Miller Modern Principles of Business Law 2012-1
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Modern principles of BUSINESS law
Contracts, the UCC,
and Business Organizations
Roger LeRoy Miller
Institute for University Studies
Arlington, Texas
Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States
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BUSINESS LAW |
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Printed in the United States of America 1 2 3 4 5 6 7 14 13 12 11 10
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
BRIEF CONTENTS
Preface xv
Unit 1 The Legal Environment of Business |
1 |
||
Chapter |
1 |
The Legal Environment |
2 |
Chapter |
2 |
Constitutional Law |
32 |
Chapter |
3 |
Courts and Alternative Dispute Resolution |
54 |
Chapter |
4 |
Torts and Cyber Torts |
79 |
Chapter |
5 |
Intellectual Property and Internet Law |
110 |
Chapter |
6 |
Criminal Law and Cyber Crime |
137 |
Chapter |
7 |
Ethics and Business Decision Making |
167 |
Unit 2 |
|
Contracts |
189 |
Chapter |
8 |
Nature and Classification |
190 |
Chapter |
9 |
Agreement in Traditional and E-Contracts |
208 |
Chapter 10 |
Consideration, Capacity, and Legality |
231 |
|
Chapter 11 |
Defenses to Contract Enforceability |
256 |
|
Chapter 12 |
Third Party Rights and Discharge |
280 |
|
Chapter 13 |
Breach and Remedies |
306 |
|
Unit 3 |
|
Commercial Transactions |
325 |
Chapter 14 |
The Formation of Sales Contracts |
326 |
|
Chapter 15 |
Performance, Breach, and Warranties for Sales Contracts |
355 |
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Unit 4 |
|
Agency and Business Forms |
381 |
Chapter 16 |
Agency Relationships in Business |
382 |
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Chapter 17 |
Sole Proprietorships, Partnerships, and Limited |
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Liability Companies |
410 |
Chapter 18 |
Corporations |
435 |
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Appendix A |
|
A–1 |
|
Glossary |
|
|
G–1 |
Index |
|
|
I–1 |
iii
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
CONTENTS
Preface xv
Unit 1—The Legal Environment of Business 1
Chapter 1—The Legal Environment 2
Section 1: Business Activities and the Legal
Environment 2
Many Different Laws May
Affect a Single Business Transaction 3 Ethics and Business Decision Making 3
Section 2: Sources of American Law 3
Constitutional Law 4
Statutory Law 4
Administrative Law 5
SHIFTING LEGAL PRIORITIES FOR
BUSINESS: Sustainability and the
Law 6
Case Law and
Common Law Doctrines 7
Section 3: The Common Law Tradition 7
Early English Courts 8
Legal and Equitable Remedies Today 10 The Doctrine of Stare Decisis 10
Stare Decisis and Legal Reasoning 12
There Is No One “Right” Answer 13
The Common Law Today 13
Section 4: Schools of
Jurisprudential Thought 15
The Natural Law School 15
The Positivist School 15
The Historical School 15
Legal Realism 16
Section 5: Classifications of Law 17
Civil Law and Criminal Law 17
Cyberlaw 17
Section 6: How to Find
Primary Sources of Law 17
Finding Statutory
and Administrative Law 17
Finding Case Law 18
Section 7: How to Read
and Understand Case Law 19
Case Titles and Terminology 22
A Sample Court Case 24
Reviewing • Terms and Concepts • Questions and Case Problems 29–31
Chapter 2—Constitutional Law 32
Section 1: The Constitutional
Powers of Government 32
A Federal Form of Government 32
Relations among the States 33
The Separation of the National
Government’s Powers 33
The Commerce Clause 34
EXTENDED CASE 2.1: Family
Winemakers of California v. Jenkins 35
The Supremacy Clause
and Federal Preemption 37
The Taxing and Spending Powers 37
Section 2: Business
and the Bill of Rights 38
Limits on Federal and
State Governmental Actions 38
Freedom of Speech 38
CASE 2.2: Bad Frog Brewery, Inc.
v. New York State Liquor Authority 40
Freedom of Religion 42
CASE 2.3: In re Episcopal Church Cases 42
INSIGHT INTO ETHICS: Is It Illegal
to Distribute Virtual Pornography? 44
Searches and Seizures 45
Self-Incrimination 46
Section 3: Due Process and Equal
Protection 46
Due Process 47
Equal Protection 47
Section 4: Privacy Rights 48
Federal Statutes
Affecting Privacy Rights 48
Other Laws Affecting Privacy 50
v
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
vi Contents
Reviewing • Terms and Concepts • Questions and
Case Problems 50–53
Chapter 3—Courts and
Alternative Dispute Resolution 54
Section 1: The Judiciary’s Role
in American Government 54
INSIGHT INTO ETHICS: How the
Internet Is Expanding Precedent 55
Section 2: Basic Judicial Requirements 56
Jurisdiction 56
EXTENDED CASE 3.1: Southern
Prestige Industries, Inc. v.
Independence Plating Corp. 58
Jurisdiction in Cyberspace 61
Venue 62
Standing to Sue 64
CASE 3.2: Oregon v.
Legal Services Corp. 64
Section 3: The State and
Federal Court Systems 65
The State Court Systems 65
The Federal Court System 67
Section 4: Alternative
Dispute Resolution 69
Negotiation 70
Mediation 70
Arbitration 71
CASE 3.3: NCR Corp. v.
Korala Associates, Ltd. 73
Other Types of ADR 74
Providers of ADR Services 75
Online Dispute Resolution 75
Reviewing • Terms and Concepts • Questions and
Case Problems 75–78
Chapter 4—Torts and Cyber Torts 79
Section 1: The Basis of Tort Law 79
The Purpose of Tort Law 79
Damages Available in Tort Actions 80
Tort Reform 80
Section 2: Intentional
Torts against Persons 81
Assault and Battery 81
False Imprisonment 82
Intentional Infliction
of Emotional Distress 82
Defamation 83
Invasion of Privacy 85
Appropriation 85
Fraudulent Misrepresentation 86
Abusive or Frivolous Litigation 86
Section 3: Business Torts 87
Wrongful Interference with
a Contractual Relationship 87
Wrongful Interference with
a Business Relationship 87
Defenses to Wrongful Interference 89
Section 4: Intentional
Torts against Property 89
Trespass to Land 89
Trespass to Personal Property 90
Conversion 90
CASE 4.1: Trustees of University
of District of Columbia v. Vossoughi 91
Disparagement of Property 92
Section 5: Negligence 92
The Duty of Care and Its Breach 93
Causation 95
CASE 4.2: Palsgraf v.
Long Island Railroad Co. 96
The Injury
Requirement and Damages 97
Section 6: Defenses to Negligence 97
Assumption of Risk 98
EXTENDED CASE 4.3:
Pfenning v. Lineman 98
Superseding Cause 100
Contributory and
Comparative Negligence 100
INSIGHT INTO ETHICS: Some
Consequences of Caps on Medical
Malpractice Awards 101
Section 7: Special Negligence Doctrines
and Statutes 102
Res Ipsa Loquitur 102
Negligence Per Se 103
“Danger Invites Rescue” Doctrine 103
Special Negligence Statutes 103
Section 8: Cyber Torts 104
Identifying the Author
of Online Defamation 104
Liability of Internet Service Providers 104
The Spread of Spam 105
Reviewing • Terms and Concepts • Questions and Case Problems 106–109
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
Chapter 5—Intellectual
Property and Internet Law 110
Section 1: Trademarks
and Related Property 110
CASE 5.1: The Coca-Cola Co.
v. The Koke Co. of America 111
Statutory Protection of Trademarks 112
Trademark Registration 113
Trademark Infringement 113
Distinctiveness of Mark 113
Service, Certification,
and Collective Marks 114
Trade Dress 115
Counterfeit Goods 115
Trade Names 115
Section 2: Cyber Marks 116
Domain Names 116
Anticybersquatting Legislation 116
Meta Tags 117
Dilution in the Online World 117
Licensing 118
Section 3: Patents 118
Searchable Patent Databases 118
What Is Patentable? 119
EXTENDED CASE 5.2: KSR
International Co. v. Teleflex, Inc. 119
Patent Infringement 122
Remedies for Patent Infringement 122
Section 4: Copyrights 122
What Is Protected Expression? 123
Copyright Infringement 123
Copyright Protection for Software 124
Section 5: Copyrights in
Digital Information 125
Digital Millennium Copyright Act 125
MP3 and File-Sharing Technology 126
CASE 5.3: Maverick
Recording Co. v. Harper 126
Section 6: Trade Secrets 129
State and Federal Law
on Trade Secrets 129
Trade Secrets in Cyberspace 129
Section 7: International
Protection for Intellectual Property 130
The Berne Convention 130
The TRIPS Agreement 130
Contents vii
SHIFTING LEGAL PRIORITIES
FOR BUSINESS: The Anti-Counterfeiting
Trade Agreement 132
The Madrid Protocol 132
Reviewing • Terms and Concepts • Questions and Case Problems 133–136
Chapter 6—Criminal Law and Cyber Crime 137
Section 1: Civil Law and Criminal Law 137
Major Differences between
Civil Law and Criminal Law 137
Civil Liability for Criminal Acts 138
Classification of Crimes 139
Section 2: Criminal Liability 139
The Criminal Act 140
State of Mind 140
Corporate Criminal Liability 141
Section 3: Types of Crimes 141
Violent Crime 141
Property Crime 142
Public Order Crime 143
White-Collar Crime 143
EXTENDED CASE 6.1:
People v. Sisuphan 144
SHIFTING LEGAL PRIORITIES
FOR BUSINESS: Prosecuting
White-Collar Crime with the
Honest-Services Fraud Law 147
Organized Crime 149
Section 4: Defenses
to Criminal Liability 150
Justifiable Use of Force 150
Necessity 151
Insanity 152
Mistake 152
Duress 152
Entrapment 152
Statute of Limitations 153
Immunity 153
Section 5: Criminal Procedures 153
The Exclusionary Rule 154
CASE 6.2: Herring v. United States 154
The Miranda Rule 155
CASE 6.3: Miranda v. Arizona 155
Exceptions to the Miranda Rule 157
Criminal Process 157
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Licensed to: CengageBrain User
viii Contents
Federal Sentencing Guidelines 158
Section 6: Cyber Crime 159
Cyber Fraud 160
Cyber Theft 160
Hacking 161
Prosecution of Cyber Crime 162
The Computer Fraud and Abuse Act 163
Reviewing • Terms and Concepts • Questions and
Case Problems 163–166
Chapter 7—Ethics and
Business Decision Making 167
Section 1: Business Ethics 167
Why Is Business Ethics Important? 168
The Moral Minimum 168
“Gray Areas” in the Law 168
Short-Run Profit Maximization 168
CASE 7.1: Skilling v. United States 169
The Importance of
Ethical Leadership 170
EXTENDED CASE 7.2:
Krasner v. HSH Nordbank AG 171
Creating Ethical Codes of Conduct 173
Section 2: Ethical Transgressions
by Financial Institutions 174
Corporate Stock Buybacks 174
Startling Executive Decisions at
American International Group 174
Executive Bonuses 175
Section 3: Approaches
to Ethical Reasoning 175
Duty-Based Ethics 176
Outcome-Based
Ethics: Utilitarianism 176
Corporate Social Responsibility 177
CASE 7.3: Fog Cutter Capital Group,
Inc. v. Securities and Exchange
Commission 178
Section 4: Making Ethical
Business Decisions 180
Section 5: Practical Solutions
to Corporate Ethics Questions 180
SHIFTING LEGAL PRIORITIES
FOR BUSINESS: Corporate
Social Responsibility and
“Outbehaving” the Competition 181
Section 6: Business
Ethics on a Global Level 182
The Monitoring of Employment
Practices of Foreign Suppliers 182
The Foreign Corrupt Practices Act 183
Reviewing • Terms and Concepts • Questions and Case Problems 184–187
Unit 2—Contracts 189
Chapter 8—Nature and Classification 190
Section 1: An Overview
of Contract Law 190
Sources of Contract Law 190
The Function of Contract Law 191
The Definition of a Contract 191
The Objective Theory of Contracts 191
Section 2: Elements of a Contract 192
Requirements of a Valid Contract 192
Defenses to the
Enforceability of a Contract 192
Section 3: Types of Contracts 192
Contract Formation 192
INSIGHT INTO ETHICS: Is It Right for a Company to Change the Prize Offered in a Contest? 194
Contract Performance 196
Contract Enforceability 196
Section 4: Quasi Contracts 198
CASE 8.1: Scheerer v. Fisher 198
Limitations on
Quasi-contractual Recovery 199
When an Actual Contract Exists 200
Section 5: Interpretation of Contracts 200
The Plain Meaning Rule 200
EXTENDED CASE 8.2: Wagner v. Columbia Pictures Industries, Inc. 201
Other Rules of Interpretation 203
CASE 8.3: U.S. Bank, N.A. v. Tennessee Farmers Mutual Insurance Co. 203
Reviewing • Terms and Concepts • Questions and Case Problems 205–207
Chapter 9—Agreement in Traditional and E-Contracts 208
Section 1: Agreement 208
Requirements of the Offer 208
CASE 9.1: Lucy v. Zehmer 209
CASE 9.2: Basis Technology
Corp. v. Amazon.com, Inc. 212
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.