice of deciding new cases with reference to former decisions, or precedents, even-
tually became a cornerstone of the English and U.S. judicial systems. The practice forms a
doctrine called stare decisis 6 (a Latin phrase meaning “to stand on decided cases”). Stare Decisis A common law
Under the doctrine of stare decisis, judges are obligated to follow the precedents estab- doctrine under which judges are
lished within their jurisdictions. (The term jurisdiction refers to a geographic area in which obligated to follow the precedents
established in prior decisions.
a court or courts have the power to apply the law.) Once a court has set forth a principle of
law as being applicable to a certain set of facts, that court must apply the principle in future
cases involving similar facts. Courts of lower rank (within the same jurisdiction) must do
likewise. Thus, stare decisis has two aspects:
1. A court should not overturn its own precedents unless there is a strong reason to do so.
2. Decisions made by a higher court are binding on lower courts.
Controlling Precedents Precedents that must be followed within a jurisdiction are known
as controlling precedents. Controlling precedents are binding authorities. A binding authority is Binding Authority Any source of
any source of law that a court must follow when deciding a case. Binding authorities include law that a court must follow when
deciding a case.
constitutions, statutes, and regulations that govern the issue being decided, as well as court
decisions that are controlling precedents within the jurisdiction. United States Supreme Court
case decisions, no matter how old, remain controlling until they are overruled by a subsequent
decision of the Supreme Court, by a constitutional amendment, or by congressional legislation.
Know This
Courts normally must
Stare Decisis and Legal Stability The doctrine of stare decisis helps the courts to be more follow the rules set
efficient because if other courts have carefully reasoned through a similar case, their legal forth by higher courts
in deciding cases with
6. Pronounced stahr-ee dih-si-sis. similar fact patterns.
The Power of Precedent Managerial Strategy
R oberta owns and manages an independent

auto repair shop in Boise City, Oklahoma.
Over the past several years, business has
Relying on Stare Decisis
With auto repairs, the customer is charged
a certain amount of “booked” hours per job,
been booming, thanks to an influx of people no matter how long the repair takes. Rober-
moving to Boise City from California. To take ta’s auto mechanics are paid per “booked”
advantage of this population boom, Roberta hour, also regardless of how long the actual
is considering opening a used car dealership repair takes. Consequently, the issue of
on an abandoned lot next to her repair shop. overtime does not apply. Roberta knows she
thanks to the doctrine of stare decisis, should
won’t be able to pay her salespeople using
Working Overtime the salespeople sue Roberta seeking over-
this system. To get more information on her
time pay, she could reasonably rely on the
Knowing that used car dealerships operate options, she calls Fran, a local labor lawyer,
Supreme Court’s decision as binding prece-
on extremely thin margins, Roberta and her for advice.
dent on this matter.
accountant attempt to come up with a list Fran tells Roberta that, under the federal
of all the costs to include in the new busi- Fair Labor Standards Act (FLSA), employers
Business Questions
ness plan. Roberta learns that other used car are not required to pay overtime for any
dealerships in the area are often open from 8 “sales[person] . . . primarily engaged in sell- 1. “When faced with a clearly errone-
A.M. to 7 P.M., presumably to take advantage ing or servicing any automobiles.” Further- ous precedent, my rule is simple,” writes
of customers who visit outside normal work more, in a recent case, the United States Supreme Court Justice Clarence Thomas.
hours. Most of the dealerships are also open Supreme Court upheld this segment of the “We should not follow it.” How do these
on weekends, meaning that any salespeople FLSA, holding that the “plain language” of words offer a cautionary tale for managers
that Roberta hires will work more than the the federal law should determine the out- relying on stare decisis to make business
normal forty-hour workweek. To determine come of any overtime pay dispute. So, under decisions?
her labor costs, Roberta needs to know if federal law, the salespeople at Roberta’s 2. Should Roberta consider paying her
she must pay these employees overtime for used car dealership would be exempt from salespeople overtime even though it is not
the extra hours. overtime pay. Furthermore, explains Fran, required by federal law? Why or why not?
reasoning and opinions can serve as guides. Stare decisis also makes the law more stable and
predictable. If the law on a given subject is well settled, someone bringing a case to court
can usually rely on the court to make a decision based on what the law has been. (See this
chapter’s Managerial Strategy feature to learn how this stability can help business managers
in their decision-making process.)
Departures from Precedent Although courts are obligated to follow precedents, some-
times a court will depart from the rule of precedent. If a court decides that a precedent is
simply incorrect or that technological or social changes have rendered the precedent inap-
plicable, the court may rule contrary to the precedent. Cases that overturn precedent often
receive a great deal of publicity.
Classic Case Example 1.6 In Brown v. Board of Education of Topeka,7 the United States
Supreme Court expressly overturned precedent. The Court concluded that separate educa-
tional facilities for whites and blacks, which had previously been upheld as constitutional,8
were inherently unequal. The Supreme Court’s departure from precedent in the Brown deci-
sion received a tremendous amount of publicity as people began to realize the ramifications
of this change in the law. ■
7. 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954).

8. See Plessy v. Ferguson, 163 U.S. 537, 16 S.Ct. 1138, 41 L.Ed. 256 (1896).
When There Is No Precedent Occasionally, courts must decide cases for which no prec-
edents exist, called cases of first impression. For instance, as you will read throughout this
text, the Internet and certain other technologies have presented many new and challenging
issues for the courts to decide.
When deciding cases of first impression, courts often look at persuasive authorities.
A persuasive authority is a legal authority that a court may consult for guidance but that is not Persuasive Authority Any legal
binding on the court. A court may consider precedents from other jurisdictions, for instance, authority or source of law that a court
although those precedents are not binding. A court may also consider legal principles and may look to for guidance but need not
follow when making its decision.
policies underlying previous court decisions or existing statutes. Additionally, a court might
look at fairness, social values and customs, and public policy (governmental policy based
on widely held societal values). Federal courts can also look at unpublished opinions (those
not intended for publication in a printed legal reporter) as sources of persuasive
authority.9
Stare Decisis and Legal Reasoning In deciding what law applies to a given dispute and
then applying that law to the facts or circumstances of the case, judges rely on the process
of legal reasoning. Through the use of legal reasoning, judges harmonize their decisions with Legal Reasoning The process of
those that have been made before, as the doctrine of stare decisis requires. reasoning by which judges harmonize
Students of business law and the legal environment also engage in critical thinking and their opinions with the judicial
opinions in previous cases.
legal reasoning. For instance, you may be asked to provide answers for some of the case
problems that appear at the end of every chapter in this text. Each problem describes the
facts of a particular dispute and the legal question at issue. If you are assigned a case problem,
you will be asked to determine how a court would answer that question, and why. In other
words, you will need to give legal reasons for whatever conclusion you reach.
Basic Steps in Legal Reasoning. At times, the legal arguments set forth in court opinions
are relatively simple and brief. At other times, the arguments are complex and lengthy.
Regardless of the length of a legal argument, however, the basic steps of the legal reasoning
process remain the same. These steps, which you can also follow when analyzing cases and
case problems, form what is commonly referred to as the IRAC method of legal reasoning.
IRAC is an acronym formed from the first letters of the words Issue, Rule, Application, and
Conclusion. To apply the IRAC method, ask the following questions:
1. Issue—What are the key facts and issues? This may sound obvious, but before
you can analyze or apply the relevant law to a specific set of facts, you must clearly
understand those facts. In other words, you should read through the case problem
carefully—more than once, if necessary. Make sure that you understand the
identities of the plaintiff (the one who initiates the lawsuit) and the defendant (the Plaintiff One who initiates a lawsuit.
one being sued) in the case, and the progression of events that led to the lawsuit.
Defendant One against whom a
Suppose that a plaintiff, Anna, comes before the court claiming assault (words
lawsuit is brought or the accused
or acts that wrongfully and intentionally make another person apprehensive of person in a criminal proceeding.
harmful or offensive contact). Anna claims that the defendant, Bryce threatened
her while she was sleeping. Although the plaintiff was unaware that she was being
threatened, her roommate, Jan, heard the defendant make the threat. So, in this
scenario, the identities of the parties are obvious. Anna is the plaintiff, and Bryce is
the defendant.
The legal issue in this case is whether the defendant’s action constitutes the
tort of assault even though the plaintiff was unaware of that threat at the time it
occurred. (A tort is a wrongful act brought under civil rather than criminal law.)
9. Rule 32.1 of the Federal Rules of Appellate Procedure.
2. Rule—What rule of law applies to the case? A rule of law may be a rule stated by
the courts in previous decisions, by a state or federal statute, or by a state or federal
administrative agency regulation. Often, more than one rule of law will be applicable
to a case.
Allege To state, recite, assert, or In our hypothetical case, Anna and her attorney allege (claim) that Bryce committed
charge. a tort. Therefore, the applicable law is the common law of torts—specifically, tort law
governing assault. Case precedents involving similar facts and issues thus would be
relevant.
3. Application—How does the rule of law apply to the particular facts and circumstances
of this case? This step is often the most difficult because each case presents a unique
set of facts, circumstances, and parties. Although cases may be similar, no two cases
are ever identical in all respects.
Normally, judges (and lawyers and law students) try to find previously decided
cases that are as similar as possible to the one under consideration. Such a case is
Case on Point A previous case called a case on point. In this situation, there might be case precedents showing that
involving factual circumstances and if a victim is unaware of the threat of harmful or offensive contact, then no assault
issues that are similar to those in the occurred. These would be cases on point that tend to prove that the defendant did
case before the court.
not commit assault and should win the case.
There might, however, also be cases showing that a sexual assault, at least, can
occur even if the victim is asleep. These would be cases on point in the plaintiff’s
favor. You will need to carefully analyze if there are any missing facts in Anna’s
claim. For instance, you might want to know the specific threat that Bryce made
(and Anna’s roommate overheard). Did he threaten to rape, kill, or beat her? Did he
know that she was asleep when he made the threat? Did he know that her roommate
heard the threat and would relay it to her when she awoke? Sometimes, you will
want to obtain additional facts before analyzing which case precedents should apply
and control the outcome of the case.
4. Conclusion—What conclusion should be drawn? This step normally presents few
problems. Usually, the conclusion is evident if the previous three steps have been
followed carefully. In our sample problem, for instance, you may determine that
Bryce did not commit a tort because Anna could not prove all of the required
elements of assault.
There Is No One “Right” Answer. Many people believe that there is one “right” answer to
every legal question. In many legal controversies, however, there is no single correct result.
Good arguments can usually be made to support either side of a legal controversy. Quite
often, a case does not involve a “good” person suing a “bad” person. In many cases, both
parties have acted in good faith in some measure or in bad faith to some degree. Addition-
ally, each judge has her or his own personal beliefs and philosophy. To some extent, these
Remedy The relief given to an personal factors shape the legal reasoning process.
innocent party to enforce a right or
compensate for the violation of a
right.
1–3c Equitable Remedies and Courts of Equity
A remedy is the means given to a party to enforce a right or to compensate for the violation of
a right. Example 1.7 Elena is injured because of Rowan’s wrongdoing. If Elena files a lawsuit
Focus Question 3 and is successful, a court can order Rowan to compensate Elena for the harm by paying her
What is the difference a certain amount. The compensation is Elena’s remedy. ■
between remedies at law and The kinds of remedies available in the early king’s courts of England were severely
remedies in equity? restricted. If one person wronged another, the king’s courts could award either money or
property, including land, as compensation. These courts became known as courts of law, and
the remedies were called remedies at law. Even though this system introduced uniformity
in the settling of disputes, when a person wanted a remedy other than property or economic
compensation, the courts of law could do nothing, so “no remedy, no right.”
Remedies in Equity Equity is a branch of law—founded on notions of justice and fair

ealing—that seeks to supply a remedy when no adequate remedy at law is available. When
d
individuals could not obtain an adequate remedy in a court of law, they petitioned the king for
relief. Most of these petitions were referred to the chancellor, an adviser to the king who had
the power to grant new and unique remedies. Eventually, formal chancery courts, or courts
of equity, were established. The remedies granted by the chancery courts were called remedies
in equity.
Plaintiffs (those bringing lawsuits) had to specify whether they were bringing an “action
at law” or an “action in equity,” and they chose their courts accordingly. A plaintiff might ask
a court of equity to order the defendant to perform within the terms of a contract. A court
of law could not issue such an order because its remedies were limited to the payment of
money or property as compensation for damages.
A court of equity, however, could issue a decree for specific performance—an order to per-
form what was promised. A court of equity could also issue an injunction, directing a party
to do or refrain from doing a particular act. In certain cases, a court of equity could allow for
the rescission (cancellation) of the contract, thereby returning the parties to the positions that
they held prior to the contract’s formation. Equitable remedies will be discussed in greater
detail in the chapters covering contracts.
The Merging of Law and Equity Today, in most states, the courts of law and equity have Know This
merged, and thus the distinction between the two courts has largely disappeared. A plaintiff Even though courts of
may now request both legal and equitable remedies in the same action, and the trial court
law and equity have
judge may grant either form—or both forms—of relief.
merged, the principles
The distinction between legal and equitable remedies remains significant, however,
because a court normally will grant an equitable remedy only when the remedy at law of equity still apply, and
(property or monetary damages) is inadequate. To request the proper remedy, a business- courts will not grant an
person (or her or his attorney) must know what remedies are available for the specific kinds equitable remedy unless
of harms suffered. Exhibit 1–2 summarizes the procedural differences (applicable in most the remedy at law is
states) between an action at law and an action in equity. inadequate.
Equitable Maxims Over time, the courts have developed a number of equitable maxims that Equitable Maxims General
provide guidance in deciding whether plaintiffs should be granted equitable relief. Because propositions or principles of law that
of their importance, both historically and in our judicial system today, these maxims are set have to do with fairness (equity).
forth in this chapter’s Landmark in the Law feature.
Exhibit 1–2 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
1–3d Schools of Legal Thought

How judges apply the law to specific cases, including disputes relating to the business world,
depends on their philosophical approaches to law, among other things. The study of law,
Jurisprudence The science or often referred to as jurisprudence, includes learning about different schools of legal thought
philosophy of law. and discovering how each school’s approach to law can affect judicial decision making.
Natural Law The oldest school of The Natural Law School According to the natural law theory, a higher, or universal, law
legal thought, based on the belief exists that applies to all human beings. Each written law should reflect the principles inher-
that the legal system should reflect ent in natural law. If it does not, then it loses its legitimacy and need not be obeyed.
universal (“higher”) moral and ethical
The natural law tradition is one of the oldest and most significant schools of jurispru-
principles that are inherent in human
nature. dence. It dates back to the days of the Greek philosopher Aristotle (384–322 b.c.e.), who
distinguished between natural law and the laws governing a particular nation.
According to Aristotle, natural law applies universally to all humankind.
The notion that people have “natural rights” stems from the natural law tra-
dition. Those who claim that certain nations, such as China and North Korea,
are depriving many of their citizens of their human rights are implicitly appeal-
ing to a higher law that has universal applicability.
The question of the universality of basic human rights also comes into
play in the context of international business operations. For instance, U.S.
companies that have operations abroad often hire foreign workers as employ-
ees. Should the same laws that protect U.S. employees apply to these foreign
employees? This question is rooted implicitly in a concept of universal rights
Science History Images/Alamy Stock Photo
that has its origins in the natural law tradition.
Legal Positivism Positive law, or national law, is the written law of a given
society at a particular point in time. In contrast to natural law, it applies only to
the citizens of that nation or society. Those who adhere to legal positivism believe
that there can be no higher law than a nation’s positive law.
According to the positivist school, there is no such thing as “natural rights.”
Rather, human rights exist solely because of laws. If the laws are not enforced,
What is the basic premise of Aristotle’s natural anarchy will result. Thus, whether a law is morally “bad” or “good” is irrele-
law theory? vant. 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
Legal Positivism A school of legal will probably be more inclined to defer to an existing law than would a judge who adheres
thought centered on the assumption to the natural law tradition.
that there is no law higher than
the laws created by a national
The Historical School The historical school of legal thought emphasizes the evolutionary
government. Laws must be obeyed,
even if they are unjust, to prevent
process of law by concentrating on the origin and history of the legal system. This school
anarchy. looks to the past to discover what the principles of contemporary law should be. The legal
doctrines that have withstood the passage of time—those that have worked in the past—are
Historical School A school of deemed best suited for shaping present laws. Hence, law derives its legitimacy and author-
legal thought that looks to the past ity from adhering to the standards that historical development has shown to be workable.
to determine what the principles of
contemporary law should be.
Followers of the historical school are more likely than those of other schools to adhere
strictly to decisions made in past cases.
Legal Realism In the 1920s and 1930s, a number of jurists and scholars, known as legal
Legal Realism A school of legal realists, rebelled against the historical approach to law. Legal realism is based on the idea that
thought that holds that the law is only law is just one of many institutions in society and that it is shaped by social forces and needs.
one factor to be considered when
This school reasons that because the law is a human enterprise, judges should look beyond
deciding cases, and that social and
economic circumstances should also
the law and take social and economic realities into account when deciding cases.
be taken into account. Legal realists also believe that the law can never be applied with total uniformity. Given
that judges are human beings with unique experiences, personalities, value systems, and
Equitable Maxims Landmark

in the Law
In medieval England, courts of equity were
expected to use discretion in supplementing
the common law. Even today, when the same
5. Equity regards substance rather than
form. (Equity is more concerned with
fairness and justice than with legal
court can award both legal and equitable technicalities.)
remedies, it must exercise discretion. 6. Equity aids the vigilant, not those
Students of business law and the legal who rest on their rights. (Equity will
environment should know that courts often not help those who neglect their
invoke equitable maxims when making their rights for an unreasonable period of
decisions. Here are some of the most signif- time.) Application to Today’s World The
icant equitable maxims: equitable maxims listed here underlie many
The last maxim has come to be known as of the legal rules and principles that are com-
1. Whoever seeks equity must do equity.
the equitable doctrine of laches. The doctrine monly applied by the courts today—and that
(Anyone who wishes to be treated
arose to encourage people to bring lawsuits you will read about in this book.
fairly must treat others fairly.)
while the evidence was fresh. If they failed For instance, in the contracts materials,
2. Where there is equal equity, the law
must prevail. (The law will determine to do so, they would not be allowed to bring you will read about the doctrine of promissory
the outcome of a controversy in which a lawsuit. What constitutes a reasonable estoppel. Under this doctrine, a person who
the merits of both sides are equal.) time, of course, varies according to the cir- has reasonably and substantially relied on
3. One seeking the aid of an equity court cumstances of the case. the promise of another may be able to obtain
must come to the court with clean Time periods for different types of some measure of recovery, even though no
hands. (Plaintiffs must have acted cases are now usually fixed by statutes of enforceable contract exists. The court will
fairly and honestly.) limitations—that is, statutes that set the estop (bar) the one making the promise from
4. Equity will not suffer a wrong to be maximum time period during which a certain asserting the lack of a valid contract as a
without a remedy. (Equitable relief will action can be brought. After the time allowed defense. The rationale underlying the doc-
be awarded when there is a right to under a statute of limitations has expired, no trine of promissory estoppel is similar to that
relief and there is no adequate remedy action can be brought, no matter how strong expressed in the fourth and fifth maxims just
at law.) the case was originally. listed.
intellects, different judges will obviously bring different reasoning processes to the same case.
Female judges, for instance, might be more inclined than male judges to consider whether a
decision might have a negative impact on the employment of women or minorities.
1–4 Classifications of Law

The law may be broken down according to several classification systems. One classification
system divides law into substantive law (all laws that define, describe, regulate, and create legal Substantive Law Law that defines,
rights and obligations) and procedural law (all laws that establish the methods of enforcing describes, regulates, and creates
the rights established by substantive law). legal rights and obligations.
Example 1.8 A state law that provides employees with the right to workers’ compensation Procedural Law Law that
benefits for any on-the-job injuries they sustain is a substantive law because it creates legal establishes the methods of enforcing
rights. Procedural laws, in contrast, establish the method by which an employee must notify the rights established by substantive
the employer about an on-the-job injury, prove the injury, and periodically submit additional law.
proof to continue receiving workers’ compensation benefits. ■ Note that a law may contain
both substantive and procedural provisions.
Other classification systems divide law into federal law and state law, and private law
(dealing with relationships between persons) and public law (addressing the relationship
Cyberlaw An informal term used to between persons and their governments). Frequently, people use the term cyberlaw to refer
refer to all laws governing electronic to the emerging body of law that governs transactions conducted via the Internet, but
communications and transactions, cyberlaw is not really a classification of law. Rather, it is an informal term used to refer to
particularly those conducted via the
Internet.
both new laws and modifications of traditional legal principles that relate to the online
environment.
Focus Question 4 1–4a Civil Law and Criminal Law

What are some important Civil law spells out the rights and duties that exist between persons and between persons
differences between civil law and their governments, as well as the relief available when a person’s rights are violated.
and criminal law? Typically, in a civil case, a private party sues another private party who has failed to comply
with a duty. Much of the law that we discuss in this text—including contract law and tort
law—is civil law.
Criminal law has to do with wrongs committed against society for which society demands
Civil Law The branch of law dealing
redress. Criminal acts are proscribed by local, state, or federal government statutes. Thus,
with the definition and enforcement
of all private or public rights, as criminal defendants are prosecuted by public officials, such as a district attorney (D.A.), on
opposed to criminal matters. behalf of the state, not by their victims or other private parties.
Whereas in a civil case the object is to obtain a remedy (such as monetary damages) to
Criminal Law The branch of law compensate the injured party, in a criminal case the object is to punish the wrongdoer in
that defines and punishes wrongful
actions committed against the public.
an attempt to deter others from similar actions. Penalties for violations of criminal statutes
consist of fines and/or imprisonment—and, in some cases, death.
1–4b Common Law and Civil Law Systems

Two types of legal systems predominate around the globe today. One is the common law
system of England and the United States, which we discussed earlier. In a common law sys-
tem, the body of law derives from custom and judicial decisions and depends on the impor-
tance of legal precedent.
Civil Law System A system of law The other, known as a civil law system, is based on Roman civil law, or “code law,” which
derived from Roman law that is based relies on legal principles enacted into law by a legislature or governing body. Thus, in a
on codified laws (rather than on case civil law system, the primary source of law is a statutory code, and case precedents are not
precedents).
judicially binding, as they normally are in a common law system. Although judges in a civil
law system often refer to previous decisions as sources of legal guidance, those decisions
are not binding. (Note that a civil law system is not the same as civil law, discussed in the
previous section.)
Generally, countries that were once colonies of Great Britain have retained their
English common law heritage. The civil law system, which is used in most continental
European nations, has been retained in countries that were once colonies of those nations
(see Exhibit 1–3). In the United States, the state of Louisiana, because of its historical ties
to France, is heavily influenced by principles of civil law systems. A third, less prevalent
legal system is widespread in Islamic countries, where the law is often influenced by
sharia, the religious law of Islam.
1–4c National and International Law

U.S. businesspersons increasingly engage in transactions that extend beyond our national
borders. For this reason, those who pursue a career in business today should have an under-
standing of the global legal environment.
National Law Law that pertains The law of a particular nation, such as Japan or Germany, is national law. National law,
to a particular nation (as opposed to of course, varies from country to country because each country’s law reflects the interests,
international law). customs, activities, and values that are unique to that nation’s culture. Even though the laws
and legal systems of various countries differ substantially, broad similarities do exist.
Exhibit 1–3 The Legal Systems of Selected Nations

CIVIL LAW COMMON LAW
Argentina Indonesia Australia Nigeria
Austria Iran Bangladesh Singapore
Brazil Italy Canada United Kingdom
Chile Japan Ghana United States
China Mexico India Zambia
Egypt Poland Israel
Finland South Korea Jamaica
France Sweden Kenya
Germany Tunisia Malaysia
Greece Venezuela New Zealand
In contrast, international law applies to more than one nation. International law can be International Law Law that
defined as a body of written and unwritten laws observed by independent nations and gov- governs relations among nations.
erning the acts of individuals as well as governments. It is a mixture of rules and constraints
derived from a variety of sources, including the laws of individual nations, customs devel-
oped among nations, and international treaties and organizations.
The key difference between national law and international law is that government author-
ities can enforce national law. If a nation violates an international law, however, enforcement
is up to other countries or international organizations, which may or may not choose to
act. If persuasive tactics fail, the only option is to take coercive actions against the violating
nation. Coercive actions range from the severance of diplomatic relations and boycotts to
sanctions and, as a last resort, war.
Practice and Review

Suppose that the California legislature passes a law that severely restricts carbon dioxide emissions of
automobiles in that state. A group of automobile manufacturers files a suit against the state of California
to prevent enforcement of the law. The automakers claim that a federal law already sets fuel economy
standards nationwide and that these standards are essentially the same as carbon dioxide emission
standards. According to the automobile manufacturers, it is unfair to allow California to impose more
stringent regulations than those set by the federal law. Using the information presented in the chapter,
answer the following questions.
1. Who are the parties (the plaintiffs and the defendant) in this lawsuit?
2. Are the plaintiffs seeking a legal remedy or an equitable remedy? Why?
3. What is the primary source of the law that is at issue here?
4. Read through the appendix that follows this chapter, and then answer the following question:
Where would you look to find the relevant California and federal laws?
Debate This
Under the doctrine of stare decisis, courts are obligated to follow the precedents established in their
jurisdiction unless there is a compelling reason not to do so. Should U.S. courts continue to adhere to this
common law principle, given that our government now regulates so many areas by statute?
Key Terms
adjudicate 6 defendant 11 ordinance 5
administrative agency 6 dissenting opinion 27 per curiam opinion 27
administrative law 6 enabling legislation 6 persuasive authority 11
administrative law judge (ALJ) 8 equitable maxims 13 plaintiff 11
administrative process 7 historical school 14 plurality opinion 27
allege 12 international law 17 precedent 9
binding authority 9 interpretive rules 7 primary source of law 4
case law 8 jurisprudence 14 procedural law 15
case on point 12 law 2 remedy 12
citation 5 legal positivism 14 rulemaking 7
civil law 16 legal realism 14 secondary source of law 4
civil law system 16 legal reasoning 11 stare decisis 9
common law 9 legislative rules 7 statutory law 5
concurring opinion 27 liability 3 substantive law 15
constitutional law 4 majority opinion 27 uniform laws 5
criminal law 16 national law 16
cyberlaw 16 natural law 14
Chapter Summary: Law and Legal Reasoning

Sources of American Law 1. Constitutional law—The law as expressed in the U.S. Constitution and the various 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 violate the U.S. Constitution or a federal law.
2. Statutory law—Laws or ordinances created by federal, state, and local legislatures. None of
these laws can violate the U.S. Constitution, and no state statute or local ordinance can violate
the relevant state constitution. Uniform laws, when adopted by a state legislature, become statutory
law in that state.
3. Administrative law—The rules, orders, and decisions of federal or state government administrative
agencies. Federal administrative agencies are created by enabling legislation enacted by the U.S.
Congress. Agency functions include rulemaking, investigation and enforcement, and adjudication.
4. Case law and common law doctrines—Judge-made law, including interpretations of constitutional
provisions, of statutes enacted by legislatures, and of regulations created by administrative agencies.
Case law governs all areas not covered by statutory law or administrative law, and is part of our
common law tradition.
The Common Law 1. Common law—Law that originated in medieval England with the creation of the king’s courts, or
curiae regis, and the development of a body of rules that were common to (or applied in) all regions
of the country.
2. Stare decisis—A doctrine under which judges “stand on decided cases”—or follow the rule of
precedent—in deciding cases. Stare decisis is the cornerstone of the common law tradition.
3. Stare decisis and legal reasoning—Judges use legal reasoning to harmonize their decisions with
those that have been made before, as required by the doctrine of stare decisis. The basic steps of
legal reasoning form what is often referred to as the IRAC method of legal reasoning. IRAC stands
for Issue, Rule, Application, and Conclusion. First, clearly grasp the relevant facts and identify
the issue. Second, determine the rule of law that applies to the case. Third, analyze (using cases
on point) how the rule of law applies to the particular facts of the dispute, and fourth, arrive at a
conclusion.
4. Remedies—A remedy is the means by which a court enforces a right or compensates for a
violation of a right. Courts typically grant legal remedies (monetary damages or property) but may
also grant equitable remedies (specific performance, injunction, or rescission) when the legal
remedy is inadequate or unavailable.
5. Schools of legal thought—Judges’ decision making is influenced by their philosophy of law. The
following are four important schools of legal thought, or legal philosophies:
a. Natural law—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 and that this law
is of a higher order than positive, or national, law.
b. Legal positivism—A school of legal thought centered on the assumption that there is no law
higher than the laws created by the government. Laws must be obeyed, even if they are unjust,
to prevent anarchy.
c. 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.
d. Legal realism—A school of legal thought that generally advocates a less abstract and more
realistic approach to the law. This approach takes into account customary practices and the
social and economic circumstances in which transactions take place.
Classifications of Law The law may be broken down according to several classification systems, such as substantive or
procedural law, federal or state law, and private or public law. Three broad classifications are civil and
criminal law, common law systems, and civil law systems, and national and international law. Cyberlaw
is not really a classification of law but a term that refers to the growing body of case and statutory law
that applies to Internet transactions.
Issue Spotters
1. The First Amendment to the U.S. Constitution provides protection for the free exercise of religion. A state legislature enacts a law that
outlaws all religions that do not derive from the Judeo-Christian tradition. Is this law valid within that state? Why or why not? (See
Sources of American Law.)
2. Apex Corporation learns that a federal administrative agency is considering a rule that will have a negative impact on the firm’s ability to
do business. Does the firm have any opportunity to express its opinion about the pending rule? Explain. (See Sources of American Law.)
—Check your answers to the Issue Spotters against the answers provided in Appendix D.
Business Scenarios and Case Problems

1–1. Binding versus Persuasive Authority. A county 3. A state statute conflicts with the common law of that state.
court in Illinois is deciding a case involving an issue that has 4. A state constitutional amendment conflicts with the U.S.
never been addressed before in that state’s courts. The Iowa Constitution.
Supreme Court, however, recently decided a case involving a
very similar fact pattern. Is the Illinois court obligated to follow 1–3. Remedies. Arthur Rabe is suing Xavier Sanchez for
the Iowa Supreme Court’s decision on the issue? If the United breaching a contract in which Sanchez promised to sell Rabe a
States Supreme Court had decided a similar case, would that Van Gogh painting for $150,000. (See The Common Law.)
decision be binding on the Illinois court? Explain. (See The 1. In this lawsuit, who is the plaintiff, and who is the defendant?
Common Law.) 2. If Rabe wants Sanchez to perform the contract as promised,
what remedy should Rabe seek?
1–2. Sources of Law. This chapter discussed a number of
sources of American law. Which source of law takes priority 3. Suppose that Rabe wants to cancel the contract because
in the following situations, and why? (See Sources of American Sanchez fraudulently misrepresented the painting as an
Law.) original Van Gogh when in fact it is a copy. In this situation,
what remedy should Rabe seek?
1. A federal statute conflicts with the U.S. Constitution.
4. Will the remedy Rabe seeks in either situation be a remedy
2. A federal statute conflicts with a state constitutional
at law or a remedy in equity?
provision.
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out. She tried a second time, but with no better success. How in the
world did her mother manage to do it so easily?
She stood looking at it, puzzled what to do next, then she
remembered that some chips and light kindling must go in on top of
the paper. She tried to get off some little slivers, and by so doing
managed first to get a splinter in her forefinger and then to cut a
gash in her thumb. She was ready to cry, and indeed the tears were
standing in her eyes, for the time was going and Jerry would be at
home very soon. She could not bear to confess to him that she could
not make fire, for Jerry, like all boys, was ready to tease. So she took
off the lids again to make a last effort.
Just then there was a knock at the door, and when it was opened
there stood Rock Hardy.
“I came to tell you that your mother will not be home till late,” he
told Cassy. He caught sight of her thumb tied up with a rag. “Why,
what a woebegone little face,” he said, “and your finger is bleeding.
What have you been doing to yourself?”
“I’ve been trying to make a fire and it won’t burn.” Cassy’s voice
was full of tears. “And I can’t get this splinter out, and I cut myself
trying to make kindling.”
“You poor little girl! you have had trouble of your own. Here, let me
see. I’ll get that splinter out, and tie up that thumb properly, and
make the fire, too. Are you here all alone?”
“Yes, you know Jerry has his market errands to do, and I wanted
to have dinner ready by the time he came.”
“Poor little girl,” Rock repeated. “First get me a fine needle and I’ll
see about that splinter. I will try not to hurt you.”
Cassy was very brave and stood quite still while Rock probed for
the splinter which had gone in quite deep, but at last he triumphantly
produced it sticking on the end of the needle, and after tying up her
cut thumb, he tipped back her chin and looked into her eyes in which
the tears were standing. She smiled and tried to wink away the
drops.
“You were a real soldier,” Rock told her, “and I know it hurt like
everything when I had to dig down after that splinter. Now for the fire.
What’s wrong? Why, you haven’t opened any of the drafts. See, you
must pull out this one, and open this thing in front; that will make a
blaze. Now, there she goes. What are you going to cook?”
Cassy looked down a little abashed.
“I wasn’t going to cook anything. I was just going to warm up this
stew and the corn-bread. You see mother didn’t expect to be gone so
long and she didn’t know we wouldn’t have anything else for dinner.”
She made her little excuses haltingly.
Rock was silent for a moment. It seemed like such a poor little
dinner to the boy accustomed to a lavish table.
“I wish you would invite me to dinner,” at last he said very gravely.
Cassy cast a startled look at the remnant of stew. There would be
enough corn-bread, but she knew Jerry’s appetite, and if Rock’s
were anything like it, some one would have to go hungry from the
table. But she said shyly, “Won’t you stay and take dinner with us?
Jerry will be glad to have you.”
“And how about Cassy?”
The child cast another glance at the little supply of food and Rock
smiled.
“I can make jolly good chocolate,” he said, “and I am going to have
some. Do you mind if we make a sort of picnic of this and let every
fellow bring his own basket? I think it would be a great lark to do
that.”
That seemed an easy way out of it, and Cassy, much relieved,
nodded and smiled. It suited her exactly to call it a picnic.
“You see,” Rock went on, “they’re talking over your mother’s affairs
at our house, and father’s lawyer is there, and so you see it is no fun
for me, and they’ll be glad to get me out of the way. So, if you will
invite me to your picnic, I should like it of all things.”
“Oh, I do invite you, and here are the rocks, and over there by the
window can be the woods, there, where the flowers are.”
Rock laughed.
“You have an imagination of your own,” he said. “All right. I am
going to shut up some of these drafts so the fire won’t all burn out. I’ll
be back directly.” He went flying out and Cassy heard him going
down the stairs, two or three steps at a time. Then she turned to her
work of setting the table.
“We are going to have a picnic, Flora,” she said. “Isn’t it fun? Won’t
Jerry be surprised? I must go into the other room and tell Miss
Morning-Glory that she can stay to dinner. I was afraid there wasn’t
going to be enough for her and all of us, too.”
She bustled about and had everything in readiness by the time
Rock returned. He carried a basket which he set down on the chest.
“Cassy’s Eyes Opened Wider and Wider”
“Now then,” he said, “let’s see if we are all right. There’s the milk
for the chocolate,” producing a bottle; “here are some sardines.
What’s this? Oh, yes, the chocolate. Here’s a box of strawberries;
they looked tempting; you can cap them while I make the chocolate.
What is in this bag? I forget. Oh, yes, that’s sugar, and this is cake
and biscuits and stuff. Nobody ever heard of a picnic without cake. I
borrowed the basket from the grocer at the corner.”
Cassy’s eyes opened wider and wider while all this abundance
was displayed, but she made her protest.
“But you have brought so much; it is more than your share.”
“I don’t think so, but if I have, you will have to excuse me, for I am
a new hand at marketing. Besides, you furnish the picnic grounds; all
these rocks and that grove over there, and the fire and the dishes. I
think when you come to look at it that I have furnished the least.”
Which statement satisfied Cassy, who went to work to cap the
strawberries while Rock set the milk to boil for the chocolate.
They were in the midst of these performances when Jerry came in.
“Hallo!” he cried, as he saw this unusual state of affairs. “Where’s
mother?”
“She is at our house,” replied Rock, “or at least she was. I left her
there, and father was talking for all he was worth to the lawyer, so I
reckon they will enter that suit, and I do hope you will win.”
“Oh,” exclaimed Cassy. “I forgot to ask you if you knew anything
about it; we thought that was what mother was going for.”
“Yes, I asked father, and he said it was too early to tell yet but
there was a good prospect of your getting something. I say, old
fellow,” he gave Jerry a friendly slap on the back, “I have invited
myself to a picnic lunch to celebrate the event. They are glad to have
me out of the way on this occasion and Cassy was so good as to ask
me to stay and dine with you.” He gave Cassy an amused look as he
spoke and she looked down, remembering how very unready she
was to invite him.
“My, that’s a jolly good feed,” cried Jerry, his eyes roaming over
the table. “I am as hungry as a bear.”
“I’m glad of that,” said Rock, “for I am too. I could eat every
mouthful of that stew.”
“I wish you would,” said Jerry, frankly. “I’m tired of it; I’d a lot rather
have the sardines.”
“All right, it’s a go,” said Rock. “I hope you don’t want any, Cassy.
Wouldn’t you rather have the sardines, too? then I can have all the
stew.”
Cassy confessed that she would rather, and Rock drew the dish of
stew to his side of the table.
“Did you have a good day, Jerry?” Cassy asked.
“Not very; I only made thirty cents.”
Rock looked at him. “To think of this little fellow helping to support
his family,” was his thought, and he gave Jerry an admiring glance.
“That’s more than I ever earned in one day,” he said, soberly.
“Oh, but you don’t have to,” Jerry replied. “I reckon I wouldn’t
either, if I were you.”
“Never mind, old fellow,” Rock went on, “you’ll be twice the man for
it. I tell you when a fellow shows what he is willing to do and that he
isn’t going to shirk, it goes a great way. John McClure told father
about your insisting upon doing something to pay for that little
measly geranium you got for Cassy, and ever since then father’s
been keen to see to this business of your mother’s. John McClure is
a fine man. Father says he is one of the most intelligent fellows he
knows. He is a Scotchman by birth and is well educated, but he had
some trouble with his people at home and came to America to make
his living any way that he could. He’d always been fond of
gardening, so he applied for the place as gardener with us, and has
been there ever since we’ve lived here. I believe he will come into
some property some day, and we’ll be sorry to part with him, I tell
you.”
“I just love him,” said Cassy.
“I think he’s a brick,” said Jerry. “Haven’t you always lived in that
house?”
“No, indeed, only for a few years. It really belongs to old Mr.
Dallas, but he and his wife are obliged to go south every year, and
so when my mother and Mr. Heath Dallas were married, his father
wanted them to take the place and keep it from running down. So
that suited everybody, and we’ve been living there two years. Mother
loves it and so do I, and I believe John McClure does, too.”
“I should think he would,” Cassy remarked fervently.
“Father would like to build a little house in the corner of the garden
for John, but he says, no, he has no one to keep house for him and
that some day he will have a place of his own; I think he means to be
a florist and have greenhouses and such things; he reads about
gardens and plants, and all that sort of thing, all the time.”
“I should think that would be the finest business,” said Jerry. “I tell
you flowers sell for a big price sometimes.”
“I know they do, especially in midwinter. Anyhow everything John
puts in the ground seems to grow, and I should think he’d make a
success of that business, for he’s what father calls a ‘canny Scot,’
though he’s not a bit stingy. By the way, I heard my father ask if you
had any relatives; I suppose you haven’t, have you?”
“No,” Jerry told him, “at least not very near ones. Father had no
brothers or sisters, and mother’s people lived in England. Her father
and mother died when she was little, and she came over here with
her aunt.”
“Oh, I see,” said Rock. He had wondered why Mrs. Law had been
left with no one to give her a helping hand.
THE SUMMER LONG
CHAPTER VIII
THE SUMMER LONG
Having satisfied his appetite to the point of discomfort, Jerry

pushed back his plate with a sigh, shaking his head when Cassy
asked if he would have more strawberries.
“Then we’ll save them and the rest of the things for mother,” she
said with a satisfied air. “Unless,” she looked at Rock with sudden
misgiving, “unless you meant to carry them home.”
Rock laughed.
“Not I, if you please. I’ve no notion of doing any such thing. I am
too lazy to move and the thought of having to burden myself with a
basket is too much for me. I will help you to wipe the dishes, though,
and Jerry can put them away.”
“Do you really mean,” said Jerry, slowly, having been in a brown
study, “that the railroad people will pay mother some money?”
“I think so,” Rock told him, “but one can’t say positively. Father
says it is a very good case for damages, but it has been so long now
that perhaps they will not want to pay the whole amount that is
claimed, but he is pretty sure they will compromise, and he knows
what he’s talking about.”
Cassy did not exactly understand all this, but she knew it meant
good fortune for her mother; that hope of which she had spoken on
Easter Day, and she wondered if it could mean as much as that they
could have a cottage with morning-glories over the porch, and if they
could move away and be rid of Billy Miles forever.
As if in answer to her thought Rock asked her: “Have you seen
anything of our friend Billy Miles lately?”
“Our friend,” Cassy repeated in scorn. “I’d like to see myself calling
him my friend.”
“Well, you’ll get rid of him soon, I hope,” Rock told her.
“Do you really think so?” Cassy exclaimed. “I hope we shall, and,
oh, I’d like to get rid of a good many things.”
“What, for instance?”
“Oh, most of the schoolgirls, and this horrid noisy street and Mrs.
Boyle’s parrot. I wish I could go to another school and move into
another street, and never see the parrot again.”
“Why, don’t you like the parrot? I think she is very funny.”
Cassy shook her head.
“She is a bad bird, and says things in such a wicked way like old
Mrs. Finnegan, and they laugh just alike. Polly bites, too, and is so
cross. Sometimes I sit on the fence and look at her and she looks at
me and says: ‘You’re bad! You’re bad!’ and I say, ‘I am not as bad as
you. You are bad!’ And then she laughs as if she liked to be bad. I
believe she has a black heart,” Cassy concluded, soberly.
Rock laughed.
“The poor Polly! I don’t believe she is as wicked as you make out,
but I’ve no doubt but by this time next year you will be far away from
here.”
“Oh, let’s pretend we will,” cried Cassy, stopping in her work of
clearing off the dishes. “You say what you think we’ll be doing, and
I’ll say, and Jerry can.”
“That reminds me of a play we have sometimes, where one begins
a story and one after another goes on with it till it is very funny by the
time it is finished. Here goes: Next year at this time you will be living
in a pretty little country town.”
“Where?” asked Cassy, fishing with a fork for the soap in her pan
of hot water.
“Why, of course in the same town where Eleanor lives.”
“How lovely! Go on.”
“And you’ll live in a nice little white cottage——”
“With morning-glories over the porch.”
“Yes, and roses. I think I know just where it is.”
“Oh, I wish I did!” Cassy dropped her mop and clasped her soapy
hands.
“And you’ll have a dog and a cat.”
“And chickens,” Jerry broke in.
“And a garden,” Cassy added, eagerly.
“And pigeons, maybe,” from Jerry.
“And we’ll have picnics whenever we want them,” Rock went on.
“We?”
“Yes; you’re not going to leave me out. I go up there every
summer, if you please.”
“Oh, do you?”
“That’s fine,” said Jerry. “Oh, pshaw! I almost thought it was going
to be really. Cass, where shall I put the milk?”
“On the window ledge, outside; it is cooler there than anywhere
else.”
“Gee whiz!” exclaimed Rock, looking at his watch. “It’s after three
and I promised George Reed that I’d be there by half-past. I must
travel. Good-bye, Cassy. Good-bye, Jerry; I’ve had a bang up time.”
He lost no time in getting away, gazed after admiringly by both the
children, Jerry declaring that he was “hot stuff,” and Cassy saying: “I
think he’s like a real Prince of Wales.”
It was late when their mother returned, tired out, and after Cassy
had bustled around and had set before her the remains of the feast,
she told them that so far all seemed very promising, but that such
matters could not be settled at once. Yet Cassy saw that there was a
brighter smile on her mother’s face and that she did not turn at once
to that hateful pile of sewing.
Yet true it was that before midsummer they had all seen the last of
the noisy street, and had turned their backs upon Billy Miles, Mrs.
Boyle and the wicked parrot, for about the first of July, just as Cassy
and Jerry were mourning the fact that the Dallas family would soon
be going away, and their house would be closed, there came a call
from Mrs. Dallas herself which resulted in a most delightful
arrangement.
“We are going to leave the city for the summer,” she said to Mrs.
Law, “and although heretofore we have always shut up the house,
yet this year Mr. Dallas will have to be here more or less, and it
would be so much more comfortable for him if he could come to his
own home when he is obliged to be in the city; so I have been
thinking how very nice it would be if you would consent to take
charge of the house during the summer months. I had thought of
renting it, but we should feel so much better satisfied to have some
one we know in it, and if you would kindly see that Mr. Dallas is
made comfortable when he comes to town, I should feel that we
would be quits in the matter of rent. John McClure has consented to
sleep in the coachman’s quarters at the stable; we take our horses
with us, you know, and I think John would be mightily pleased if you
would board him; it might help out with your table expenses if you
could do that. The back rooms are really the most agreeable in
summer, for they look out on the garden, and the porch at that side is
very cool. We always find a breeze there, if there is any stirring. Do
you think you could arrange to come?”
Mrs. Law glanced at Cassy, who was looking thin and pale.
“Oh, mother!” cried the child in an imploring tone.
“You would like it, wouldn’t you, Cassy?” said Mrs. Dallas, smiling
at her.
“Better than anything,” said Cassy.
“I know it is a responsibility,” Mrs. Dallas went on, “and that one
always feels more or less uneasy if he or she is given charge of
another’s belongings, but you need use only the rooms at the back
of the house, and I am sure everything will be in much better
condition than if the house were left closed. Mr. Dallas will only sleep
there when he is in town, so you will not have to think of meals for
him, and, oh yes, whenever you think there is need of extra cleaning
you are at liberty to call upon Martha Collins; I think you may need
her once in a while. She understands that, for she is paid half her
wages while we are away, and it is an understood thing that she
holds herself in readiness to do anything we exact of her. John will
see to it that the pavements are kept clean; there is a boy who
comes to do that. John says he wouldn’t agree to having any other
children in and out of his garden, so you and Jerry may consider
yourselves complimented,” she said, turning to Cassy.
The upshot of the whole matter was that Mrs. Law agreed to
accept Mrs. Dallas’s offer, and in a few days the Law family found a
summer home at the old Dallas place, with John as their boarder.
Cassy could scarcely believe her ears that first morning when she
was awakened by the robins whistling in the cherry-trees, early, so
early, before any one was up. She had a little room next her
mother’s; both rooms opened on a porch and overlooked the garden.
Cassy slipped out of bed and tiptoed to the window. She could see
the robins getting their share of the cherries before any one else
should gather them, and then her eyes fell upon a wonderful sight
just under her window. Those were morning-glories surely, blue and
pink and purple and pearly white, opening now as the light touched
them.
“Oh!” whispered the child in ecstasy. “You darlings!” She reached
out her hand and drew a bit of the vine towards her, gazing into the
frail cups and touching with gentle finger the curling tendrils.
She was so happy that her eyes filled with tears, and she stood
there whispering to herself till she heard her mother stir, and then
she scampered back to bed again, but not to sleep; the robins were
too lively, and when in the course of an hour she heard the click of a
grass-mower in the garden, she jumped up and dressed herself,
then groped her way down-stairs and let herself out the door into the
morning sunshine.
“Hello!” cried John, looking up from his grass-cutting. “You are an
early bird.”
“I’m not as early as the robins.”
“No, you’d have to get up betimes to get ahead of them, little
robbers that they are.”
“Aren’t there enough cherries for them to have some?” Cassy
asked anxiously.
John smiled.
“That depends upon how many you want for yourself. Do you like
cherries?”
Cassy thought for a minute.
“I don’t believe I ever tasted any. Mother didn’t think they were
good for us, and she never let us eat them.”
“Well, I declare,” said John. “But I don’t blame her. I doubt if any
you ever saw were fit to eat. There is a muckle of difference between
cherries picked right off the tree and those you see on the fruit stand
at your corner. As soon as I get through this lawn I’ll get you some.
By to-morrow they ought to be picked, anyhow.”
Cassy looked up at the red and white waxy fruit. She thought it
looked very pretty among the green leaves.
“What a good time the robins were having, to be sure.” She
thought it might be great fun to be a robin and go flying, flying among
the trees. They did seem to be enjoying themselves so much that the
little girl felt sorry that the cherries must be picked, and they be left
without any, but she remembered that the cherries would not last
very long anyhow, and that the robins would have their share first.
Up and down the lawn John went, while Cassy sat on the step and
watched him and the robins, and gazed at the garden before her.
The best of the blossoming was over, but there were a number of
flowers still to be seen; marigolds, and larkspurs, and snap-dragons,
phlox and mignonette and monthly roses, not to mention the
geraniums. Every time John came to the end of his line he would
stop to have a pleasant word, and although he declared that he
wasn’t getting along very fast, it was evident that he enjoyed Cassy’s
company.
After a while the grass was cut and lay in sweet smelling heaps
upon the lawn.
“That will make quite a little pile of hay,” said John, “and there’s
nothing smells sweeter. Come along now and we’ll get those
cherries.”
Bringing a ladder he placed it against the tree and soon had
climbed within reach of the fruit-laden branches. He tossed a cluster
down to Cassy.
“Try ’em,” he said.
Cassy immediately popped one into her mouth.
“Like that? Pretty good, isn’t it?”
“It’s delicious,” Cassy returned.
“Think you’d like to come up here and pick some for yourself?
Afraid to try the ladder? It’s pretty steady.”
“I’d love to do that.”
“Come along, then.” John settled himself into a crotch of the tree
and watched her ascend. She came lightly and with perfect
confidence. “That’s right,” he said. “You weren’t a bit scared, were
you?”
“No, indeed.”
He put out his arm and drew her to a safe seat near him. “There
now, help yourself,” he told her. “You can run a race with the robins if
you like.”
Cassy laughed, and then for the first time in all her life she
gathered fruit from its own tree. After awhile she saw that her mother
had come down and that Jerry was looking for her. She gave a merry
glance at John.
“Don’t tell him where we are; let him find us.”
“Cassy, Cassy,” called Jerry.
“Here I am,” came the answer.
Jerry looked mystified. He hunted the garden over, and finally
spied the ladder leaning against the tree.
“Oho!” he cried peering up into the green; and just then a bunch of
ripe cherries came pelting against his upturned face and a merry
laugh sounded from above.
“Want to come up?” said John. Didn’t he? Could any one imagine
that he didn’t? However, John warned him: “Better wait till we come
down. There’ll be most too many in this tree, I’m afraid.”
Bearing his hat full of cherries he came down the ladder and
Cassy followed. Then Jerry was given permission to go up. This was
a treat he had not expected, to be allowed the freedom of a cherry
tree full of ripe cherries. What bliss!
The boy gave a sigh of great content as he settled himself astride
a huge bough.
“Don’t eat too many,” John warned, “and come down when I call
you.” Jerry promised; he valued John’s good opinion, and moreover
had respect for his authority, and he was not going to do anything to
alter the present pleasant state of things.
Cassy had climbed down safely and stood below, her eyes fixed
on Jerry.
“Isn’t it splendid?” she called up to him.
“I should say so,” came the answer, rather indistinctly by reason of
a mouthful of cherries.
“Here, little one,” said John, “suppose you take these in to your
mother,” and he poured the hatful of shining fruit into Cassy’s
outstretched apron. She ran lightly across the freshly cut grass to the
kitchen where her mother was getting breakfast.
“Just see! Just see!” cried the child, “I’ve been up the tree, and the
robins were there too, and John went up and Jerry is there now. I
picked cherries, real cherries, from the tree myself.” The delight in
her face made her mother stop to kiss her.
“Breakfast is ready,” she told her. “Call Jerry and Mr. McClure.”
And Jerry regretfully was obliged to come down. “You shall help me
to pick them to-morrow,” John told him, and this prospect was
enough to satisfy him.
NEWS

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Business Law Today - Standard

Edition: Text & Summarized Cases

Roger LeRoy Miller

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Unit 1 The Legal Environment of Business 1

Business Activities and the Legal Environment 3

Following a State Court Case 98 Chapter 7

Unit 2 Contracts and E-Contracts 243

Unit 3 Commercial Transactions 377

512 Case 22.3: In re Chamberlain 561

Creating and Perfecting a Security Interest 512

Unit 4 Agency and Employment Law 567

Wages, Hours, and Leave 598 Chapter 25

Unit 5 Business Organizations 651

Unit 6 Government Regulation 771

The Sherman Antitrust Act 773 Protecting the Environment 809

Consumer and Environmental Law 794 Confidentiality and Privilege 837

Unit 7 Property and Its Protection 845

Landlord-Tenant Law 868 Trusts 907

B The Constitution of the United States A–3

C The Uniform Commercial Code (Excerpts) A–3

D Answers to Issue Spotters A–4

E Sample Answers for Business Case Problems

New and Updated Features

Making Ethical Business Decisions—The IDDR Approach

New Cases and Case Problems

Many New Highlighted and Numbered Case Examples

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John J. Balek Bradley D. Childs Joseph L. Flack Joseph D. Marcus

The journey continues to more delightful times.

1 Law and Legal Reasoning

9 Criminal Law and Cyber Crime

1–1 Business Activities and the Legal Environment

Courts and Sales and

1–2 Sources of American Law

1–2a Constitutional Law

1–2b Statutory Law

Applicability of Statutes A federal statute, of course, applies

contact with an undocumented immigrant. Then, immigration

1–2c Administrative Law

Rulemaking A major function of an administrative agency is rulemaking—­

E Sample Answers for Business Case Problems

Rulemaking A major function of an administrative agency is rulemaking—

Exhibit 1–2 Procedural Differences between an Action at Law and an Action in Equity