Essentials of Business Law and the Legal Environment

by Mann, Richard A.; Roberts, Barry S.

• ISBN13: 9780324154788
• ISBN10: 032415478X
• Edition: 8th
• Format: Hardcover
• Copyright: 2003-06-06
• Publisher: South-Western College/West

Summary

This text offers complete coverage of business law and its environment in a non-technical, straightforward, and learner-friendly style. Cases are summarized by the authors and integrated throughout chapters. Legal issues and court decisions are carefully explained with a minimum of legal jargon. Most important, Essentials of Business and The Legal Environment covers all required business law topics for the CPA exam.

Table of Contents

PART I Introduction to Law and Ethics	1	(44)
Introduction to Law	2	(13)
Nature of Law	3	(1)
Classification of Law	4	(2)
Sources of Law	6	(1)
Concept Review: Comparison of Civil and Criminal Law	6	(3)
Concept Review: Comparison of Law and Equity	9	(2)
Consumer Insight: Across the Globe: Four Major Legal Systems	11	(1)
Legal Analysis	12	(1)
The Law and You	13	(2)
Business Ethics	15	(30)
Law versus Ethics	16	(1)
Ethical Theories	16	(1)
Managerial Insight: The Aftermath of Bhopal	17	(3)
Ethical Standards in Business	20	(2)
Ethical Responsibilities of Business	22	(7)
Business Ethics Cases	29	(16)
Pharmakon Drug Company	29	(2)
Mykon's Dilemma	31	(5)
Oliver Winery, Inc.	36	(2)
JLM, Inc.	38	(3)
Sword Technology, Inc.	41	(4)
PART II The Legal Environment of Business	45	(122)
Civil Dispute Resolution	46	(28)
The Court System	46	(1)
The Federal Courts	47	(2)
State Courts	49	(1)
Jurisdiction	50	(1)
Subject Matter Jurisdiction	50	(3)
Concept Review: Subject Matter Jurisdiction	53	(1)
Jurisdiction over the Parties	54	(3)
Civil Dispute Resolution	57	(1)
Civil Procedure	57	(5)
The Law and You	62	(2)
Alternative Dispute Resolution	64	(2)
Concept Review: Comparison of Adjudication, Arbitration, and Mediation/Conciliation	66	(8)
Constitutional Law	74	(19)
Basic Principles	75	(4)
Powers of Government	79	(3)
Limitations on Government	82	(1)
Concept Review: Limitations on Government	83	(4)
Ethical Dilemma: Who Is Responsible for Commercial Speech?	87	(6)
Administrative Law	93	(15)
Operation of Administrative Agencies	94	(3)
Concept Review: Administrative Rulemaking	97	(3)
Limits on Administrative Agencies	100	(3)
Ethical Dilemma: Should the Terminally Ill Be Asked to Await FDA Approval of Last-Chance Treatments?	103	(5)
Criminal Law	108	(17)
Nature of Crimes	109	(1)
Classification	110	(1)
Concept Review: Degrees of Mental Fault	111	(1)
White-Collar Crime	112	(2)
Crimes Against Business	114	(3)
Defenses to Crimes	117	(1)
Criminal Procedure	118	(2)
The Law and You	120	(1)
Concept Review: Constitutional Protection for the Criminal Defendant	121	(4)
Intentional Torts	125	(19)
Harm to the Person	128	(2)
Harm to the Right of Dignity	130	(2)
Managerial Insight: Employee References and Liability for Defamation	132	(3)
Concept Review: Privacy	135	(1)
Harm to Property	135	(1)
Harm to Economic Interests	136	(2)
Ethical Dilemma: What May One Do to Attract Clients from a Previous Employer?	138	(1)
Concept Review: Intentional Torts	139	(5)
Negligence and Strict Liability	144	(23)
Negligence	145	(1)
Breach of Duty of Care	145	(5)
Ethical Dilemma: What Are the Obligations of a Bartender to His Patrons?	150	(2)
Proximate Cause	152	(3)
Injury	155	(1)
Defenses to Negligence	156	(3)
Strict Liability	159	(1)
Activities Giving Rise to Strict Liability	159	(2)
The Law and You	161	(1)
Defenses to Strict Liability	161	(6)
PART III Contracts	167	(176)
Introduction to Contracts	168	(15)
Development of the Law of Contracts	169	(2)
Definition of Contract	171	(1)
Requirements of a Contract	171	(3)
Classification of Contracts	174	(2)
Promissory Estoppel	176	(1)
Managerial Insight: Can You Contract by Fax?	177	(1)
Quasi Contracts	178	(2)
Concept Review: Contracts, Promissory Estoppel, and Quasi Contracts	180	(3)
Mutual Assent	183	(20)
Offer	184	(1)
Essentials of an Offer	184	(4)
Duration of Offers	188	(4)
Acceptance of Offer	192	(1)
Communication of Acceptance	192	(4)
Variant Acceptances	196	(1)
The Law and You	197	(1)
Concept Review: Offer and Acceptance	198	(5)
Conduct Invalidating Assent	203	(19)
Duress	203	(2)
Undue Influence	205	(2)
Fraud	207	(4)
Nonfraudulent Misrepresentation	211	(1)
Mistake	212	(1)
Concept Review: Misrepresentation	212	(2)
Concept Review: Conduct Invalidating Assent	214	(1)
The Law and You	215	(7)
Consideration	222	(18)
Legal Sufficiency	222	(3)
Concept Review: Consideration in Unilateral and Bilateral Contracts	225	(1)
Ethical Dilemma: Should a Spouse's Promise Be Legally Binding?	226	(5)
Bargained-For Exchange	231	(1)
Contracts without Consideration	232	(8)
Illegal Bargains	240	(15)
Violations of Statutes	240	(3)
Violations of Public Policy	243	(6)
The Law and You	249	(1)
Effect of Illegality	249	(1)
Ethical Dilemma: Is It Fair to Reserve the Right to Withhold Test Scores?	250	(5)
Contractual Capacity	255	(13)
Minors	255	(6)
Incompetent Persons	261	(1)
The Law and You	262	(1)
Intoxicated Persons	262	(1)
Ethical Dilemma: Should a Merchant Sell to One Who Lacks Capacity?	263	(5)
Contracts in Writing	268	(23)
Statute of Frauds	269	(1)
Contracts within the Statute of Frauds	269	(6)
Concept Review: The Statute of Frauds	275	(1)
Compliance with the Statute of Frauds	276	(3)
Effect of Noncompliance	279	(1)
Parol Evidence Rule	279	(1)
The Rule	280	(1)
Situations to Which the Rule Does Not Apply	281	(2)
Ethical Dilemma: What's (Wrong) in a Contract?	283	(1)
Supplemental Evidence	283	(1)
Interpretation of Contracts	284	(7)
Third Parties to Contracts	291	(17)
Assignment of Rights	291	(6)
Delegation of Duties	297	(2)
Third-Party Beneficiary Contracts	299	(9)
Performance, Breach, and Discharge	308	(16)
Conditions	308	(4)
Discharge by Performance	312	(1)
Discharge by Breach	312	(2)
Discharge by Agreement of the Parties	314	(2)
Discharge by Operation of Law	316	(8)
Contract Remedies	324	(19)
Monetary Damages	325	(7)
Remedies in Equity	332	(3)
Restitution	335	(1)
Limitations on Remedies	336	(7)
PART IV Sales	343	(104)
Introduction to Sales and Leases	344	(20)
Nature of Sales and Leases	345	(1)
Definitions	345	(3)
Fundamental Principles of Article 2 and Article 2A	348	(3)
Ethical Dilemma: What Constitutes Unconscionability in a Business?	351	(1)
Formation of Sales and Lease Contracts	352	(1)
Manifestation of Mutual Assent	352	(5)
Consideration	357	(1)
Form of the Contract	357	(2)
The Law and You	359	(1)
Concept Review: Contract Law Compared with Law of Sales	360	(4)
Performance	364	(19)
Performance by the Seller	365	(5)
Performance by the Buyer	370	(4)
Obligations of Both Parties	374	(2)
Ethical Dilemma: Should a Buyer Refuse to Perform a Contract Because a Legal Product May Be Unsafe?	376	(7)
Transfer of Title and Risk of Loss	383	(17)
Transfer of Title	383	(6)
Risk of Loss	389	(5)
Bulk Sales	394	(1)
Ethical Dilemma: Who Should Bear the Loss?	394	(6)
Product Liability: Warranties and Strict Liability	400	(25)
Warranties	401	(1)
Types of Warranties	401	(4)
Obstacle to Warranty Actions	405	(4)
Concept Review: Warranties	409	(1)
Strict Liability in Tort	409	(1)
Requirements of Strict Liability in Tort	410	(3)
Obstacles to Recovery	413	(2)
Restatement (Third) of Torts: Products Liability	415	(1)
Concept Review: Product Liability	416	(1)
Managerial Insight: A. H. Robins: What Went Wrong?	417	(1)
Ethical Dilemma: When Should a Company Order a Product Recall?	418	(7)
Sales Remedies	425	(22)
Remedies of the Seller	426	(5)
Remedies of the Buyer	431	(1)
Concept Review: Remedies of the Seller	432	(5)
Contractual Provisions Affecting Remedies	437	(1)
Concept Review: Remedies of the Buyer	438	(1)
Consumer Insight: Warranty of Title: Who Pays Attorneys' Fees When a Dispute Arises?	439	(8)
PART V Negotiable Instruments	447	(98)
Form and Content	448	(17)
Negotiability	449	(1)
Types of Negotiable Instruments	450	(2)
Formal Requirements of Negotiable Instruments	452	(7)
The Law and You	459	(6)
Transfer	465	(16)
Negotiation	465	(5)
Indorsements	470	(2)
Managerial Insight: Details of $1 Million Embezzlement Case Emerge	472	(4)
Concept Review: Indorsements	476	(5)
Holder in Due Course	481	(22)
Requirements of a Holder in Due Course	481	(6)
Ethical Dilemma: What Responsibility Does a Holder Have in Negotiating Commercial Paper?	487	(3)
Holder in Due Course Status	490	(2)
The Preferred Position of a Holder in Due Course	492	(6)
Limitations Upon Holder in Due Course Rights	498	(5)
Liability of Parties	503	(19)
Contractual Liability	503	(1)
Signature	504	(2)
Liability of Primary Parties	506	(1)
Liability of Secondary Parties	507	(4)
Termination of Liability	511	(1)
Concept Review: Contractual Liability	511	(1)
Liability Based on Warranty	512	(1)
Warranties on Transfer	513	(1)
Warranties on Presentment	514	(4)
Ethical Dilemma: Who Gets to Pass the Buck on a Forged Indorsement?	518	(4)
Bank Deposits, Collections, and Funds Transfers	522	(23)
Bank Deposits and Collections	523	(1)
Collection of Items	523	(5)
Relationship between Payor Bank and Its Customer	528	(4)
Electronic Funds Transfer	532	(1)
Ethical Dilemma: Can Embezzlement Ever Be a Loan?	533	(1)
Types of Electronic Funds Transfer	533	(1)
Consumer Insight: Thwarting ATM Fraud	534	(1)
Consumer Funds Transfer	535	(2)
Wholesale Funds Transfer	537	(2)
Concept Review: Parties to a Funds Transfer	539	(6)
PART VI Agency	545	(44)
Relationship of Principal and Agent	546	(19)
Nature of Agency	547	(2)
Creation of Agency	549	(2)
Duties of Agent to Principal	551	(3)
Duties of Principal to Agent	554	(3)
Termination of Agency	557	(2)
Ethical Dilemma: Is Medicaid Designed to Protect Inheritances?	559	(6)
Relationship with Third Parties	565	(24)
Relationship of Principal and Third Persons	566	(1)
Contract Liability of the Principal	566	(4)
Managerial Insight: Undisclosed Principal Working Through Agents Assembles Home for Famous Mouse, Duck, and Friends	570	(5)
Ethical Dilemma: When Should an Agent's Power to Bind His Principal Terminate?	575	(1)
Tort Liability of the Principal	575	(6)
Criminal Liability of the Principal	581	(1)
Relationship of Agent and Third Persons	581	(1)
Contract Liability of Agent	581	(3)
Tort Liability of Agent	584	(1)
Rights of Agent against Third Person	584	(5)
PART VII Business Associations	589	(164)
Formation and Dissolution of General Partnerships	590	(35)
Choosing a Business Association	591	(1)
Factors Affecting the Choice	591	(1)
Forms of Business Associations	592	(3)
Concept Review: General Partnership, Limited Partnership, Limited Liability Company, and Corporation	595	(1)
Formation of General Partnerships	595	(1)
The Law and You	596	(1)
Nature of Partnership	596	(1)
Formation of a Partnership	597	(8)
Dissociation and Dissolution of General Partnerships under RUPA	605	(1)
Concept Review: Partnership Property Compared with Partner's Interest	605	(1)
Dissociation	606	(1)
Dissolution	607	(3)
Dissociation without Dissolution	610	(3)
Concept Review: Dissociation and Dissolution under RUPA	613	(1)
Dissolution of General Partnerships under UPA	614	(1)
Dissolution	614	(1)
Ethical Dilemma: What Duty of Disclosure Is Owed to Incoming Partners?	615	(1)
Winding Up	616	(1)
Continuation after Dissolution	617	(8)
Operation of General Partnerships	625	(19)
Relationships among Partners	625	(1)
Duties among Partners	626	(3)
Ethical Dilemma: When Is an Opportunity a Partnership Opportunity?	629	(1)
Rights among Partners	629	(3)
Relationship between Partners and Third Parties	632	(1)
Contracts of Partnership	632	(4)
Torts and Crimes of Partnership	636	(2)
Notice to a Partner	638	(1)
Liability of Incoming Partner	638	(6)
Limited Partnerships and Limited Liability Companies	644	(20)
Limited Partnerships	644	(7)
Concept Review: Comparison of General and Limited Partners	651	(1)
Limited Liability Companies	652	(4)
Concept Review: Comparison of Member-Managed and Manager-Managed LLCs	656	(1)
Other Unincorporated Business Associations	657	(1)
Concept Review: Liability Limitations in LLPs	658	(6)
Nature and Formation of Corporations	664	(23)
Nature of Corporations	665	(1)
Corporate Attributes	665	(1)
Classification of Corporations	666	(1)
Managerial Insight: Why Delaware?	667	(3)
Formation of a Corporation	670	(1)
Organizing the Corporation	670	(3)
Formalities of Incorporation	673	(2)
Recognition or Disregard of Corporateness	675	(1)
Defective Incorporation	675	(3)
Piercing the Corporate Veil	678	(2)
Corporate Powers	680	(1)
Sources of Corporate Powers	680	(1)
Ultra Vires Acts	681	(1)
Liability for Torts and Crimes	681	(6)
Financial Structure of Corporations	687	(20)
Debt Securities	688	(1)
Authority to Issue Debt Securities	688	(1)
Types of Debt Securities	688	(2)
Equity Securities	690	(1)
Consumer Insight: Bond Ratings: What Do They Tell Us? Who Makes Them?	691	(1)
Issuance of Shares	691	(4)
Classes of Shares	695	(1)
Concept Review: Debt and Equity Securities	696	(1)
Dividends and Other Distributions	697	(1)
Types of Dividends and Other Distributions	697	(1)
Legal Restrictions on Dividends and Other Distributions	698	(3)
Declaration and Payment of Distributions	701	(1)
Liability for Improper Dividends and Distributions	702	(5)
Management Structure of Corporations	707	(29)
Corporate Governance	708	(1)
Role of Shareholders	709	(1)
Voting Rights of Shareholders	709	(5)
Enforcement Rights of Shareholders	714	(1)
Concept Review: Concentrations of Voting Power	715	(3)
Role of Directors and Officers	718	(1)
Function of the Board of Directors	719	(2)
Election and Tenure of Directors	721	(1)
Exercise of Directors' Functions	722	(1)
Officers	723	(1)
Duties of Directors and Officers	724	(6)
Ethical Dilemma: Whom Does a Director Represent? What Are a Director's Duties?	730	(6)
Fundamental Changes of Corporations	736	(17)
Charter Amendments	737	(1)
Combinations	737	(7)
Ethical Dilemma: What Rights Do Minority Shareholders Have?	744	(2)
Dissolution	746	(1)
Concept Review: Fundamental Changes under Pre-1999 RMBCA	747	(6)
PART VIII Debtor and Creditor Relations	753	(64)
Secured Transactions and Suretyship	754	(36)
Secured Transactions in Personal Property	755	(1)
Essentials of Secured Transactions	755	(1)
Classification of Collateral	756	(3)
Attachment	759	(3)
Concept Review: Requisites for Enforceability of Security Interests	762	(1)
Perfection	762	(5)
Priorities among Competing Interests	767	(1)
Concept Review: Methods of Perfecting Security Interests	767	(5)
Default	772	(3)
Suretyship	775	(1)
The Law and You	776	(1)
Nature and Formation	776	(1)
Ethical Dilemma: What Price Is ``Reasonable'' in Terms of Repossession?	777	(2)
Rights of Surety	779	(1)
Defenses of Surety and Principal Debtor	780	(10)
Bankruptcy	790	(27)
Federal Bankruptcy Law	791	(1)
Case Administration---Chapter 3	792	(1)
Creditors, the Debtor, and the Estate---Chapter 5	793	(6)
Liquidation---Chapter 7	799	(3)
Reorganization---Chapter 11	802	(3)
Adjustment of Debts of a Family Farmer---Chapter 12	805	(1)
Adjustment of Debts of Individuals---Chapter 13	806	(2)
The Law and You	808	(1)
Concept Review: Comparison of Bankruptcy Proceedings	809	(1)
Creditors' Rights and Debtors' Relief Outside of Bankruptcy	809	(1)
Creditors' Rights	809	(1)
Debtors' Relief	810	(7)
PART IX Regulation of Business	817	(190)
Securities Regulation	818	(30)
The Securities Act of 1933	820	(1)
Definition of a Security	820	(1)
Registration of Securities	821	(2)
Exempt Securities	823	(1)
Exempt Transactions for Issuers	824	(3)
Exempt Transactions for Non-Issuers	827	(1)
Concept Review: Exempt Transactions for Issuers under the 1933 Act	828	(1)
Liability	828	(2)
The Securities Exchange Act of 1934	830	(2)
Disclosure	832	(3)
Liability	835	(1)
Concept Review: Disclosure under the 1934 Act	835	(5)
Ethical Dilemma: What Information May a Corporate Employee Disclose?	840	(3)
Concept Review: Civil Liability under the 1933 and 1934 Acts	843	(5)
Intellectual Property	848	(19)
Trade Secrets	848	(3)
Trade Symbols	851	(4)
Trade Names	855	(1)
Copyrights	855	(1)
Managerial Insight: Licensed Trademarks Beset by Pirates, Counterfeiters, and Copycats	856	(4)
Ethical Dilemma: Who Holds Copyright on Lecture Notes?	860	(1)
Patents	861	(1)
The Law and You	862	(1)
Concept Review: Intellectual Property	863	(4)
Employment Law	867	(24)
Labor Law	868	(1)
Employment Discrimination Law	869	(10)
Employee Protection	879	(1)
Concept Review: Federal Employment Discrimination Laws	879	(4)
Ethical Dilemma: What (Unwritten) Right to a Job Does an Employee Have?	883	(1)
The Law and You	884	(7)
Antitrust	891	(21)
Sherman Antitrust Act	892	(7)
Concept Review: Restraints of Trade under the Sherman Act	899	(2)
Clayton Act	901	(1)
Ethical Dilemma: When Is an Agreement Competitive?	902	(2)
Robinson-Patman Act	904	(2)
The Law and You	906	(1)
Federal Trade Commission Act	906	(6)
Accountants' Legal Liability	912	(12)
Common Law	912	(5)
Federal Securities Law	917	(7)
Consumer Protection	924	(20)
State and Federal Consumer Protection Agencies	925	(4)
Consumer Purchases	929	(2)
Consumer Credit Transactions	931	(1)
Concept Review: Consumer Recission Rights	932	(4)
Creditors' Remedies	936	(1)
Ethical Dilemma: Should Some Be Protected from High-Pressure Sales?	937	(1)
The Law and You	938	(6)
Environmental Law	944	(21)
Common Law Actions for Environmental Damage	944	(1)
Nuisance	945	(1)
Trespass to Land	945	(1)
Strict Liability for Abnormally Dangerous Activities	946	(1)
Problems Common to Private Causes of Action	946	(1)
Federal Regulation of the Environment	946	(1)
The National Environmental Policy Act	947	(1)
The Clean Air Act	948	(4)
The Clean Water Act	952	(2)
Hazardous Substances	954	(2)
Ethical Dilemma: Distant Concerns	956	(2)
Concept Review: Major Federal Environmental Statutes	958	(1)
The Law and You	959	(2)
International Protection of the Ozone Layer	961	(4)
International Business Law	965	(18)
The International Environment	966	(2)
Jurisdiction over Actions of Foreign Governments	968	(2)
Transacting Business Abroad	970	(2)
Ethical Dilemma: Who May Seek Economic Shelter under U.S. Trade Law?	972	(5)
Forms of Multinational Enterprises	977	(6)
CyberLaw	983	(24)
Defamation	983	(3)
Intellectual Property	986	(6)
Contracts and Sales	992	(1)
UCITA	993	(2)
Privacy and the Internet	995	(4)
Securities Regulation	999	(2)
Cybercrime	1001	(6)
PART X Property	1007
Introduction to Property, Property Insurance, Bailments, and Documents of Title	1008	(29)
Introduction to Property and Personal Property	1009	(1)
Kinds of Property	1009	(1)
Concept Review: Kinds of Property	1010	(2)
Transfer of Title to Personal Property	1012	(3)
Property Insurance	1015	(1)
The Law and You	1016	(1)
Fire and Property Insurance	1016	(1)
Consumer Insight: Insurance Fraud, Supposedly the Victimless Crime---Who Pays? Who Cares?	1017	(2)
Nature of Insurance Contracts	1019	(2)
Bailments and Documents of Title	1021	(1)
Bailments	1021	(4)
Concept Review: Duties in a Bailment	1025	(2)
Ethical Dilemma: Who is Responsible for the Operation of Rental Property?	1027	(1)
Documents of Title	1028	(9)
Interests in Real Property	1037	(19)
Freehold Estates	1037	(2)
Leasehold Estates	1039	(2)
Concept Review: Freehold Estates	1041	(5)
Concurrent Ownership	1046	(3)
Concept Review: Rights of Concurrent Owners	1049	(1)
Nonpossessory Interests	1049	(2)
The Law and You	1051	(5)
Transfer and Control of Real Property	1056	(18)
Transfer of Real Property	1057	(1)
Contract of Sale	1057	(2)
Deeds	1059	(1)
Secured Transactions	1060	(2)
Adverse Possession	1062	(1)
Public and Private Controls	1062	(1)
Zoning	1062	(2)
Eminent Domain	1064	(1)
Ethical Dilemma: Where Should Cities House the Disadvantaged?	1065	(1)
Private Restrictions on Land Use	1066	(1)
The Law and You	1067	(7)
Trusts and Wills	1074
Trusts	1074	(1)
Types of Trusts	1075	(2)
Creation of Trusts	1077	(3)
Termination of a Trust	1080	(1)
Concept Review: Allocation of Principal and Income	1080	(1)
Decedent's Estates	1081	(1)
Wills	1081	(5)
Ethical Dilemma: When Should Life Support Cease?	1086	(1)
Intestate Succession	1086	(1)
Administration of Estates	1087
Appendix A The Constitution of the United States	2
Appendix B Uniform Commercial Code (Selected Provisions)	1	(1)
Appendix C Uniform Partnership Act	1	(1)
Appendix D Revised Uniform Partnership Act (Selected Provisions)	1	(1)
Appendix E Revised Model Business Corporation Act (Selected Provisions)	1	(1)
Appendix F Dictionary of Legal Terms	1	(1)
Index	1