Questions Answers. Business 506 legal & ethical environment of business.

BUSI 506 –LEGAL AND ETHICAL ENVIRONMENT 

MID-TERM QUIZ

Please  read  the questions carefully. There are nine (9) questions. If there are multiple parts to the question, be sure to  Answer Each Part. Please give complete answers using complete sentences and good English. Please write clearly. The point values for each question are noted at the end of the question.  Please make sure your name is on your answers.  Upon completion, please post your answers in the Mid-Term Examination Dropbox in D2L on or before 11:59 pm CDT on Monday, April ,, 2025. The Dropbox will be closed after that time, and the exam will not be accepted.

QUESTION 1

On Thursday, Trista receives a letter from Charlie in which he offers to sell her a diamond ring. The letter states: “if you choose to accept, you must do so prior to 2:00 p.m. tomorrow.” Trista had a telegram of acceptance dispatched before 2:00 p.m. on Friday. The telegram is delivered to Charlie's home at 2:15 p.m. Do Trista and Charlie have a contract? If yes, please explain why. If no, also give your reasons. (15 Points)

Trista and Charlie do have a contract. According to the Mailbox Rule, accepting an offer becomes effective when dispatched unless such acceptance is distinguished rather than when received. Trista sent her telegram of acceptance before 2:00 p.m. on Friday, which satisfies the condition of the offer by Charlie that the acceptance must happen before 2:00 p.m. on that day. The timing of the dispatch, not the timing of the delivery, goes towards the contract's validity under the Mailbox Rule. The outcome might have been different if Charlie had explicitly required that the acceptance be received by 2:00 p.m. (e.g., must reach me by 2:00 p.m.). Although the rule is in place, the contract is valid.

QUESTION 2

Ashley wants to sue Joe because her friend Mary was hurt by Joe, and Ashley wants to be awarded money to give to Mary. Mary is currently incurring medical bills to treat her injuries and wants to focus on trying to get better, rather than suing. Can Ashley sue Joe on behalf of Mary? Please explain. (10 Points)

Ashley cannot sue Joe on Mary’s behalf unless she has the legal standing or the authorization to do so. To bring a lawsuit on behalf of another person, a lawsuit, a person can only get a lawsuit for another person in legal terms if they have the legal right to do so, say, via power of attorney, as the legal guardian, or as a personal representative of the injured party. Ashley does not, per se, automatically have the ability to represent Mary in a lawsuit unless Mary has given her the ability to do so. Ashley may feel inclined to sue on behalf of her friend, but the legal principle of "standing" dictates that this lawsuit should end up being pursued by the direct victim of the discrimination, Mary, unless she is legally unable to file the lawsuit. For Mary to sue, she must file it herself or appoint someone else to do so on her behalf.

BUSI 506 – LEGAL AND ETHICAL ENVIRONMENT

MID-TERM EXAMINATION – 2

QUESTION 3

Aiden, who just started at his new job as an assistant manager at a fast-food restaurant, wants to make a good impression. He thinks that things are going well. On only the second day on the job, however, he sees his manager, Debbie, slink out of the restaurant with a big box of hamburgers. She puts them in her car and speeds away. Aiden is fairly certain that Debbie did not pay for the hamburgers. Aiden asks your advice what he should do. What possible actions does Aiden have? What might be the results or consequences of each possible action? What is your advice? Please explain. (25 Points)

Aiden has several possible actions to take:

1. Report the Incident to Higher Management or Authorities: Aiden could report what he witnessed to his supervisor or a relevant authority. This would ensure the theft is addressed and prevent future occurrences. Consequences might include disciplinary actions for Debbie but could also damage Aiden’s relationship with her, possibly leading to workplace tension or retaliation. However, this is the most ethical action.

2. Confront Debbie Directly: Aiden could speak to Debbie about what he saw. This approach may clear up any misunderstanding but could also lead to an uncomfortable or hostile work environment, especially if Debbie denies the theft.

3. Do Nothing: Aiden could ignore the situation, which would be unethical. Allowing theft to continue could harm the business, and Aiden might later be seen as complicit.

I advise Aiden to report the situation to the relevant authority, such as his supervisor or law enforcement agency, to address the ethical and legal implications properly.

QUESTION 4 

Peter Mallory and James Reid were widely considered by their peers and by the community-at-large the very best officers the San Bernardino, California Police Department had to offer. Today, they were seeking to uphold that reputation. After weeks of tracking Malcolm Leary, a suspect in last year's gruesome murder of 32-year-old Rachel Vang, they had located and detained Leary pursuant to a validly issued arrest warrant. On their way back to headquarters in the squad car, with Mallory and Reid silent, Leary offers up a confession from the back seat, saying "I killed that witch because she deserved it, and if I have to spend the rest of my life in prison and eternity in hell for doing it, it was worth it!" Both Mallory and Reid are shocked that Leary "broke" so easily, but they are happy to have the confession.

Prior to his declaration of murder, neither Mallory nor Reid had "Mirandized" Leary. Will Malcolm Leary's statement be admissible in his criminal prosecution, or will it be inadmissible based on a violation of the due process standard set forth in  Miranda v. Arizona? Ethically what are Mallory and Reid supposed to do? Have they “violated” an ethical standard by not giving the  Miranda warnings? What is their obligation to their department, the people of California, and to the justice system? (15 Points)

Mallory and Reid’s failure to Mirandize the defendant before he confesses to them will likely render Leary’s statement inadmissible in his criminal prosecution. Under the Miranda v. Arizona decision, a confession obtained when a suspect was not advised of their rights (the right to remain silent and the right to an attorney) is generally inadmissible in Arizona's court. Mallory and Reid’s failure to give the suspects Miranda warnings is an ethical violation of standards. The basic job was to ensure that suspects know, or at least are aware, of their rights, and by not doing so, the justice system's fairness was compromised. This oversight affects the department, the people of California, and the justice system.

BUSI 506 – LEGAL AND ETHICAL ENVIRONMENT

MID-TERM EXAMINATION – 3

QUESTION 5

Cooper sues Acme Trucking in state court in South Carolina, where he lives, for negligence alleging personal injury and property damage totaling $100,000 after a truck driven by an employee of Acme Trucking rear-ended his pickup truck. Acme Trucking is incorporated in Delaware, has its headquarters in New York, but does a substantial amount of business in South Carolina. Claiming diversity of citizenship, Acme Trucking seeks removal (transfer) of the case to federal district court, but Cooper opposes the motion.  Can Acme Trucking have the case removed (transferred) to Federal court? If yes, what is the reason? If the answer is no, what is the reason? Please explain. (15 Points)

Acme Trucking can indeed remove the case to federal court based on the diversity of citizenship jurisdiction. However, in this case, Cooper lives in South Carolina, whereas Acme Trucking is incorporated in Delaware and based in New York. Because the parties are from different states, and the amount in controversy is more than $75,000, the diversity jurisdiction requirement is met for jurisdiction in federal court under 28 U.S.C. § 1332. Although Acme Trucking carries out a great volume of business in South Carolina, the company is incorporated and has its principal place of business outside South Carolina, which is enough for federal jurisdiction. That does not preclude the grounds for removal. Thus, Acme Trucking's petition for transfer to federal court is valid.

QUESTION 6

Brian Puryear is an employee of Wellborn Industrial Systems, Inc. ("Wellborn"), located in Little Rock, Arkansas. Times are tough at Wellborn—the company's rank and file workers have not had a raise in four years. Despite the federal government's assertions that inflation is under control, Puryear knows that prices for goods and services keep rising, and he desperately needs to make up for the difference.  Puryear has been searching the Internet for part-time jobs in Little Rock. He notices that a security guard position is available at a local manufacturing plant. The security job is Monday through Friday from 8:00 p.m. until 2:00 a.m. His job at Wellborn is Monday through Friday from 8:00 a.m. until 5:00 p.m. Would Brian Puryear violate his duty of loyalty to Wellborn Industrial Systems, Inc. if he accepted the part-time security position? From an ethical perspective, should Brian notify Wellborn of his intentions and secure Wellborn's approval before accepting the security guard position? (25 Points)

If Brian Puryear accepts the part-time security position without informing his employer, he may violate his duty of loyalty to Wellborn Industrial Systems. While the jobs are at different times, Wellborn might still have concerns about his commitment, performance, and availability to the company by taking a second job because he could get tired or distracted by his other responsibilities. From an ethical point of view, Brian should inform Wellborn of the intention to take the security job and seek his approval. Open communication and transparency are essential to keep trust and clear from potential conflicts of interest. If it might affect work performance, Wellborn may have policies about secondary employment. With Brian seeking approval, he ensures that he respects his obligations to his employer and makes responsible decisions about his financial needs. This reflects a professional attitude and realization of his responsibility to prioritize Wellborn's interests while accepting personal goals.

BUSI 506 – LEGAL AND ETHICAL ENVIRONMENT

MID-TERM EXAMINATION – 4

QUESTION 7

Adam, a house painter, enters into a contract with Ben under which he promises to paint Ben's house for which Ben promises to pay $1,000 at the completion of work. Adam mistakenly paints Carrie's house next door. Carrie returns from vacation, surprised to see her house beautifully painted. Adam asks Carrie to pay for the work. Can Adam claim that a contract exists with Carrie? Is Carrie obligated to pay Adam for painting her house? If Carrie refuses to pay, may Adam attempt to recover from Carrie? Will he be successful? Under what theory? Please explain. (25 Points)

Adam cannot assert that a contract with Carrie exists because he has never reached a mutual agreement or consent for the work. A contract needs an offer, acceptance, and consideration, and Carrie had not accepted the painting or offered compensation. That said, Carrie does not have to pay Adam for the work. However, Adam could try to recover payment from Carrie on the theory of quantum meruit, a principle of unjust enrichment. This theory allows people to get the value of someone else enjoying services without a formal contract. Adam would have to show that Carrie benefited from the painting and that it would be unfair for her to keep that benefit without reimbursing him. Whether the court holds that it is a reasonable expectation that Carrie should pay for the unexpected benefit she received determines whether Adam recovers the cost.

QUESTION 8

Rachel Siddons, an architect, has been in negotiations with Dorland Architects for several weeks for a job. At long last, she receives a contract in the mail. The terms of the contract are not as ideal as she would have liked, but she decides to accept the offer.The contract states that Siddons must respond by mail within five days. She was on vacation for when the contract arrived, so she is unsure when it actually arrived. To be safe, she responds via email and agrees to the contract terms. The next week, Siddons resigns from her position at her current firm and then reaches out to Quinn Bigos, the vice president of human resources at Dorland, to discuss a start date. To her shock and surprise, Bigos tells her that because she did not respond via the required method, the offer is null and void, and the job has been given to another candidate.  Is Bigos right? Is the offer void because Siddons did not respond via the manner in which the contract specified? (20 Points)

Bigos is incorrect. Although the contract stated that Rachel Siddons should respond by mail, in contract law, acceptance by email may be valid if it is another reasonable acceptance method not specifically important to the offer. However, if acceptance by mail were an essential term of the contract as explicitly specified in the offer, then Siddons’ failure to comply with such an acceptance method would make the offer void. So, in this case, where the acceptance method was not evident in the contract, Siddons having responded via email can be interpreted as a viable solution. The offer may not be void, but the imposed method may be circumvented by Siddons if required since strict adherence to the stated method is not what the offeror will have relied upon.

BUSI 506 – LEGAL AND ETHICAL ENVIRONMENT

MID-TERM EXAMINATION – 5

QUESTION 9

Jeanie, a Wisconsin resident, is hauling several containers of gasoline in her vehicle in preparation for riding her personal watercraft. On the way home, Jeanie stops at the automatic teller machine at a bank in Illinois and exits her car. Holly, a resident of Iowa pulls behind her and rear-ends Jeanie's car. The Jeanie’s car explodes, and the bank building burns. The bank sues Holly for negligence claiming that Holly should have to pay for damage to the bank building.  Does the bank have a valid claim against Holly? Does the bank have a valid claim against Jeanie? In which court should the bank file suit? Please explain. (25 Points) 

The bank might have a valid claim against Holly for negligence. With Holly having rear-ended Jeanie’s car, Holly’s actions directly caused the car to explode and damage the bank building. If a lawsuit were to be filed, Holly could be liable for allowing the negligence to happen that caused the explosion and fire. However, the bank still has to prove that Holly’s actions were the proximate cause of the damage and that she breached a duty of care. The bank is unlikely to have a claim against Jeanie because she wasn’t responsible for causing the accident or the explosion. In this scenario, Jeanie's parking her car was not a negligent act that caused the damage to the bank. The bank should file the suit in Illinois, where the incident happened, particularly where the damage to the bank building occurred. The case should be brought to Illinois because the incident is within that jurisdiction, and there is personal jurisdiction over the parties in Illinois.