corporate ethics and law
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Chapter 1 – Origin and Nature of Law
1. In what major way does the common law differ from the Civil Law?
The common law emphasizes precedent; Civil Law emphasizes the wording of
the applicable ode. Common law codes are collections of statutes and do not try
to set out the entire law on a particular subject.
2. Why should a definition of law emphasize enforcement?
If law is not enforced, it has no effect on society—it is ignored, a “dead letter”
without meaning. If government passes many laws but does not attempt to police
them, the citizenry loses its respect for government and law, and society is greatly
weakened.
3. When we say that law “improved” or “progressed” from Hammurabi to Napoleon, what
is meant by “improved” or “progressed”?
“Improvement” and “progress” are relative terms and must be evaluated in
accordance with principles or criteria. If our evaluations are based on democracy
or self-determination, then clearly there has been “improvement” and “progress”.
If, however, the criterion is order or governmental control, Justinian’s code may
have been the best of the codes.
4. Are there any circumstances under which society could exist without law?
To the extent that society necessarily involves several persons or millions of
persons, it is hard to imagine common existence without enforced rules. Insofar
as individuals are “self-enlightened” or “self-controlled”, friction may be
minimized, but will not be eliminated.
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5. If the law requires that a person take some action (salute the flag, report or spy on an
unpopular minority group or person) he/she considers immoral, should the person obey
the law? Give other examples of such a conflict.
When the law conflicts with personal morality, the individual has a hard choice.
When a person has strong feelings about the moral principle involved and
enforcement of the conflicting law is weak, the individual may (at his/her peril)
choose to ignore the law.
However, there are many variations in regard to these conflicting forces, and no
simple rule can be stated. Be wary of unlawful conduct that implies a gain or
profit from the act, even though disobedience to the law (draft evasion;
nonpayment of unjust, oppressive taxes) may be stated in moral terms.
6. Why is it difficult to make law “uniform” by enacting uniform statutes?
Each of the 50 states is a “sovereign” state with the right to judge its own citizens
and to define and carry out its own laws, subject, of course, to constitutional
limitations. Also, even when uniform laws are uniformly enacted, judges may
interpret them differently.
7. Which is more important, procedural law or substantive law?
Substance is probably more important, but incorrect or improper procedures can
deprive the individual of his/her substantive rights and remedies. Procedural law
is (or should be) more flexible, but this flexibility is not without limits.
8. Why is it likely that the common law system will produce a greater number of lawyers
than the Civil Law system?
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The fact that there are many precedents in the common law system, and hence,
much scope for argument and disagreement, encourages litigation, which
produces a need for lawyers.
9. Is it easier to know your “rights” in a Civil Law country or in a common law country?
The Civil Law, written in more comprehensive detail, may seem more definitive
as to “rights”. However, a clear code may not lead to strong, understandable
rights in actual practice. A society’s willingness to sustain rights as well as the
actual trial of cases involving rights both may be more uncertain in Civil Law
countries.
10. Which of the following may waive the attorney/client privilege: (a) the attorney; (b) the
client; (c) a third party; (d) a judge?
(a) No; (b) Yes; (c) No—if a communication was made in the presence of a third
party, then no confidentiality existed and no privilege ever arose in the first place;
(d) No (a very rare exception might be an emergency in which a lawyer’s client
posed immediate danger of inflicting deadly force on others and the lawyer’s
revelation of confidential information could be narrowly tailored to the prevention
of such harm, not building a case against the client).
11. Name at least four general, ethical duties of an attorney
An attorney should: handle cases competently, zealously advocate the client’s
cause, remain true to his/her duties as an officer of the court, keep the client
reasonably informed, abide by the strictures of attorney/client privilege, and try to
protect a client from problems caused by the attorney’s withdrawal from a case.
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Chapter 2 – Government Under Law
1. For each of the three branches of the federal government, describe the system of checks
and balances on the powers of the other branches
Executive: veto legislation, appoint federal judges.
Legislative: override veto, compel executive official’s attendance at hearings,
refuse to confirm appointments, limit scope of judicial review, increase the
number of federal judges, impeach executive or judicial officials.
Judiciary: limit or invalidate laws or executive actions.
2. Name three Congressional powers specifically enumerated in the U.S. Constitution.
To regulate foreign and interstate commerce, to tax, and to provide for the
nation’s defense and general welfare.
3. By what constitutional provision does Congress have the implied powers to take
legislative action not specifically mentioned in the U.S. Constitution?
The “necessary and proper” clause of Article I, Section 8.
4. State the general test for determining whether a tax is constitutional.
A tax may serve to regulate an activity. However, the more a tax acts as a
punishment rather than as a source of revenue, the more likely it is to be judged
an invalid penalty.
5. How does Congress use its power to spend as a method for national regulation?
By placing conditions (compliance with a regulatory framework) upon
participation in a federal program. Without compliance, the would-be
participant—be it a state or local government, a corporation, or an individual—
cannot receive the federal money.
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6. What two types of bills may neither Congress nor a state legislature pass?
An ex post facto law and a bill of attainder.
7. Name the seven general functions that may be performed by an administrative agency.
Advising, reviewing, supervising, rule making, investigating, prosecuting, and
adjudicating.
8. State the two major standards for review in equal protection cases, including the type of
cases that fall under each standard.
“Strict scrutiny” (differential treatment constitutional only if (1) drawn as
narrowly as possible, and (2) necessary to achieve a compelling governmental
interest): cases involving adverse impact on racial, religious, and nationality
minorities.
“Rational basis” (differential treatment constitutional when reasonable and related
to a permissible governmental goal): cases involving business regulation or
“nonsuspect” classes. A third, intermediate standard for review is sometimes
used for differential treatment based upon sex or illegitimacy. There, the
differential treatment must be substantially related to achieving an important
governmental goal.
9. Name three independent federal agencies.
I. Federal Communications Commission, Federal Trade Commission, National
Labor Relations Board.
10. Over what types of cases does the U.S. Supreme Court have original jurisdiction?
II. Cases involving ambassadors or other foreign officials and cases in which two
states are adversaries.
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11. Name two fundamental rights set forth in the Fourteenth Amendment to the U.S.
Constitution.
III. Due process and equal protection.
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Chapter 3 The U.S. Court System and the Legal Process
1. State the three main levels of courts in the federal system.
i. District courts
ii. Circuit courts
iii. U.S. Supreme Court.
2. Describe the differences between the functions of a trial court and an appellate court.
In a jury trial, the trial judge interprets the law and instructs the jury on the law. He/she
makes rulings on evidence and any motions. In a nonjury trial, the trial judge also
assumes the jury’s role and decides factual disputes. An appellate court does not retry the
case. It does not hear witnesses. Rather, it reviews the lower court case for errors of law.
Factual findings can be overturned only if they are not at all supported by the evidence.
3. What is the key constitutional question concerning “long-arm” personal jurisdiction?
The key question is: Has the defendant had enough “minimal contacts” within the state so
that requiring him/her to defend a lawsuit there does not violate due process of law.
4. Distinguish jurisdiction from venue.
Jurisdiction involves a court’s power to decide the issues in a case (subject-matter
jurisdiction) and to bind parties (personal jurisdiction). Once jurisdiction has been
established, the question of venue is merely a matter of deciding whether a particular
locale (e.g., county) is the proper place to bring suit.
5. What state’s substantive laws usually govern a tort case?
The state where the injury occurred.
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6. (a) State the general order of pleadings filed before a trial.
(1) Complaint, (2) motion to dismiss (optional), (3) answer, (4) counterclaim
(optional). At any time, until shortly before trial, discovery requests, summary
judgment motions, and other motions are possible.
(b) What are the four main methods of discovery?
i. Depositions,
ii. interrogatories,
iii. requests for admissions,
iv. document production.
7. (a) Who usually has the burden of persuasion?
The plaintiff.
(b) Who has the burden of coming forward?
Whichever party alleges the fact in question
8. Name at least four reasons why disputes are compromised.
(1) Anxiety about going to court
(2) Time and expense of lawsuits
(3) Worries about bad publicity
(4) Need for a speedy resolution
(5) Uncertainty as to outcome
(6) Desire to maintain personal or business relationship with other side
9. What is the most important difference between mediation and arbitration?
Mediation cannot force a settlement; arbitration can. Arbitration, in essence,
substitutes for a court trial.
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10. Give at least four examples of administrative deprivations of liberty or property (thus
requiring a hearing).
Revocation of a professional or business operating license, cessation or reduction
of welfare, cessation or reduction of unemployment or social security benefits,
firing of a tenured teacher or (in most cases) another public employee, revocation
of parole, termination of parental custodial rights.
11. Explain what each part of this citation means: Brown v. Board of Education, 347 U.S.
483 (1954).
Brown was a plaintiff and the Board of Education was the defendant. The U.S.
Supreme Court opinion is in Volume 347 of the United States Reports, starting at
page 483. The case was decided in 1954.
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Chapter 4 – Nature, Classification, and Formation
1. In what sense is it incorrect to refer to a written document as a contract?
A contract is a mental condition expressed in a written document. The written
document is only evidence of the mental condition.
2. How would you go about proving (a) an express contract, (b) an implied-in-fact contract,
(c) a quasi contract?
a. An express contract should be easy to prove since it is stated in words and
generally in contract language.
b. An implied-in-fact contract is implied by the facts of the case. These facts include
proof of the circumstances, actions of the parties, and their words, if any. All of
these together should lead a “reasonable person” to believe that there was an
agreement.
c. A quasi, or implied-in-law, contract involves proof of unjust enrichment, that is,
proof of a benefit to an individual under circumstances requiring payment for the
benefit. A quasi contract generally does not include benefits imposed upon
someone who may or may not want them.
3. Why is a lawsuit based on an implied contract more likely to produce greater damages
and a larger verdict than one based on a quasi contract?
The implied contract is for the usual charge for services rendered, whereas the
quasi contract is for the going price for such services in the marketplace. On the
assumption that usual charges are higher than those in the marketplace, the
implied contract is preferable.
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4. How can a unilateral offeree convert the contract into a bilateral contract? When should
he/she do so?
If the offer is to buy goods that are to be shipped, the unilateral offeree can say, “I
accept your offer and hereby agree to perform the requested services.” This
should be done before the offeree expends money and effort.
5. When is an advertisement an offer?
An advertisement is an offer only when definite and made very specifically to an
identifiable person or group of persons
6. What are the four exceptions to the rule that an offer can be withdrawn at any time before
it is accepted?
The option contract, promissory estoppel, the unilateral contract after substantial
performance has taken place, and the UCC exception relating to a merchant’s firm
agreement to hold his offer open for the period specified or, if no time is
specified, for a reasonable period (in either case, no more than 3 months).
7. What is the effect of a conditional acceptance?
A conditional acceptance is a counteroffer and a rejection of the original offer.
8. What is the meaning of the term “adequacy of consideration”?
“Adequacy of consideration” relates to the value of the consideration or to its
weight when compared with the consideration offered by the other party to the
contract. Ordinarily, courts do not test the value or weight of consideration.
9. What does it mean to say that a contract must have “consideration”?
All contracts require “something for something,” that is, a contract cannot be a
“one-way street.” There must be consideration on both sides.
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10. What is the consideration for the promise in a unilateral contract?
In a unilateral contract, the consideration for the promise is the performance of the
requested action.
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Chapter 5 – Reality of the Contract: Did the minds really meet?
1. Explain the circumstances under which it may be possible to rescind a contract because
of unilateral mistake.
Generally speaking, a unilateral mistake does not provide ground for rescinding a
contract. The major exception covers situations where the other party is aware of
the mistake and should have spoken up. In today’s consumer-minded world, the
unilaterally mistaken party has a substantial chance of rescinding the contract if
(a) he/she could not easily have learned the facts, and (b) the other party had full
control of the situation.
2. Name a situation in which an opinion statement would give rise to rescission of a
contract.
In a case involving fraud, an opinion given by a professional, such as an attorney
or a physician, is a statement of fact giving rise to grounds for rescission. In
addition, you should consider that opinions given by trades people, such as
plumbers, electricians, and hairdressers (in cases concerning shampoos or
brushes), will be given greater weight and should be discussed.
3. How have the old equity doctrines influenced the law of contract mistake?
The equity concept of fairness controls the law of contract mistake. The old idea
of caveat emptor favored an unscrupulous seller. The modern law tries to
“balance the equities,” so that neither side should be able to take unreasonable
advantage of the other. This is basic equity law.
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4. How does the penalty for contract fraud differ from the right of recission in cases of
simple mutual mistake?
Contract fraud permits the defrauded party either to keep the contract and receive
damages in tort (perhaps even punitive damages) or to rescind the contract; simple
mutual mistake permits only the right of rescission.
5. Can a person’s careless statements give rise to fraud when the person does not know for a
fact that he/she is lying?
Merely careless statements can give rise to fraud if they are made recklessly. The
law does not protect those who show disregard for the truth, whether the disregard
is shown by outright lying or lack of interest in presenting the facts accurately.
6. Name four confidential relationships where undue influence could exist.
Undue influence can exist in the relationship of husband/wife,
minister/parishioner, lawyer/client, doctor/patient, parent/child,
trustee/beneficiary, political office holder/constituent and others involving trust
and potential conflict of interest.
7. When does duress cause a contract to be (a) void or (b) voidable?
(a) Duress causes a contract to be void if it is the result of a physical threat, such as
pointing a gun.
(b) A contract is voidable when it is the result of mental coercion.
8. Define “unconscionable contract”.
“Unconscionable” means grossly unfair. Gross unfairness occurs generally when
one party is in an advantageous position in relation to the other party, because of
either superior knowledge and power, or the inferior knowledge and power of the
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other. Disparities in skill, education, professional background, and economic
status would be factors in determining unconscionability.
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Chapter 6 – Capacity of the parties and legality of subject matter
1. State how the term “capacity” applies to minors, insane persons, and sometimes users of
alcohol or drugs.
The term “capacity” relates to the ability of one mind to meet another mind. This
ability may not yet be developed in a minor and may be clouded or confused by
insanity or alcohol/drug use.
2. Discuss the pros and cons of permitting a suit against a minor for fraud if he
misrepresents his age.
A reason for permitting such a suit is that fraud is a tort, and minors are
responsible for this kind of tort if all other requirements of fraud are met. A
reason not to permit such a suit is that it indirectly permits the adult party to
obtain the same benefits he/she would have received for the minor’s breach of
contract.
3. Name a specific instance in which contract law attempts to protect general morality.
Public policy is “grounded” in common morality. Thus, an agreement contrary to
public policy is simply one that is contrary to general morality. Restraint of trade
is contrary to fairness and good morals . The same is true of an excessively broad
exculpatory clause, as well as other illegality.
4. Why is an intoxicated person not given the same right to disaffirm his/her contract that a
minor is given?
An intoxicated person becomes intoxicated by reason of his/her own freedom of
action and is not within a class of persons whom society seeks to protect. Thus,
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unless the intoxication is evident to the other party, he/she is bound by a contract
made while intoxicated.
5. Does the warning on cigarette packages that “Smoking by Pregnant Women May Result
in Fetal Injury …” operate as an exculpatory clause to the cigarette company?
Cigarette companies have attempted to use the Surgeon General’s warning as an
exculpatory clause. However, such a clause does not excuse harm caused by their
gross negligence, recklessness, or active, intentional misconduct (e.g., fraud).
6. If an action (e.g., murder) is a crime by reason of a statute, will it usually also be a crime
by reason of public policy?
Actions made criminal by statute are usually contrary to prevailing morality and,
hence, contrary to public policy. Murder, arson, robbery, and so forth are
contrary to public policy. Some crimes—speeding, failure to file income tax
returns, failure to register securities being offered to the public—arguably are
criminal only because they are in violation of a statute.
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Chapter 7 – The Statute of frauds; Parol Evidence Rule; Privity
1. Does the Statute of Frauds require that certain contracts be in writing?
The Statute of Frauds requires that there be written evidence of certain contracts.
This written evidence is a so-called memorandum, not a full contract
2. Is an agreement to work for a person for the lifetime of that person subject to the Statute
of Frauds?
No. It is possible for this contract to be performed within one year.
3. What is the meaning of the sentence “The assignee stands in the shoes of the assignor”?
The sentence simply means that the assignee has exactly the same rights, as did
the assignor. The other party to the contract does not have a better or worse
position because the contract has been assigned.
4. Would the right to enter another person’s property and pick fruit from fruit trees be
subject to the Statute of Frauds?
Yes. Since the fruit is attached to trees, which are in turn attached to the real
estate, and since the right to enter property is a right affecting real estate, a
memorandum should be prepared as evidence of the agreement.
5. Explain why an incidental beneficiary cannot sue on contracts to which he/she is a party.
An incidental beneficiary’s benefit is too indirect and too remote. When persons
make a contract, they should not have to expect that any person in the world can
bring suit on their private agreement.
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Chapter 8 – Discharge; Damages and Other Remedies
1. What is the difference between the words “discharge” and “performance”?
“Discharge” refers to any of the ways in which a contract may be completed or
ended; “performance” is one way to discharge.
2. State the four broad categories for the ways in which a contract can be discharged.
The four categories for discharge are performance, breach, agreement of the
parties, and operation of law.
3. In a contract what words and phrases create express conditions?
“Condition,” “of the essence,” “subject to,” and equivalent words or phrases.
When does the law consider “satisfaction” to be objective and not a matter of
taste? What difference does this distinction make in setting up a “condition”?
“Satisfaction” is considered to be objective if the contract contains a definition of
performance, such as a reference to plans and specifications, or if performance is
determined by ascertainable criteria. If satisfaction can be objectively proven, it is
not a condition. How can a contract be breached before the date of performance
arises?
Anticipatory breach may occur before the date of performance arrives, if one
party signifies or implies that he/she cannot or will not perform.
4. When should one obtain a release?
A release should always be obtained if there could reasonably be a question of
performance of one’s contract.
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5. Discuss the legal significance of the word “impracticable.”
Many courts consider that a contract performance is “impossible” if it is
commercially “impracticable.” However, some unforeseen contingency must
occur that was not bargained for and that custom or usage in the trade or business
does not require one to assume.
6. Is an “act of God” the same as a force majeure?
Force majeure (superior force) is broader than “act of God” (natural forces),
although it includes acts of God. Force majeure applies to any third force or
action beyond the control or power of the contracting parties.
7. Is a contract obligation “wiped out” (erased) by the passage of time provided in the
statute of limitations?
The statute of limitations does not “wipe out” (erase) the contractual obligation.
This obligation may be revived by renewal of the promise.
8. What are the three essential elements to a contract case in court? Which is most difficult
to prove?
These three elements are (1) that there was a contract, (2) that defendant
breached it, and (3) that as a result of the breach, plaintiff was damaged.
Depending on the nature of the case, difficulty of proof varies. An implied-in-
fact contract is sometimes hard to prove; where performance is complicated,
breach may be difficult to show; damages are difficult to prove when bills
were not rendered or accounts not kept.
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9. What limits are placed on compensatory damages?
The limits are (1) reasonable certainty, (2) reasonable foreseeability, (3)
mitigation of damage.
10. When are consequential damages not allowed?
Consequential damages are not allowed if they were not reasonably foreseeable.
11. What prevents the parties, by mutual agreement, from placing any desired dollar amount
of damages in their contract as the definition of liquidated damages if the contract is
breached?
The parties cannot agree upon an unreasonable, unconscionable amount of
damages under the guise of “liquidated” damages. To be enforceable, the agreed-
upon damages should be related in some way to the expected or anticipated loss
that would occur upon breach.
12. Why does the court permit a jury to hear about a defendant’s wealth in a case involving
punitive damages?
In order to assess an appropriate amount for such damages. A person of great
wealth is not punished by a money damage award against him/her to the same
extent as is a person of more modest means who is subject to the same award.
13. Name two equity remedies available in some breach of contract cases.
Specific performance of contract, and injunction to prevent breach of contract.
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Chapter 9 – Special Problems Concerning Sales Contracts
1. Why is there a special article in the Uniform Commercial Code dealing with sales
contracts but not an article dealing with contracts in general?
Sales contracts involve both consumers and merchants, categories with high
levels of visibility and concern in the law of business. Also, there is a greater need
for uniformity of law in these categories.
2. Give some examples of the higher standard of dealing imposed on merchants by the code.
Merchants must observe not only rules of honesty, but also reasonable standards
of fair dealing in their trade; they are subject to an implied warranty of
merchantability; their contracts are interpreted in accordance with methods of
doing business in their trade; they have a high standard of duty to make
disclosures to uneducated and untrained buyers; they may be subject to strict
liability in tort; they have limited ability to disclaim liability for consequential
damages in their sales contracts.
3. Name two legal transactions that transfer possession, but not title.
Bailment and lease.
4. How does the UCC permit a possessor of property to convey a better title than the
possessor himself/herself has?
A person with a voidable title can pass a good title to a bona fide purchaser; a
purchaser from a retailer who had previously sold an interest in the goods to some
other person can acquire a good title; a purchaser may get a good title from a
dealer in goods even though the dealer is holding the goods for someone else.
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5. Does the UCC rely entirely on contract terms in determining risk of loss during the
process of sale and delivery of goods?
If the contract terms are clear about risk of loss, these terms control. If the
contract contains no provision, the seller bears the risk until delivery of goods to
the buyer.
6. How does the perfect tender rule change the common law rule of performance?
The common law rule of performance considers “substantial” performance as an
acceptable performance. The perfect tender rule requires absolute compliance
with the contract before the tender is considered to have been performed.
7. Ordinarily, which tender much occur first: the seller’s tender of the goods, or the buyer’s
tender of payment?
Ordinarily, the seller’s tender of goods is to occur before the buyer’s tender of
payment.
8. What does the UCC’s “make whole” principle confirm?
UCC Section 1-106(1) confirms for sales contracts the common law of contracts
principle that, in general, the remedies for breach are to be “liberally
administered” to make the aggrieved (nonbreaching) party whole: “put in as good
a position as if the other party [the breaching party] had fully performed.”
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Chaptere 10 – Negotiable Instruments: Definitions, Concepts, and Negotiation
1. Name two purposes of commercial paper.
i. Extension of credit,
ii. Money substitute.
2. (a) Name the parties to a note.(b) Name the parties to a draft.
a. Maker, payee.—(b) Drawer, drawee, payee.
3. (a)What article of the UCC covers the law of negotiable instruments?
(a) Article 3
(b)What article of the UCC covers the law of bank deposits and collections?
(b) Article 4.
4. How is a check different from other drafts?
The drawee of a check is always a bank, and a check, unlike some drafts, is
payable on demand.
5. State the differences in the role of consideration when one attempts to enforce a
negotiable instrument rather than an ordinary contract.
Ordinary contract: consideration must be proved; past consideration generally
insufficient Negotiable instrument: consideration presumed; consideration
unnecessary for holder-in-due course; past consideration sufficient.
6. What advantage does a holder-in-due-course have over the assignee of a contract?
A holder-in-due-course is usually not subject to personal defenses, as an assignee
is.
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7. Which usually requires greater formality (adherence to specific requirements for proper
formation): a negotiable instrument or an ordinary contract?
The negotiable instrument. Some special contracts (e.g., land transactions) must
meet formal requirements to be enforceable. Generally, though, contracts do not
require such formality.
8. What are the requirements for an instrument to be negotiable?
It must be
i. in writing,
ii. signed by the maker or drawer,
iii. an unconditional promise or order to pay a fixed amount of money,
iv. without any other undertaking or instruction, except as permitted by UCC
Article 3,
v. payable on demand or at a definite time, and
vi. payable to order or to bearer.
9. True or false?
a. Ambiguities are to be resolved in favor of negotiability.
a. False
b. By agreement of the parties, a nonnegotiable instrument can become negotiable.
b. False
10. What types of statements may affect the amount due under an instrument, but do not
leave the instrument without a fixed amount?
Specified interest rate, stated installments, collection costs, attorney’s fees,
particular discounts, or additions.
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11. What types of statements do not make a promise or order conditional?
Statements that mention: the underlying transaction or agreement; the
instrument’s consideration; a separate writing; that the obligor waives the benefit
of laws intended for his protection; that rights concerning collateral, acceleration,
or prepayment are in a separate writing; that the instrument is secured; that upon
default a confessed judgment is permitted.
12. True or false?
a. An instrument “payable upon drawer’s death” is negotiable.
a. False
b. Agents may complete an instrument for their principals (e.g., employers).
b. True
c. Dates and signatures on an instrument are presumed correct.
c. True
13. In disputes about the terms of an instrument, which usually takes precedence?
a. Handwriting or typing
a. Handwriting
b. Typing or print
b. Typing
c. Handwriting or print
c. Handwriting
d. Words or numerals
d. Words
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14. How are negotiable instruments negotiated?
Bearer instrument: by delivery. Order instrument: by delivery and proper
endorsement.
15. What is the effect of a blank (general) endorsement?
It makes the instrument bearer paper.
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Chapter 11 – Negotiable Instruments: The Holder in Due Course, Defenses, Liability, Discharge
1. Define a HIDC.
A holder who has taken a negotiable instrument for value, in good faith, and
without notice that it is overdue, has been dishonored, or has defenses or claims
against it.
2. (a) Name three characteristics of an instrument that usually indicate notice of a claim or
defense.
(a) Incorrect endorsements, material omissions, important alterations
(b) Name two that do not.
(b) Antedated or postdated, originally incomplete and later completed
3. (a) Name at least three facts that, if known by the would-be HIDC, usually indicate notice
of a claim or defense.
(a) Party’s obligation void or voidable, parties discharged, defective title, unauthorized
completion of instrument, default in principal payments or on series instruments.
(b) Name at least three that do not.
(b) Parties include fiduciaries or accommodation parties, instrument issued or negotiated
for an executory promise, existence of separate agreements, default on interest
payments or on different instruments
4. Name at least five “real” defenses and seven personal defenses.
“Real” defenses: fraud in the execution (factum), forgeries and unauthorized
signatures, defenses nullifying the obligor’s duty, infancy (sometimes), the
obligor’s claim in recoupment against the holder, a bankruptcy discharge of the
obligor, other
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Personal defenses: lack or failure of consideration, fraud in the inducement,
ordinary contract defenses, breach of warranty when a draft was accepted,
modification of the obligation by a separate agreement, conditional issuance of an
instrument, defenses rendering a contract voidable, payment violating a restrictive
endorsement, acquisition of lost or stolen bearer paper, nondelivery or
unauthorized delivery of an instrument, unauthorized completions, some “real”
defenses in which the party asserting the defense was negligent. Discharges of the
instrument that the holder had actual notice of when he became a HIDC, and
material alterations.
5. Which type of defense works even against a HIDC?
“Real” defenses. Only in cases of consumer protection does a personal defense
have any likelihood of defeating a HIDC.
6. In regard to consumer protection versus the HIDC concept, one approach reduces the
HIDC’s power to evade personal defenses, while another approach makes it more
difficult for someone to become a HIDC. Which approach has been followed by many
state legislatures? By the FTC?
The first approach. The second approach.
7. Name at least three types of negligence that can so substantially contribute to
unauthorized alterations or signatures that they preclude recovery against persons paying
in good faith.
Doing nothing to stop known forgeries, negligence as to signature stamps,
failure to include a corporate designation when appropriate, delivery of
instrument to wrong person, failure to audit.
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8. (a) State the three main types of liability between parties to a negotiable instrument. (b)
(b) What tort is expressly listed as a remedy (e.g., for wrongful payment of an
instrument) in UCC 3-420?
(a) The underlying contract, contractual liability on the instrument, warranty liability.
(b) Conversion.
9. Name the areas covered by the three presentment warranties.
Title, signature authorization, lack of material alteration.
10. Name the areas covered by the five transfer warranties.
Same as answer 9, plus: lack of good defenses and absence of knowledge
about insolvency of makers, acceptors, or (sometimes) drawers.
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Chapter 12 – Banking Procedures and the Bank / Customer relationship
1. Are checks assignments?
No
2. Are banks subject to garnishment by a customer’s creditors? Why?
Yes.
In essence, the bank is a debtor of the customer/account-holder.
3. Give at least three proper reasons for dishonoring a check.
Insufficient funds, improper or missing endorsement, unauthorized drawer’s
signature, stale check (over 6 months old).
4. State the two ways of making stop-payment orders and the length of time for which each
is effective.
Written and oral. Written last 6 months and can be renewed. Oral last 14 days,
but can be confirmed in writing (and thus extended to 6 months).
5. What Article 4 legal requirements can a bank and its customers not change via the
bank/customer contract?
The bank’s responsibility for its lack of good faith or ordinary care
(dishonesty or negligence) and the measure of damages resulting from such
dishonesty or negligence.
6. When can certification of a check be required?
Generally, never. It is the bank’s option whether to certify.
7. (a) What does Section 4-406 require of bank customers?
(a) That the customers promptly examine bank statements and report any unauthorized
signatures or alterations.
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(b) If the customer fails to meet the 4-406 requirements, what can happen to him/her?
(b) The customer can be precluded from recovering for unauthorized signatures and
alterations that he/she could have discovered, unless the bank was itself negligent.
8. What is the statute of limitations for a customer’s claim against his/her bank on
unauthorized customer signatures or alterations?
One year after receiving relevant bank statements.
9. Name at least four areas covered by the Electronic Funds Transfer Act.
Customer liability limits on lost or stolen bank cards, receipts for transactions,
monthly statements, customer examination of monthly statements, bank
investigation of alleged errors, information about the act for new customers.
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Chapter 19 – Crimes and Torts
1. What are the key guarantees for criminal defendants under the U.S. Constitution?
Fourth, Fifth, Sixth, Eighth, and Fourteenth Amendments.
Fourth: protection from unreasonable searches and seizures;
Fifth: due process of law (federal) and prohibition of compulsory self-
incrimination and double jeopardy;
Sixth: speedy and public trial, impartial jury, information as to charges,
calling and confronting witnesses, having a lawyer;
Eighth: proscribes excessive bail, excessive fines, and cruel and unusual
punishment;
Fourteenth: due process of law (state).
2. Discuss the levels of evidence necessary at each of the four phases of criminal procedure:
investigation, arrest, lodging of charges, and trial.
Investigation: no level; arrest: probable cause; charges: probable cause,
preponderance of evidence, or prosecutor’s evidence supports belief in guilt;
trial: guilt proved beyond a reasonable doubt.
3. (a) What are the rules of evidence intended to do?
(a) To streamline the trial, among other things. To exclude irrelevant, unreliable, or
unfairly prejudicial matters.
(b) What effect may U.S. Constitutional guarantees have on the introduction of evidence?
(b) Constitutional guarantees, especially their violation, may necessitate the restriction or
outright barring of otherwise admissible evidence.
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4. Name two methods by which crimes can be classified.
i. Classification as either felony or misdemeanor;
ii. Classification according to the type of harm caused.
5. How is intent transferable?
If one knowingly commits a criminal or tortious act, one is presumed to intend the
natural consequences of that act. Moreover, if the consequences occur to someone
not intended as the victim, or if the consequences are different from those
intended, the law may transfer the mens rea, or tortious intent, from what was
intended to what actually occurred.
6. Name the basic elements needed to prove negligence.
Duty, breach of duty, causation, and damages.
7. Distinguish between intent and motive.
Intent is the mens rea preceding or accompanying the act. Motive is the
overall purpose, good or bad, for which the act is done.
8. Name (a) six intentional torts involving interference with the person, and (b) four
concerning interference with property.
(a) Assault, battery, false arrest, false imprisonment, intentional infliction of mental
(emotional) distress, and invasion of privacy;
(b) conversion, nuisance, trespass to personal property, and trespass to real property.
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9. List some white-collar crimes.
Tax evasion, bribes, extortion, embezzlement, kickbacks, pilferage, forgery,
computer crimes, antitrust violations, RICO offenses, and fraud concerning
consumers, credit cards, securities, insurance, bankruptcy, and bank loans.
10. Compare the law of crimes and torts with respect to burdens of proof, damages, consent,
sources of the law, and types of acts required for guilt or liability.
Crimes: proof of guilt beyond a reasonable doubt, damages not necessary,
consent usually no defense, mainly statutory law, and guilt requires intentional
or grossly negligent acts.
Torts: preponderance of evidence, damages needed, consent a defense, mainly
common law, and liability based on intentional acts, negligence, or no-fault
(e.g., strict liability).
11. True or false: If A does not disclose every problem he has had with a machine that he is
selling to B, then B will probably win a suit against A for fraud. Explain your answer.
False. In most cases, there is no duty to volunteer information. Even if, in this
case, there were a duty to speak, it is not at all clear from the facts that (1) the
nondisclosure was of a material fact; (2) A intended that B would rely on the
nondisclosure; (3) B justifiably relied on the nondisclosure; and (4) B was
damaged.
All of those points would have to be proved, in addition to demonstrating that
A had a duty to speak (e.g., because A knew that B had misconstrued A’s
silence).
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12. Name two crimes where the defendant’s alleged behavior does not constitute a tort.
Attempt and compounding a crime. In some cases, other crimes (e.g., bribery)
may also have no tort equivalents.
13. Name nine crimes for which the culprit may also be subject to tort liability for
conversion.
Arson, bribery, burglary, computer crimes, corporate crimes, embezzlement,
forgery, larceny (theft), and robbery.
14. Name four defenses to negligence that are not defenses to crimes.
Act of God, assumption of risk, contributory or comparative negligence, and
superseding (intervening) causes.
15. What is the basis of a seller’s contractual liability for defective goods? How can sellers
protect themselves from this liability?
Express and/or implied warranties. By a disclaimer.
16. What is the basis of a seller’s tort liability for defective goods? How can sellers protect
themselves?
Negligence or strict liability. Provide a conspicuous, comprehensive warning
about possible injuries and the need of the buyer and other users to be very
careful.
17. How does the Magnuson-Moss Act affect warranty law?
The Magnuson-Moss Act sets certain requirements for warranties. They must
be either full warranties (without limitations) or limited warranties (with
clearly stated limitations).
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18. Is privity of contract required for a person to win a claim for breach of warranty?
No. Parties usually are liable for a breach of warranty if they could have
foreseen the existence of, and potential injury to, the purchaser of a defective
good, as well as others exposed to that defective good.
Page 38 of 39
Chapter 26 – Legal Topics Concerning Information Technology:
Intellectual Property, Computer Law, and Privacy
1. For each of the three main types of intellectual property that can be registered, state its
duration, two examples (or a definition), and the degree to which the law is federal not
state law.
Patents—20 years from when the patent application was first filed (for design
patents, 14 years from when the patent was granted); examples: a new type of
mechanical process, a new industrial cleaning formula; exclusively federal
law.
Copyrights—creator’s life plus 70 years (corporate copyrights last for 95
years); examples: a song, a novel; almost exclusively federal law.
Trademarks—no set term, ten-year registrations can be renewed any number
of times; definition: any distinctive mark used by a business to identify its
goods; state law plays an important role, with federal law rarely preempting
the state law.
2. What three characteristics must an invention have in order to be patentable?
To receive a utility patent for an invention, the applicant must demonstrate
that the invention is novel, useful, and nonobvious.
3. Can computer programs be (a) copyrighted; (b) patented?
(a) Yes
(b) Generally not
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4. Name two elements needed to show the existence of a trade secret.
A formula, process, or method to produce goods or services that is (1) meant
to be held in employees’ confidence, and (2) needed by employees to perform
their jobs.
5. Name several types of crimes and torts that can be committed via computer.
Crimes—embezzlement, extortion, fraud, infringement of intellectual
property, theft, vandalism, and statutory crimes under the FCADCFA Act and
various federal privacy laws.
Torts—conversion, fraud, infringement of intellectual property, invasion of
privacy, negligence, trespass to personal property, and civil actions for
violations of various privacy protection statutes.
6. Credit information about a particular debtor may not be shared among different creditors
without the written approval of the debtor. True or False?
False.
Under the Fair Credit Reporting Act, there are many instances in which creditors,
employers, government agencies, and others are free to exchange information
(and often can be expected to do so) without having to first obtain a debtor’s
permission. Except for when investigative reports are prepared or a consumer /
debtor requests information, the very fact that information is being disclosed
ordinarily need not be disclosed to a consumer/debtor.
law_attachments_2016_09_09.zip
Business Its Legal, Ethical, and Global Environment 10th Summaries.pdf
Chapter 1
Summary
How is law defined?
Law is a form of order. Law is the body of rules of society governing individuals and
their relationships.
What types of laws are there?
Public law—codified law; statutes; law by government body
Private law—rules created by individuals for their contracts, tenancy, and employment
Civil law—laws regulating harms and carrying damage remedies
Criminal law—laws regulating wrongful conduct and carrying sentences and fines
Statutory law—codified law
Common law—law developed historically and by judicial precedent
Substantive laws—laws giving rights and responsibilities
Procedural laws—laws that provide enforcement rights
What are the purposes of law?
Keep order; influence conduct; honor expectations; promote equality; offer compromises
What are the characteristics of law?
Flexibility; consistency; pervasiveness Jurisprudence—theory of law
Where are laws found and who enacts them?
Constitution—document that establishes structure and authority of a government
Federal statutes—laws passed by Congress: the U.S. Code
State statutes—laws passed by state legislatures, including uniform laws on contracts and
business organizations
Ordinances—local laws passed by cities, counties, and townships
What are the sources of international law?
Customs—the standards of conduct and norms in a country
Treaties—agreements between and among nations regarding their political and
commercial relationships
Private law—party autonomy recognized in all nations
International doctrines—widely accepted principles of law followed in most countries
European Union—group of nations working collectively for uniform laws and barrier-
free trade
Uniform laws—Contracts for the International Sale of Goods (CISG)
Chapter 2
Summary
What is ethics?
Behavior beyond the law
Day-to-day nature of ethics
What is business ethics?
Ethical standards—normative standards of behavior set by culture
Ethical standards—standards of behavior set by natural law
Ethical standards—moral relativism; moral standards by situation
Ethical standards—religion and ethics
What are the categories of ethical dilemmas in business?
Taking things that don’t belong to you
Saying things you know are not true
Giving or allowing false impressions
Buying influence or engaging in conflict of interest
Hiding or divulging information
Taking unfair advantage
Committing acts of personal decadence
Perpetrating interpersonal abuse
Permitting organizational abuse
Violating rules
Condoning unethical actions
Balancing ethical dilemmas
How do employees resolve ethical dilemmas?
Blanchard and Peale
Front-page-of-the-newspaper test
Wall Street Journal and stakeholders
Laura Nash and perspective
Categorical imperative
Why do we fail to reach good ethical decisions?
“Everybody else does it.”
“If we don’t do it, someone else will.”
“That’s the way it has always been done.”
“We’ll wait until the lawyers tell us it’s wrong.”
“It doesn’t really hurt anyone.”
“The system is unfair.”
“I was just following orders.”
“You think this is bad, you should have seen . . . ”
“It’s a gray area.”
What is social responsibility and how does a business exercise it?
Positive law—codified law
Inherence—serves shareholders’ interests
Enlightened self-interest—serves shareholders’ interests by serving larger society
Invisible hand—serves larger society by serving shareholders’ interests
Social responsibility—serves largest society best by serving larger society
Why is business ethics important?
Profit
Leadership
Reputation
Strategy
How does a business create an ethical atmosphere?
Tone at the top
Frank-Dodd and corporate sentencing guidelines
Code of ethics
Reporting hotlines
Ethical posture and developing an ethical stance
What are the ethical issues in international business?
Corruption issues
Economic systems and ethics
Chapter 3
What is the judicial process?
Judicial review—review of a trial court’s decisions and verdict to determine whether any
reversible error was made
Appellate court—court responsible for review of trial court’s decisions and verdict
Brief—written summary of basis for appeal of trial court’s decisions and verdict
Reversible error—mistake by trial court that requires a retrial or modification of a trial
court’s decision
Options for appellate court:
Reverse—change trial court’s decision
Remand—return case to trial court for retrial or reexamination of issues
Affirm—uphold trial court’s decisions and verdict
Modify—overturn a portion of the trial court’s verdict
Stare decisis—Latin for “let the decision stand”; doctrine of reviewing, applying, and/or
distinguishing prior case decisions
Case opinion—written court decision used as precedent; contains dicta or explanation of
reasoning and, often, a minority view or dissenting opinion
Who are the parties in the judicial system?
Plaintiffs/petitioners—initiators of litigation
Defendants/respondents—parties named as those from whom plaintiff seeks relief
Lawyers—officers of the court who speak for plaintiffs and defendants
Attorney–client privilege—confidential protections for client conversations
Appellant—party who appeals lower court’s decision
Appellee—party responding in an appeal
What factors decide jurisdiction?
The power of the court to hear cases
Subject matter jurisdiction—authority of court over subject matter
Jurisdiction over the parties: in personam jurisdiction
Voluntary
Through property
Presence in the state: minimum contacts
Residence
Business office
What are the courts and court systems?
Federal court system
Federal district court—trial court in federal system; hears cases that involve a federal
question, the United States as a party, or a plaintiff and defendant from different states
(diversity of citizenship) and $75,000 or more at issue; opinions reported in Federal
Supplement
Limited jurisdiction courts—bankruptcy courts, court of claims
U.S. Courts of Appeals—federal appellate courts in each of the circuits; opinions
reported in Federal Reporter
U.S. Supreme Court—highest court in United States; requires writ of certiorari for
review; acts as trial court (original jurisdiction) for suits involving states and diplomats
State court system
Lesser courts—small claims, traffic courts, justice of the peace courts
State trial courts—general jurisdiction courts in each state
State appellate courts—courts that review trial court decisions
State supreme courts—courts that review appellate court decisions
International courts
Voluntary jurisdiction
International Court of Justice—UN court;
contentious (consensual) jurisdiction; reported in International Law Reports
London Commercial Court—voluntary court of Arbitration
Chapter 4
Summary
How can businesses resolve disputes?
Alternative dispute resolution (ADR)—means of resolving disputes apart from court
litigation
Types of ADR:
Arbitration—hearing with relaxed rules of evidence
Mediation—third party acts as go-between
Conciliation—international term for mediation
Medarb—combination of mediation and arbitration
Minitrial—private judge and courtroom; shortened trial
Rent-a-judge—disputes resolved by hired judge
Summary jury trial—advisory verdict by jurors in a mock trial
Early neutral evaluation—third-party evaluation before litigation proceeds
International Chamber of Commerce (ICC)—voluntary international court that offers
arbitration in international disputes
What strategies should businesses follow if litigation is inevitable?
Evaluate cost, including the unknowns such as jury reaction
Consider privacy and creative remedies
How do courts proceed with litigation?
Complaint—plaintiff’s statement of a case
Summons—document to serve defendant with lawsuit
Answers—defendant’s response to complaint
Statute of limitations—time limit for filing suit
Discovery—advance disclosure of evidence in case
Production—obtain and produce document
Deposition—questioning of witnesses under oath
Interrogatories—information questions to other party
Admissions—acknowledgment of facts in a case
Trial—court proceeding for hearing evidence
Voir dire—jury selection method to screen for bias
Opening statements—frame by parties’ lawyers of the case
Plaintiff’s case—facts for proving complaint presented
Defendant’s case—defenses to allegations presented
Evidence—testimony and documents presented in the case; no hearsay
Chapter 5
What is the Constitution?
U.S. Constitution—document detailing authority of U.S. government and rights of its
citizens
What are the constitutional limitations on business regulations?
Commerce Clause—portion of the U.S. Constitution that controls federal regulation of
business; limits Congress to regulating interstate and international commerce
Intrastate commerce—business within state borders
Interstate commerce—business across state lines
Foreign commerce—business outside U.S. boundaries
Who has more power to regulate business—the states or the federal government?
Supremacy Clause—portion of the U.S. Constitution that defines relationship between
state and federal laws
Taxation—authority to tax interstate businesses
What individual freedoms granted under the Constitution apply to businesses?
Bill of Rights—first 10 amendments to the U.S. Constitution, providing individual
freedoms and protection of individual rights
First Amendment—freedom-of-speech protection in U.S. Constitution
Commercial speech—ads and other speech by businesses
Corporate political speech—business ads or positions on candidates or referenda
Due process—constitutional guarantee against the taking of property or other
governmental exercise of authority without an opportunity for a hearing
Equal protection—constitutional protection for U.S. citizens against disparate treatment
Substantive due process—constitutional protection against taking of rights or property by
statute
Chapter 6
Summary
What is an administrative agency?
Administrative agency—statutory entity with the ability to make, interpret, and enforce laws
What laws govern the operation of administrative agencies?
Administrative Procedure Act—general federal law governing agency process and
operations
Government in the Sunshine Act—federal law requiring public hearings by agencies
(with limited exceptions)
Federal Privacy Act—federal law protecting transfer of information among agencies
unless done for enforcement reasons
Freedom of Information Act—federal law providing individuals with access to
information held by administrative agencies (with some exemptions such as for trade
secrets)
What do administrative agencies do?
Rulemaking—process of turning proposed regulations into actual regulations; requires
public input
Federal Register—daily publication that updates agency proposals, rules, hearing notices,
and so forth
Code of Federal Regulations—federal government publication of all agency rules
Licensing—role in which an agency screens businesses before permitting operation
Inspections—administrative agency role of checking businesses and business sites for
compliance
How do agencies pass rules?
Study issue, develop evidence of the need for the rule
Public comment period—period in rulemaking process when any individual or business
can provide input on proposed regulations
Promulgation—approval of proposed rules by heads of agencies
Rule must survive challenges based on standards of “arbitrary and capricious,”
“substantial evidence,” “ultra vires,” and “procedural errors.”
How do agencies enforce the law?
Consent decree—settlement (nolo contendere plea) of charges brought by an
administrative agency
Administrative law judge (ALJ)—overseer of hearing on charges brought by
administrative agency
Chapter 7
Summary
What laws affect businesses in international trade?
Foreign Sovereign Immunities Act of 1976
Foreign Assistance Act of 1962 (Hickenlooper Amendment)
Overseas Private Investment Corporation (OPIC)
Export Trading Company Act of 1982
Contracts for the International Sale of Goods (CISG)
What treaties, agreements, practices, and principles affect international business and
trade?
North Atlantic Treaty
North Atlantic Treaty Organization (NATO)
Maastricht Treaty
General Agreement on Tariffs and Trade (GATT)
North American Free Trade Agreement (NAFTA)
International Monetary Fund (IMF)
Duties, quotas, tariffs—controls on prices and quantities of goods by nations with the
goal of balancing imports and exports
Foreign Corrupt Practices Act (FCPA)—controls on means of accessing governments
The Iran Threat Reduction and Syria Human Rights Act of 2012
What principles of international law affect business?
Sovereign immunity—freedom of one country from being subject to orders from another
country
Expropriation; act of state doctrine—recognition by U.S. courts of the actions of other
governments as valid despite noncompliance with traditional U.S. rights and procedures
Repatriation—returning profits earned in other countries to one’s native land
Conflict of laws—issue as to which country’s law applies in international transactions
Antitrust issues
Forum non conveniens—doctrine requiring dismissal of cases that should be heard in
another country’s courts
What protections exist in international competition?
Antitrust laws
Protections for intellectual property
Criminal law protections
Chapter 8
Summary
Who is liable for business crimes?
Vicarious liability—holding companies accountable for criminal conduct of their officers
Elements—requirements of proof for crimes
Mens rea—requisite mental state for committing a crime
Actus reus—physical act of committing a crime
What penalties exist for business crimes?
Penalties—punishments for commission of crimes; include fines and imprisonment
Corporate sentencing guidelines—federal rules used to determine level of penalties for
companies and officers; a system that decreases penalties for effort toward prevention of
wrongdoing and cooperation with investigations and increases penalties for lack of effort
and other problems in company operations
What is the nature of business crime?
Obstruction—under Sarbanes-Oxley, prohibits destruction of documents when civil or
criminal
investigations are pending
Computer crime—crimes committed while using computer technology
Criminal fraud—misrepresentation with the intent to take something from another
without that person’s knowledge; to mislead to obtain funds or property
Racketeer Influenced and Corrupt Organizations (RICO) Act—federal law designed to
prevent racketeering by intensifying the punishments for engaging in certain criminal
activities more than once
USA Patriot Act—federal law that deals with due process rights as well as substantive
issues such as money laundering prohibitions and mandatory disclosures by those
involved in financial transactions, including banks, escrow and title companies, and other
financial institutions
What are the rights of corporate and individual defendants in the criminal justice system?
Fourth Amendment—provision in U.S. Constitution that protects against invasions of
privacy; the search warrant amendment
Fifth Amendment—the self-incrimination protection of the U.S. Constitution
Sixth Amendment—the right-to-trial protection of the U.S. Constitution
Search warrant—judicially issued right to examine home, business, and papers in any
area in which there is an expectation of privacy
Miranda warnings—advice required to be given to those taken into custody; details the
right to remain ilent and the right to have counsel
Due process—right to trial before conviction
Warrant—public document authorizing detention of an individual for criminal charges;
for searches, a judicial authorization Initial appearance—defendant’s first appearance in
court to have charges explained, bail set, lawyer appointed, and future dates set
Preliminary hearing—presentation of abbreviated case by prosecution to establish
sufficient basis to bind defendant over for trial
Information—document issued after preliminary hearing requiring defendant to stand
trial
Grand jury—secret body that hears evidence to determine whether charges should be
brought and whether defendant should be held for trial
Indictment—document issued by grand jury requiring defendant to stand trial
Arraignment—hearing at which trial date is set and plea is entered
Plea bargain—settlement of criminal charges
Omnibus hearing—evidentiary hearing outside the presence of the jury
Trial—presentation of case by each side
Chapter 9
Summary
What types of civil wrongs create a right of recovery for harm?
Tort—a civil wrong; action by another that results in damages that are recoverable
Intentional tort—civilly wrong conduct that is done deliberately
Negligence—conduct of omission or neglect that results in damages
Strict tort liability—imposition of liability because harm results
What are the types and elements of torts?
Defamation—publication of untrue and damaging statements about an individual or
company
Product disparagement—the tort of defamation of products
Malice—publication of information knowing it is false or with reckless disregard for
whether it is false
Privilege—a defense to defamation that protects certain statements because of a public
interest in having information such as testimony in a trial or media coverage protected
from suit
Interference—the wrong of asking a party to breach a contract with a third party
False imprisonment—wrongful detention of an individual; shopkeepers have a privilege
to reasonably detain those they have good cause to believe have taken merchandise
Shopkeeper’s privilege—defense to torts of defamation,invasion of privacy, and false
imprisonment for merchants who detain shoppers when shopkeepers have reasonable
cause to believe merchandise has been taken without payment
Intentional infliction of emotional distress—bizarre and outrageous conduct that inflicts
mental and possible physical harm on another
Invasion of privacy—disclosing private information, intruding upon another’s affairs, or
appropriating someone’s image or likeness
Appropriation—the use, without permission, of another’s likeness, image, voice, or
trademark for commercial gain
What are the elements and defenses in negligence?
Reasonable and prudent person—the standard by which the conduct of others is
measured; a hypothetical person who behaves with full knowledge and alertness
Causation—the “but for” reason for an accident
Proximate cause—the foreseeability requirement of causation
Contributory negligence—negligence on the part of a plaintiff that was partially
responsible for causing injuries
Comparative negligence—newer negligence defense that assigns liability and damages in
accidents on a percentage basis and thus reduces a plaintiff’s recovery by the amount his
negligence contributed to the cause of the accident
Assumption of risk—plaintiff’s voluntary subjection to a risk that caused injuries
What are the public policy and business issues in tort recovery?
Tort reform—political and legislative process of limiting damages and changing methods
of recovery for civil wrongs
Amount of punitive damages
Chapter 10
Summary
What are the areas of focus in cyberlaw?
Rights of employers and employees in the workplace cyberspace including information
on websites, e-mails, Twitter, and Facebook.
Rights and responsibilities of users of the Internet, such as when and if their anonymous
identity online can be revealed by those who provide Internet services. The courts
balance the right of free expression under the First Amendment with issues of illegal
activity. The courts also balance the free and open commerce nature of the Internet with
the right of users’ privacy and potential invasions of that privacy through the use of data
and tracking mechanisms.
Appropriation and competition issues in cyberspace; the use of trademarks and trade
names on the Internet as well as the ongoing issues related to copyright infringement of
music, movies, and television shows.
Contract issues; the issues of formation, misrepresentation, and how contracts are formed
online; the responsibilities of online retailers to prevent fraud and collect sales taxes for
residents of states in which they may not have any physical presence.
What should employees know about their rights in cyberspace?
Employers have the right to monitor their e-mails text messages, and other
communications sent electronically using company equipment and servers.
The issue of employers requiring employees and applicants to provide access to their
private Facebook and other accounts is an area of change in the law, with states moving
to introduce legislation to make it illegal for employers to request such access as a
precondition or condition of employment.
“You have no privacy on the Internet,” especially at work.
What should employers know about monitoring employee cyberspace activity?
Have a policy in place.
Make full disclosures about that policy and require that employees sign off on their
awareness of the policy.
Use caution in posting or forwarding employee e-mails that have been monitored or were
sent to an individual only.
What are users’ rights to privacy in cyberspace?
Your identity is protected for purposes of your First Amendment rights.
Your ISP can be required to reveal your identity from your online username if you are
engaged in illegal activity, such as in copyright infringement or terrorism threats.
The use of the cloud for storage carries cheaper costs in terms of capital investment, but
there are risks with access and third-party knowledge and use of cloud information.
Statutes do provide protections to stop cyberbullying and cyberstalking through
injunctions and also make such activities crimes so that individuals can be punished with
a statute that applies directly to this form of cyberspace activity.
How are intellectual property rights and competition protected on the Internet?
The unauthorized use of copyrighted and trademarked materials on the Internet can be
stopped through injunctions and owners can collect damages for such unauthorized use.
Infringement requires owners to constantly review materials on the Internet to check for
infringement.
The tort of appropriation also applies to unauthorized use on the Internet of proprietary
information, symbols, and other forms of intellectual property.
Unfair competition on the Internet would include the posting of false information about a
competing business or posting fake product reviews not really written by real users of a
product or service. Because identities are concealed on the Internet, it is difficult to
question product and service endorsers directly.
Commercial speech requires accuracy in order to increase competition.
What should businesspeople know about contract formation in cyberspace?
Make sure there is an electronic record and preserve it so that the terms and formation are
clear.
Know your rights on misrepresentation and fraud on the Internet.
Chapter 11
Summary
What are the public and private environmental laws? What protections and requirements
are present in environmental laws?
Nuisance—bad smells, noises, or dirt from one property that interferes with another’s use
and enjoyment of their own property
Nonattainment areas—areas with significant air pollution problems
Emissions offset policy—new plants not built until new emissions are offset by
reductions elsewhere
Bubble concept—EPA policy of maximum air emissions in one area
Clean Air Act—federal law that controls air emissions
Maximum Achievable Control Technology (MACT)—best means for controlling
emissions
Clean Water Act—federal law that regulates emissions in various water sources
Effluent guidelines—EPA maximum allowances for discharges into water
Safe Drinking Water Act—federal law establishing standards for contaminants
Oil Pollution Act (OPA)—federal law imposing civil and criminal liability for oil spills
Resource Conservation and Recovery Act (RCRA)—federal law controlling disposal of
hazardous waste through a permit system
Superfund—funds available for government to use to clean up toxic waste sites
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA)—federal law providing funds and authority for hazardous waste site cleanups
Endangered Species Act (ESA)—powerful federal law that can curb economic activity if
it presents harm to endangered species or their habitat
Who enforces environmental laws?
Environmental Protection Agency (EPA)—federal agency responsible for enforcement of
environmental laws at the federal level National Environmental Policy Act (NEPA)—
federal law that requires federal agencies to assess environmental issues before taking
actions
Environmental impact statement (EIS)—report by federal agency on study of proposed
action’s effect on the environment
What are the penalties for violations?
Injunction—judicial order halting an activity
Fines and criminal penalties
Chapter 12
Summary
What are contracts?
Contract—promise or set of promises for breach of which the law gives a remedy, or the
performance of which the law in some way recognizes as a duty
What laws govern contracts?
Common law—traditional notions of law and the body of law developed in judicial
decisions
Restatement (Second) of Contracts—general summary of the common law of contracts
Uniform Commercial Code (UCC)—set of uniform laws (49 states) governing
commercial transactions
Federal Consumer Contract Laws—Dodd-Frank Wall Street Reform and Consumer
Protection Act (which created the Bureau of Consumer Financial Protection); Credit Card
Accountability, Responsibility and Disclosure Act of 2009 (CARD), Truth in Lending
Act (TILA), and Equal Credit Opportunity Act (ECOA)
What are the types of contracts?
Bilateral contract—contract of two promises; one from each party
Unilateral contract—contract made up of a promise for performance
Express contract—written or verbally agreed-to contract
Implied contract—contract that arises from parties’ voluntary conduct
Quasi contract—theory for enforcing a contract even though there is no formal contract
because the parties behaved as if there were a contract
Implied-in-fact contract—contract that arises from factual circumstances, professional
circumstances, or custom
Implied-in-law contract—legally implied contract to prevent unjust enrichment
Void contract—contract with illegal subject matter or against public policy
Voidable contract—contract that can be avoided legally by one side
Unenforceable contract—agreement for which the law affords no remedy
Executed contract—contract that has been performed
Executory contract—contract not yet performed
How are contracts formed?
Offer—preliminary to contract; first step in formation
Offeror—person making the offer
Offeree—recipient of offer
Course of dealing—UCC provision that examines the way parties have behaved in the
past to determine present performance standards
Revocation—offeror canceling offer
Options—offers with considerations; promises to keep offer open
Merchant’s firm offer—written offer signed by a merchant that states it will be kept open
Counteroffer—counterproposal to offer
Battle of the forms—UCC description of merchants’ tendency to exchange purchase
orders, invoices, confirmations, and so on; under Revised UCC, the court determines
terms after the fact looking at intent, forms used, and the UCC terms
Acceptance—offeree’s positive response to offer
Mailbox rule—timing rule for acceptance
Consideration—something of value exchanged by the parties that distinguishes gifts from
contracts
Charitable subscriptions—enforceable promises to make gifts
Promissory estoppel—reliance element used to enforce otherwise unenforceable contracts
When must contracts be in writing?
Statute of frauds—state statutes governing the types of contracts that must be in writing
to be enforceable
Merchants’ confirmation memorandum—UCC provision that allows one merchant to
bind another based on an oral agreement with one signature
Parol evidence—extrinsic evidence that is not admissible to dispute an integrated
unambiguous contract
What issues for contracting exist in international
business?
CISG—Contracts for the International Sale of
Goods; a uniform law for international commercial transactions that countries can choose
to adopt and contracting parties can choose to use
Chapter 13
Summary
What if the assumptions made and the information given turn out to be untrue? Must the
parties still go forward with the contract?
Contract defense—situation, term, or event that excuses performance
Capacity—mental and age thresholds for valid contracts
Voidable contract—one party can choose not to honor the contract
Puffing—statements of opinion
Material fact—basis of the bargain
Void contract—contract that courts will not honor
Misrepresentation—incomplete or inaccurate information prior to contract execution
Bureau of Consumer Financial Protection
Consumer Financial Protection Act (Dodd–Frank)
Three-day rescission period
Home Equity Loan Consumer Protection Act of 1988
Home Ownership and Equity Protection Act of 1994 (HOEPA)
Rescission—setting aside of contract as a remedy
Fraud—intentional misrepresentation
Scienter—knowledge that information given is false
Duress—physical or mental force that deprives party of a meaningful choice with respect
to a proposed contract
Undue influence—exerting control over another party for purposes of gain
Confidential relationship—trust, confidence, reliance in a relationship
Fair Credit Reporting Act
Fair Debt Collections Practices Act
Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (BAPCPA)
Public policy—standards of decency
Exculpatory clauses—attempt to hold oneself harmless for one’s own conduct
Unconscionable contract—contract that is grossly unfair
If one party does not perform, is the other side excused? When is performance required
and when is it excused?
Conditions precedent—advance events that must occur before performance is due, for
example, obtaining financing
Substantial performance—performance that, for practical purposes, is just as good as full-
performance
Commercial impracticability—defense to performance of sales contract based on
objective impracticability
Novation—agreement to change contract among all affected, for example, agreement to
substitute parties
Accord and satisfaction—agreement entered into as settlement of a disputed debt
Obligation of good faith—must perform in a reasonable fashion; performance must meet
commercial standards
What remedies exist?
Compensatory damages—amount required to place party in as good a position as before
breach
Incidental damages—costs of collecting compensatory damages
Liquidated damages—agreement clause in contract that preestablishes and limits
damages
Consequential damages—damages owed to third parties from a breach
What are the contract performance issues in international business?
Bill of lading—title document used to control transfer of goods
Letter of credit—pledge by bank of availability of funds for a transaction
Exchange rate and risk issues in contracts
Chapter 14
Summary
How does advertising create liability for a business?
Express warranty—contractual promise about nature or potential of product that gives
right of recovery if product falls short of a promise that was a basis of the bargain
Bait and switch—using cheaper, unavailable product to lure customers to store with a
more expensive one, which is then substituted or offered instead
Federal Trade Commission (FTC)—federal agency responsible for regulating deceptive
ads
Wheeler-Lea Act—federal law that allows
FTC to regulate “unfair and deceptive acts or practices”
Celebrity endorsements—FTC area of regulation wherein products are touted by easily
recognized public figures
Consent decree—voluntary settlement of FTC complaint
What are the contract theories of product liability?
Implied warranty of merchantability—warranty of average quality, purity, and adequate
packaging given in every sale by a merchant
Implied warranty of fitness for a particular purpose—warranty given in circumstances in
which the buyer relies on the seller’s expertise and acts to purchase according to that
advice
Disclaimer—act of negating warranty coverage
Privity—direct contractual relationship between parties
What is required for tort-based recovery on a defective product? What is strict tort
liability for products?
Strict liability—standard of liability that requires compensation for an injury regardless
of fault or prior knowledge
Restatement (Second) § 402A—American Law Institute’s standards for imposing strict
liability for defective products
Negligence—standard of liability that requires compensation for an injury only if the
party responsible knew or should have known of its potential to cause such injury
Punitive damages—damages beyond compensation for knowledge that conduct was
wrongful
What defenses exist in product liability?
Misuse—product liability defense for plaintiff using a product incorrectly
Contributory negligence—conduct by plaintiff that contributed to plaintiff’s injury;
serves as a bar to recovery
Comparative negligence—negligent conduct by plaintiff serves as a partial defense by
reducing liability by percentage of fault
Assumption of risk—defense to negligence available when plaintiff is told of product risk
and voluntarily uses the product
What reforms have occurred and are proposed in product liability?
Consumer Product Safety Commission—federal agency that regulates product safety and
has recall power
Consumer Product Safety Improvement Act of 2008—expands authority to secondhand
sales
MGMT 533 Key Terms Consolidated.pdf
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 1 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 1
Act of State Doctrine – 21, 219 E 619,629
Appropriation - 23
Bilateral Treaty – 21 E 618
Brief – 8, 74 E 64, 640
Cite or Citation – 17 E 72, 644
Civil Law – 4 E 3, 644(2)
Code of Federal Regulations – 18
Common Law – 5 E 7-8, 647
Confiscation – 23 E 623, 649
Constitution – 17 E 22-25, 651
Contracts for International Sale of Goods (CISG) - 22
Courts of Chancery - 5
Criminal Law – 4 E 654
Custom – 20 E 655
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 2
Equity – 5 E 8-9, 665
European Union (EU) - 22
Executive Orders – 18 E 677
Expropriation – 222 E 623 TO CHAPTER 7
Federal Statutes – 17 E 25-32
General Agreement on Tariffs and Trade (GATT) - 23
Geneva Convention – 21
Injunctions – 5 E 683
Jurisprudence – 14 E 689
Multilateral Treaties - 21
Nationalization – 222 E 700
North American Free Trade Agreement (NAFTA) – 213
Ordinances - 19
Party Autonomy - 21
Private Law – 4, 19, 21 E 712
Procedural Laws – 4 E 10, 712
Promulgation – 18
Public Law – 4 E 4, 715
Stare Decisis – 5, 75 E 8, 50, 727
State Codes - 18
State Statutes – 18 E 21, 34-35
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 3
Statutory Law – 5 E 15
Substantive Laws – 4 E 10, 43, 50, 730
Treaty – 20 E 736
Uniform Commercial Code (UCC) – 18 E 737
Uniform International Laws – 22
Uniform Laws – 18 E 14-15, 738
United States Code (USC) – 17-18 E 738
Universal Treaties - 21
Vienna Convention – 21
Warsaw Convention – 21
Chap 2
Business Ethics - 30
Code of Ethics - 59
Enlightened Self-Interest - 46
Inherence - 45
Invisible Hand - 46
Moral Relativism - 33
Moral Standards - 33
Natural Law – 32 E 4, 700
Positive Law – 31 E 710
Sarbanes-Oxley - 58
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 4
Situational Ethics - 33
Social Responsibility - 46
Chap 3
Affirms – 74
Appellate Brief – 74
Appellate Court – 73 E 44
Appellant – 79 E 633
Appellee – 79 E 633
Attorney-Client Privilege – 81 E 11, 636
Brief – 74 E 64, 640
Concurrent Jurisdiction – 81 E 640
Consensual Jurisdiction – 94
County Courts – 86
Court of Justice of European Communities – 94
Defendants – 77 E 48, 53, 657
De novo – 87
Dissenting Opinion – 74
Diversity of Citizenship – 81 E 45. 660
European Court of Human Rights – 95
Exclusive Jurisdiction – 81 E 667
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 5
Federal Circuits – 87
Federal District Court – 80, 82 E 44
Federal Question Jurisdiction – 80 E 45, 52, 669
Federal Reporter – 84 E 72
Federal Special Trial Courts – 81
Federal Supplement – 82 E 72
In personam Jurisdiction – 79, 88-94 E 683
In rem Jurisdiction – 90 E 683
Inter-American Court of Human Rights – 95
International Court of Justice – 94 E 618, 623
Judges – 79 E 44, 70-71
Judicial Review – 73-74 E 23, 72, 688
Jurisdiction – 79 E 38, 43, 45, 48, 689
Justice of the Peace Courts - 86
Lawyer – 77 E 414-415
Limited Jurisdiction – 86 E 692
Long Arm Statutes – 91-92 E 48-49, 52 694
Minimum Contacts – 91 E 49, 697
Modify - 75
Oral Argument – 74
Original Jurisdiction – 85 E 38, 705
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 6
Petitioner – 79 E 53, 709
Plaintiffs – 77 E 53, 709
Precedent – 75 E 710
Regional Reporter – 87
Remand – 74 E 718
Residence – 90
Respondent – 79 E 53, 720
Reverse – 74
Reversible Error – 74
Small Claims Court – 86 E 726
Stare Decisis – 75 E 8, 50, 727
Subject Matter Jurisdiction – 88 E 45, 48, 52, 56, 729
Traffic Courts – 86
Trial Court – 73
Trial de novo – 87
U.S Courts of Appeals – 82
U.S. Supreme Court – 84
Venue – 88 E 49, 740
Writ of certiorari – 84
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 7
Chap 4
Alternate Dispute Resolution (ADR) – 101 E 66-68, 632
American Arbitration Association (AAA) – 105 E 632
Answer – 117 E 633
Arbitration – 101 E 67-68, 634
Binding Arbitration – 102
Burden of Proof – 125 E 640
Class Action Suits – 115 E 645
Closing Arguments – 128
Complaint – 113 E 53-58. 648
Counterclaim – 117 E 57, 653
Cross Examination – 126 E 63
Default – 117 E 658
Denial – 117 E 658
Depositions – 120 E 59-60, 658
Derivative Suit – 116 E 658
Directed Verdict – 126 E 63, 659
Direct Examination – 126
Discovery – 107, 120 E 43, 58-61, 65, 660
Early Neutral Evaluation – 107 E 662
Equitable Remedy – 115 E 158-159, 160, 665
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 8
Federal Arbitration Act (FAA) – 102
Hearsay – 127 E 676
Hung Jury – 128 E 678
Injunctions – 115 E 160, 683
Instructions – 128 E (jury charge) 689
International Chamber of Commerce (ICC) – 108
Interrogatories – 120 E 60, 65
Judgment NOV – 129 E 64, 688
Jury Deliberation – 128
Legal Remedy – 115 E 691
Mandatory Arbitration – 102
Medarb – 107
Mediation – 106 E 67
Minitrial – 106 E 697
Motion – 117 E 58, 65, 699
Motion for Judgment on the Pleadings – 115
Motion for Summary Judgment – 119
Motion to Dismiss – 119 E 56, 65, 700
Nonbinding Arbitration – 102
Opening Statement – 125 E 705
Peer Review – 108
MGMT 533 Federal Regulations, Ethics, and the Legal System
pg. 9
Peremptory Challenge – 125 E 708
Petition – 113
Pleadings – 117 E 43, 53-58, 709
Prima Facie Case – 126 E 711
Process Server – 115 E 713
Redirect Examination – 126
Removal for Cause – 124 E 95, 719
Rent-a-Judge – 107
Request for Admissions – 120 E 60, 719
Request for Production – 120 E 719
Specific Performance – 115 E 158-159, 727
Statute of Limitations – 113 E 56, 81, 97, 152, 181, 241, 457, 727
Summary Jury Trials – 107
Summons – 115 R 48, 54, 730
Trial – 123 E 43, 62-63, 78
Verdict – 128 E 63, 740
Voir Dire – 124 E 62, 740-741
Work Product – 123 E 12
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 2 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 5
Balancing Test - 145
Bill of Rights – 141 E 28-29, 638
Checks and Balances – 140 E 24-25, 644
Commerce Clause – 141 E 25, 646
Commercial Speech – 154 E 30, 647
Congress – 133 E 22-23, 35
Corporate Political Speech – 157
Disparate Treatment – 168 E 560-561
Due Process – 166 E 28-32, 48, 662
Eminent Domain – 162 E 31, 495, 664
Equal Protection – 168 E 29-32, 665
Executive Branch – 139 E 23
Fifth Amendment – 141 E 28, 29, 32, 49, 68, 72, 430
First Amendment – 141 E 28, 30
Foreign Commerce – 147 E 25
Fourteenth Amendment – 141 E 49, 68, 72
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
Fourth Amendment – 141 E 28, 430
House of Representatives – 139 E 22
Interstate Commerce – 141-142, 145-146 E 26-27, 31, 34, 490
Judicial Branch – 139 E 23, 38, 43-49
Judicial Review – 141 E 23, 72, 688
Just Compensation – 166 E 31, 689
Legislative Branch – 139 E 22-23, 35
Nexus – 148
Police Power – 145 E 709
Preemption – 151 E 22, 34-35, 710
Procedural Due Process – 166 E 28-32, 712
Public Purpose – 162
Public Use – E 31
Regulating – 164
Senate – 139 E 22
Separation of Powers – 139 E 22-24, 724
Substantive Due Process – 168 E 28-32, 730
Substantive Law – 168 E 10, 43, 50, 730
Supremacy Clause – 140 E 22, 34-35, 731
Taking – 164 E 732
U.S. Constitution – 139 E 22-25
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
Chap 6
Administrative Agency – 175 E 36-38.629
Administrative Law Judge (ALJ) – 199 E 630
Administrative Procedures Act (APA) – 178
Arbitrary – 189 E 634
Capricious – 189 E 634
Code of Federal Regulations – 182
Complaint – 198
Congressional Enabling Act – 182 E 36-38, 664
Consent Decree – 198 E 650
Due Process – 178 E 29-32, 48, 662
Enabling Act – 182 E 36-38, 664
Exhausting Administrative Remedies – 200 E 69-70, 668
Ex Parte Contacts – 199 E 668
Federal Privacy Act (FPA) – 180
Federal Register – 182
Federal Register Act (FRA) – 181
Federal Register System – 181
Freedom of Information Act (FOIA) Request – 179
Formal Rulemaking – 179 E 37
Freedom of Information Act (FOIA) – 179 E 37
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Government in the Sunshine Act – 180
Government Manual – 181
Hearing Examiner – 199
Hearing Officer – 199
Hearings – 186, 198
Hybrid Rulemaking – 182
Injunction – 198 E 683
Inspections – 196
Intervenors – 200
Licensing – 196
Nolo Contendere – 198 E 701
Notice of Proposed Rules – 184
Open Meeting Law – 180
Promulgation – 182
Public Comment Period – 184 E (comment period) 646
Regulatory Flexibility Act (RFA) – 184
Rulemaking – 183 R 722
Substantial Evidence – 191 E 729
Substantial Evidence Test – 191 E (substantial evidence standard) E 730
Sunset Law – 195 E 730
Ultra Vires – 192 E 736
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
U.S. Government Manual – 182
Zero-Based Budgeting – 195
Chap 8
1933 Securities Act – 246, 263
Actus Reus – 256 E 432, 629
Arraignment – 270 E 634
Arrest – 268 E 634
Banishment – 249
Bond – 668-269
Clean Air Act – 246 E 538-539
Clean Water Act – 246 E 737-538
Computer Crime – 258 E 648
Conscious avoidance – 256
Consumer Product Safety Act – 246, 263
Corporate Sentencing Guidelines – 252-253
Corporate Integrity Agreement – 245
Crime – 237 E 429-436, 443, 450-458, 654
Criminal Fraud – 259 E 654
Culpability Multiplier – 250
Discovery – 270 E E 43, 58-61, 65, 660
Due Process – 268 E 29-32, 48, 662
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 6
Elements – 252, 256
Embezzlement – 256-257 E 451-452, 664
Fifth Amendment – 264 E 29, 31, 49, 68, 430
Fourth Amendment – 264 E 430
Grand Jury – 270 E 62, 674
Honest Services Fraud - 244
Indictment – 270 E 434, 682
Information – 269 E 434, 682
Initial Appearance – 268 E 683
Internal Revenue Code – 244, 263
Know Thy Customer - 261
Mens Rea – 255
Miranda Warnings – 268 E (Miranda rights) 698
Money Laundering Control Act – 264 E 699
Monitors - 247
Nolo Contendere – 270 E 701
Obstruction of Justice – 257
Occupational Safety and Health Act – 246-263 E 552-553
Omnibus Hearing – 270
Plea Bargain – 270 E 434, 709
Preliminary Hearing – 269 E 711
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 7
Probable Cause – 264 E 712
Racketeer Influence and Corrupt Organization Act (RICO) – 259-261 E 452
Released on His Own Recognizance – 269
Sarbanes-Oxley (SOX) – 244, 246, 257 E 12, 412-415
Search Warrant – 264 E (searches and seizures) 433, 723
Securities and Exchange Act of 1934 – 246, 263
Self-incrimination – 267 E 724
Shame Punishment – 247
Sherman Act – 244, 268 E 517-522
Sixth Amendment – 264 E 28. 430
Speedy Trial - 268
Theft – 256-257 E 453, 733
Trial – 270 E 43, 62-63, 736
USA Patriot Act – 261
U.S. Sentencing Commission – 250
Warrant – 268 E 433, 741
White-Collar Crime – 241 E 432, 453, 742
White-Collar Criminal Penalty Enhancement Act of 2002 – 244
White-Collar Kingpin Law – 244
Work Product - 267
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 3 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 9
Chap 9
Absolute Privilege – 281 E 457, 627
Appropriation – 287 E (appropriation for commercial advantage) E 633
Assumption of Risk – 299 E 454, 635
Breach of Duty – 292 E E 436-437, 640
But For Test – 295 E 641-642
Causation – 295 E (causation in fact) 436-437, 642
Comparative Negligence – 299 E 454-455, 647
Contract Interference – 285 E (interference with contract) E 685
Contributory Negligence – 299 E 455, 655
Damages – 279, 299 E 436, 655
Defamation – 278 E 436, 655
Duty – 290 E 436-437, 662
False Imprisonment – 285 E 444, 669
Health Insurance Portability and Accountability Act (HIPAA) - 286
Intentional Infliction of Emotional Distress – 286 E 444, 684
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
Intentional Torts – 298 E 436, 444-450, 684
Interference – 285 E (interference with contract) 446, 685
Invasion of Privacy – 286 E 444-446, 686
Libel – 278 E 448-449, 692
Malice – 279-280 E 450
Negligence – 278-289 E 436-437, 700
Ordinary and Reasonably Prudent Person – 290 E (“reasonable person standard”) 437, 719
Privilege – 281-283 E 457, 712
Product Disparagement – 279
Proximate Cause – 295-296 E 436-437, 714
Public Disclosure of Private Facts
Public Figure – 283 E 448
Publication – 278 E 448
Qualified Privilege – 281
Shopkeeper’s Privilege – 285 E (“merchant protection”) E 444, 697
Slander – 278 E 448, 726
Strict Liability – 302 E 467, 729
Strict Tort Liability – 278 E 441, 466-467, 469
Tort – 277 E 429, 436, 441-450, 734
Tortious Interference with Contracts – 285 E 446, 685, 734
Tort Reform – 301-302
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
Unauthorized Appropriation – 287 E (appropriation of a person’s name or likeness) 444-445, 633
Chap 10
Blogging – p. 309
Cable Communications Policy Act – E p. 599
Children’s Online Privacy Protection Act (COPPA) – p. 325 E p. 600
Cloud – pp. 323-324
Computer Fraud and Abuse Act (CFAA) – p. 325
Computer Software Act – E p. 593
Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act – 328
Cookies – p. 324
Craigslist – p. 326
Cyberbullying – p. 324
Cyberspace – p. 308 E p. 447
Cyberstalking – p. 324
Digital Millennium Copyright Act (DMCA) – p. 327 E p. 593
E-mail – pp. 309-315
Economic Espionage Act (EEA) – 327
Electronic Communications Privacy Act (ECPA) – p. 310 E p. 599
Electronic Signatures in Global and National Commerce Act (E-Sign) - p. 329 E pp. 134-135
Electronic Funds Transfer Act – E p. 600Reporting Act -
Facebook – p. 309
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Federal Counterfeit Access Device and Computer Fraud and Abuse Act (FCADCFA) – E p. 598
Federal Trade Commission – p. 320
Internet – E p. 598
Internet Service Provider (ISP) – p. 320
Internet Tax Freedom Act – p. 330
National Security Administration p. 325
No Electronic Theft Act – 328
Privacy Act – 325
Right to Financial Privacy Act – E p. 599
Semiconductor Chip Privacy Act – E p. 593
Stored Communication Act – pp. 310-311
Tweeting (Tweets) – p. 309
Uniform Electronic Transactions Act (UETA) – p. 329 E pp. 134-135
Uniform Computer Information Transaction Act (UCITA) – p. 329
Chap 14
Assumption of Risk – 473 E 454, 635
Bait and Switch – 455 E 253, 637
Caveat Emptor – 477 E 105, 642
Celebrity Endorsements – 454
Comparative Negligence – 473 E 454-455, 647
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
Computer Fraud and Abuse Act (CFA) – 262
Consent Decree – 457 E 650
Consumer Product Safety Commission (CPSC) – 476-477
Content Control and Accuracy – 451-453
Contributory Negligence – 473 E 455, 652
Corrective Advertising – 452
Design Defects – 465 E (defect) E 467, 657
Disclaimers – 412 E (warranty disclaimer) 463-464, 659, 741
Express Warranty – 447 E 461, 668
Federal Agency Advertising Regulation - 458
Federal Trade Commission (FTC) - 451
Federal Trade Commission Act – 451 E 67
FTC Remedies – 457-458
Implied Warranty of Fitness for a Particular Purpose – 461 E 462, 680
Implied Warranty of Merchantability – 458-459 E 462, 680
Improper Warranties – 465 E 467
Manufacturing, Handling, or Packaging Errors – 468
Misuse – 473 E 698
Negligence – 470 E 436-437, 700
Opinions – 448 E 449, 715
Privity – 462-463, 471-472 E 464-465. 712
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 6
Product Comparisons – 455-456
Product Liability – 447 E 466-467, 713
Product Liability Reform – 476
Professional Advertisements – 458
Punitive Damages – 471 E 459-460, 715
Record - 463
Same Condition – 468
Seller Engaged in the Business – 471
Strict Liability – 463-464
Strict Tort Liability – 463-464 E (section 402A) 466-469, 739
Unconscionable Disclaimers - 462
Unreasonable Defective Condition – 464
Warranty – 447 E 461-462
Warranty of Title – 462. Exhibit 14.2 E 734 (2)
Wheeler-Lea Act - 451
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 4 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 12
Acceptance – 387, 391 E 91-93
Annual Percentage Rate (APR) - 378
Article 2A Leases – 373 E 173
Bargained-For Exchange - 395
Battle of the Forms – 387 E168
Bilateral Contract – 374 E 84, 638
Bill of Lading – 403 E 638
Bureau of Consumer Financial Protection(BCFP) – 379
Certain and Definite Terms – 384
Charitable Subscriptions – 396
Common Law – 370 E 3, 7-9, 37, 44, 152
Consideration – 395 E 81, 93-98
Consumer Credit Protection Act – 376 E 252
Consumer Financial Protection Act – 379
Contract(s) – 369 E 52, 81-184, 652
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
Contracts for International Sale of Goods – 402 E 170-172
Counteroffers – 386 E 91, 653
Course of Dealing – 384 E 653
Credit Card Accountability, Responsibility and Disclosure (CARD) Act - 379
Dodd-Frank Wall Street Reform and Consumer Protection Act (DFCPA) - 379
Electronic Signatures in Global and National Commerce Act of 2000 (E-Sign) – 399 E 134
Equal Credit Opportunity Act (ECOA) – 376 E 255
Executed Contracts – 376 E 84, 667
Executory Contracts – 376 E 84, 135-136, 667
Express Contract – 375 E 83, 86, 288, 668
Force Majeure – 405 E 151-153, 671
Implied Contract – 375 E 679
Implied-in-Fact Contract – 375 E 83,679
Implied-in-Law Contract – 395 E (quasi contract) 83, 716
Mailbox Rule – 392 E (mailbox acceptance rule) 91-92, 694
Merchants’ Confirmation Memoranda – 401 E 167
Merchant – ?? E 697
Merchant’s Firm Offer – 385 E (firm offer rule) 671
Negotiation – 380 E 85-87
Offer – 380 R 87-96, 704
Offer Communication - 384
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
Offeree – 380 E 86, 704
Offeror – 380 E 86, 704
Options – 384 E (option contract) 90, 705
Parol Evidence – 401 E 130, 136-137, 706
Promissory Estoppel – 415 E 91, 713
Quasi Contract – 395 E 83, 86, 120, 716
Restatement (Second) of Contracts – 389
Revocation – 384 E 89-91, 721
Statute of Frauds – 397 E 130-136, 168, 727
Stipulated Means - 392
Truth in Lending Act (TILA) – 376
Unenforceable Contract – 376 E 84-85, 737
Uniform Commercial Code (UCC) – 370 E 737
Uniform Computer Information Transaction Act (UCITA) - 373
Uniform Electronic Transactions Act (UETA) – 399 E 134
Unilateral Contract – 374 E 738
United Nations Convention on Contracts for the International Sale of Goods (CISG) - 402
Void Contract – 375 E 85, 106, 112, 740
Voidable Contract – 376 E 85, 106, 112, 740
Writing - 399
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Chap 13
Accord and Satisfaction – 432 E 149, 628
Age Capacity – 412 E 87, 118-121
Assignment – 441 E 138-139, 635
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) – 436
Bill of Lading – 441 E 638
Capacity – 412 E 87, 118-122, 641
Commercial Impracticability – 429 E 152, 641
Compensatory Damages – 440 E 154-156, 647
Conditions – 426 E 145-147, 649
Conditions Concurrent – 417 E 147, 649
Conditions Contemporaneous – 427
Conditions Precedent – 426 E E 146-147, 649
Confidential Relationship – 420
Consequential Damages – 440 E 156-157, 650
Consumer Financial Protection Act – 415
Covenants Not to Compete – 424 E (non-compete clause) 124-125, 654
Delegation – 441 E 139, 658
Duress – 420 E 662
Exculpatory Clauses – 424 E 125-126, 667
Fair Credit Billing Act – 432
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
Fair Debt Collection Practices Act – 433
Force Majeure – 424 E 151-152, 671
Fraud – 416 E 106-110, 672
Garnishment – 436 E 252, 672
Home Equity Loan Consumer Protection Act of 1988 – 418
Illegality – 421 E (illegal contract) 122-126, 150-153, 679
Impossibility – 429 E 151-152, 680
Incidental Damages – 440 E 156, 681
Infant – 412 E 682
Judgment – 436 E 688
Letter of Credit – 442 E 691
Licensing – 423 E 123
Liquidated Damages – 440 E 157, 693
Material Fact – 414 E (material misrepresentation) 107
Mental Capacity – 414 E 87, 121-122
Minor – 412 E 119-121, 697
Misrepresentation – 414 E 106-107, 450, 698
Novation – 432 E 139, 703
Obligation of Good Faith – 445, 446
Performance – 426 E708
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 6
Public Policy – 424 – E 118, 122, 715
Puffing – 414 E 449, 715
Rescission – 414 E 105, 160, 719
Scienter – 416 E 108, 722
Substantial Performance – 428 E 156, 730
Three day cooling off period – 418
Unconscionable – 424 E 103, 113, 737
Undue Influence – 420 E 103, 110-112, 737
Usury – 424 E 123, 739
Void Contract – 414 E 85, 106, 113, 740
Voidable Contract – 412 E 85, 106, 112, 740
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 5 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 15
America Invents Act – 487 Berne Convention – 489, E p. 591 Community Trademark (CTM) – 506 Computer Software Copyright Act of 1980 – 489 E (Computer Software Act) p. 593 Copyrights – 489 E 589-593, 653 Design Patent – 486 E 658 Digital Millennium Copyright Act – 493 E 593 Disparagement – 507 E 446, 660 Fair Use – 494 E 591, 669 Federal Trademark Dilution Act – 499 First to Invent – 487 Function Patent – 486, E (“utility” or “functional” patent) p. 588 Generic – 498 E 674 Gray Market Goods – 507 E 675 Industrial Espionage Act of 1996 – 505
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
Infringement – 488, 490 E 450, 682 Injunction – 488 E 683 Intangible Property – 485 E 684 Knock-Off Goods – 506 E 689 Lanham Act of 1946 – 496, 501 E p. 595 Misappropriation – 509 E 452, 698 Office of Harmonization of the Internal Market (OHIM) – 506 Opposition Proceedings – 506 Palming Off – 507 E 706 Patents – 486 E 588-589, 707 Permanent Injunction - 488 Plant Patent – 486 E 709 Slander of Title – 507 E 726 Sonny Bono Copyright Term Extension Act (CTEA) - 492 Trade Dress – 501 E 595-596, 735 Trade Libel – 507 E 735 Trade Name – 499 E 595, 735 Trade Secret – 503-504 E 596-597, 735 Trademarks – 497 E 594-596, 735 Utility Patent – 486 E 739 Working Requirements – 506
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
World Intellectual Property Organization (WIPO) – 506 E 591
Chap 16
Antitrust Modernization Commission (AMC) – 521, 543 Celler-Kefauver Act – 521 Clayton Act – 520, 541, 542 E 522-523, 574 Conscious Parallelism – 523 E 519, 650 Covenant Not to Compete – 517 E 124-125, 654, 720 (2) Cross-Elasticity of Demand – 523 E p. 523 Customer and Territorial Restrictions – 537 E p. 521 Divvying Up Markets – 527 E p. 520 Equitable Remedies – 541-542 Exclusionary Conduct – 523 Exclusive Distributorship Agreement – 536 E 521 Failing Company Doctrine – 530 E (failing firm) 524, 669 Fair Trade Contracts – 533 Federal Trade Commission Act – 521, 541, 542 E pp. 526-527 Geographic Market – 523 E p. 525 Group Boycotts – 522, 528 E 519, 675 Horizontal Restraints of Trade – 522 E pp. 518-520, 523, and 678 Injunction – 542 E p. 522 ??
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Interbrand Competition – 537 E pp. 522 and 685 Interlocking Directorates – 528-529 E pp. 522 and 685 Intrabrand Competition – 537 E 522, 686 Like Grade or Quality – 540 E p. 525 Limit Production – 526 E p. 519 List Prices – 526 Market Power – 522 E 525, 695 Maximum Prices – 526 E p. 518 Meeting the Competition – 541 E 696 Minimum Prices – 526 E p. 518 Monopolizing – 522 E 523-524, 699 Monopoly(ies) – 521 E 521, 699 Monopsony – 536 New Industry Defense – 537-538 ?? Noerr-Pennington Doctrine – 528 E pp. 519 and 701 Per se Illegal – 521, 522 E p. 518 Per se Violation – 526, 527, 528 E p. 518 Predatory Bidding - 536 Predatory Pricing – 523 E 710 Price Discrimination – 521, 539 E pp.525-526 and 711
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
Price Fixing – 522, 526 E 518, 711 Product Market – 523 E p. 525 Quality Control for the Protection of Goodwill – 538 Quantity Discounts – 540 E p. 526 Refusals to Deal – 528 E p. 519 Relevant Market – 523 E pp. 525 and 718 Resale Price Maintenance – 530 E pp. 519 and 719 Robinson-Patman Act – 520, 541 E pp. 525-526 Rule of Reason – 522 E pp. 517, (“reasonableness”) 518, and 722 Sherman Act – 520, 521, 541 E 517-522 Small-Company Doctrine -530 ?? Sole Outlet Agreement – 536 E p. 521 Submarket – 523 Suggested Retail Price – 533 Superior Skill, Foresight, and Industry – 523 E p. 525 Trade Restraints – 522, 530 E pp. 518-522 Treble Damages – 526, 541, 542 E 736 Tying Sales – 537 E pp. 520, 521, and (tying arrangements) 736 Vertical Mergers – 541 E pp, 523 and 740 Vertical Trade Restraints – 530 E pp. 521-522 and 523
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 1
AGENCY RELATIONSHIPS AND
TERMINOLOGY
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 2
SOURCES OF AGENCY AUTHORITY
Oral Express
Written ACTUAL
Implied Custom
Position
APPARENT Lingering
Failure to Supervise
Full Information
RATIFICATION Verbal Acceptance Silence with Acceptance of Benefits
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 3
SIGNING AS AN AGENT (Your Group Name) By: (Your Name) (Your Title) The Phoenix Association of Managers
By: Marianne Jennings Treasurer
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 4
CONTRACT LIABILITY OF DISCLOSED PRINCIPAL
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 5
CONTRACT LIABILITY OF
UNDISCLOSED OR PARTIALLY
DISCLOSED PRINCIPAL
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 6
DO’S AND DON’TS OF FIRING
Do Don’t Conduct regular reviews of Don’t make oral promises of job employees, using objective, security to employees who might later
uniform measures of be laid off. Danger: breach-of-
performance. contract suit. Give clear, business-related Don’t put pressure on an employee Reasons for any dismissal, to resign in order to avoid getting
backed by written documen- fired. Danger: coercion suit. tation when possible. Seek legal waivers from older Don’t make derogatory remarks workers who agree to leave about any dismissed worker, even under an early-retirement if asked for a reference by a pro-
plan, and make sure they spective employer. Danger:
understand the waiver terms defamation suit. in advance. Follow any written company Don’t offer a fired employee a face- guidelines for termination, or saving reason for the dismissal that’s be prepared to show in court unrelated to poor performance.
why they're not binding in any Danger: wrongful-discharge suit. particular instance.
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 7
WHISTLE-BLOWING TIPS Encourage whistle-blowing. Publicize your hot line for disclosing illegal activity and encourage employees to come forward. Eliminate employee fears by directing the investigation of complaints to someone outside a reporting employee's chain of command. Be certain that all complaints are investigated and that investigations are done promptly. Whenever possible, publicize the investigation and its outcome to encourage other employees to come forward.
For the employee, the following suggestions should be followed: 1. Consult family and close friends for perspective and support. 2. Work within your system and through its chain of command
before going public. Go through the various layers of management, even to the board of directors.
3. Voice/write your concerns; don't make accusations. 4. Maintain records of your internal contacts and their objections. 5. Find other employees who also know about this potentially
volatile situation. 6. Keep a record of your information and carefully document your
complaints. Eliminate speculation, personal opinion, and anger. Be objective.
MGMT 533
Federal Regulations, Ethics, and the Legal System
Embry-Riddle Aeronautical University, 2014 8
7. Maintain copies of records. 8. Find support groups in your community (and nationwide, if
necessary).
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 7 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 20
American Competitiveness in the Twenty-First Century Act of 2000 – 696
American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) – 695
Antiterrorism and Effective Death Penalty Act – 695
Certification – 687 E 578
Closed Shop – 691 E 581
Collective Bargaining – 685 E 579-580
Collective Bargaining Agreement – 690 E 580
Collective Bargaining Unit – 687 E 578
Concerted Activities – 691 E 581
Cooling-off Period – 686
Employment Retirement Income Security Act of 1974 (ERISA) – 670 and 678 E 556
Equal Pay Act of 1963 – 670 and 673 E 565-566
Fair Labor Standards Act (FLSA) – 669, 673 E 554
Family and Medical Leave Act – 670
Featherbedding – 692 E 669
Federal Insurance Contributions Act (FICA) – 677 E 555-556
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
Good-Faith Bargaining – 690 E 576 and 579
Illegal Immigration Reform and Immigrant Responsibility Act of 1996 – 695
Immigration Act of 1990 – 695
Immigration and Naturalization Act (INA) – 695
Immigration Reform and Control Act of 1986 (IRCA) – 695 E 621-622
Independent Contractor – 682 E 285-286, 296, and 682
International Labour Organization (ILO) – 698
Labor Management Relations Act of 1947 – 686 E 576
Labor Management Reporting and Disclosure Act of 1959 – 686 E 577
Landrum-Griffin Act – 686 E 577
Lockout – 694 E 581-583 and 693-694
Mandatory/compulsory Subject Matter Bargaining Terms – 623 E 579 and 695
Minimum Wage – 670 E 554
National Institute for Occupational Safety and Health (NIOSH) – 674
National Labor Committee (NLC) - 698
National Labor Relations Act (NLRA) – 685 E 575-578
National Labor Relations Board (NLRB) – 685 E 575 and 578-579
Norris-LaGuardia Act of 1932 – 685 E 574
Occupational Safety and Health Act – 670 and 674-675 E 552-553
Occupational Safety and Health Administration (OSHA) – 674 E 552-553
Occupational Safety and Health Review Commission (OSHRC) – 670
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
Overtime Pay – 670 E 554
Patient Protection and Affordable Care Act - 670
Pension Protection Act of 2006 – 670 and 678
Permissive Subject Matter Bargaining Terms – 690 E 578 and 708
Picketing – 691 E 581
Right-to-Work Laws – 692 E 581 and 721
Runaway Shop – 693 E 722
Scheduled Injuries – 682
Slowdown – 691
Social Security Act of 1935 – 670 and 677-678 E 555-556
Strike – 691 E 581-582 and 729
Taft-Hartley Act – 686 E 576
Unemployment Compensation – 679 E 555 and 737
Unfair Labor Practice – 691 E 57-575 and 737
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act (USA Patriot Act) – 696
Unscheduled Injuries – 682
U.S. Department of homeland Security (DHS) – 696
Wagner Act – 685 E 575
Worker Adjustment and Retraining Notification Act of 1988 (WARN) – 693 E 555
Workers’ Compensation – 670 and 680-681 E 551-552 and 743
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Chap 21
Affirmative Action - 725 E 564-565, 631, and 707
Age Discrimination in Employment Act (ADEA) of 1967 – 641, 642 and 670 E 566
Americans with Disabilities Act (ADA) – 708 and 734-736 E 566-569
Aptitude Tests - 728
Bona Fide Occupational Qualifications (BFOQ) – 727 E 558-559
Civil Rights Acts – 707 and 708 E 551 and 557
Communicable Diseases - 734
Disparate Impact – 709 and 712-714 E 561
Disparate Treatment – 709-712 E 560-561
Equal Employment Opportunity Act of 1972 – 707
Equal Employment Opportunity Commission (EEOC) – 707 E 557, 559, and 461
Equal Pay Act of 1963 – 707, 708, and 734 E 557 and 565-566
Fair Employment Practices Act - 709
Family and Medical Leave Act (FMLA) – 708 and 736 E 553-554
Glass Ceiling Act - 708
Merit Systems – 727-728 E 559
Misconduct - 728
Pattern or Practice of Discrimination – 714 E (pattern of discrimination) 562
Pregnancy Discrimination Act – 708 and 720 E 569
Quotas – 726 E 564
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
Racial Discrimination - 725
Reasonable Accommodation – 735 E 567
Rehabilitation Act of 1973 – 708 E 567
Religious Discrimination - 723
Right-to-Sue Letter – 731 E (right-to-sue notice) 721
Seniority System – 727-728 E 559 and 724
Sex Discrimination – 715
Sexual Harassment – 716 E 562-564, 569, and 725
Title VII – 708 and 709 E 557-563
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 1
MGMT 533 – Module 8 – Key Terms
(NOTE: The first number(s) is/are where the terms/concepts can be located in the Jennings text,
and any number(s) which appear after the letter “E” are where the terms/concepts can be located
in the Emerson text.
Chap 7
Act of State Doctrine – 219, 230 E 618-619, 629
Alternative Fines Act – p. 217
Civil Law – 209 E 3, 6-7, 10, 64 (1)
Code Law – 209 E (code) E 6, 9-10, 645
Common Law – 209 E 3, 7, 10, 616, 647
Conflict of Law – 224 E 610
Contract for the International Sale of Goods (CISG) – 211 E 170-172, 616, 621
Dispute Settlement Body (DSB) – 213
European Court of Justice (ECJ) – 213
European Union (EU) – 212 E 601, 619
Export Trading Company Act – 228, 230 E 619
Expropriation – 222, 230 E 623, 668
Foreign Assistance Act – 230
Foreign Corrupt Practices Act (FCPA) – 215-217 E 619
Foreign Sovereign Immunities Act – 221, 230 E 617
Forum Non Conveniens – 224
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 2
General Agreement on Tariffs and Trade (GATT) – 213, 230 E 620
Grease Payments – 217 E 619
The Hague Convention – 214
Hickenlooper Amendment – 230
Individual Nation Sanction – 213
International Bank for Reconstruction and Development (World Bank) – 214 E 620
International Monetary Fund (IMF) – 214 E 620
Iran and Libya Sanctions Act (ILSA) – 214, 230
Islamic Law – 209
Kyoto Protocol – 215
Kyoto Treaty – 215
LESCANT Factors – 210-211
Maastricht Treaty – 212, 230
Most Favored Nation (MFN) – 213 E 620, 699
Multilateral Treaty – 213
Nationalization – 222 E 700
Nongovernmental Organization (NGO) – 215
North American Free Trade Agreement (NAFTA) – 213, 230 E 620
North Atlantic Treaty Organization (NATO) – 230
Organization for Economic Cooperation and Development (OECD) – 219
Organization of Petroleum Exporting Countries (OPEC) – 215
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 3
Overseas Private Investment Corporation (OPIC) – 223, 230 E 623
Primary Trade Sanctions – 213
Repatriation – 224, 230 E 719
Secondary Boycott – 214 E 723
Sovereign Immunity – 220-222 E 618-619, 726
Special Drawing Rights (SDR) – 214
Tariffs – 228 E 732
World Bank – 214 E 620
World Trade Organization (WTO) – 212 E 620
Chap 11
Air Pollution Control Act – 340
Air Quality Act – 340
Asbestos Hazard Emergency Response Act (AHERA) – 354
Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996 – 345
Best Available Treatment (BAT) – 344
Best Conventional Treatment (BCT) – 344
Brownfields – 351
Bubble Concept – 341 E 535. 545-546, 640
Clean Air Act – 340, 358 E 538-539
Clean Air Act Amendments of 1990 – 342
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 4
Clean Water Act – 343, 358 E 537-538
Community Right-to-Know Substance – 354
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) – 345 E
540-542
Conventional Pollutants – 344
Council on Environmental Quality (CEQ) – 358 E 536
Department of Health, Education and Welfare (HEW) – 360
Due Diligence – 348
Effluent Guidelines – 344
Emissions Offset Policy – 341 E 664
Endangered Species Act (ESA) – 354 E 544
Environmental Impact Statement (EIS) – 351 E 536, 665
Environmental Protection Agency (EPA) – 340 E 535-536
Federal Environmental Pesticide Control Act – 353 E 542
Federal Water Pollution Control Act of 1972 – 343 E 537
Federal Water Pollution Control Administration (FWPCA) – 343
Hazardous Substance Response Trust Fund – 345 E 676
Injunctions – 337 E 683
International Organization for Standardization (ISO) – 361 E 621
Maximum Achievable Control Technology (MACT) – 361
National Environmental Policy Act of 1969 (NEPA) – 351 E 535-536
National Pollution Discharge Elimination System (NPDES) – 344 E 537
MGMT 533
Federal Regulations, Ethics, and the Legal System
pg. 5
Noise Control Act of 1972 – 353
Nonattainment Area – 341
Nonconventional Pollutants – 344
NIMBY – 340
Nuisance – 337 E 447-448, 703
Occupational Safety and Health Administration (OSHA) – 353 E 552-553
Oil Pollution Act (OPA) – 344 E 538
Point Source – 344
Prevention of Significant Deterioration Areas – 341
Resource Conservation and Recovery Act of 1976 – 345 E 539-540
Rivers and Harbors Act of 1899 – 343 E 536
Safe Drinking Water Act – 344 E 537
State Implementation Plans (SIPS) – 340 E 539
Superfund – 345 E 535. 540-542
Superfund Amendment and Reauthorization Act - 345
Surface Mining and Reclamation Act of 1977 - 353
Toxic Pollutants - 344
Toxic Substances Control Act (TOSCA) – 345 E 542
Water Quality Act - 343
- MGMT 533 Module 1 Key Terms
- MGMT 533 Module 2 Key Terms
- MGMT 533 Module 3 Key Terms
- MGMT 533 Module 4 Key Terms
- MGMT 533 Module 5 Key Terms
- MGMT 533 Module 6 Key Terms
- MGMT 533 Module 7 Key Terms
- MGMT 533 Module 8 Key Terms
law_attachments_2__2016_09_09.zip
Mid-term Modules I thru IV.pdf
Module 1 - Self-Assessment: Chapter 1 - Introduction
to Law Started: Aug 16 at 10:33pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 1. There are 49
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Question 1
Terms of a consulting contract are an example of private law.
True
False
Question 2
Which of the following subjects is not generally covered by local ordinances?
Zoning
Curfews
dog licensing
Partnerships
Traffic
Question 3
Statutory law exists at all levels of government.
True
False
Question 4
A personnel manual is an example of private law.
True
False
Question 51 pts
Citations are a form of legal shorthand for referring to statutes, ordinances, and cases.
True
False
Question 6
A curfew is an example of the type of law that would be found in city or town ordinances.
True
False
Question 7
The Internal Revenue Code is part of federal statutory law.
True
False
Question 8
A multilateral treaty is a treaty among several nations.
True
False
Question 91 pts
The United States Code includes laws on anticompetitive/antitrust activities as well as laws regulating the sale of
securities.
True
False
Question 10
Administrative regulations are promulgated by:
Congress.
Constitutional conventions.
Administrative agencies.
State legislatures.
none of the above
Question 11
Courts interpret all levels of statutes and regulations.
True
False
Question 12
Which of the following is not part of the United States Code?
1933 Securities Act
Sherman Act
Equal Employment Opportunity Act
Uniform Commercial Code
All of the above are part of the United States Code.
Question 13
Equitable remedies are not available in courts of law in the United States.
True
False
Question 14
If conduct is a criminal violation, it cannot also be a civil violation.
True
False
Question 15
Constitutions exist at both state and federal levels.
True
False
Question 16
Ordinances are generally found in state legislative codes.
True
False
Question 17
Statutes that eliminate constitutional protections are still valid if they are federal statutes.
True
False
Question 18
Stare decisis is Latin for "let the decision stand."
True
False
Question 19
The principle of stare decisis forbids a court from changing a doctrine already established judicially.
True
False
Question 20
The U.S. Constitution does not apply to the states.
True
False
Question 21
Once a court decision is issued, it cannot be reversed without legislative action.
True
False
Question 22
The Uniform Commercial Code and the Uniform Partnership Act are both enactments of Congress.
True
False
Question 23
Zoning is an example of private law.
True
False
Question 24
In "cite 15 U.S.C. sec. 77”, the 15 represents:
Page number.
Volume number.
The session of Congress when enactment occurred.
none of the above
Question 25
Criminal laws:
Carry fines and/or imprisonment penalties.
Are enforced by individuals.
Are generally not enforced by government agencies.
Are the same as private laws.
none of the above
Question 26
On faxed documents, it is often difficult to tell if a signature is authentic, both because clarity is a problem and also
because signatures can be cut and pasted onto new documents from old documents. The Uniform Commercial Code
provides that anything placed on a document with the intent to authenticate it is a binding signature for a valid
contract. The UCC definition:
Did not anticipate the technology problems arising from the fax.
Will apply even in these fax situations.
Is a common law definition.
Is part of federal law.
Question 27
The European Union (EU) will be disbanded if there are fewer than 12 nation members.
True
False
Question 28
Keeping order is not a purpose of the law...
True
False
Question 29
Union/management laws demonstrate the role of law as a compromiser.
True
False
Question 30
Violations of civil laws can result in imprisonment.
True
False
Question 31
City ordinances generally cover the legal aspects of incorporation and securities registration.
True
False
Question 32
There are no criminal laws at the federal level.
True
False
Question 33
Which of the following is not an example of a law that promotes order?
disclosure statutes for securities sales
Curfew
speed limits
trespassing laws
Question 34
Judicial review is one means for clarifying the meaning of laws.
True
False
Question 35
If you run a red light and hit and injure a pedestrian, both civil and criminal laws can apply.
True
False
Question 36
Ellen Benson has been operating a small catering business out of her home. Business growth is now requiring an
office and kitchen facilities. Before expanding facilities, Ellen wishes to incorporate her business. Where would
Ellen find the laws of incorporation?
state statutes
zoning ordinances
Code of Federal Regulations
county ordinances
Question 37
The CISG (Contracts for the International Sale of Goods) is another name for the UCC.
True
False
Question 38
Criminal laws are generally enforced by individuals.
True
False
Question 39
The act of state doctrine permits other countries to intervene in a nation's government when human rights are
violated.
True
False
Question 40
Party autonomy is not permitted in international contracts.
True
False
Question 41
Treaties are a source of international law.
True
False
Question 42
The common law in each state is the same.
True
False
Question 43
Laws' flexibility allows adjustments for technology changes.
True
False
Question 44
The Code of Federal Regulations includes the rules promulgated by federal administrative agencies.
True
False
Question 45
Which of the following is an example of a law that provides compromises?
Curfews
antitrust laws
traffic laws
union/management laws
Question 46
States do not have administrative laws.
True
False
Question 47
Courts create and apply the common law.
True
False
Question 48
The uniform laws on partnerships and corporations are found codified in the United States Code.
True
False
Question 49
Custom has no impact on international law.
True
False
Module 1 - Self-Assessment: Chapter 2 - Business
Ethics and Social Responsibility Started: Sep 1 at 1:17am
Quiz Instructions This self assessment covers material that you should have learned in Chapter 2. There are 49
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Whether everyone else does it is one method for evaluating the ethics of a particular course of
action.
True
False
Question 2 Ethics consists of the unwritten rules we apply in both business and personal lives.
True
False
Question 3 "I was just following orders," is a defense in law and a test for ethical behavior.
True
False
Question 4 Unethical behavior is not necessarily illegal behavior.
True
False
Question 5 Business ethics is the application of standards for moral reasoning to business dilemmas.
True
False
Question 6 To obtain the protections and benefits of the Federal Sentencing Guidelines, a company having a
code of ethics could be helpful.
True
False
Question 7 Corruption impedes economic development.
True
False
Question 8 "If you think what we're doing now is bad, you should have seen 10 years ago at this company..."
is an example of:
ethical analysis.
rationalization.
comparative or relative ethics.
both a and c
Question 9 Rationalization is one form of ethical analysis.
True
False
Question 10 "Everybody else does it" is a valid test for determining whether conduct is ethical.
True
False
Question 11 The "front page of the newspaper test" is an application of whether conduct gives the appearance
of impropriety.
True
False
Question 12 A lack of business ethics can result in a lack of business goodwill.
True
False
Question 13 The social-responsibility school holds that businesses profit by being responsive to society.
True
False
Question 14 Condoning unethical behavior is an ethical breach.
True
False
Question 15 An inherence school company would become involved in a residential property tax for schools
only if:
the community would benefit from the tax.
government leaders are in favor of the tax.
the issue would affect the company's performance.
community leaders favored it.
Question 16 Training employees in ethics is a factor that reduces a company's sentence under the federal
sentencing guidelines.
True
False
Question 17 An anonymous reporting system is a minimum requirement for companies working to achieve
and maintain an ethical culture.
True
False
Question 18 "It's a gray area," if it applies, means that the conduct you are evaluating is ethical, so long as
you stay in the gray area.
True
False
Question 19 Ethics are key to the success of economic systems.
True
False
Question 20 Which of the following is not an element of the Nash test?
Will I feel as good over the long term about this decision?
Is it legal?
How did I get into this situation in the first place?
Could I discuss this decision with the affected parties?
Question 21 "That's the way it has always been done," is a phrase that often signals ethical difficulties.
True
False
Question 22 The first question of the Wall Street Journal model is whether the conduct complies with the law.
True
False
Question 23 The inherence school is one that follows the standard of society's interest coming first.
True
False
Question 24 Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for
running the pilot tests on PharmaMed's new oral spray medication for individuals with adult
onset diabetes. Jane has discovered that if those in the test group do not spray the medicine
correctly or if they spray for too short of a time, the medicine is not effective, or as effective, and
insulin shock has resulted in a few of the patients. Jane talks with one of her colleagues who
responds, "Look, there's no need to stop the testing or the drug's release. Just tell them in the test
and in the brochures that will be with the spray, 'Spray correctly! If you do not, you may not
receive your necessary dose.'" Jane is not sure anyone can be 100% accurate in spraying all the
time. What risks does the company run if the spray doesn't work for the patients?
fines and penalties
litigation by patients who become ill
damage to its reputation
all of the above
Question 25 Conflicts of interest can result in the use of quid pro quo.
True
False
Question 26 The enlightened self-interest school manager serves only the shareholder.
True
False
Question 27 Why did the late Dr. Milton Friedman feel that managers should not involve their companies in
social issues?
they are agents of the shareholders and should act in their best interests
companies lose money when they are socially responsible
economic studies show businesses that are socially responsible make less money
all of the above
Question 28 Which of the following is not a question for the Blanchard/Peale test for ethical behavior?
Is it legal?
Does it follow industry code?
Is it balanced?
How does it make me feel?
Question 29 Giving a false impression, although not actually an untruth, is still an ethical violation.
True
False
Question 30 Invisible hand managers do not become involved in social issues.
True
False
Question 31 Ethics can provide a strategic advantage for companies.
True
False
Question 32 "When in Rome, do as the Romans do," is an example of moral relativism.
True
False
Question 33 Sarbanes-Oxley is the most extensive regulation of companies since the 1933 and 1934
Securities laws.
True
False
Question 34 An employer instituted a wellness program for all employees. The wellness program includes an
exercise facility and several pay incentives for losing weight, quitting smoking, or beginning an
exercise program. The program is not required under any state or national laws. Which of the
following schools of social responsibility applies to this employer?
inherence school
enlightened self-interest school
invisible hand school
social responsibility school
Question 35 When Michael Chertoff was the head of the Department of Homeland Security, he paid 25 cents
to the federal government each time a personal fax comes to him at his federal office. Mr.
Chertoff's actions:
are meant to establish an effective tone at the top.
are unnecessary because there is no ethical breach when you have no control over who
sends faxes.
are inconsequential for the agency.
none of the above
Question 36 Compliance with the law meets all ethical standards.
True
False
Question 37 Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for
running the pilot tests on PharmaMed's new oral spray medication for individuals with adult
onset diabetes. Jane has discovered that if those in the test group do not spray the medicine
correctly or if they spray for too short of a time, the medicine is not effective, or as effective, and
insulin shock has resulted in a few of the patients. Jane talks with one of her colleagues who
responds, "Look, there's no need to stop the testing or the drug's release. Just tell them in the test
and in the brochures that will be with the spray, 'Spray correctly! If you do not, you may not
receive your necessary dose.'" Jane is not sure anyone can be 100% accurate in spraying all the
time. Whom is affected by Jane's decision, regardless of what decision she makes?
Shareholders
Customers
Jane and her reputation
all of the above
Question 38 Natural law and positive law are one and the same theories of moral standards.
True
False
Question 39 Milton Friedman's philosophy on corporate behavior is:
a business serves its shareholders best by serving the community.
a business serves its shareholders best by serving society at large.
a business serves its shareholders best by serving regulatory interests.
a business serves its shareholders best by serving shareholders.
Question 40 To obtain the protections and benefits of the sentencing guidelines, it would be helpful for a
company to have some form of anonymous reporting.
True
False
Question 41 Having a code of ethics does not reduce a company's sentence under the federal sentencing
guidelines.
True
False
Question 42 The first question of the Blanchard/Peale model for resolving ethical dilemmas is whether the
conduct is legal.
True
False
Question 43 Which of the following might help reduce a company's under the Federal Sentencing Guidelines?
having a code of ethics
Having an ethics hotline (anonymous)
Having a training program for employees in the ethics code and ethics
All of the above could help reduce the company's sentence
Question 44 A manager at a chemical weapons plant discovered that toxic by-products from chemical
manufacturing at the plant are simply put in barrels and stacked near the boundary lines of the
plant property. Children in the homes near these boundaries have an unusually high rate of
kidney disease. The manager does not want to disclose the barrels' contents because he will lose
his job and the town will lose its major employer. Which of the following ethical tests would
support the manager's decision?
Wall Street Journal model
ethical relativism
Blanchard/Peale model
"front page of the newspaper test"
Question 45 Business ethics provides a guarantee of profitability.
True
False
Question 46 Milton Friedman's standard for business social responsibility is one that requires a company to
do all that it can for its community.
True
False
Question 47 A company that self-reports a legal violation risks a higher penalty.
True
False
Question 48 A code of ethics is an individual firm's behavior standard for employees.
True
False
Question 49 Situational ethics is also known as moral relativism.
True
False
Module 1 - Self-Assessment: Chapter 3 - The Judicial System Started: Sep 1 at 6:55pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 3. There are 47
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
A lawyer who knows that his client is guilty of a breach of contract:
must disclose the information to the court.
commits an ethical violation by representing the client.
must keep that information confidential.
both a and b
Question 2
Regional reporters carry the opinions of state appellate and supreme court decisions.
True
False
Question 3
A case that is remanded requires further procedures.
True
False
Question 4
Which of the following is NOT true of long-arm statutes?
they are state jurisdiction statutes
they are not subject to federal review
they vary from state-to-state
all of the above are not true
Question 5
Which of the following names apply to the party who appeals the trial court decision?
Respondent
Appellant
Appellee
none of the above
Question 6
An appeal of an IRS decision against you on your tax return would be heard in:
state court.
tax court.
Federal District Court.
U.S. Court of Appeal.
Question 7
The doctrine of "minimum contacts" is one of fairness in extending in personam jurisdiction.
True
False
Question 8
There are 13 federal judicial circuits.
True
False
Question 9
The U.S. Court of Appeals is a court of original jurisdiction.
True
False
Question 10
Specialty courts exist in both the state and federal systems.
True
False
Question 11
Long-arm statutes give courts power to take jurisdiction over parties in other states in some cases.
True
False
Question 12
If a plaintiff's home country provides an adequate remedy for a wrong, the case is less likely to be heard
in the United States.
True
False
Question 13
Small claims courts are state courts of original jurisdiction in which minimal damage suits are tried.
True
False
Question 14
U.S. Supreme Court opinions are reported in three different reporter series.
True
False
Question 15
When a case is remanded, the lower court must conduct additional proceedings.
True
False
Question 16
Federal district courts are courts of original jurisdiction.
True
False
Question 17
U.S. Supreme Court cases are generally heard by three judges.
True
False
Question 18
A court that has subject matter jurisdiction over a case also has in personam jurisdiction over the case.
True
False
Question 19
The trial transcript, trial evidence, and appellate briefs are generally not available to the appellate court.
True
False
Question 20
Mad Hatters, Inc. is a costume store based in Navajo County, Arizona. It has stores in Navajo, Maricopa,
Pima and Pinal counties. Xeon Corporation entered into a contract for Mad Hatters to furnish 75
costumes for an ad campaign. Xeon has its headquarters in Maricopa County, but has offices in Pima
and Navajo Counties. Xeon has failed to pay for the costumes. Mad Hatters has brought suit in Superior
Court, the trial court for Arizona. The county in which the suit is held is a question of:
venue.
fact.
federal jurisdiction.
none of the above
Question 21
An appellate court's role is to take additional evidence after a trial has ended.
True
False
Question 22
An appellate court reversal requires a unanimous vote by the reviewing judges.
True
False
Question 23
Bankruptcy courts are the only courts in the state or federal system that handle bankruptcy declarations
and proceedings.
True
False
Question 24
Decisions of the federal district court are reported in the Federal Reporter.
True
False
Question 25
Dicta is the rule of law in a case.
True
False
Question 26
The party who appeals a decision is called an appellant.
True
False
Question 27
The U.S. Supreme Court has no original jurisdiction.
True
False
Question 28
The International Court of Justice can compel parties to appear before it.
True
False
Question 29
When a case is remanded:
it is affirmed.
it is sent back to the trial court.
it is completed.
precedent is not being followed.
none of the above
Question 30
All states have a general trial court of original jurisdiction.
True
False
Question 31
In which system are bankruptcy courts located?
Federal court system
State court system
State lesser court system
Municipal courts
none of the above
Question 32
Which of the following is an issue in subject matter jurisdiction determinations?
the residence of the defendant
the nature of the controversy
the amount of the controversy
all of the above are issues in subject matter jurisdiction
Question 33
Some state Supreme Court decisions can be appealed to the U.S. Supreme Court.
True
False
Question 34
A traffic court:
is a court of federal jurisdiction.
is a court of limited jurisdiction.
is an appellate court from small claims.
both a and b
Question 35
The U.S. Courts of Appeal use a writ of certiorari process for appeals.
True
False
Question 36
The U.S. Supreme Court nearly always issues a writ of certiorari when a case is appealed to it.
True
False
Question 37
If any mistake is made in a case, it is reversible error.
True
False
Question 38
Which of the following is an example of a reversible error?
misapplication of the law by the judge
refusal to allow material testimony
trial publicity
a and b only
Question 39
There are 13 federal district courts.
True
False
Question 40
An en banc hearing is one in which all the judges participate.
True
False
Question 41
Which is not part of the National Reporter System?
Federal Supplement
Pacific Reporter
State supreme court decisions
both a and c
Question 42
True small claims courts do not permit lawyers to represent the parties in the proceedings.
True
False
Question 43
Federal district courts are the general trial courts of the federal system.
True
False
Question 44
In personam jurisdiction is the authority of a court over the subject matter of the case.
True
False
Question 45
Diversity of citizenship and a claim of $75,000 or more and a federal question are required for a federal
district court to take jurisdiction on a case.
True
False
Question 46
The principle of stare decisis requires that all similar cases be decided the same way.
True
False
Question 47
A trial court generally has three judges who preside in a case.
True
False
Module 1 - Self-Assessment: Chapter 4 - Managing
Disputes: Alternative Dispute Resolution and
Litigation Strategies Started: Sep 1 at 7:56pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 4. There are 48
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
An appellate court reversal requires a unanimous vote by the reviewing judges.
True
False
Question 2
Jack Knighton is an employee of PRG Consulting. He has been called for jury duty. One of
PRG's clients is Renar Corporation. Renar is the defendant in the case for which Jack has been
called for the jury panel. The attorney for the plaintiff who is suing Renar:
could have Jack struck from the panel for cause.
cannot have Jack struck just because his company has the defendant as a client.
has no recourse because the jury is a wild card in litigation.
none of the above
Question 3
The U.S. Supreme Court nearly always issues a writ of certiorari when a case is appealed to it.
True
False
Question 4
True small claims courts do not permit lawyers to represent the parties in the proceedings.
True
False
Question 5
The doctrine of "minimum contacts" is one of fairness in extending in personam jurisdiction.
True
False
Question 6
Amanda Reiss was injured at a wedding reception at a private home. Amanda tripped over a
piece of rebar that was sticking from the end of one portion of a sidewalk leading to the front
door. Amanda's lawyer believes that the homeowners were aware of the rebar problem and that
other guests to the home had tripped over it but not been injured. How can Amanda's lawyer get
the information about the homeowner's knowledge?
he cannot because they are not required to talk with Amanda's lawyers
he can depose the homeowners
he can depose others who have been guests
both b and c
Question 7
Long-arm statutes give courts power to take jurisdiction over parties in other states in some
cases.
True
False
Question 8
The U.S. Courts of Appeal use a writ of certiorari process for appeals.
True
False
Question 9
If there is a hung jury:
the case must be dismissed.
the judge finds in favor of the defendant.
the case can be retried.
the judge can grant summary judgment.
Question 10
In personam jurisdiction is the authority of a court over the subject matter of the case.
True
False
Question 11
The U.S. Court of Appeals is a court of original jurisdiction.
True
False
Question 12
Dicta is the rule of law in a case.
True
False
Question 13
A case that is remanded requires further procedures.
True
False
Question 14
An en banc hearing is one in which all the judges participate.
True
False
Question 15
A court that has subject matter jurisdiction over a case also has in personam jurisdiction over the
case.
True
False
Question 16
There are 13 federal district courts.
True
False
Question 17
Specialty courts exist in both the state and federal systems.
True
False
Question 18
An appellate court's role is to take additional evidence after a trial has ended.
True
False
Question 19
If any mistake is made in a case, it is reversible error.
True
False
Question 20
A complaint must establish the court’s subject matter jurisdiction.
True
False
Question 21
A lawsuit begins with the filing of a complaint or petition.
True
False
Question 22
When is a motion for a directed verdict properly made?
after the defendant has filed its answer
after summary judgment has been granted
after the plaintiff has presented its case
only at the appellate court level
Question 23
Diversity of citizenship and a claim of $75,000 or more and a federal question are required for a
federal district court to take jurisdiction on a case.
True
False
Question 24
When a case is remanded, the lower court must conduct additional proceedings.
True
False
Question 25
A prima face case:
is one that has met the elements of proof.
is one that is dismissed following a motion for a directed verdict.
is a term that applies in criminal law only.
both a and c
Question 26
A motion for judgment NOV:
is a motion for judgment notwithstanding the verdict.
can only be made by the plaintiff.
is made only before the verdict is returned.
none of the above
Question 27
Decisions of the federal district court are reported in the Federal Reporter.
True
False
Question 28
Specific performance is an equitable remedy.
True
False
Question 29
All states have a general trial court of original jurisdiction.
True
False
Question 30
Which of the following would not be discoverable in a contract suit requesting lost profits as
damages?
income tax returns of the business
orders of merchandise
expense records
work product
Question 31
Some state Supreme Court decisions can be appealed to the U.S. Supreme Court.
True
False
Question 32
U.S. Supreme Court opinions are reported in three different reporter series.
True
False
Question 33
Venue is the subject matter jurisdiction of a court.
True
False
Question 34
The U.S. Supreme Court has no original jurisdiction.
True
False
Question 35
U.S. Supreme Court cases are generally heard by three judges.
True
False
Question 36
There are 13 federal judicial circuits.
True
False
Question 37
A trial court generally has three judges who preside in a case.
True
False
Question 38
If a plaintiff's home country provides an adequate remedy for a wrong, the case is less likely to
be heard in the United States.
True
False
Question 39
Small claims courts are state courts of original jurisdiction in which minimal damage suits are
tried.
True
False
Question 40
Federal district courts are the general trial courts of the federal system.
True
False
Question 41
Who conducts cross-examination when the defendant is presenting its case?
the defendant because the defendant always does cross-examination
the plaintiff
the judge because the burden of proof has shifted
none of the above
Question 42
The party who appeals a decision is called an appellant.
True
False
Question 43
The International Court of Justice can compel parties to appear before it.
True
False
Question 44
Bankruptcy courts are the only courts in the state or federal system that handle bankruptcy
declarations and proceedings.
True
False
Question 45
The principle of stare decisis requires that all similar cases be decided the same way.
True
False
Question 46
Federal district courts are courts of original jurisdiction.
True
False
Question 47
The trial transcript, trial evidence, and appellate briefs are generally not available to the appellate
court.
True
False
Question 48
Regional reporters carry the opinions of state appellate and supreme court decisions.
True
False
Module 2 - Self-Assessment: Chapter 5 - Business and the Constitution Started: Sep 1 at 10:12pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 5. There are 43
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
A state law that covers all businesses cannot give in-state businesses an advantage over out-of-state
businesses.
True
False
Question 2
Corporate political speech:
Enjoys full First Amendment protection.
Can be regulated.
Can be prohibited.
none of the above
Question 3
In which of the following areas of constitutional law is the balancing test used?
state police powers
Congressional regulation of commerce
Preemption
The balancing test is used in all of the above areas of constitutional law.
Question 4
The states' police powers are subject to a balancing test.
True
False
Question 5
The Internet Tax Freedom Act of 1998 prohibits sales tax on Internet transactions.
True
False
Question 6
If the underlying activity Congress attempts to regulate is not economic in nature, authority for such
regulation is not part of the Commerce Clause.
True
False
Question 7
In those areas in which federal laws and regulation are extensive and detailed, the likelihood is that the
Supremacy Clause precludes state regulation.
True
False
Question 8
States have authority over international commerce that comes within their borders and can circumvent
U.S. treaties.
True
False
Question 9
Janis Hoffman was involved in a tailgate brawl that took place in the parking lot of State U just prior to one
of State's football games. Janis and others have charges pending with the county attorney. State U has
filed charges against Janis and the others for violation of State U's code of conduct that prohibits
disorderly conduct on university property. She has been suspended for a semester. When she
requested a hearing she was told that the charges by the county were sufficient proof for her university
misconduct charges.
State U officials are correct; the criminal charges will give Janis her due process.
State U officials must still provide Janis with a hearing on the University charges.
The University charges will not stand until Janis is convicted.
both b and c
Question 10
Which of the following is not a requirement for a valid state tax?
Tax cannot discriminate against interstate business.
Tax cannot apply to businesses in interstate commerce.
There must be a sufficient nexus between the state and the business being taxed.
none of the above
Question 11
The rights of land owners in eminent domain are protected by the:
First Amendment.
Fifth Amendment.
Fourteenth Amendment.
Fourth Amendment.
Question 12
One state can impose a tax on a corporation's property if the corporation does any business in the state.
True
False
Question 13
The Supreme Court uses the direct and immediate effect test in reviewing congressional regulation of
interstate commerce.
True
False
Question 14
In supremacy clause cases, legislative intent of Congress is examined.
True
False
Question 15
The Commerce Clause was the basis for federal authority for passing and enforcing federal civil rights
laws.
True
False
Question 16
The U.S. Constitution is an example of code law.
True
False
Question 17
A state law that exempts in-state businesses from additional licensing and inspections but that applies to
out-of-state businesses is not a proper exercise of police powers.
True
False
Question 18
The First Amendment does not cover corporate ads on ballot propositions.
True
False
Question 19.
True
False
Question 20
The Supremacy Clause:
Controls, via preemption, whether Congress or the states have the authority over certain
matters.
gives Congress full authority to regulate all areas of commerce.
is never applied in state regulation cases.
none of the above
Question 21
A statute that requires only out-of-state milk companies to undergo additional testing for their products is
unconstitutional.
True
False
Question 22
In which of the following areas of constitutional law is the nexus test used?
state police powers
state regulation of commerce
state taxation of commerce
All of the above areas use the nexus test.
Question 23
State and local governments can exercise eminent domain under the Kelo decision:
only when there is a clear public purpose use proposed for the land being taken.
if there is a plan for economic development or revitalization.
only if the land will be used by another public entity.
both a and c
Question 24
Article III of the U.S. Constitution establishes the judicial branch of government.
True
False
Question 25
Requiring farmers shipping goods from outside the state to use only in-state companies for transportation
is not a proper exercise of the police power.
True
False
Question 26
In supremacy clause cases, a case-by-case review is conducted.
True
False
Question 27
Article I of the U.S. Constitution establishes the executive branch of government.
True
False
Question 28
LL Bean has warehouse facilities in Maine, Nevada, Washington, Idaho, Utah, and North Dakota.
Any states in which LL Bean does business can tax the warehouse inventory.
Any states in which LL Bean has warehouses can tax LL Bean on all of its inventory.
Any state in which LL Bean has warehouses can tax LL Bean on the inventory in that state.
none of the above
Question 29
To be constitutional, federal statutes regulating commerce within a state must involve some economic
activity.
True
False
Question 30
State regulation of commerce is controlled by both the commerce and supremacy clauses.
True
False
Question 31
Corporate political speech enjoys less First Amendment protection than individual political speech.
True
False
Question 32
Police power is:
the states' authority to bypass the Fifth Amendment.
the states' authority to conduct searches under the Fourth Amendment.
government agencies' authority to conduct a search of private property at any time.
the states' power to pass laws to promote public welfare and health and safety .
Question 33
The Bill of Rights contains the Commerce Clause.
True
False
Question 34
Which of the following qualifies as a presence in a state for purposes of collecting sales tax from an
Internet merchant?
having an office in the state
having an employee who works in the state
owning or leasing property in the state
All of the above constitute a qualifying presence.
Question 35
Substantive due process is the same as procedural due process.
True
False
Question 36
The Fifth Amendment and Fourteenth Amendment are the "due process" amendments.
True
False
Question 37
Advertising is commercial speech and cannot be limited because of First Amendment protections.
True
False
Question 38
The Fifth and Fourteenth Amendments provide procedural due process protections for corporations and
individuals.
True
False
Question 39
Substantive due process rights:
no longer exist.
have been changed to procedural due process rights.
are found in criminal procedure statutes.
prevent laws that take property without reason and justification.
Question 40
The Commerce Clause authorizes Congress to regulate interstate and international commerce.
True
False
Question 41
The Bill of Rights covers freedom of speech.
True
False
Question 42
An unconstitutionally vague statute is a violation of substantive due process rights.
True
False
Question 43
Taxes on sales across the Internet will be subject to constitutional protections and constraints.
True
False
Module 2 - Self-Assessment: Chapter 6 - Administrative Law Started: Sep 1 at 10:56pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 6. There are 47
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
The substantial evidence challenge cannot be used in cases where formal rule-making procedures were
followed.
True
False
Question 2
Appeals of federal administrative agency final decisions go to federal district court.
True
False
Question 3
The Government in the Sunshine Act requires advance notice of certain agency meetings and hearings.
True
False
Question 4
The Government in the Sunshine Act is often referred to as an open-meeting law.
True
False
Question 5
Hearings are required in all federal rule proposals.
True
False
Question 6
The Federal Register Act is part of the Administrative Procedures Act.
True
False
Question 7
Law enforcement agencies are exempt from the Federal Privacy Act.
True
False
Question 8
An enabling act is an act approving rules promulgated by an administrative agency.
True
False
Question 9
The Department of Homeland Security has been given the responsibility for the construction of a fence
along the border between the United States and Mexico. The Department has not followed the 30-day
comment rule on the composition and location of the proposed fence. Secretary of Homeland Security
says that the fence is a matter of national security. The Department:
has not complied with the rulemaking requirements and cannot proceed with the fence.
is using the emergency exception for the time waiver on rulemaking.
does not have the authority to waive the time requirements.
both a and c
Question 10
The Federal Register System includes the Federal Register, the Code of Federal Regulations, and the
United States Code.
True
False
Question 11
A rule is arbitrary and capricious if there is no evidence to support its promulgation.
True
False
Question 12
The Federal Register Act is part of the Administrative Procedures Act.
True
False
Question 13
Choose the one with the correct ordering of rulemaking functions from among the following:
enabling statute, comment period, studies of issues, promulgation
enabling statute, studies of issues, promulgation, comment period
enabling statute, studies of issues, comment period, promulgation
None of the above is in correct order.
Question 14
A consent decree is similar to a nolo contendere plea.
True
False
Question 15
Reverse FOIA suits are suits by agencies to stop disclosures.
True
False
Question 16
Under the FOIA, agencies are not permitted to charge for copying costs.
True
False
Question 17
The FDA had approved a new diet drug for the market. The agency pulled the approval and the drug off
the market because a staff member said, "This drug didn't work for me.” The manufacturer of the drug
could challenge the FDA action:
as arbitrary and capricious.
on the basis of a failure to follow ADA procedures.
lack of substantial evidence.
any of the above
Question 18
The Government in the Sunshine Act applies to all federal administrative agencies.
True
False
Question 19
Under the federal sunshine laws, agency staff members may hold meetings without notice.
True
False
Question 20
During the public comment period for a proposed rule, only affected businesses can make comments.
True
False
Question 21
Ralph Watkins is the president of Animal Crackers, Inc. Animal Crackers operates childrens' clothing
stores. Ralph has just received notice of charges by the Federal Trade Commission (FTC) against
Animal Crackers for deceptive advertising. Watkins wishes to know the company's rights. Which of the
following statements is true?
Animal Crackers is entitled to a jury trial.
Animal Crackers could dispose of the matter through a consent decree.
Animal Crackers is facing criminal charges.
Animal Crackers will have a 30-day comment period.
Question 22
Only consumers have rights of comment during the public comment period.
True
False
Question 23
An ultra vires challenge to an administrative regulation is one brought on the grounds of procedural error.
True
False
Question 24
Administrative remedies must be exhausted before a court will review agency actions.
True
False
Question 25
Inspections are a means of enforcement for administrative agencies.
True
False
Question 26
If a company challenges a penalty imposed by an administrative agency, which of the following is the
correct order for its appeal?
ALJ, agency commissioners, judicial challenge
judicial challenge, ALJ, agency commissioners
agency commissioners, ALJ, judicial challenge
None of the above is in the correct order.
Question 27
Only businesses can provide input in the formal rulemaking process.
True
False
Question 28
An ex parte contact is prohibited in administrative hearings.
True
False
Question 29
The public comment period of 30 days in federal agency rule making can be shortened in cases of
emergency.
True
False
Question 30
Appeals of federal agency decisions to courts of appeal require a grant of certiorari.
True
False
Question 31
Many federal agencies use licensing as a means of enforcement.
True
False
Question 32
Which of the following is not part of the Administrative Procedures Act?
Freedom of Information Act
Privacy Act
Government in the Sunshine Act
Federal Register Act
Question 33
An ultra vires challenge is a challenge of the agency's jurisdictional authority on a rule.
True
False
Question 34
Inspections by administrative agencies require a search warrant unless the business owner gives
permission.
True
False
Question 35
Law enforcement purposes are an exception to the prohibited exchanges of information among agencies
under the Federal Privacy Act.
True
False
Question 36
The Code of Federal Regulations contains all the regulations of federal agencies.
True
False
Question 37
A consent decree is a negotiated settlement which does not admit anything.
True
False
Question 38
Licensing and inspection are the only enforcement tools of administrative agencies.
True
False
Question 39
Federal agencies do not have the authority to issue fines.
True
False
Question 40
Which of the following is not exempt from an FOIA request?
national defense or foreign intelligence information
internal agency policies on copy charges
trade secrets
personnel records of agency employees
Question 41
An administrative agency is neither a legislative nor a judicial body.
True
False
Question 42
The 30-day comment period can be waived for emergency rulemaking.
True
False
Question 43
The Federal Privacy Act amends the Administrative Procedures Act.
True
False
Question 44
Before administrative agencies' rules become law, there must be congressional approval.
True
False
Question 45
The Federal Maritime Commission approved the charter for an inter-island ferry service in Hawaii but did
so without a study of the environmental impact of adding the ferry service. Federal agencies are required
to determine environmental impacts of all actions. The airlines that fly between the islands wish to
challenge the ferry approval by the Maritime Commission. What grounds could they use?
nepotism
failure to comply with the substantial evidence test
Favoritism
none of the above
Question 46
An agency that fails to investigate the issues before proposing a rule has acted arbitrarily and
capriciously.
True
False
Question 47
The Freedom of Information Act amends the Administrative Procedures Act.
True
False
Module 2 - Self-Assessment: Chapter 8 - Business Crime Started: Sep 2 at 5:41pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 8. There are 52
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Which of the following is not an element of the crime of embezzlement?
intent to take property
taking property permanently
no authorization to take the property
All of the above are elements of embezzlement.
Question 2
Corporate officers are not liable for acts delegated to subordinates.
True
False
Question 3
Mens rea is the conduct required for a crime.
True
False
Question 4
Which of the following laws require businesses to report cash transactions involving $10,000 or more?
Bank Secrecy Act
USA Patriot Act
Money Laundering Control Act
all of the above
Question 5
Probable cause is required only for warrantless searches.
True
False
Question 6
The omnibus hearing is held before the preliminary hearing.
True
False
Question 7
The defendant enters his/her plea at the arraignment.
True
False
Question 8
Because of USA Patriot Act provisions, many businesses require training their employees who handle
large amounts of cash from customers how to discern potential money laundering and other suspicious
activity.
True
False
Question 9
Corporate officers cannot invoke the Fifth Amendment for a corporation.
True
False
Question 10
What is usually the basis of RICO civil suits?
criminal fraud or wire fraud
Prostitution
Gambling
illegal drug sales or transportation
Question 11
Bribery is an ethical violation, but is not a crime.
True
False
Question 12
Ann McMillan is a CPA with a public accounting firm. A client of Ann's has called to tell her that the SEC
is investigating the company for possible misrepresentations in the company's financial reports. Ann is
worried that she may have pushed the envelope in allowing some of the revenues of the client to be
reported as they were. Ann shreds several sets of notes from her meetings with the client on revenue
recognition. Ann
is probably guilty of obstruction of justice.
has done nothing wrong because the notes are privileged communication the SEC is not
entitled to have.
has not committed obstruction of justice because the SEC has not contacted her.
none of the above
Question 13
In criminal procedure, the initial appearance:
is the preliminary hearing.
is where bail is set.
follows the grand jury proceedings.
is where a plea is entered.
Question 14
Predicate offenses under RICO are theft, burglary, and arson.
True
False
Question 15
The "Know They Customer" program:
is a federal program directed at commercial bribery prevention.
is a federal program related to detecting money laundering.
is an unconstitutional federal program.
both a and c
Question 16
Under SOX (Sarbanes-Oxley), document destruction is now a specific crime of obstruction of justice with
increased penalties.
True
False
Question 17
The Fourth Amendment protections:
apply to individuals and corporations.
do not apply to corporations.
do not apply to corporate officers.
all of the above
Question 18
"Taking the Fifth" refers to the Fifth Amendment protection against self-incrimination.
True
False
Question 19
Directors are liable for a crime if the corporation is found guilty of the crime.
True
False
Question 20
Voluntary reporting of criminal violations reduces a company's fines under the federal sentencing
guidelines.
True
False
Question 21
The White-Collar Criminal Penalty Enhancement Act of 2002 is known as the King Pin Act.
True
False
Question 22
The Fourth Amendment is the Miranda warning amendment.
True
False
Question 23
RICO applies only to corporations.
True
False
Question 24
For some crimes, the white-collar kingpin law imposes minimum mandatory sentences on certain
corporate officials.
True
False
Question 25
Mens rea can be established without a confession.
True
False
Question 26
Monitors are not permitted to have daily access to a corporation.
True
False
Question 27
Commercial bribery is only criminal for the recipient.
True
False
Question 28
Officer Muldoon is on foot patrol in Tempe, Arizona when he looks inside a garage (the garage door is
open) and sees a statute that he knows is a rare art work that was stolen the night before from a building
downtown. Officer Muldoon:
cannot use the sighting as a basis for a warrant.
cannot enter the premises to recover the statute.
is not permitted to look inside the garage from the street even when the door is open.
none of the above
Question 29
Corporate monitors are frequently part of a corporate integrity agreement.
True
False
Question 30
SOX is the shorthand for the Sarbanes-Oxley business crime legislation.
True
False
Question 31
The purpose of an omnibus hearing is to:
issue an indictment.
issue an information.
hear evidentiary challenges.
have the defendant enter a plea.
Question 32
The exceptions for obtaining warrants include evidence in "plain view."
True
False
Question 33
The failure to follow crime prevention programs can result in harsher sentences under the U.S. corporate
sentencing guidelines.
True
False
Question 34
The Fifth Amendment protection against self-incrimination is not applicable to corporate records.
True
False
Question 35
A grand jury is composed of judges.
True
False
Question 36
The failure to give the Miranda warnings:
is a problem only if the defendant is in jail.
will result in a dismissal of all charges.
is a problem only if the defendant is in custody.
none of the above
Question 37
Mens rea is the particular mental state required to establish a crime.
True
False
Question 38
Plea bargaining is done only before the arraignment.
True
False
Question 39
Employee protection against retaliation for reporting activities is a critical part of crime prevention under
U.S. guidelines.
True
False
Question 40
The "culpability multiplier" is part of the U.S. sentencing guidelines.
True
False
Question 41
RICO is a federal criminal statute.
True
False
Question 42
The Sixth Amendment is the right-to-speedy trial amendment.
True
False
Question 43
Jason Ormand was arrested on suspicion of sexual assault. The arresting officers did not give Jason his
Miranda warnings. Jason confesses to the assault. The DNA evidence taken from the victim shows with
99% certainty that Jason was her attacker.
Because of the violation of Jason's rights in the officers' failure to give the Miranda
warnings, the case must be dismissed.
The case can still proceed with the DNA evidence.
The case can proceed but only with the victim's testimony.
none of the above
Question 44
The Fifth Amendment protections:
apply to corporations.
can be used by officers of a corporation to prevent disclosure of corporate records.
can be used by officers of a corporation to prevent disclosure of corporate records that
incriminate them.
none of the above
Question 45
'Know the customer' is a training program for employees on preventing money laudering.
True
False
Question 46s
A grand jury issues an information.
True
False
Question 47
Embezzlement is theft by an employee.
True
False
Question 48
Aside from management (i.e., the board of directors and officers), other corporate employees of the
corporation cannot be held liable for any criminal charges of/by the corporation.
True
False
Question 491 pts
A preliminary hearing is the same proceeding as an arraignment.
True
False
Question 50
Bond or bail is established at the initial appearance.
True
False
Question 51
Mens rea is:
the actual criminal act.
not required for proof of a crime.
only required for common-law crimes.
none of the above
Question 52
The corporate sentencing guidelines provide a mathematical formula for determination of corporate
sentences for crimes.
True
False
Module 3 - Self-Assessment: Chapter 9 - Business Torts Started: Sep 3 at 12:35pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 9. There are 25 out
of 49 randomly chosen questions. You are allowed multiple attempts. The maximum learning
experience would be achieved by researching answers missed and retaking this assessment until
a grade of 100% is earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Newspapers have an absolute privilege with respect to defamation suits.
True
False
Question 2
Assumption of risk is not a defense unless there was full information prior to the risk being assumed.
True
False
Question 3
The media have a qualified privilege in defamation cases.
True
False
Question 4
The employer privilege statutes provide employers with some defenses for candor in references.
True
False
Question 5
Britney Spears is an example of a public figure for purposes of proving malice.
True
False
Question 6
Contract interference:
requires involvement by more than one third party.
requires proof of intent to interfere.
is a federal crime.
requires proof of misappropriation.
Question 7
A breach of duty can still be established for negligence cases even when the defendant has complied
with the law.
True
False
Question 8
A false statement that impeaches someone's honesty is defamatory.
True
False
Question 9
Slander is oral defamation.
True
False
Question 10
Members of Congress enjoy an absolute privilege for their speech while on the floor.
True
False
Question 11
The distinguishing element between intentional torts and negligent torts is:
intent.
level of damages.
causation.
All of the above are distinctions.
Question 12
Businesses are never liable for criminal activity on their premises.
True
False
Question 13
Comparative negligence, if established, is a complete defense to negligence.
True
False
Question 14
The failure to follow industry code is a breach of duty.
True
False
Question 15
The purpose of causation is to tie the breach of duty to the resulting injury.
True
False
Question 16
Posting false information about a person to an Internet blog would be publication.
True
False
Question 17
Speeding in an automobile could be breach of duty for negligence purposes.
True
False
Question 18
Galley, Inc. has a contract for operating the kitchen at the Palm Crest Hotel in Miami, Florida. Mealco has
approached Palm Crest's director of operations and stated, "Look, sign with us. We'll take care of
whatever damages you owe Galley.” Mealco's statements:
are defamatory.
constitute the tort of contract interference.
constitute the tort of negligence.
none of the above
Question 19
The shopkeeper's privilege is a defense to false imprisonment if the detention is reasonable.
True
False
Question 20
Running a red light is a breach of duty for negligence purposes.
True
False
Question 21
Defamation cannot exist in cyberspace because there is no evidence that someone heard or understood
the statements.
True
False
Question 22
Which of the following statements would qualify for a defamation action (assuming the statement is
false)?
"All corporate types are selfish."
"Accountants will sign off on anything."
"He pled guilty to a violation of campaign contribution laws."
All of the above qualify for a defamation action.
Question 23
The Health Insurance Portability and Accountability Act control the collection, use, and conveyance of
medical information. Pg. 286
True
False
Question 24
Proximate cause need not be established in negligence cases.
True
False
Question 25
In an opinion column published in wallstreetbuzz.com, a columnist wrote, "James Jackson, CEO of Blain
Investments, now posting an $8 billion write-down, has robbed shareholders blind through his accounting
slights of hand. Jackson insists that he has scruples. I don't know about that but if he does have
scruples you can bet they belong to somebody else.” The columnist:
has committed the tort of libel.
is protected from defamation liability under the opinion/analysis quasi-privilege.
cannot be protected from defamation liability by the opinion/analysis privilege if the
statement was published.
none of the above
Module 3 - Self-Assessment: Chapter 10 - Cyberlaw, Social Media, and Privacy Started: Sep 3 at 12:03am
Quiz Instructions This self assessment covers material that you should have learned in Chapter 10. There are 38
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Craigslist is liable for criminal acts that occur because of connections made between buyers and sellers
using its service.
True
False
Question 2
Internet Service Providers (ISPs) are always required to reveal the identity of their customers and users.
True
False
Question 3
The Anti-Spam Technical Alliance is an industry group working to deter spam.
True
False
Question 4
Employers are responsible when employees use their computers to infringe on others' intellectual
property rights.
True
False
Question 5
Employers are responsible when employees use their computers to infringe on others' intellectual
property rights.
True
False
Question 6
Fourth Amendment rights still apply on the Internet.
True
False
Question 7
Employee e-mails cannot be obtained through discovery processes in litigation against the company
because of Fifth Amendment protections.
True
False
Question 8
Which federal law controls websites?
The CFAA
The ECPA
The NSA
None of the above
Question 9
COPPA is a federal law to control the posting of pornographic images online.
True
False
Question 10
The Economic Espionage Act makes it a crime to take trade secrets by computer.
True
False
Question 11
The Economic Espionage Act covers:
only international commercial transactions.
the copying, downloading, or transmitting of trade secrets.
bribes to obtain government contracts.
only national stock exchange companies.
Question 12
Craigslist is liable for criminal acts that occur because of connections made between buyers and sellers
using its service.
True
False
Question 13
Employer monitoring of employee e-mail is illegal.
True
False
Question 14
The Anti-Spam Technical Alliance is an industry group working to deter spam.
True
False
Question 15
At least one court has held that the placement of cookies on an individual's computer without consent is a
form of unauthorized access.
True
False
Question 16
Employees are not required to give consent to employer access to their e-mails under the Stored
Communications Act.
True
False
Question 171 pts
An employee who uses his or her company e-mail system to communicate privately with his or her lawyer
waived the privilege and the content can never be used in court.
True
False
Question 18
The Economic Espionage Act only applies in international transactions.
True
False
Question 19
IFRACK is the user name of an individual who has been posting information about fracking on blogs, in
chat rooms, and in cyber letters to newspapers. Several environmental groups wish to stop the
comments IFRACK's makes. These groups believe that IFRACK may be affiliated with the oil industry,
and believe that information should be disclosed. Which of the following is correct in analyzing this
situation?
The environmental groups will be able to obtain IFRACK's identity from the ISP because
they have a good reason.
The environmental groups are not entitled to know IFRACK's identity because of First
Amendment protections.
Until IFRACK violates the law, his or her identity cannot be disclosed by the ISP.
There is never identity disclosure allowed in civil matters.
Question 20
Fourth Amendment rights still apply on the Internet.
True
False
Question 21
E-merchants need not follow the same FTC rules that apply to catalog merchants.
True
False
Question 22
Employee e-mails can be used to establish criminal intent in prosecution of companies.
True
False
Question 23
There are both federal and state anticyberstalking laws.
True
False
Question 24
State anti-spamming statutes may tie severity of the offense to the volume of messages.
True
False
Question 25
Internet companies are permitted to collect information about user's purchasing habits without advance
disclosure:
True
False
Question 26
The Electronic Communications Privacy Act applies to all forms of electronic communication..
True
False
Question 27
The Electronic Communications Privacy Act applies to all forms of electronic communication..
True
False
Question 28
Employers are permitted to monitor employee Tweets about company issues.
True
False
Question 29
The Economic Espionage Act only applies in international transactions.
True
False
Question 30
With what area of the law is there tension as the courts deal with cyber bullying issues?
Privacy
First Amendment
Interstate commerce
All of the above
Question 31
If done properly, the employer practice of "googling" job applicants is not prohibited by federal law.
True
False
Question 32
Employer monitoring of employee e-mail is illegal.
True
False
Question 33
Cyberspace companies are exempt from the consumer privacy rules on use of consumer information and
sale of consumer lists.
True
False
Question 34
An employee who uses his or her company e-mail system to communicate privately with his or her lawyer
waived the privilege and the content can never be used in court.
True
False
Question 35
At least one court has held that the placement of cookies on an individual's computer without consent is a
form of unauthorized access.
True
False
Question 36
The Economic Espionage Act makes it a crime to take trade secrets by computer.
True
False
Question 37
Cyberspace companies are exempt from the consumer privacy rules on use of consumer information and
sale of consumer lists.
True
False
Question 38
An employee can be prosecuted for giving his or her company user name and password to hackers.
True
False
Module 3 - Self-Assessment: Chapter 14 - Product Advertising and Liability Started: Sep 3 at 11am
Quiz Instructions This self assessment covers material that you should have learned in Chapter 14. There are 46
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Proving manufacturer knowledge in defective product design or manufacture may result in plaintiff
recovery of punitive damages.
True
False
Question 2
Corrective ads can be required only when competition is affected.
True
False
Question 3
The Federal Trade Commission is responsible for the regulation of deceptive advertising.
True
False
Question 4
Private parties can enforce the FTC regulations on comparative ads.
True
False
Question 5
A product can be defective for purposes of liability for injury if proper warnings about its use are not given.
True
False
Question 6
Proof for a breach of the warranty of merchantability suit requires establishment of the fact that the
product was in a defective and unreasonably dangerous condition.
True
False
Question 7
Caveat emptor is a Latin term meaning "let the buyer beware."
True
False
Question 8
The implied warranty of fitness for a particular purpose requires:
proof that the seller made the first contact with the buyer.
proof that the seller used the term "warrant."
proof that the seller is a merchant.
none of the above
Question 9
If there is a breach of the warranty of merchantability, there can be no tort liability, or strict liability.
True
False
Question 10
A bike purchaser who alters the frame of a bike after the purchase and who is injured because the frame
cracks:
may not be able to recover from the manufacturer because the product was in a different
condition at the time of the accident.
can still recover from the manufacturer because the manufacturer should know that buyers
would alter their bikes.
can still recover, but not punitive damages.
both b and c
Question 11
Bait and switch:
is a sales tactic of advertising a cheaper product in order to get a customer in to buy a more
expensive product.
is not based on ad content.
is not regulated by the FTC.
none of the above
Question 12
A lack of adequate warnings can be a defective product.
True
False
Question 13
Misuse of a product is a defense in a product liability suit.
True
False
Question 14
Which of the following phrases is an express warranty?
"boned chicken"
"Maine's finest"
"Best in the West"
All of the above are express warranties.
Question 15
Proof that a manufacturer was aware of a defect in its product but did not correct it is proof of negligence.
True
False
Question 16
The implied warranty of merchantability (unless disclaimed) is given in every sale of goods by a merchant.
True
False
Question 17
The foreign/natural test for food items is different from the liability issues under the reasonable
expectation test.
True
False
Question 18
Passengers injured in a plane crash caused by the plane's defective design have no rights of recovery
against the airplane manufacturer.
True
False
Question 19
The implied warranty of merchantability requires proof that the buyer was relying on some language when
he or she made the purchase of the good.
True
False
Question 20
The UCC warranty of merchantability:
does not cover sales of food in restaurants.
can be disclaimed by using the term "as is."
is made in every sale of goods.
none of the above
Question 21
It is difficult, if not impossible, to disclaim an express warranty.
True
False
Question 22
If in endorsing a product a celebrity indicates s/he is a satisfied customer, the celebrity must have used
the product.
True
False
Question 23
To establish an express warranty under the UCC, the buyer must produce evidence that the seller used
the term "warrant" or "guarantee."
True
False
Question 24
Privity in negligence product liability cases is:
not required.
more stringent than in UCC cases.
determined by the relationship of the injured party to the buyer.
none of the above
Question 25
A purchase of a deep fryer at a sale of a bankrupt restaurant's equipment by the bankruptcy trustee is
covered by the warranty of merchantability.
True
False
Question 26
"These dresses are 100% cotton" is an example of an express warranty.
True
False
Question 27
There can be no recovery on the basis of a breach of a UCC warranty by anyone other than the actual
buyer.
True
False
Question 28
The Federal Trade Commission does not have the authority to halt deceptive ads.
True
False
Question 29
The FTC can issue an order to halt a comparative ad if information used in the ad is inaccurate.
True
False
Question 30
Privity of contract is a direct contractual relationship between the parties.
True
False
Question 31
Federal trademark law provisions provide remedies for companies whose products are misrepresented in
comparative advertising.
True
False
Question 32
Corrective advertising:
is unconstitutional.
is one of the FTC's many remedies.
has never been ordered by a court.
none of the above
Question 33
Tops Meat had to recall all of its frozen hamburger patties because of the presence of E-Coli in the meat.
About 20 consumers who ate the Tops patties became ill and two died. The E-Coli was present in the
animals Tops purchased for slaughter from various ranchers.
Tops is not liable to its purchasers because it did not produce a defective product.
Tops is not liable to its purchasers because it was not aware of the E-Coli when it sold its
products.
Tops is liable to its purchasers for any injuries and damages from the presence of E-Coli.
both a and b
Question 34
Privity of contract:
means a direct contractual relationship between the parties.
is required for recovery on a UCC warranty theory.
is required for recovery under section 402A.
none of the above
Question 35
The implied warranty of fitness for a particular purpose (unless disclaimed) is given in every sale of goods
by a merchant.
True
False
Question 36
A sale of a toaster at a garage sale is covered by the warranty of merchantability.
True
False
Question 37
Ads can be a basis for an express warranty.
True
False
Question 38
The language "as is" disclaims both the warranty of merchantability and the warranty of fitness for a
particular purpose.
True
False
Question 39
Bait and switch is not a deceptive advertising technique.
True
False
Question 40
Which of the following does not constitute an express warranty?
"This car will give you a great deal of satisfaction."
"This car is equipped with Michelin radial tires."
"This car goes from 0 to 60 mph in 10 seconds."
All of the above are express warranties.
Question 41
Privity is required for recovery on the basis of warranty.
True
False
Question 42
The implied warranty of fitness for a particular purpose requires reliance.
True
False
Question 43
Which of the following actions cannot be taken on comparative advertising that is misleading?
the FTC can seek an injunction
the FTC can seek criminal penalties
the manufacturer of the product that is compared can bring suit
All of the above actions can be taken.
Question 44
"This car has the finest workmanship money can buy" is an example of an express warranty.
True
False
Question 45
A consent decree is similar to a no-contest plea in a criminal proceeding.
True
False
Question 46
Section 402A permits suits only by those in privity of contract.
True
False
Module 4 - Self Assessment: Chapter 12 - Contracts and Sales: Introduction and Formation Started: Sep 3 at 1:07pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 12. There are 38
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
The Uniform Electronic Transaction Act (UETA):
has been adopted in all 50 states.
has been declared unconstitutional.
is the same as E-sign.
none of the above
Question 2
Fred Twain sends the following e-mail to Ralph Barnes: "Will sell you my 2006 Audi A4 for $23,500, will
carry, or take cash. This offer to remain open until November 11, 2007.” Ralph responds, "I know how
much you love that car. I'll think about it.” On November 12, 2007, Ralph e-mails Fred and writes, "Fred,
I am ready to buy your car.” Fred responds, "Ralph, I sold the car this morning because I didn't hear from
you."
Fred has breached a contract because Ralph accepted.
Fred was required to notify Ralph before he sold the car to someone else.
Ralph no longer had the power of acceptance.
both a and b
Question 3
The UCC Merchant's Confirmation Memorandum allows enforcement of a contract that is signed by only
one party.
True
False
Question 4
Under the old UCC and between merchants, additional terms in acceptance:
are part of the contract unless they are material.
are part of the contract unless the offer was limited.
result in rejection of the original offer.
none of the above
Question 5
An offer is effectively communicated upon mailing or dispatch.
True
False
Question 6
A contract for the sale of a $12.2 million Lear jet would be governed by common law because a document
of title is involved.
True
False
Question 7
The following exchange took place in a series of e-mails between Mitchell Raines and Leslie Carroll:
Mitchell: I am looking at the Trek bike advertised on your website for $650.00. Would you take $600.00?
Leslie: I would take $600 if there were no delivery required.
Mitchell: Well, I have to have it delivered because you are two states away.
Leslie: Well, then if there has to be delivery, I could do it for $630.00.
Mitchell: Is that cash?
Leslie: Yes.
Mitchell and Leslie have a contract for the sale and purchase of the bike for $630.00 with
delivery.
Mitchell and Leslie have a contract for the sale and purchase of the bike for $630.00
without delivery.
Mitchell and Leslie have an offer on the table of $600 with no delivery.
Mitchell and Leslie do not have a contract.
Question 8
"I'll take the bike for $75, but first I have to sell my fish tank," is an example of a valid acceptance.
True
False
Question 9
Point-and-click is a valid means of forming a contract if the parties had adequate knowledge of the terms
and conditions of the agreement in advance.
True
False
Question 10
A contract for the sale of potatoes is not governed by the UCC.
True
False
Question 11
E-Sign requires that there be fax 29s or written verification of electronic contracts.
True
False
Question 12
Under common law, a counteroffer is also a rejection.
True
False
Question 13
The parties' previous course of performance and/or course of dealing will have little impact as courts
interpret their contract.
True
False
Question 14
The Restatement of Contracts is another name for the UCC.
True
False
Question 15
"Would you be interested in selling your Prius for $21,000?", is not an offer.
True
False
Question 16
UETA has not yet been adopted in all of the states.
True
False
Question 17
For statute of frauds purposes, the UCC accepts e-mail communications as sufficient for a record/writing.
True
False
Question 18
Julia Pitt runs a boutique that specializes in luggage and travel items. Julia contacts Tumi luggage about
carrying its line of messenger satchels. The Tumi representative tells Julia that Tumi would be happy to
sell her 100 Tumi Black Messenger bags for $318 each. Julia is happy with the price and asks Tumi to
send the bags. The Tumi representative then faxes a confirmation of the shipment of the 100 bags at
$318 each. Julia receives the fax. When the bags arrive, Julia contacts Tumi and says there is a
business downturn and that she does not want the bags and that there was no contract anyway.
Julia is correct; the contract requires some type of authentication from Julia to be
enforceable.
Julia is correct; the contract required more than a fax to have a sufficient record.
Julia is incorrect; she and Tumi have a valid and enforceable contract.
both a and b
Question 19
Revocation can be valid any time prior to acceptance.
True
False
Question 20
"Drive my car to Albuquerque, and I'll pay you $500," is not a valid offer.
True
False
Question 21
E-Sign is a federal law that requires written signatures for electronic contracts to be valid.
True
False
Question 22
Parol evidence is always admissible for challenging contract terms.
True
False
Question 23
A merchant's firm offer requires consideration to be valid.
True
False
Question 24
"I am interested in buying one of your ranch lots”, is an example of an offer.
True
False
Question 25
"I'm thinking of selling my CD player," is an example of offer language.
True
False
Question 26
Common law does not dictate amounts required for consideration.
True
False
Question 27
Which of the following contracts must be in writing to be enforceable?
A contract for the sale of an easement for $250.
A contract for the sale of a bike for $175.
A six-month marketing consulting contract.
All of the above must be in writing to be enforceable.
Question 28
Under the common law, a counteroffer:
must be accepted by the original offeror.
is effective upon mailing or dispatch.
is also a rejection.
none of the above
Question 29
An executory contract is one that is fully performed.
True
False
Question 30
Which of the following is effective upon mailing or dispatch?
Offers
Rejections
Counteroffers
Revocation
none of the above
Question 31
Morality clauses in contracts are both illegal and unethical.
True
False
Question 32
Options require consideration to be valid.
True
False
Question 33
The UCC rules on additional terms in acceptance are the same for merchants and nonmerchants.
True
False
Question 34
A contract for rebinding 500 books at a cost of $1.50/book is governed by the UCC.
True
False
Question 35
Quasi contracts are implied-in-law contracts.
True
False
Question 36
A contract for the sale of a car for $700, in a state which has not adopted the Revised UCC Article 2,
must be in writing to be enforceable.
True
False
Question 37
Implied contracts are unenforceable.
True
False
Question 38
Contracts for the sale of land must be in writing to be enforceable.
True
False
Module 4 - Self Assessment: Chapter 13 - Contracts and Sales: Performance and Remedies Started: Sep 3 at 1:52pm
Quiz Instructions This self assessment covers material that you should have learned in Chapter 13. There are 43
questions. You are allowed multiple attempts. The maximum learning experience would be
achieved by researching answers missed and retaking this assessment until a grade of 100% is
earned. These self assessments will not be calculated into your final grade.
Note: Self-assessment feedback is only available upon submission of the assessment for
evaluation and will not be available again once you have exited the assessment screen.
Question 1
Bob, age 17, has entered into a contract to buy a car. The contract is:
voidable.
void.
voidable only if Bob can return the car.
enforceable since it is for a necessary.
none of the above
Question 2
The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years
within a one-mile radius of the sold business. Such an agreement:
is void as against public policy.
is void as unconscionable.
is void as usurious.
is valid and enforceable.
Question 3
A force majeure clause is a clause that prevents additional terms in acceptances from becoming part of
the contract.
True
False
Question 4
Misrepresentation does not require proof of the buyer's reliance.
True
False
Question 5
An accord and satisfaction is a void contract.
True
False
Question 6
Attorneys' fees are an example of liquidated damages.
True
False
Question 7
A contract with a minor is voidable at the minor's option.
True
False
Question 8
Exculpatory clauses are generally considered void as against public policy. Pg. 424
True
False
Question 9
Contracts with illegal subject matter are voidable.
True
False
Question 10
A multi-million dollar contract between a manufacturer and a parts supplier provides for damages of $300
per day for late delivery is void as a penalty contract.
True
False
Question 11
A bilateral contract is one in which one side promises to perform in exchange for the other side's actions.
Pg. 374
True
False
Question 12
An accord and satisfaction is a void contract.
True
False
Question 13
A mortgage broker who sells mortgage contracts to mortgage companies has created a third party
beneficiary contract.
True
False
Question 14
A liability limitation clause is the same as an exculpatory clause.
True
False
Question 15
An assignment is the transfer of benefits under a contract.
True
False
Question 16
A bilateral contract is one in which one side promises to perform in exchange for the other side's actions.
True
False
Question 17
Minors are liable for the reasonable value of necessaries. Pg. 412
True
False
Question 18
Misrepresentation must be fraudulent before rescission can be permitted.
True
False
Question 19
Covenants not to compete are valid only in sales of a business.
True
False
Question 20
Duress requires proof of physical force.
True
False
Question 21
A bill of lading is a receipt for shipment issued by the seller.
True
False
Question 22
An assignment is the transfer of benefits under a contract.
True
False
Question 23
A contract with a party who has been declared incompetent is voidable.
True
False
Question 24
A contract with a minor is voidable at the minor's option.
True
False
Question 25
Sue and Kevin Kellman signed a contract for the construction of a cabin near Pinetop. In building the
$562,000 cabin, the builder discovered that it had to put the vent for the heating system in the area where
the hall closet is located. The result was that the Kellman's had a half-closet there instead of a full-length
closet that was open to the floor. The Kellmans:
need not pay for the cabin because of this material breach.
can be compensated under the doctrine of force majeure.
can be compensated under the doctrine of commercial impracticability.
can be compensated under the doctrine of substantial performance.
Question 26
A bill of lading is a receipt for shipment issued by the seller.
True
False
Question 27
Contracts with illegal subject matter are voidable. Pg. 406
True
False
Question 28
Minors are liable for the reasonable value of necessaries. Pg. 412
True
False
Question 29
Conditions precedent are events that must happen before contract performance is required.
True
False
Question 30
A minor who has received medical care can never be responsible for payment for those services.
True
False
Question 31
Covenants not to compete are valid only in sales of a business.
True
False
Question 32
Minors can be held liable for the reasonable value of necessaries for which they contracted.
True
False
Question 33
A lawyer/client relationship is an example of a confidential relationship.
True
False
Question 34
A contract with a party who has been declared incompetent is voidable.
True
False
Question 35
Duress requires proof of:
physical force.
threat of physical force.
deprivation of a meaningful choice.
none of the above
Question 36
Misrepresentation does not require proof of the buyer's reliance.
True
False
Question 37
Duress requires proof of physical force.
True
False
Question 38
A multi-million dollar contract between a manufacturer and a parts supplier provides for damages of $300
per day for late delivery is void as a penalty contract.
True
False
Question 39
Material information is something that would affect the decision to buy or sell.
True
False
Question 40
Minors can be held liable for the reasonable value of necessaries for which they contracted. Pg. 412
True
False
Question 41
An example of a condition precedent in a home purchase contract is that the buyer must qualify for
financing first.
True
False
Question 42
A minor who has received medical care can never be responsible for payment for those services.
True
False
Question 43
A mortgage broker who sells mortgage contracts to mortgage companies has created a third party
beneficiary contract.
True
False
- Module 1 - Self-Assessment Chapter 1 - Introduction to Law Quiz
- Module 1 - Self-Assessment Chapter 2 - Business Ethics and Social Responsibility Quiz
- Module 1 - Self-Assessment Chapter 3 - The Judicial System Quiz
- Module 1 - Self-Assessment Chapter 4 - Managing Disputes - Alternative Dispute Resolution and Litigation Strategies Quiz
- Module 2 - Self-Assessment Chapter 5 - Business and the Constitution Quiz
- Module 2 - Self-Assessment Chapter 6 - Administrative Law Quiz
- Module 2 - Self-Assessment Chapter 8 - Business Crime Quiz
- Module 3 - Self-Assessment Chapter 9 - Business Torts Quiz
- Module 3 - Self-Assessment Chapter 10 - Cyberlaw, Social Media, and Privacy Quiz
- Module 3 - Self-Assessment Chapter 14 - Product Advertising and Liability Quiz
- Module 4 - Self-Assessment Chapter 12 - Contracts and Sales Introduction and Formation Quiz
- Module 4 - Self-Assessment Chapter 13 - Contracts and Sales Performance and Remedies Quiz
Module 1 - Module 8 Notes (Complete).pdf
Business: Its Legal, Ethical, and Global Environment
I) Introduction to Law A) Definition
1) Aristotle- Law is reason unaffected by desire 2) Holmes- Law embodies the story of a nation’s development through many centuries 3) Blackstone- That rule of action which is prescribed by some superior and which the inferior
is bound to obey 4) Black’s Law Dictionary- Body of rules of action or conduct prescribed by the controlling
authority, and having legal binding force 5) Body of rules governing individuals and their relationships
B) Classifications 1) Public law- Laws enacted by some authorized governmental body 2) Private law- Laws enacted by private individuals 3) Criminal law- Law concerned with wrongs against society 4) Civil law- Law concerned with wrongs against individuals 5) Substantive- Gives rights and responsibilities 6) Procedural Law- Laws that provide means for enforcing substantive rights 7) Common Law- Laws that have come about through decision of courts or other decisions.
Origins are precedent or judiciary 8) Statutory Law- Laws that have been written down and codified by the legislative branch of a
country. Origins are Legislator or Government 9) Equity- body of law that attempts to do justice when the law does not provide a remedy,
when the remedy is inadequate, or when the application of the law is terribly unfair. (a) Injunctions- Orders prohibiting certain conduct or ordering certain acts (b) Allowed courts of chancery to provide remedies when courts of law could now
C) Purposes of Law 1) Keeping Order 2) Influencing Conduct 3) Honoring Expectations 4) Promoting Equality 5) Great Compromiser
D) Characteristics of Law 1) Flexibility 2) Consistency 3) Pervasiveness
E) Jurisprudence- Theory or philosophy of Law 1) Positive Law- Critical part of the law is obedience so that we can have an orderly society 2) Natural Law- Certain rights that cannot be taken by law 3) The Protection of Individuals and Relationships- The life of the law has been experience 4) The Social Contract- Law exists as the result of those who happen to be in power, that there
is a type of social contract that we mutually honor F) Sources of Law
1) Constitutional Law (a) Law of the people
(b) Protects general rights (c) Is unbroken (d) Establishes government structure and individual rights
2) Statutory Law (a) Federal- Congress is the responsible party and laws passed are part of the United States
Code (U.S.C.) (i) “15 U.S.C.” is Title 15 of the U.S.C. (ii) Executive orders part of statutory law at the Federal level (iii) Code of Federal Regulations- Set of paperback volumes of Federal regulations
published once each year • “12 CFR §226” is Vol 12 of CFR section 226
(b) State- Code containing laws passed by its legislature (i) State codes contain the states’ criminal laws, laws for incorporation, laws governing
partnerships, and contract laws. (ii) Uniform laws- State laws drafted by groups of business people, scholars, and
lawyers in an effort to make interstate business less complicated (iii) Ordinances- Statutes within their areas of power or control (iv) Private laws- Final source of written law found in contracts,, leases, employer
regulations (v) Court Decisions- provides interpretation or clarification of law when language in
statute is unclear 3) Local Laws of Cities, Counties, and Townships 4) Private 5) Court Decisions
G) International Law 1) Custom- Differs Country-by-Country 2) Treaties
(a) Bilateral- Treaty between two nations (b) Multilateral- Treaty among three or more nations (c) Geneva Convention- Universal treaty covering the treatment of prisoners of war (d) Vienna Convention- Universal treaty covering diplomatic relations (e) Warsaw Convention- Treaty that addresses issues of liability for injuries to passengers
and property during international air travel 3) Private Law in International Transactions
(a) Party Autonomy- Allows firms to operate uniformly throughout the world if their contracts are recognized as valid in most countries
4) International Organizations (a) United Nations
5) Doctrines of International Law (a) Act of state doctrine- Theory that protects governments from reviews of their actions by
courts in other countries such as in events of taking private property 6) Trade Law and Policies
(a) Orovide additional details on tariffs, trade laws, restrictions, and trade agreements 7) Uniform International Laws
(a) UN developed Contracts for the International Sale of Goods (CISG) in order to bring uniformity in international contract law
8) The European Union (a) Tariff-free group of European countries that have joined together to enjoy the benefits
of barrier-free trade. II) Business Ethics and Social Responsibility
A) Ethics- Normative standards, generally accepted rules of conduct that govern society 1) Normative standards- how we behave on average, how we treat each other, and
expectations on contracts beyond legal interpretation B) Business Ethics- Standards of ethical reasoning applied to business dilemmas
1) Three layers of business ethics (a) Basic values like honesty (b) Notions of fairness or how we treat each other (c) Issues related to community and environment
2) Positive Law (a) Codified law is followed
3) Natural Law and Ethics (a) Positive law is not the standard because some principles are inviolate
4) Moral Relativism (a) Ethics standard based on the situation you are dealing with
5) Religion and Ethics (a) Tenets of faith are ethical standards
C) Categories of Ethical Dilemmas 1) Stealing 2) Dishonesty 3) False impressions 4) Buying influence or engaging in conflict of interest 5) Hiding or divulging information 6) Taking unfair advantage 7) Committing acts of personal decadence 8) Unfair treatment of others 9) Unfair treatment of an organization 10) Violating rules 11) Overlooking unethical actions 12) Balancing ethical dilemmas
D) Analyzing ethical dilemmas 1) Obtain all available facts 2) List information desired and assumptions 3) List people involved and concerns they would face 4) List resolutions for the problem 5) Evaluate resolutions for costs, legalities, and impact 6) Make recommendation for actions that should be taken
E) Resolution of Business Ethical Dilemmas 1) Blanchard and Peale- Method of asking three determining questions
(a) Is it Legal? (b) Is it balanced? (c) How does it make me feel?
2) Front-Page-of-the-Newspaper Test- Method of visualizing the wrong in the newspaper (a) How would the story be reported from an objective and informed reporter’s view?
3) Laura Nash and Perspective- Questions (a) How would I view the problem if I sat on the other side of the fence? (b) Am I able to discuss my decision with close ones? (c) What am I trying to accomplish? (d) Will I feel as comfortable over the long term as I do today?
4) Wall Street Journal Model (a) Compliance- Are you violating any laws? (b) Contribution- What are the effects of this action to customers, shareholders,
bondholders, employees, community, and suppliers? (c) Consequences- How will the action affect me, the company, family, employees, and
shareholders 5) Immanuel Kant’s Categorical Imperative, similar to Golden Rule
(a) Do unto others as you would have them do unto you F) Reasons People Fail to Reach Good Decisions in Ethical Dilemmas
1) Everybody else does it 2) Someone else will if I don’t do it 3) It’s the way it’s always been done 4) Waiting until the lawyers tell us it’s wrong 5) It doesn’t hurt anyone 6) System is unfair 7) Following orders 8) Situation isn’t as worse as it was in the pat 9) It’s a gray area
G) Social Responsibility 1) Questions asked: Whose interest should corporation serve? To whom should a corporation
be responsive in order to best serve that interest? (a) Applied to different schools of thought
(i) Inherence • Serve shareholders
(ii) Enlightened Self-Interest • Manager is responsible first to shareholders but serves them best by being
responsible to larger society (iii) Invisible Hand
• Best for society to guide itself (iv) Social Responsibility
• Manager should serve larger society H) Importance of Ethics in Business Success and the Costs of Unethical Conduct
1) Ethics Resource Center Study results (a) Firms w/ written codes of ethics did substantially better
(b) Strengthens a firm’s competitive edge (c) Earns high respect
2) High costs of unethical behavior 3) The Tony Bennett Factor- Integrity leads to longevity 4) Key’s to Long-Term Survival 5) Ethics as a Strategy 6) Impact on Reputational of Ethical Missteps 7) Reputation’s Impact on Market Price and Capitalization 8) Reputational Capital and its importance
I) Creation of an Ethical Culture in Business 1) Tone at the Top- Actions by officers and executives that show they “walk the talk” about
ethics 2) Following are helpful in setting the tone of the company
(a) Code of ethics (b) Training for employees (c) Means for anonymous reporting (d) Following on employee reports (e) Reporting up the ladder (f) Action by the board in monitoring and following up (g) Self-reporting by company (h) Enforcement within company (i) Haigh-ranking officer in charge
3) The Ethical Culture model (a) Base of ethics codes (b) Middle tier are company policies and compensation systems (c) Top tier is Leadership by Example
4) Developing an ethics stance (a) Send clear signals on parameters for personal and business behavior (b) Setting tone of tolerance or intolerance for behavior
5) Dangers of unethical environment (a) Intense competition and issues of survival (b) Managers making poor judgements (c) Avoiding the “Either/or conundrum” ultimatum (d) Difference in time devoted to ethics discussion vs performance discussion
6) Being careful about pressure and signals (a) Competition is so intense that business survival is threatened (b) Managers make poor judgements (c) Employees have few or no personal values (d) Employees respond only to earnings demands (e) Managers and executives are advertising earnings
J) Ethical Issues in International Business 1) Businesses must decide whether to operate under one uniform set of standards 2) Cultures, laws and standards vary
(a) Creates issues of bribes, grease payments, and culture-related gifts
(b) Problems of economic development where bribery is common III) The Judicial System
A) Types of Courts 1) Trial courts- Place where the facts of a case are presented
(a) Where a case begins (b) Jury hears cases and decides disputed issues of fact (c) Single judge presides over case
2) Appellate courts- Reviews the conduct during the trial of the judge, lawyers, the witnesses, and the jury (a) Usually have published opinions for uniformity and consistency (b) No trials held-panel of judges hears case
B) How Courts Make Decisions 1) Process of Judicial Review- Process of Appellate courts
(a) Possible actions of reviewing court (i) Affirm- No reversible error and decision stands (ii) Reverse- Reversible error and decision is reversed (iii) Remand- Error that requires further proceedings (iv) Modify- Change ruling of lower court
(b) Statutory interpretation (i) Courts at appellate level can review statutory application (ii) Can determine scope of statute
(c) Judicial review and case precedent- the doctrine of stare decisis (i) Courts follow previous decisions for consistency (ii) Precedent- Previous decisions that present and or future courts follow
• Exceptions to precedent ⇒ Cases are factually distinguishable ⇒ Precedent is from another jurisdiction ⇒ Technology changes ⇒ Sociological, moral, or economic changes
• Interpreting precedent ⇒ The rule of law in the case is the precedent ⇒ Dicta is not the precedent ⇒ Dicta is the discussion of the relevant law
C) Parties in the Judicial System (Civil Cases) 1) Plaintiffs
(a) Initiate the lawsuit (b) Called petitioners in some cases like divorce
2) Defendants (a) Accused of having violated right or rights of the plaintiff (b) Party named to provide recovery of plaintiff
3) Lawyers (a) Advocates for plaintiffs and defendants (b) Have trusted relationships with clients (c) Represents client and sees that procedures are followed
(d) Privileges that exist with the client (i) Keeps what client tells them confidential
• Exception is advance notice of crime to be committed 4) Judges
(a) Control proceedings or outcomes (b) Elected or appointed (c) Trial- Judge presides over trial (d) Appellate- Judge hears appeal from trial court
5) Name changes for Parties on Appeal (a) Appellant or Petitioner- Party appealing the lower court’s decision (b) Appellee or Respondent- Party who won below and is not appealing (c) Name of cases switch in some states e.g. Smith v Jones turns to Jones v Smith after
Jones loses and appeals D) The Concept of Jurisdiction
1) Jurisdiction- Authority of a Court to Hear a Case (a) Subject matter jurisdiction- Jurisdiction over the subject matter of the case (b) In personam jurisdiction- Jurisdiction over the parties in a case.
E) Subject Matter of Jurisdiction of Courts: The Authority Over Content (a) Federal District Court- General trial court of the federal system
(i) Subject matter jurisdiction • When U.S. is a party • Federal question • Diversity of citizenship
(ii) State Trial Court • Limited jurisdiction- Jurisdiction over certain types of cases
(iii) Specialized Courts- Courts of Limited Original Jurisdiction • Tax court • Bankruptcy court • Claims court • Judge Advocate General (military courts) • Courts for other agencies • Court of International Trade
(iv) Ninety four federal districts present; number of districts per state is determined by population and case load
(v) Federal District Court Opinions • Opinions are reported in the Federal Supplement
(vi) Court of Appeals aka U.S. Circuit Court of Appeals • Thirteen federal circuits • Panel of three judges reviews appeals from Federal District Court • Opinions are found in Federal Reporter
(vii) Supreme Court • Must decide to review cases
⇒ Issues writs of certiorari on cases they will review; determined by the rule of four
• Has original jurisdiction for ⇒ Disputes between and/or among states ⇒ Charges of espionage or ambassadors and foreign consuls
• Nine judges w/ lifetime appointments • Opinions reported in United States Reports-official reports
(b) State Court System (i) General Trial Court
• Usually called superior, circuit, district, or county court • Opinions reported in regional reporters and state reporters
(ii) Lesser Courts • Small Claims-Lesser damage claims, no lawyer • Justice of Peace – Smaller damage claims; lawyers permitted to appear • Traffic courts- For citations • Probate courts- For wills, guardianships, conservatorships, etc. • Venue- Location of court in the system within a jurisdiction
⇒ Can change in criminal cases from location of crime to another court ⇒ Civil venue- where defendant resides or where cause of action occurred
F) In Personam Jurisdiction of Courts: The Authority over Persons 1) Determining criteria for acquiring jurisdiction
(a) Property ownership in the state (b) Volunteer- parties agree to it (c) Presence in the state
(i) Residence (ii) Corporations incorporated or doing business in the state (iii) Minimum contracts- Constitutional standards of contact within a state; Long-Arm
Statutes G) The International Courts
1) International Court of Justice (ICJ) (a) Part of U.N. (b) Jurisdiction is contentious-Court’s jurisdiction is consensual
2) EU Courts (a) Court of Justice of European Communities (b) European Court of Human Rights
3) Inter-American Court of Human Rights 4) Opinion Found in International Law Reports 5) London’s Commercial Court
(a) Site of many international arbitrations 6) Jurisdiction Issues in International Courts
(a) Similar to in personam jurisdiction 7) Conflicts of Law
(a) Court systems vary (b) Tort (wrong doing) recovery more liberal in U.S.
(i) No contingency fees allowed elsewhere IV) Managing Disputes: Alternative Dispute Resolution and Litigation Strategies
A) Alternative Dispute Resolution (ADR)- Use of methods such as mediation and arbitration to resolve a dispute instead of litigation 1) Litigation- Process of taking legal action 2) Arbitration- Parties submit grievances and evidence to a third party expert in an informal
setting (a) American Arbitration Association provide many arbitrators and rules (b) Advantages
(i) Less formality (ii) Moves faster than a trial (iii) Handled privately (iv) Expert handles the cases
(c) Disadvantages (i) Arbitrator may not have legal training and may not understand the significance of
legal points (ii) Rules of evidence do not apply (iii) Expense and complexity has increased
(d) Federal Arbitration Act (i) Passed to stop judicial interference with arbitration (ii) Courts rarely interfere with arbitration clauses in consumer contracts (iii) Courts now rarely interfere with arbitration decisions
(e) Procedures (i) Parties agree to submit to arbitration (ii) American Arbitration Association (AAA) can handle the proceedings for a fee (iii) Demand for arbitration is filed (iv) Arbitrator is selected
B) Types of ADR 1) Arbitrator is the oldest type of ADR 2) Mediation- Process in which both parties meet with a neutral mediator who listens to each
side explain its position (a) Used in international transactions (b) Mediator does not issue a decision but offers suggestions for resolution; goal is to have
parties agree on a solution (c) Not binding
3) MedArb (Mediation Arbitration)- Recent creation in which arbitrator first attempts to mediate the settlement (a) Case goes to arbitration if unsuccessful
4) Minitrial- Parties have their lawyers present the strongest aspects of their cases to senior officials from both companies in the presence of a neutral advisor or a judge with experience in the field
(i) Advisor or judge makes the decision (ii) Can motivate parties to resolve differences even if the results are not binding
5) Rent-a-judge-Trial held in commercial as opposed to a public court (i) Parties pay fees for courtroom and judge (ii) Example: “The People’s Court” TV show
6) Summary Jury Trials- Parties given the opportunity to present summaries of their evidence to a judge and jurors, then jurors provide advisory verdict (a) Provides parties an idea about jury’s perceptions (b) Used after discovery is complete
(i) Discovery –Process before trial for investigation of the case 7) Early Neutral Evaluation- Another attorney to meet with parties, receive an assessment of
case by both sides, then provide evaluation of merits of the case (a) Used prior to discovery (b) Used to encourage settlement (c) Saves expenses if parties settle following the evaluation
8) Peer Review-Review by coworkers of the action taken against an employee C) Resolution of International Disputes
1) International Chamber of Commerce- Private organization that handles 250 arbitration cases each year (a) Used arbitration since 1922
2) International Center for Settlement of Investment Disputes (ICSID)- Arbitral organization created specifically to hear disputes between investors and the nations in which they have made investments (a) International arbitral for investors (b) Investment contracts can provide for arbitration by ICSID
3) International Centre for Dispute Resolution (ICDR)-Parties free to choose which courts will hear their disputes (a) Party autonomy (b) U.S. courts are a popular choice
D) Litigation vs ADR: The Issues and Costs 1)
Litigation ADR Technical discovery rules Open lines of communication Judicial constraints of precedent Parties can agree to virtually anything Remedies limited Creative remedies Docket backlog Parties set time line Public proceeding Private Control by lawyers Control by parties Expensive Less expensive (some changes here) Strict procedures and timing Flexible Judge and juries unknown Parties select Judicial enforcement Enforcement by good faith
2) Trial process (a) Pleadings- Compliant, answer, counterclaims, then cross-claims (b) Discovery- Interrogatories, depositions, requests for production, requests for admission (c) Pretrial work- Motions, pretrial conference (d) Trial (e) Post-trial Work- Motions, appeal
E) When You Are in Litigation 1) Lawsuit starts by people begin civil lawsuits
(a) System does not do it for them (b) Based on a claim of right (c) Lawsuits are efforts of individuals to enforce their rights
2) Filing a Complaint or Petition (a) Complaint- General statement of claim
(i) Must describe actions that led to claim of violation (ii) Must establish jurisdiction and venue of court in which it is filed (iii) Class actions are often filed against businesses
3) Service of process (a) Complaint or petition and summons served on defendant (b) Summons explains to defendant his/her rights
(i) Where to defend (ii) How long to defend (iii) The effect of not defending the suit
(c) Delivered by an officer of the court or by licensed private process servers (i) In exceptional circumstances, service is accomplished by publication
4) The Answer (a) Content of answer
(i) Defendant can admit allegations in compliant are true (ii) Defendant can deny allegations in complaint (iii) Defendant can counterclaim- effect is the defendant is also suing plaintiff for
damages (b) Failure to file an answer within the statutory time period is a default
(i) Time limits for filing answers are typically twenty to thirty days (ii) Like a forfeit in sports- plaintiff wins because the defendant fails to show up
5) Ending a Suit Through Motions (a) Motion for judgment on the pleadings
(i) Even if everything the plaintiff said in the complaint were true, there is no cause for action
(ii) If court grants motion, the case is over at the trial court level (appeal is possible) 6) Pre Trial Motions
(a) Motion for summary judgment (i) Appropriate in cases where there are no factual issues (ii) Used to resolve questions of law when the parties agree on the facts
7) Discovery (a) Forms of discovery to supplement evidence released
(i) Requests for admissions- request from one party to another for the admission of facts so that proof requested at trial is limited
(ii) Interrogatories- Written questions submitted to opposition (iii) Depositions- Statements of parties or witnesses taken under oath in an informal
setting (iv) Request for mental or physical examination or for inspection
(b) Only relevant, non-privileged information is discoverable (c) NO:
(i) Work product (ii) Attorney/client privilege (iii) Husband/wife privilege
8) The Trial (a) Jury trial
(i) Required in cases where damages over $20 are claimed (ii) Absolute right to jury trial is only in criminal cases (iii) Jurors selected from voting or drivers’ license lists
(b) Voir dire- Determines whether a potential juror is qualified to serve (i) Used to narrow jurors for panel (ii) Ask questions about their knowledge of the case, level of education, background,
etc. (iii) Can be challenged for cause- incapable of making an impartial decision when they
know parties, when they were involved with the case (iv) Peremptory challenge- limited number of challenges used by attorneys to remove
potential jurors with whom they are uncomfortable, but may not be based on race or sex
(c) Plaintiff’s case (i) Presents witnesses- direct examination (ii) Defendant can cross-examine plaintiffs’ witnesses
(d) Opening Statement (i) Gives summary of the case and witnesses and how they fit together to prove
necessary elements (e) Post-plaintiff’s case motion-- Motion for a directed verdict
(i) Plaintiff must prove all elements- called a prima facie case (ii) Failure to prove all elements entitles defendant to a directed verdict (iii) Made with jury excused
(f) Defendant’s case (i) Presents witnesses- direct examination (ii) Plaintiff can cross-examine defendant’s witnesses
(g) Types of evidence (i) Witnesses’ testimony (ii) Documents (iii) Photographs (iv) Tangible items (v) Heresay- can be admissible to establish facts other than the truth of the matter
asserted (h) Closing arguments
(i) Each side summarizes case presented (i) Jury instructions
(i) Judge explains law to jurors (ii) Law is written in form for jurors to apply (iii) Lawyers have input on instructions
(j) Jury deliberations
(i) Some states do not require unanimous verdicts in civil cases- only a majority (ii) If the jury can’t reach a verdict, a hung jury results in a mistrial
(k) Jury verdict (i) Decisions of the jury (ii) One side can request to have the jury polled- occasionally any pressure exerted will
come out then (l) Post-trial motions
(i) Motion for a judgement NOV ( non obstante veredicto) – motion for a judgement (ii) Notwithstanding the verdict; effect is a trial court judge reversing the jury verdict-
rarely done (iii) Motion for a new trial- judge orders case retried
F) Issues in International Litigation 1) Which Laws Apply?
(a) Foreign citizens may not come to U.S. to benefit from our traditionally liberal recovery rules and higher verdicts if there are adequate remedies in their own country
I) Business and the Constitution A) The U.S. Constitution- States the entire structure of the federal government, its powers, the
powers of the states, and the rights of all citizens 1) Article I: Legislative Branch
(a) Two houses of Congress (i) House of Representatives (ii) Senate
2) Article II: Executive Branch (a) President qualifications, manner of election, term, and powers specified (b) Vice President
3) Article III: Judicial Branch (a) Creates U.S. Supreme Court (b) Authorizes Congress to create other courts
4) System of checks and balances- each branch has some power check over the others to keep any one form becoming too powerful
5) Article IV: State Interrelationships 6) Article V: Procedures for Amendments 7) Article VI: Supremacy Clause 8) Article VII: State Ratification of the Constitution 9) Bill of Rights
(a) 1st amendment: Freedom of speech (b) 4th amendment: Privacy (c) 5th amendment: Due process and self-incrimination (d) 6th amendment: Jury trial (e) 14th amendment: Due process and equal protection
B) The Role of Judicial Review and the Constitution 1) Determines the rights afforded by the U.S. Constitution 2) Determines the Scope of Rights 3) Plays Unique Role in Checks and Balances
(a) Determines the appropriateness of the actions of other branches C) Constitutional Limitations of Economic Regulations
1) The Commerce Clause: Article I, Section 8 (a) Standards for Federal Regulation of Interstate Commerce (b) Historical application
(i) Initially, Court gave a narrow interpretation (ii) Court held New Deal Legislation unconstitutional (iii) Roosevelt proposed Court-Packing Plan (iv) After these political battles, the court responded in NLRB v. Laughlin Steel with the
affection doctrine (c) Ability of Congress to tax has been consistently upheld
2) Standards for state regulation of commerce (a) If Congress has regulated, there is an overriding concern about the Supremacy Clause (b) If Congress has not acted, there is a benefit/burden analysis (c) Balance police power (state’s interest in regulation) with the burden on commerce
(d) State law cannot give in-state businesses an advantage 3) Limits of Economic Regulation
(a) Economic Activity in an Economic Setting (i) Price fixing by multinationals
(b) Economic Activity in a Non-Economic Setting (i) Loan sharking on the street corner
(c) Non-Economic Activity in an Economic Setting (i) Race discrimination by a hotel
(d) Non-Economic Activity in a Non-Economic Setting (i) VAWA and Morrison
(e) Congressional Regulation of Foreign Commerce (i) Power of Congress to regulate foreign commerce applies regardless of where it
begins and ends (f) State and Local Taxation of Interstate Commerce
(i) Interstate business is not exempt from state and local taxes just because they are interstate businesses
(g) Requirements for Valid State Tax (i) Tax cannot discriminate against interstate commerce (ii) Tax cannot be an undue burden on interstate commerce (iii) Must be a “sufficient nexus” between the state and the business being taxed
• Ex: Does business there, holds property titles there, manufactures there, inventory there, inventory stored there
(iv) Must be apportioned fairly • Ex: A corporation doing business in fifty states cannot have all income taxed in
all fifty states- must be apportioned according to its revenues in the states D) State versus Federal Regulation of Business- Constitutional Conflicts Preemption and the
Supremacy Clause 1) Article VI exists to determine which laws control in the event both state and federal
governments regulate the same thing 2) If state law directly conflicts with federal law, state law is invalid 3) Whether there is preemption is controlled by answering several questions:
(a) What does legislative history provide? (b) What is the level of detail in the federal regulation? (c) What benefit flows from the federal regulation? (d) What is the nature of conflict- can the two laws survive?
E) Application of the Bill of Rights to Business 1) First Amendment
(a) Provides some protection for commercial speech (i) Commercial speech- Speech used to further the economic interests of the speaker
(b) Advertising and commercial speech protection (i) Can regulate advertising (ii) Substantial government interest must be furthered (iii) Is the regulation the least restrictive means of accomplishing the interest
(c) Corporate political speech
(i) Corporate participation in campaigns is given full First Amendment protection (ii) Nike case was never fully litigated to determine whether advertising regulation
could be applied to, for example, letters to the editor or columns by corporate executives about controversial issues that affect the company, such as Nike’s labor practices in other countries
2) Eminent domain- right of government to take private property for public purpose for just compensation (a) Ex: Highways, schools, urban development, limits on mining, historical preservation,
economic development 3) Procedural Due Process
(a) Requirement (i) Applies to criminal, civil, and administrative proceedings
• Ex: Summons and complaint provide notice to defendants (ii) Right to notice of hearings (iii) Right to be heard
4) Substantive Due Process (a) Requirement
(i) State laws cannot substantively eliminate rights without some benefit • Law must be logically related to legitimate governmental purpose • Ex: Sunday blue laws- stores are closed by law- sates must be able to show
economic, health, social benefits of such closure 5) Equal Protection
(a) Elements of Protection for Regulation (i) Regulation must apply to all businesses
• Ex: Courts have struck laws that allow small stores to stay open on Sunday while large stores could not
F) The Role of Constitutions in International Law 1) General Types of Constitutions Found in the United States and England 2) Code Law Countries Found in Mexico and Many European Countries 3) Islamic Law: Based on Religion, Governs All Aspect of Personal and Business Life Law
II) Administrative Law A) Administrative Agencies- Not legislative or judicial body
1) A statutory creation within the executive branch with the power to make, interpret and enforce laws
2) Legislatures pass enabling acts (a) Sets up basic law, purpose, and penalties (b) Sets up administrative agencies to handle the enforcement
3) Federal Administrative Agencies (a) Department of Agriculture (b) Department of the Interior (c) Federal Maritime Commission (d) Veterans Administration
4) Securities and Exchange Commission (SEC) Organizational Chart Pg 177
(a) Enabling act- Gives the agency the power to deal with the issues and problems the act addresses
B) Roles of Administrative Agencies 1) Specialization
(a) Needed to deal with complexities of legislation (b) Agencies can hire the necessary expertise
(i) Examples: Environmental, occupational, safety, nuclear, securities- regulation in these areas requires special expertise
2) Protect Small Interests and Small Business (a) Examples: Corrective advertising, consumer complaints
3) Provide for More Rapid Enforcement and Relief (a) Do not have to use court system for enforcement (b) Licensing and permits can be done quickly
4) Achieve Social Goals (a) Examples: Environmental Protection Agency; Federal Home Loan Bank Board;
Resolution Trust Corporation C) Laws Governing Administrative Agencies
1) Administrative Procedures Act (APA) (a) Established uniform procedures for agencies to follow in promulgating rules (b) Other acts have separate names but are amendments to the APA
2) Freedom of Information Act (FOIA) (a) APA amendment passed in 1996 (b) Purpose was to allow public access to agency records (c) Types of information required to be published
(i) Location of offices (ii) Names of responsible individuals (iii) Rules and regulations (iv) Reports (v) Policy statements
(d) Types of information not published (i) Hearing orders (ii) Non-published interpretations (iii) Personnel policies and procedures
(e) Unpublished information can be obtained through an FOIA request (i) Must be written (ii) Must describe the information and/or documents sought (iii) Agency can charge for time and copy costs
(f) Wrongful refusal to supply information allows requestor to bring suit and obtain court order for release as well as recovering cost
(g) Exceptions from disclosure (i) National defense or foreign policy matter (ii) Internal personnel rules of the agency (iii) Statutorily protected information (iv) Trade secrets
(v) Inter- and intra-agency memos (vi) Personnel and medical files (vii) Records of investigations (viii) Banking audits (ix) Geological information on well sites
(h) Federal Privacy Act (i) Passed in 1974 as an APA amendment (ii) Intended to cut down on the pervasive and casual exchange of information about
individuals between and among agencies (iii) Agencies cannot obtain individuals’ records from other agencies without the
consent of that person (i) Government in Sunshine Act
(i) Open meeting law passed in 1976 (ii) Requires prior public notice of meetings of those agencies with heads appointed by
the president (j) Federal Register Act
(i) Authorizes a formal record of agency actions called the Federal Register (k) Regulatory Flexibility Act
(i) Requires publication of proposed rulemaking in trade publications D) Functioning of Administrative Agencies
1) Declaring Regulations—Business Input (a) Formal rulemaking
(i) Congress passes Enabling Act (ii) Agency researches a problem (iii) Proposed regulations (iv) Public comment period (v) Action on rules is taken (vi) Challenges to adopted agency rules
(b) Steps in Rulemaking pg 183 (c) Notice of Proposed Rulemaking
E) Business Rights in Agency Enforcement Action 1) Business Relationships with Administrative Agencies
(a) Case 6.1 U.S. v. Sun-Diamond Growers of California (1999) (i) Defendant charged with making illegal gifts to then Secretary of Agriculture, Mike
Espy (ii) Defendant was convicted and appealed (iii) Held: Reversed. There must be a link between the gift and some official act
2) Authority of Administrative Agencies (a) Case 6.2 Hornbeck Offshore Services, L.L.C. et al., v. Salazar (2010)
(i) What was done with the regulation to result in this Judicial decision and why? (b) Case 6.3 Massachusetts v. EPA (2007)
(i) What area of regulation did the court find that EPA had not addressed properly? (ii) What concerns does the dissent have?
3) Proactive Business Strategies in Regulation
(a) Sunset Laws (i) Agency created for a limited time (ii) Must justify its existence within that time
(b) Zero-Base Budgeting (i) Ongoing budget for agency is not assumed (ii) Must justify its budget each year
4) Enforcement Actions (a) Steps
(i) Nonprosecuting (ii) Prosecution (iii) Penalties and Sanctions (iv) Consent Decrees (v) Hearings (vi) Appeal of Agency Action
(b) Licensing and inspection (i) Enforcement and Inspection
• Up-front approval • Some checks imposed
(ii) Enforcement by inspection • Health Code violation, Occupational Safety and Health Administration (OSHA)
safety inspections (iii) Prosecution of Business
• Enforcement by prosecution ⇒ Complaint is filed ⇒ Injunction can be obtained for this period
• Consent decree ⇒ Like a plea bargain in a criminal case ⇒ Like a nolo contendere plea in a criminal case
• Can go to hearing without any agreements ⇒ Administrative law judge (ALJ) hears the case ⇒ ALJ is like a trial judge ⇒ Intervenors can appear in the case ⇒ Rules of evidence are relaxed ⇒ Must allow for due process ⇒ Exhaust administrative authority before appeal
• Penalties ⇒ Fines ⇒ Injunctions ⇒ Repayment to buyers ⇒ Corrective advertising
(iv) Prosecution and Business • Go to court of appeals
⇒ Appeals of decisions go to agency heads exhausting administrative authority (unless it would be futile) before court or appeals will consider
⇒ State court appeals also go to court of appeals; however, some states require new trial in state trial court
F) The Role of Administrative Agencies in the International Market 1) Passing Rules
(a) Steps (i) Rule proposed
• Parties-Agency ♦ Results- New Rules
(ii) Comments • Parties-Consumers
♦ Results- Modified Rules (iii) Modification, withdrawal, or promulgation
• Parties-Agency, Consumers, and Business ♦ Results- Withdrawn Rules
2) Enforcement (a) Steps
(i) Licensing • Parties-Agency and Business
♦ Results- None (ii) Inspections
• Parties-Agency Courts ( if Warranty is required) and Business ♦ Results- Search and Inspection
(iii) Complaints • Parties-Agency
♦ Results- Fines, Penalties, Injunctions, Consent decrees, and Hearings 3) Administrative Agencies in the International Market
(a) The United States Is Heavily Regulated (i) Some businesses have argued that regulations hinders them in the international
marketplace III) Business Crime
A) The Crimes within a Corporation 1) White Collar Crime- Corporate crime
(a) Occurs because of economic pressure on managers and employees for results 2) Intra-Business Crime (90%)
(a) Stealing from employers (b) High cost of insurance and security (c) Includes thefts and kickbacks
3) Inter-Business Crime (a) Stealing from competitors (b) Acting illegally to gain a competitive advantage (c) Electronic eavesdropping (d) Federal violations—securities, campaign laws, antitrust
(e) Offers and Directors are Liable (i) If they authorized the conduct, or (ii) If they knew about the conduct and did nothing
(f) Case 8.1 United States v. Park (1975) (i) What standard of liability did the instruction given by the judge impose? (ii) Is Mr. Park guilty of a criminal violation? (iii) What does this case say about a manager’s responsibility?
4) Federal Laws (a) Boesky and Milken: The Insider Trading and Securities Fraud Enforcement Act of 1988
(ITSFEA) (b) Savings and Loan Crisis: The “white-collar kingpin” law (c) Enron et al: Sarbanes-Oxley (d) Subprime crisis: The Financial Services Reform Act, also known as the Dodd-Frank Wall
Street Reform and Consumer Protection Act (e) White-Collar Kingpin Act
(i) Federal Law imposes minimum federal mandatory sentences on corporate officers (f) Sarbanes- Oxley Act (2002)
(i) Criminal penalties increased (ii) Personal accountability enhanced
(g) Financial Services Reform or Dodd-Frank (2008) (h) Honest Services Fraud
(i) Action by an officer that deprives the shareholders of that officer’s honest services (ii) Following Skilling v. U.S., require proof of bribery, conflicts, or corruption to be a
charge for a corporate officer B) The Crimes against a Corporation C) Who is Liable for Business Crime? D) Federal Laws Targeting Officers and Directors for Criminal Accountability E) The Penalties for Business Crime
1) Reforming Criminal Penalties (a) Concerned that they are directed at “natural” persons and not “corporate” persons (b) Alternatives
(i) Placing penalties as a percentage of company profits (ii) Monitors (iii) Prison sentences for officers and directors (iv) Use traditional criminal statutes (v) Indictment for common law criminal offenses
2) Corporate Sentencing Guidelines (a) Developed by U.S. Sentencing Commission (b) Sentences for officers increase if crime prevention methods are not in place at the
corporation (c) Avoiding penalties
(i) Written crime prevention program (ii) Officer assigned responsibility for enforcement (iii) Screen employees
(iv) Training programs and written materials (v) Prevention and detection of crime processes
(d) Business should learn the following from the basic principles of the sentencing guidelines: (i) Have a code of ethics in place (ii) Conduct training on the code of ethics (iii) Have a company hot line and ombudsperson for employees to utilize anonymously
in reporting violations (iv) Protect employees who report violations (v) Investigate all allegations regardless of their sources (vi) Report all violations immediately and voluntarily (vii) Offer restitution to affected parties (viii) Cooperate and negotiate with regulators
3) Admit your mistakes and shortcomings (a) State of mind required to commit a crime (b) For corporations—prove intention on behalf of directors
(i) To prosecute, must show individual intent (c)
(i) Be forthright and public with your code of ethics F) Reforming Criminal Penalties G) Elements of Business Crime
1) Mens Rea, Scienter, or Criminal Intent (i) Can establish by showing their knowledge of actions and failure to object
2) Case 8.3 U.S. v. Ahmad (1996) (a) What is the difference between knowledge of the law and knowledge of the conduct? (b) Why is Ahmed’s testimony that he thought he was discharging water significant?
3) Actus Reus—The Act of the Crime (a) Intent alone is not a crime; the act must be committed (b) The required conduct described for each crime (c) Sometimes a failure to act may constitute a crime—for example, failure to pay taxes
H) Examples of Business Crimes 1) Theft
(a) Intent to take property (b) Actual taking property for permanent use (c) No authorization to take the property
2) Embezzlement (a) Intent to take property (b) Actual taking of property for use, temporary use is still crime (c) By person entrusted with property
3) Criminal Fraud (a) Obtaining money, goods, services, or property through false on misleading statements (b) Requires intent to defraud
4) RICO- Racketeer Influenced and Corrupt Organizations Act
(a) Pattern of racketeering activity- person who engages in dishonest and fraudulent business dealings
(b) Must have at least two consecutive violations (c) Offenses that qualify as predicate offenses include pornography, murder, kidnapping,
bribery, extortion, fraud, etc. 5) USA Patriot Act
(a) Business Crimes and the USA Patriot Act (i) Prior to 2001: Money Laundering Control Act (ii) Post to 2001: USA Patriot Act amended Money Laundering Control Act and Bank
Secrecy Act (iii) Cannot contract with terrorist groups or funnel cash to them for services (Chaquita
Consider) I) Procedural Rights for Business Criminals
1) Fourth Amendment Rights (a) Privacy amendment (b) Search warrant procedures
(i) Must be based on probable cause (ii) Must be issued by a disinterested magistrate (iii) If searches are done improperly, evidence is inadmissible at trial
(c) Exceptions to warrant requirement (i) Records are being destroyed (ii) “Plain view” exception
(d) Records in possession of a third party (i) Can recover them (ii) Third party cannot assert Fourth Amendment rights—must be record owners
(e) Case 8.4 Dow Chemical Co. v. United States (1986) (i) What significance is the fact that Dow’s plant could be seen from the air? (ii) What objections does the dissent raise to the decision?
2) Fifth Amendment Rights (a) Protection against self-incrimination (b) Given to natural persons- not to corporations
(i) Corporate officers can assert it to protect themselves but not corporate records (c) Miranda warnings
(i) Given when individual is in “custody” • Custody-inability to leave—not necessarily jail
(ii) Right to attorney; right to silence—notice of evidentiary use of statements (iii) Under recent attack, consider United States v. Dickerson, 166 F.3d 667 (4th Cir.
1999) (d) Due Process Protections of Fifth Amendment
(i) Warrant or warrantless arrest begins process • Warrant—you have committed crime and they look for you • Warrantless—you are arrested at the scene
(ii) Initial appearance • Required within short period (24 hours)
• Charges explained • Bail terms set; amount; or released on own recognizance
(iii) Preliminary hearing or grand jury • Hearing—information issued; defendant is present and can cross-examine
witnesses • Grand jury—hear indictment; secret proceedings
(iv) Arraignment • Plea is entered • Trial date is set
(v) Discovery: Mandatory disclosure of witnesses and evidence (vi) Pretrial conference: Try to settle some issues if possible (vii) Omnibus hearing: Challenge evidence admissibility (viii) Trial (ix) Appeal
J) Business Crime and International Business
I) Business Torts A) What is a Tort? Roots of Law and Commerce
1) Meaning (a) Latin meaning- Crooked, dubious, twisted (b) Text meaning- Some type of interference with someone or with someone’s property
that results in injury to persons or property (c) Slide meaning-Civil wrong that is an interference with someone’s person or property
such that injury results 2) Private wrong
(a) Injured party seeks remedy (b) Recovers damages from the one who commits the tort
3) Crime is a public wrong (a) Wrongdoer is prosecuted (b) Pays fine to government or is jailed to pay debt to society
4) Types (a) Intentional torts
(i) More than an accidental wrong (b) Tort of negligence
(i) Accidental harms that result from the failure to think through the consequences (ii) Still have liability but there are defenses
(c) Strict tort liability (i) Absolute standard of liability (ii) Used in product liability cases
B) The Intentional Torts 1) Defamation
(a) Untrue statement by one party that is published to a third party (i) Slander defamation is oral or spoken (ii) Libel defamation is written, and in some states broadcast
(b) Elements (i) Statement about a business’ or person’s reputation or honesty that is untrue (ii) Statement is directed at business and made with malice and intent to injure (iii) Publication- someone heard and understood the statement (iv) Damages- economic losses such as damage to reputation (v) In some cases, proof hatred
(c) Defenses (i) Truth is a complete defense (ii) Privileged speech types
• Absolute- Strong public interest supports protecting the speech regardless of whether it is true ⇒ Testimony under oath and legislative debate (so long as related to the
matter at hand) • Opinion
⇒ Analysis and op-ed articles; choice of words and thoughts on conduct or actions (calling someone a “deadbeat” who has, in fact, not paid his bills) are not defamation and enjoy First Amendment protection
• Qualified- privileges that provide limited liability for defamation ⇒ Media (so long as item published without malice, which is knowing
information is false or with reckless disregard for whether it is true or false) (d) Elements of Contract interference (e) Third party to the contract is injured by breach of contract induced by the third party (f) False Imprisonment
(i) Custody of someone else for any period of time against their will (ii) Need not establish physical damages; just the fact that they are detained establishes
sufficient damages (iii) Defense of shopkeeper’s privilege
• Can detain for reasonable time • Must have basis for detaining the individual
(g) Intentional infliction of emotional distress (i) Liability for conduct that exceeds all bounds of decency (ii) Difficult for plaintiff to establish emotional distress (iii) Has been used by debtors against collectors
(h) Invasion of privacy (i) Public disclosure of private facts (ii) Appropriation of another’s name for commercial advantage (iii) Intrusion into private affairs of another (iv) HIPAA protects health/patient privacy
(i) Appropriation (i) Unauthorized use of someone’s name, voice, image, or likeness for commercial
advantage (ii) Even if manner of use is accurate, it is a tort because of the use without
authorization C) Negligence
1) Element One- Duty (a) All persons are expected to behave as ordinary and reasonably prudent persons do
(i) Standard of the law is not always used (ii) Example: speed limit of 45 is not appropriate inn ice and snow
2) Element Two- Breach of Duty (a) Failure to comply with established standard of conduct
(i) Often connected with element one as courts struggle to determine whether a duty even exists
(b) Premises liability tips (i) Good lighting (ii) Access to public phones (iii) Security patrols (iv) Locked gates to parking lots; gate or security access (v) Escorts provided for customers and employees to their vehicles after closing hours
(vi) Camera security (vii) Assigned parking spaces for tenants and employees (viii) Warning signs to use caution and be alert
3) Element Three- Causation (a) Breach of duty caused the plaintiff’s injuries (b) But/for causation test (c) Restricted by the zone of danger rule = Duty
4) Element Four- Proximate Cause (Foreseeability) (a) Some courts hold the cut-off line must be drawn between the “but/for” causation and
events contributing to plaintiff’s injuries 5) Element Five- Damages
(a) Medical bills (b) Lost wages (c) Pain and suffering (d) Loss of consortium (as between spouses)
6) Defenses to Negligence (i) Contributory negligence-Plaintiff is also negligent
• Operates as a complete bar to recovery (ii) Comparative Negligence- Compare acts of plaintiff and defendant and access blame
for accident • Reduces plaintiff’s recovery by amount of fault
(iii) Assumption of risk- Plaintiff knew of inherent risk and went forward anyway 7) Tort Reform
(a) Current Attempts at Reform (i) Limits on verdicts (ii) Standards for recovery
(b) Limit on Punitives (i) Eighth Amendment excessive punitive damages is cruel and unusual punishment (ii) Due process violated with excessive punitives (iii) Exxon case and other statutory limitations
(c) Strict liability-Absolute liability for injury (i) Can result from violation of statute (improper disposal of toxic waste) (ii) Public Policy Reason- Manufactures take appropriate steps to design and
manufacture products II) Cyberlaw, Social Media, and Privacy
A) Employers, Employees, and Cyberlaw 1) Employers are held accountable for electronic content 2) Criminal cases are built from e-mails 3) Harassment cases are built from e-mails 4) Electronic Communications Privacy Act
(a) Prohibits the unauthorized access of “live” communications, as when someone uses a listening device to intercept a telephone coversation
5) Stored Communications Act
(a) Prohibits the unauthorized interception of electronic communications, generally meaning stored communication, not ongoing communication such as test messaging, tweeting, and instant messaging.
(b) Covers e-mails 6) Employer’s right of access to e-mails
(a) Disclosure to employees (b) Sign-off by employees (c) Privacy disclaimers do not apply
7) Employer Screening via Google (a) Can conduct pre-employment monitoring (b) Must use with all applicants, not selectively
8) Employer Requests for “Friending” (a) Some states prohibit this requirement as a condition of employment (b) Some states have laws pending (c) Employer should disclose as a condition of employment
9) Admissions Office Screening of Applicants—Some state laws pending or passed 10) Employee misuse of computers
(a) Giving away your password (b) Using computers for personal reasons
B) User Issues in Cyberspace 1) Use of Information
(a) Follows FTC guidelines on all uses of consumer information, regardless of how obtained 2) Disclosure of user identity by ISPs 3) Cloud issues
(a) Liability and protections (b) Scanning of information stored there
4) Cookies and privacy (a) Consent issues
5) Cyberbullying, cyberstalking, and privacy (a) State and federal regulation (b) Statutory definitions of conduct for criminal prosecution
6) Statutory privacy protections (a) Privacy Act of 1974-Applies to government use of information (NSA, IRS, and Social
Security) (b) Computer Fraud and Abuse Act- Protects financial information (c) Children’s Online Privacy Protection Act- Regulates sites directed at children
7) Posted information that is dangerous (a) Ads that encourage criminal activity (b) Dangerous individuals make connections through sites (c) Responsibility of sites to warn, but not required to screen
C) Appropriation and Other Forms of Unfair Competition in Cyberspace 1) Cannot use likeness or image online for commercial advantage 2) Concealed identity issues
(a) “sock-puppeting”
3) Economic Espionage Act 4) Copyright Issues
(a) Digitial Millennium Copyright Act 5) No electronic theft act 6) CAN-SPAM
D) Contract Issues in Cyberspace 1) Formation
(a) Electronic signatures are recognized under Electronic Signatures in Global and National Commerce Act (E-sign)
(b) Uniform Electronic Transactions Act (UETA) and Uniform Computer Transaction Act (UCITA)
2) Same standards for misrepresentation and fraud apply 3) Tax Issues
(a) Internet access is not taxed (b) Sales taxes are collected on internet sales
III) Product Advertising and Liability A) Development of Product Liability
1) Initially no liability for the seller (a) Courts followed a theory of Caveat Emptor (‘Let the buyer beware’)
2) Caveat Emptor Removed in Section 402A of the Restatement of Torts (a) Law has swung from no liability to almost per se liability
B) Advertising as a Contract Basis for Product Liability 1) Express Warranties
(a) Creation- Affirmation of fact or promise of performance (samples, model, descriptions) (b) Restriction: Must be part of the basis of the bargain (c) Disclaimer: Cannot make a disclaimer inconsistent with an express warranty
2) Federal Regulations (a) Federal Trade Commission Act Authorizes FTC as Enforcement Agency
(i) Passed in 1914 (ii) Federal Trade Commission given broad authority (iii) Requires regulation of “unfair and deceptive trade practices”
(b) FTC Broadened by Wheeler-Lea Act of 1938 (i) “Is public deceived?” standard (ii) Not limited to adverse impact on competition
(c) FTC Improvements Act of 1980 (i) Put some restrictions on FTC regulation
(d) Content Control and Accuracy (i) Express warranties like “gluten free” or “no trans fats”
(e) Performance claims: Advertiser must be able to prove claim (i) Corrective advertising: FTC has required corrective advertising when
unsubstantiated claims have been made (f) Celebrity Endorsements
(i) Celebrity must have used the product (ii) If the celebrity has not used the product, the source of claims must be given
(g) Bait and Switch (i) Prohibits advertising cheaper product and then getting customers to buy the more
expensive product (h) Celebrity Tweet Guidelines
(i) To thine own self be true- whatever the celebrity says must be honest opinion (ii) Time will tell- endorsement can be used only as long as the celebrity uses the
product and believes in the product (iii) Celebrity cannot ignore obvious facts that indicate claims about the product are not
true (iv) Companies must disclose that the celebrity is being paid for the Tweets- Tweets
must contain information about celebrity compensation (i) Product Comparisons
(i) FTTC took a laissez-faire approach during the 1980s (ii) It encouraged comparisons (iii) Congress amended trademark law in 1989 to allow competitors to bring suit for
deceptive statements about products in competitor’s ads (j) FTC Remedies: Consent Decree is a Negotiated Settlement (k) Ad Regulation by FDA
(i) FDA is regulating more as more prescription medications are directly advertised (l) State Regulations: Professional Ads
C) Contract Product Liability Theories: Implied Warranties 1) Implied Warranty of Merchantability (§2-314)
(a) Given in every sale of goods by a merchant (b) Goods are fit for ordinary purposes (c) Average quality with adequate packaging
2) Implied Warranty of Fitness for a Particular Purpose (§2-315) (a) Requirements
(i) Seller has particular skill or judgment (ii) Buyer is relying on that skill or judgment (iii) Seller knows or has reason to know of reliance (iv) Seller makes recommendation to buyer
3) Eliminating Warranties by Disclaimers (a) Can disclaims both implied warranties by using “with all faults,” “as they stand,” “as is” (b) Can also disclaim by using the names of both warranties in clear language
4) Privity Standards (§2-318) (a) Privity at buyer level—three code alternatives
(i) Alternative A—buyer, members of household, and guests (ii) Alternative B—any natural person expected to use goods (iii) Alternative C—extends to any person expected to use the goods
D) Strict Tort Liability: Product Liability Under Section 402A 1) Strict Tort Liability (§402A)
(a) Defendant had duty to manufacture a reasonably safe product/was in the business of selling or manufacturing product
(b) That duty was breached
(c) Breach of duty caused plaintiff’s injury (product reached plaintiff in same condition) (d) Foreseeable that defect would cause injury (e) Plaintiff has property or physical damages (f) Unreasonably Dangerous Defective Condition
(i) Design defect (ii) Improper warnings or insufficient instructions (iii) Negligent packaging, manufacturing, or handling
(g) Strict Product Liability (i) Manufacturing, handling, or processing error
• Product must be properly manufactured, handled and packaged to avoid liability (ii) Reaching the Buyer in the Same Condition
• No substantial change in product design that caused malfunction or injury • Product not tampered with during distribution
(iii) Requires for a “Seller” • Need not be a merchant • Need not be “in the business” of selling that product • Example: peanuts sold at games by a baseball club • In some cases recovery has been allowed against groups of sellers
(h) Negligence- Product liability suits based on negligence (i) Same elements as strict tort liabilities plus prior knowledge of defective condition (ii) Punitive damages if plaintiff can show manufacturer/seller knew of defect
(i) Negligence: Privity (i) Does not require privity of contract (ii) Was injury to that party foreseeable (iii) Should anticipate household use, presence of children, and so on
E) Defenses to product liability torts-32 1) Misuse or abnormal use: Exceeding weight limitations, using around flames 2) Contributory negligence: Complete defense that overlaps with misuse 3) Comparative Negligence: Reduces the amount of recovery 4) Assumption of Risk: Plaintiff aware of danger, but does it anyway
F) Product liability reform 1) Movement toward reform
(a) Verdicts and costs affect international competitiveness (b) Congress has made efforts to make laws uniform (c) Business need to focus on prevention (d) Restatement (Third) of torts
G) Federal standards for product liability 1) Consumer product safety commission
(a) Federal Penalties of $2,000/violation (b) Up to $500,000 maximum (willful violations carry $50,000 and/or 1 year) (c) Consumer product safety improvements act- covers secondary sales (lead toys)
2) Uniform product liability law (a) The department of commerce has tried to get states to adopt uniform product liability
laws
H) International issues in product liability 1) EU trying to gain uniformity
(a) “State-of-the-art” defense: product as good as it can be upon release (b) International standards organization’s 9000 guidelines for quality assurance
Chapter 15 Products: Business Intellectual Property
I) Intangible Property Rights A) Examples
1) Patents 2) Copyrights 3) Trademarks 4) Trade Names 5) Trade Dress
II) Patents A) 20 Years From Filing/14 Years for Design Patent B) Exclusive Rights to Use and Profits C) Must Be Non-obvious, Novel, and Useful D) Using the Idea Without Consent Constitutes Infringement E) Remedies for Patent Infringement
1) Case 15.1eBay, Inc. v. MercExchange, LLC (2006) (a) The issue of a permanent injunction (b) How do we balance interest in protecting property rights without depriving the world of
new developments and technologies? III) Copyrights
A) Protect Authors of Books, Magazine Articles, Plays, Movies, Songs, Dances, Photographs B) Protects Against Vicarious Infringement
1) Third parties who facilitate infringement C) Case 15.2Sony BMG Music Entertainment v. Tenebaum(2011)
1) What happens if you are warned against facilitating infringement or are infringing and don’t stop?
2) What is the school’s liability for use of its server? D) Runs For Lifetime of Author Plus Seventy Years E) 120 Years From Creation or 95 Years From Publication, Whichever is Shorter, if Company Holds
Rights F) Federal Statutes
1) Sonny Bono Copyright Extension Act 2) Digital Millennium Copyright Act 3) Computer Software Copyright Act of 1980
G) Works Automatically Copyrighted But No Suits Can be Filed Until the Copyright Office is Given a Copy
H) Damages Include Profits, Costs, Attorney’s Fees I) Fair Use is Permitted—Short Quotes; Research Copies, Criticism, Commentary and Parody
J) Is Parody Fair Use? 1) Case 15.3 Campbell v. Acuff-Rose Music, Inc. (1994)
(a) What is the significance of 2 Live Crew’s commercial gain from the parody? (b) Do you agree with the Court’s decision? (c) Was it a fair use?
IV) Trademarks A) Words, Pictures, Designs, or Symbols Used to Identify a Product B) Lanham Act of 1946 and Subsequent Amendments Provide Protection C) Must Be Unique and Non-generic D) Holder Must Maintain Unique Nature E) Recent Changes Allow Registration Prior to Use of the Trademark F) Trademark Dilution
1) Federal Trademark Dilution Act (an Amendment to the Lanham Act) (a) Passed in 1996 (b) Protects against dilution of trademarks and includes both profit and non-profit uses
2) Case 15.4 Moseley, dbaVictor’s Little Secret, v. V Secret Catalogue,Inc.(2003) (a) Were the two names confusing? (b) What connection do the two companies have? (c) What does VS have to prove to prevail?
G) Trade Dress 1) Colors, Shapes, and Designs Associated With a Product
(a) Allowing their use is likely to create confusion (b) Consumer surveys are used to establish whether consumers will be misled
2) Penalties for Infringement (a) Civil suits (b) Criminal penalties
H) Infringement and the Web 1) Cyber Infringement
(a) Federal Trademark Dilution Act (b) Applies to Internet (c) Self-enforcing
I) Intellectual Property Rights
1)
V) Trade Secrets
A) Customer Lists, Customer Information, Data Processed a Certain Way B) Uniform Trade Secrets Act
1) Protects employers from having former employees take trade secrets to new employer C) Industrial Espionage Act
1) Makes it a federal crime to transfer trade secrets to another VI) International I.P. Issues
A) Patent Protection 1) Some countries require opposition proceedings for defense of the patent 2) Some countries impose working requirements
B) Trademark Protection 1) Name, symbol, mark, letter, word or figure 2) Must be registered in United States and other countries for full protection 3) Protects the goodwill of the firm 4) Common law countries establish trademark through establishing use and recognition 5) Now in United States you can register a trademark before you begin using it 6) In 1996, EU opened a centralized office for Trademark registration for member states
(a) Provides a one-step registration for all EU countries 7) 1891 Madrid Agreement provides for international registry of trademarks
(a) Effective in all member countries for five years 8) 1929 Pan American Convention provides protection for registered trademarks in all member
countries
9) Knock-off goods: goods carrying trademarks that are not produced by the trademark holder 10) Gray market goods: actual trademark goods that are sold without authorization of
trademark holder C) Copyrights
1) Berne convention membership: registration in one is registration in all 2) Will be part of WIPO 3) Simultaneous publication in member country is protected 4) International standards vary
(a) China’s software piracy (b) China is on trade watch list because so much software is copied
VII) Enforcing Business Rights A) Product Disparagement: Defamation for Products/Businesses
1) Elements (a) Statement about a business’ reputation, honesty, or integrity that is untrue (b) Publication (c) Statement is directed at business with intent to injure (d) Damages
B) Case 15.5 Bose Corporation v. Consumers Union of the United States, Inc. (1984) 1) Why is Malice an important part of the case? 2) What classes of speech are excepted from First Amendment protection?
C) Palming Off 1) Company sells product by leading buyers to believe the product is something else
(a) Examples: Fake Rolex watches; Cabbage Patch dolls 2) Plaintiff must establish that confusion is likely
D) Misappropriation 1) Protects business trade secrets such as the customer list 2) Some theft, espionage or bribery must be used to obtain secret information
Chapter 16 Business Competition: Antitrust
I) Common Law Protections A) Covenants Not to Compete
1) Initially were void B) Gradually Became Acceptable
1) If necessary to protect business 2) If reasonable as to time 3) If reasonable as to geographic scope
C) Negotiating Valid Covenants Not To Compete 1) State the reason for the covenant
(a) Mix of tenants (b) Goodwill preservation (c) Protection of proprietary information
2) Be sure the covenant is reasonable (a) Time (b) Geographic scope
3) Make the covenant part of the sale, lease, or employment agreement 4) Have the parties initial the noncompete clause 5) Have legal representation
II) Modern Trade Restraints A) Case 16.1Mark-It Place Foods, Inc. v. New Plan Excel Realty Trust (2004)
1) Discuss the difference between intra-and inter-shopping center competition? 2) Why is the court willing to allow restrictions in the shopping center?
B) Federal Antitrust Statutes
1)
C) A Look At Markets, Competition, and Antitrust Laws
1)
III) Horizontal Restraints A) Designed to Lessen Competition Among a Firm’s Competitors
1) Examples (a) Price Fixing (b) Group boycotts/refusals to deal (c) Joint Ventures/Mergers/Monopolization
B) Sherman Act Restraints—Monopolization 1) Section 2 prohibits monopolization 2) Some monopolies are permitted
(a) Newspapers—town cannot support more than one business (b) Monopoly gained by nature of product—superior skill, foresight, and industry
3) Monopoly power (a) Power to control prices or exclude competition in the relevant market (b) Examine firm’s market power (c) Examine relevant markets
(i) Geographic market (ii) Product Market
4) Elements of monopolization (a) Purposeful act required (b) Monopoly has resulted from something other than superior skill, foresight, and industry (c) Predatory pricing—pricing below cost for a temporary period to drive others out (d) Exclusionary conduct—prevents competitor from entering the market
5) Attempts to monopolization (a) Section 2 of Sherman Act may be violated even though no monopoly exists
C) Sherman Act Restraints—Price Fixing 1) Collaboration among competitors for the purpose of raising, depressing, fixing, pegging, or
stabilizing the price of a commodity 2) Per se violation
(a) Conduct is unreasonable and illegal (b) No defenses for such action
3) Minimum prices—discourages competition 4) Maximum prices—stabilizes prices but see State Oil Co. v. Khan, 522 U.S. 3 (1997) 5) List prices—exchange of price information hurts market 6) Production limitations—controls supply and controls price 7) Limitations on competitive bidding 8) Credit arrangements—universal agreement on charges is price-fixing
D) Division of Markets 1) Per se violation; lessens competition in that market
E) Group Boycotts and Refusals to Deal 1) May have the best intentions in the world but boycotts are still illegal
(a) Example: Garment boycotts on knock-offs F) Free Speech and Anticompetitive Behavior
1) Noerr-Pennington doctrine (a) Competitors can work together for governmental action (b) Lobbying and political efforts (c) Cannot restrain this activity—First Amendment protection
2) Local Government Antitrust Act (a) Exempts state and local government from antitrust suits (b) Must have state policy to allow suit
G) Subtle Anticompetitive Behavior: Interlocking Directorates 1) Prohibits director of firm with $1 million or more in capital from being a director for a
competitor 2) Lessens likelihood of exchange of anti-competitive information
H) Merging Competitors and the Effect on Competition 1) Presumptively illegal to have horizontal mergers 2) Courts look at market share to determine true illegality 3) Today Justice Department follows the Herfindahl-Hirschman Index to evaluate market
concentration IV) Vertical Restraints
A) Covers Parties in Chain of Distribution 1) Manufacturer 2) Wholesaler 3) Retailer
B) Resale Price Maintenance 1) Attempt by manufacturer to control price retailers charge for the product 2) May be a violation of Section 1 3) Applies to minimum and maximum prices as well
C) Case 16.2State Oil v. Khan (1997) 1) Is vertical price fixing a per se violation? 2) What does the court say about long-standing precedent and stare decisis?
D) Case 16.3Leegin Creative Leather Products, Inc. v. PSKS, Inc. (2007) 1) What happened to retailers who discounted the products? 2) Why does the court see customer service as a part of competition? 3) Does the court see services as a means of justifying minimum prices?
E) Monopsony 1) A monopsony is price control by the buyer 2) In Weyerhaeuser v. Ross-Simons, the court held that a buyer was not artificially driving up
suppler prices through its large orders –its manufacturing process was superior and it needed more supplies just because it could process more
F) Sole Outlets and Exclusive Distributorships 1) Manufacturer appoints a distributor or retailer as the exclusive outlet 2) Subject to a rule of reason analysis: Not automatically illegal; violators can present
justification 3) Factors examined in rule of reason analysis
(a) Manufacturers can pick and choose dealers (b) There must be inter-brand competition (c) If there is little inter-brand competition, then intra-brand competition is required
G) Customer and Territorial Restrictions 1) Restricting to whom and where a dealer can sell 2) Subject to a rule of reason analysis
(a) Consider amount of inter-brand competition (b) Consider market power of manufacturer
H) Tying Arrangements 1) Sales arrangements that require buyers to buy an additional product in order to get the
product they want (a) Tying product = desired product (b) Tied product = additional product
2) Generally illegal per se violation (Clayton Act Section 3) (a) Clayton Act—covers goods (b) Sherman Act—Section 1 covers services, real property, and intangibles (c) Violation depends on market and power—is tying product unique?
3) Tying Arrangements: Defenses (a) New industry defense: needed to protect quality of tying product (b) Quality control for protection of goodwill specifications are so detailed, could not be
supplied by anyone else 4) Case 16.4 Illinois Tool Works, Inc. v. Independent Ink, Inc. (2006)
(a) Is the arrangement illegal per se? (b) Is proof of market power required for typing? (c) Is there a problem with tying unsuccessful products with successful ones?
I) Price Discrimination 1) Prohibited by Robinson-Patman Act 2) Selling goods at prices that have different ratios to the marginal cost of producing them 3) Required elements (if established, both buyer and seller are guilty)
(a) Interstate commerce (b) Price discrimination between purchasers (c) Commodities of like grade and quality (d) Lessening or injuring competition
4) Price Discrimination: Defenses (a) Legitimate cost differences (b) Quantity discounts OK (if there is an actual savings) (c) Market changes, inflation, material costs (d) Meeting the competition
J) Vertical Mergers: Mergers Between Firms With a Buyer-Seller Relationship 1) Illegality Depends Upon
(a) Geographic and product markets (b) Whether entry of competitors would be difficult
2) Failing Firm Defense (a) No other offers to buy (b) Chapter 11 bankruptcy would not help
3) States Now Have Authority to Step in and Regulate Mergers if Feds Do Not V) Antitrust Remedies
A)
VI) Antitrust Modernization Commission
A) Released Its Findings in 2007 After Being Created in 2002 B) Recommendations Tended to Favor Status Quo C) Courts Need to Refine on a Case-by-Case Basis D) Courts Should Consider the Economic Issues
VII) International Competition and the World Market A) –United States allows joint ventures in international markets that would not be permitted in the
United States B) –Antitrust laws most stringent in the United States C) –Foreign companies doing business in the United States are still subject to U.S. Antitrust laws
Chapter 17 Management of Employee Conduct: Agency I) Nature of Agency: Agency Terminology
A) Nature of Agency: Agency Relationship is One in Which One Party Agrees to Act on Behalf of Another 1) Examples: sales clerks, real estate agents, sports agents
B) Principal: The Party for Whom the Agent Acts C) Agent: Party Who Acts for Another D) Master/Servant
1) Relationship in which the master/principal exercises a great deal of control over the servant/ agent. Most common form is employer/employee relationship
2) Factors that control whether this type of relationship exists (a) Level of supervision (b) Level of control (c) Nature of agent’s work (d) Regularity of hours and pay (e) Length of employment
E) Independent Contractor 1) Hired to perform a task but is not directly supervised 2) Example: Lawyer
F) Agency Law: Restatement of Agency 1) Common law followed by most courts
G) Three Parts to Agency Law 1) Creating the agency relationship 2) Relationship between principal and agent 3) Relationships of agent and principal to third parties
II) Creating the Agency Relationship: When the Principal Hires Someone A) Express Authority Agency
1) Created by principal stating or writing that agency exists and the authority thereof 2) Requires oral or written agreement -must be in writing if required by statute of frauds
(a) Example: Agency contract is longer than one year B) Principal Must Have Legal Capacity
1) Age and mental capacity C) Capacity: Unincorporated Associations Do Not Have Capacity
1) Have no legal existence 2) Members will be liable since there is no principal
D) The Capacity of Agent Becomes an Issue When it Concerns 1) Authority to enter contracts 2) Potential liability to third parties
E) Signing As An Agent 1) _____________________
(Your Group Name) _____________________ By: (Your Name) _____________________ (Your Title) The Phoenix Association of Managers By: Marianne Jennings Treasurer
F) Implied Authority: The Extension of Express Authority By Custom G) Apparent Authority
1) Arises from the way agents present themselves to third parties 2) Also called agency by estoppel or ostensible authority
(a) Examples: Failure to notify of an agent’s retirement, allowing bank to use your name for another’s loan
3) Case 17.1Cove Management v. AFLAC, Inc. (2013) (a) What was the apparent authority Galgano had? (b) What representations were made to Cove Management? (c) Is this apparent or actual authority?
H) Agency by Ratification 1) Principal reviews contract and decides to honor it even though agent had no authority to
enter into it III) Principal-Agent Relationship
A) Agent’s Responsibilities 1) Agent acts in the principal’s best interests
(a) Loyalty, trust, care, obedience 2) Loyalty
(a) Agent can’t represent both sides (b) Can’t make a profit at principal’s expense
B) Case 17.2Lucini Italia Co. v. Grappolini (2003) 1) How was the agent playing both ends of the deal here? 2) What should the U.S. principal have done to catch the problem earlier? 3) Comment on the ethics of the agent
C) Duty of Loyalty 1) Post-Employment Agreements 2) Covenants Not to Compete 3) Must Be Necessary (Purpose for Restricting Employee’s Post-Termination Work) 4) Must Be Reasonable in Time and Geographic Scope 5) Must Be Voluntary
D) Noncompete Agreements 1) Not Given Time to Negotiate 2) Non-compete Terms are Not Part of Original Agreement 3) No Consideration to Support Terms
4) No Right to Discuss With Their Own Counsel 5) California Issues –Loathe to Enforce
E) Rights and Duties 1) Agent: Obedience
(a) Follows principal’s instructions (b) Need not do anything illegal
2) Agent: Duty of Care (a) Give time and effort (b) Follow through
3) Principal: Duties and Rights (a) Duty to pay –Except gratuitous agency (b) Duty to reimburse
IV) Liability of Principals for Agents’ Conduct: The Relationship with Third Parties A) Principal’s Liability to Third Parties
1) Contract liability and issues of disclosure (a) Principal has full liability for authorized acts of agent and those done with apparent
authority (b) Disclosed principal—principal is fully liable; agent is not unless the agent had no
authority (c) Partially disclosed principal—agent indicates there is a principal but does not tell who it
is; third party can hold either liable (d) Undisclosed principal—agent does not disclose there is a principal; agent stands alone
unless principal comes forward (e) Contract Liability of Disclosed Principal
(i)
(f) Contract Liability of Undisclosed or Partially Disclosed Principal (i)
2) Principal’s Liability
(a) Liability of Principals for Torts (i) Must have master-servant relationship, not independent contractor (ii) Liable for torts of servants in scope of employment
• Scope = doing master’s work • Doctrine of respondeat superior-let the master answer • Not liable for torts committed while on frolic
(b) Scope of Employment (i) Case 17.3 Faverty v. McDonald’s Restaurant of Oregon, Inc.(1995)
• Why would a restaurant association have an interest in the outcome of the case?
(ii) Case 17.4 Lange v. National Biscuit Co.(1973) • What test does the court give for determining scope of employment?
(c) Non-Scope Issues (i) Liability if There was Negligent Hiring
• Failure to screen • Failure to do background check
(ii) Liability if There was Negligent Retention • Failure to take action when employee engages in dangerous behaviors or takes
risk • Knowledge + inaction = Liability
(d) Principles are Generally Not Liable for the Torts of Independent Contractors (e) Exceptions
(i) Inherently dangerous activities (ii) Negligent hiring of independent contractor (iii) Principal provided specifications for project or job
V) Agency Termination A) Due To
1) Definite duration of time 2) Agent quits/is fired 3) Principal dies/is incapacitated 4) Need to give public or constructive notice (trade publication) 5) Actual notice (letters) 6) Without notice, agent will have lingering apparent authority
VI) Termination of At-Will A) Has No Definite Ending Date B) Usually There is No Formal Written Contract C) Used to be They Could be Fired at Any Time D) The Do’s and Don’ts of Firing At-Will Employees
1) Do: (a) Conduct regular reviews of employees, using objective, uniform measures of
performance (b) Give clear, business-related reasons for any dismissal, backed by written documentation
when possible (c) Seek legal waivers from older workers who agree to leave under an early-retirement
plan, and make sure they understand the waiver terms in advance (d) Follow any written company guidelines for termination, or be prepared to show in court
why they're not binding in any particular instance 2) Don't:
(a) Make oral promises of job security to employees who might later be laid off (i) Danger: Breach of contract suit
(b) Put pressure on an employee to resign in order to avoid getting fired (i) Danger: Coercion suit
(c) Make derogatory remarks about any dismissed worker, even if asked for a reference by a prospective employer (i) Danger: Defamation suit
(d) Offer a fired employee a face-saving reason for the dismissal that's unrelated to poor performance (i) Danger: Wrongful discharge suit
E) The Implied Contract 1) In some states personnel manuals will be a contract if employees rely on its procedures 2) Case 17.5Dillon v. Champion Jogbra, Inc.(2002)
(a) Were there representations about her continuing employment? (b) What should the company have done differently?
F) Public Policy 1) The Public Policy Protection—Whistleblowers
(a) Whistle Blower Protection Act of 1978 (b) False Claims Act
2) Protection for Whistleblowers—The Anti-Retaliation Statutes (a) Passed in many states and by federal agencies
(i) Prohibit firing, demotion, reprimands, and pay cuts of employees who report conduct of their employers
3) Case 17.6 Tides v. The Boeing Company (2011) (a) Does this case create an affirmative legal duty for helping those in danger? (b) Can an employee in Washington be fired for assisting a citizen who is a crime victim?
4) Protection for Whistleblowers—The Anti-Retaliation Statutes (a) Federal level—Energy Reorganization Act affords protection for employees involved in
nuclear work (b) Whistleblowing for both employers and employees (c) Many companies have created a peer review process for termination and other actions
against employees 5) WhistleblowingTips
(a) Encourage whistleblowing. Publicize your hot line for disclosing illegal activity and encourage employees to come forward. Eliminate employee fears by directing the investigation of complaints to someone outside a reporting employee's chain of command. Be certain that all complaints are investigated and that investigations are done promptly. Whenever possible, publicize the investigation and its outcome to encourage other employees to come forward.
(b) For the employee, the following suggestions should be followed: (i) Consult family and close friends for perspective and support. (ii) Work within your system and through its chain of command before going public. Go
through the various layers of management, even to the board of directors. (iii) Voice/write your concerns; don't make accusations. (iv) Maintain records of your internal contacts and their objections. (v) Find other employees who also know about this potentially volatile situation. (vi) Keep a record of your information and carefully document your complaints.
Eliminate speculation, personal opinion, and anger. Be objective. (vii) Maintain copies of records. (viii) Find support groups in your community (and nationwide, if necessary).
VII) International Law A) Pitfalls of Complex Global Organizations
1) Complex interrelationships often evade the law (a) Example: BCCI and its complex structure
2) Disclosure of interrelationships becomes important for conflicts, compliance
Chapter 18 Governance and Structure: Forms of Doing
I) Comparison of Business Organizations A)
B)
C)
II) Sole Proprietorships
A) Formation 1) Done by an individual 2) May have a fictitious name
(a) Example: Ralph Jones d/b/a Spuds Brewery 3) No formal requirements for formation 4) May have to publish d/b/a name
B) Sources of Funding 1) Loans 2) Government help
C) Liability: Full Personal Liability of Owner D) Tax Consequences
1) Owner claims all income and losses 2) No separate filing requirement
E) Management and Control 1) All assets with one person
F) Transferability of Interest 1) Business can be sold—property, inventory, and goodwill 2) Owner will usually sign a non-compete agreement
III) Partnerships A) Formation
1) Governed by the Uniform Partnership Act (UPA) (a) Adopted in 49 states (b) In absence of a partnership agreement, UPA controls
(c) Revised Uniform Partnership Act (1994)—adopted in nine states 2) Definition
(a) An association of two or more persons to carry on as co-owners, a business for profit (b) Can include corporations and natural persons
3) Formation (a) Voluntary formation: By agreement
(i) Draw up articles of partnership (b) Involuntary formation→
4) Information in Articles of Partnership (a)
5) Involuntary Formation: By Implication
(a) Sharing of profits (b) Constitutes prima facie evidence that a partnership exists (c) Exceptions—rent, wages, annuity to widow or estate, payment for goodwill
6) Case 18.1Byker v. Mannes(2002) (a) Was there a partnership created? (b) When did the relationship legally end? (c) Is Mannes liable to Byker?
7) Involuntary Formation: Partnership by Estoppel (or Ostensible Partner) (a) Results when someone allows the inference to be made that he/she is a partner (b) Allowing name to be used to get a loan
B) Partnership Funding 1) Sources of Funding
(a) Capital contributions of partners
(b) Loans by partners (c) Outside loans
C) Partnership Liability 1) Mutual Principals and Agents
(a) Partnership assets reachable by partnership creditors (b) Personal assets reachable by partnership creditors when partnership assets are
exhausted 2) Case 18.2 Vrabel v. Acri(1952)
(a) Why wasn’t Mr. Acri a defendant? (b) Is Ms. Acri liable for the injuries?
D) Tax Consequences in Partnerships 1) Tax Issues
(a) Partnership does not pay taxes (b) Partnership files informational return (c) Partners report income and losses on their returns
2) Partnership Control (a) Unless otherwise agreed, each has equal management authority (b) May delegate day-to-day authority to one partner (c) Each partner is mutual principal and agent of the others
E) Partnership Management 1) Borrowing—Done Routinely In Most Partnerships 2) Unanimous Consent Required for Confession of Judgment, Selling Goodwill, and Admission
of Another Partner 3) No Compensation for Work Unless Agreed 4) Fiduciary Duties
(a) Mutual principals and agents (b) Each is to act in the best interests of the partnership
5) Partnership Property (a) Property contributed to the firm or purchased with partnership assets (b) Own property as tenants in partnership
6) Transfers of Partners’ Interest (a) Partner’s interest is personal property (b) Can be pledged to creditors and transferred (c) Transferee does not become a partner
F) Transfers of Partners’ Interest 1) Admission of new partner requires unanimous consent 2) Transferring partner is not relieved of liability 3) Some partnership agreements require partners to offer it first to remaining partners
G) Partnership Dissolution 1) One Partner No Longer Associated With the Partnership
(a) Examples: Retirement, death 2) Can Just Be a Change in Structure or Can Proceed to Termination
3) Dissolution Methods (a) By agreement (b) By operation of law: Death of a partner, bankruptcy of partnership or partner (c) Court order
4) Termination (a) Assets are liquidated (b) Distribute in this order: outside creditors; partners’ advances (loans); capital
contributions; profits IV) Limited Partnerships
A) Formation 1) Governed by Uniform Limited Partnership Act (ULPA) 2) Revised Uniform Limited Partnership Act (RULPA)
(a) Recent revision adopted in nearly all states (b) Use ULPA or RULPA when no agreement (c) RULPA addresses the needs of the larger limited partnership
3) Structure (a) Must have at least one general partner (b) Must have at least one limited partner (c) Liability of limited partner is limited to capital contribution (d) Liability of general partner is unlimited
4) Formation (a) Must meet statutory requirements; if not met a general partnership may be created (b) Must File Certificate of Limited Partnership (see text for list of requirements and note
differences between ULPA and RULPA) (i) RULPA is much briefer
(c) Corrections Can Be Filed By Limited Partners (d) Formation –the RULPA Requires the Following Information for Formation of a Limited
Partnership (i) Name -must contain the words “Limited Partnership” (ii) Address of principal place of business (iii) Name and address of statutory agent for services process (iv) Business address of general partner (v) Latest date for dissolution of partnership
B) Sources of Funding 1) Limited partners provide most of the financing 2) Limited partners can contribute services under RULPA 3) Loans are used—called advances when made by partners 4) Under RULPA, limited partners can use services already given as a contribution
C) Liability 1) Limited Partners Have Limited Liability But Cannot Participate in Management 2) Under RULPA, Can Do the Following and Still Retain Limited Liability Status
(a) Can be an employee (b) Can consult with and advise the general partner (c) Can act as a surety guarantor for the limited partnership (d) Can vote on amendments, dissolution, sale of property, and debt assumptions
D) Tax Consequences 1) Taxed the Same as General Partnerships 2) Partners Report Profits and Losses on Individual Returns 3) Limited Partners Get Direct Tax Benefits With Limited Liability 4) IRS Scrutinizes to be Certain it is a Partnership and Not a Corporation
E) Management and Control 1) Partner Relationships: Management is Responsibility of General Partner 2) Profits and Distributions
(a) Authority belongs to general partner to make decisions here (b) Profits and losses are allocated on the basis of capital contributions (c) RULPA requires agreement for splitting profits and losses to be in writing
3) Partner Authority (a) General partner has same authority as in general partnership (b) Can restrict by agreement (c) Consent of limited partners required for
(i) Admitting a new general partner (ii) Admitting a new limited partner (can give authority in the agreement) (iii) Extraordinary transactions (selling assets)
(d) Limited partners have right to inspect books and records F) Transferability
1) ULPA Allows Transfer of Interests (a) May have significant restrictions on transfer to prevent liability under federal securities
laws (b) The more easily an interest can be transferred, the more likely the IRS is to label it a
corporation (c) Transfer of a limited partner’s interest does not dissolve the partnership
2) Under RULPA, Assigning Limited Partner Can Be Given the Authority to Make the Assignee a Limited Partner
G) Dissolution 1) RULPA Provides for the Following Means
(a) Expiration of time period in agreement or event as provided in agreement (b) Unanimous written consent of all partners (c) By court order (d) Withdrawal of general partner
2) If Termination is Elected, Assets are Distributed as Follows (a) Outside creditors (b) Partners’ distributions (c) Return of capital contributions (d) Remainder split according to agreement
V) Corporations A) Characteristics of a Corporation
1) Unlimited duration 2) Free transferability of interest 3) Limited liability 4) Centralized management 5) Legal existence
(a) Can hold legal title to property (b) Can sue and be sued
B) Types 1) For Profit 2) Not For Profit 3) Domestic—in the State of Incorporation 4) Foreign—Everywhere Else 5) Government Corporations—Like FNMA 6) Professional Corporations—Limited Liability on Everything Except Professional Malpractice 7) Close or Closely Held Corporations: Limited Number of Shareholders, Subject to Less
Formality 8) Subchapter S or S Corporation
(a) IRS election to be treated as partnership for tax purposes (b) Still have limited liability (c) Limits on size for this election
9) The Law of Corporations: Model Business Corporation Act (MBCA) (a) Liberal statute (b) One-third of the states have adopted (c) Revised in 1984
C) Formation 1) Must Comply With Statutory Requirements 2) File Articles of Incorporation
(a) Name (b) Names and addresses of all incorporators (c) Capital structure of the corporation (d) Types of stock
3) File Articles of Incorporation (a) Classes of stock (b) Rights of shareholders (c) Voting rights (d) Statutory agent
4) Where to Incorporate (a) Status of state’s corporation laws (b) State tax laws (c) Ability to attract employees (d) Incentives
5) Incorporators (a) Idea people—also called promoters (b) Will be personally liable for contracts entered into before incorporation (c) Corporation can ratify contracts—promoter is secondarily liable (d) Corporation can enter into a novation with the third party—promoter or incorporator is
released from liability 6) Must Hold Initial Meeting After Incorporation
(a) Elect new directors (b) Adopt bylaws (day-to-day procedures) (c) Issue stock (d) Ratify pre-incorporation contracts
D) Corporate Capital 1) Capital and Sources of Corporate Funds
(a) Debt Financing—The Bond Market (b) Short-term financing—loans from banks (c) Bond market (d) Benefits of debt financing
(i) Interest is tax deductible (ii) Debt holders get paid first
(e) Limitation: too much debt renders corporation financially unstable 2) Equity Financing—Shareholder
(a) Common stock: Has voting rights, receives dividends when paid (b) Preferred stock: Receiver preference over common stock can be cumulative or
noncumulative E) Liability Issues
1) Must make full payment for shares—if not, there is liability (water stock); not paying par value
2) Shareholders’ liability generally limited to amount of investment 3) If corporate veil is pierced, there is shareholder liability. Means corporate immunity from
liability is set aside 4) Reason for Piercing the Veil
(a) Inadequate capitalization—must put in enough money to meet the risks of doing business
(b) Alter ego theory—separate nature of corporation is disregarded (c) No formalities—personal and corporate properties are mixed together (d) Ignoring corporate formalities—personal elections, meetings (e) Forming to perpetrate a fraud on creditors
5) Piercing the Veil (a) Case 18.3U.S. v. Bestfoods, Inc.(1998)
(i) Is there a special CERCLA rule for piercing the corporate veil? (ii) What must be shown to hold a parent liable for the action of a subsidiary?
F) Corporate Tax Consequences 1) Corporation Pays Tax
(a) Shareholders pay tax on dividend income 2) Subchapter S or S Corporation
(a) Corporate liability protection with partnership tax status G) Corporate Management and Control: Directors and Officers:
1) Corporate Directors (a) Election of Directors
(i) Elected by shareholders to make corporate policy (ii) May operate by committee (iii) Hire officers of corporation and set officers’ salaries
(b) Director Liability (i) Protected by the Business Judgment Rule. Directors and Officers must act in good
forth and with prudence to avoid personal liability (ii) Can consult experts but must study issues
(c) Control By Board of Officer Pay (i) Dodd-Frank Requirements on Independence of Compensation Committee and Pay
Votes • Shareholder “say on pay” vote every three years • Independent compensation committee • Claw-back provisions in compensation for executives if there is fraud or other
illegality (d) Case 18.4Brehm v. Eisner (2000)
(i) Who made the decision to terminate Ovitz? (ii) Was hiring Ovitz just a HUGE mistake? (iii) Why is there no liability on the part of the directors?
2) Corporate Officers (a) Officer Liability
(i) Increasing personal liability (ii) Increasing prosecutions (iii) Particularly when environmental laws are violated
3) Sarbanes-Oxley Act (a) Liability for Officers and Directors
(i) Prohibitions on Loans to Officers (ii) Code of Ethics for Financing Reporting (iii) Lawyer’s new duties to company and officers (iv) Board Membership –majority must be independent
4) Sarbanes-Oxley, Dodd-Frank, and Boards (a) Majority of Independent Directors (b) Only Independent Directors on Audit and Compensation Committees (c) No Loans to Officers (d) Codes of Ethics for Financial Reporting (e) Legal Counsel’s Role
(i) Must investigate issues raised (ii) Must notify CEO of investigation (iii) Must report material violations to CEO (iv) Must go to independent directors if problem is not resolved
H) Corporate Management and Control: Shareholder Rights 1) Voting Shareholders
(a) Elect the board (b) The Proxy (c) Vote on critical corporate issues (d) Pooling agreement (e) Voting trust
2) Shareholders Have Right to Vote on Mergers, Consolidations, and Sale of All Assets, Not on Acquisition
3) Procedure (a) Board of Directors adopts resolution in favor of combination or sale (b) Resolution with notice of meeting sent to all shareholders (c) Shareholders vote on resolution at meeting
4) Dissenting Shareholders (a) Shareholders not voting in favor of the combination can force corporation to purchase
their shares for cash –called appraisal rights 5) Corporation May Use Freeze-Out to Defeat Dissenters’ Rights 6) Shareholders Have Access to Books and Records
(a) Under revised MBCA, no ownership requirements (b) Must have proper purpose
7) Generally Shares in a Corporation are Freely Transferable; However Sometimes Transfers are Restricted
8) Transfer Restrictions (a) Must be noted or referenced on stock certificates
(b) Must serve a necessary purpose (c) Must be reasonable
I) Dissolution of a Corporation 1) Voluntary
(a) Board resolution (b) Shareholder approval
2) Involuntary (a) Forced by court or state agency (b) Example: Fraud
VI) Limited Liability Companies A) History: In Existence Internationally For Some Time
1) GMBH—Europe 2) Limitada—South America 3) LLC—U.S.
B) Nature 1) Aggregate organization 2) Liability shield 3) Income flows through
C) LLC: Formation 1) Articles of Organization 2) Filed Centrally 3) Name Must Disclose Status –L.L.C. or LLC
D) Funding: Members Contribute Capital E) Liability
1) Members stand to lose capital contributions, but their personal assets are not subject to attachment
F) Tax Consequence 1) Income passes through to members 2) LLC does not pay taxes
G) Management and Control 1) Operating Agreement—specifies voting rights 2) One member or an outside consultant can have operating authority delegated to him or her
H) Transferability of Interest 1) Interest can be transferred 2) Transferee does not become a member unless majority of remaining members approve
I) Dissolution and Termination 1) Generally withdrawal, death or expulsion of members will dissolve company 2) Some state permit judicial dissolution 3) All state permit voluntary dissolution
VII) Limited Liability Partnership A) Formation: Must File To Create B) Funding: Capital Contribution From Partners
C) Liability: Limited Liability For All D) Tax Consequences: Tax Reporting Entity Not Tax Paying E) Management and Control
1) Partners can participate in management without personal liability for partnership debts F) Transferability
1) Transfer must be restricted G) Dissolution and Termination
1) Similar to Limited Partnership VIII) International Issues IX) Joint Ventures Increasing
A) Joint ventures with countries themselves B) Business structure varies
1) Example: Germany and differing board structures
Chapter 20-Management of Employee I) Wage and Hours Protection
A) Employee Welfare: The Federal Statutes
B) Wages and Hours Protection
1) Fair Labor Standards Act (FLSA) (a) Often called “the minimum wage law” (b) All covered employees must be paid minimum wage (c) 1 1/2 time pay for overtime (d) Overtime pay for anything over 40 hours/week (e) All Businesses Covered that Affect Interstate Commerce (f) Exemptions
(i) Independent contractors (ii) Agriculture, fishing, and domestic service (iii) White-collar management (iv) Executive, administrative, and professional people (v) State employees? SeeAlden v. Maine98-436 (1999)
(g) Child Labor Protections (i) Age 18 and over: any jobs (ii) 16-17: any non-hazardous job, unlimited hours (hazardous—mining, logging,
roofing, excavation) (iii) 14-15: any non-hazardous, non-manufacturing, and non-mining job during non-
school hours; limits on hours (iv) Record keeping
• Employers must keep records of hours and wages • Fines for not doing so
(h) Enforcement of FLSA (i) Can begin by complaint filed with U.S. Labor Department
(ii) Employer can seek interpretation from Department of Labor (iii) Labor Department can initiate its own investigation
(i) Violations of FLSA (i) Corporation is liable (ii) Officers can be held individually liable (iii) Fines -$10,000 first conviction (iv) $10,000 and or six months for second violation (v) Employees cannot be fired for reporting violations
2) Liability for Wage Taxes (a) Case 20.1Chao v. Hotel Oasis, Inc. (2007)
(i) Who is responsible for the wage taxes? (ii) Why is the corporate structure not relevant for purposes of wage tax liability?
3) Equal Pay Act (a) Illegal to Pay Different Wages to Men and Women Doing the Same Jobs (b) Equal Pay Act is Not a Comparable Worth Statute
(i) Comparable worth requires equal pay for jobs that require equal skill, effort, and responsibility
(ii) Comparable worth changes the free marketplace concept that we as a society have adopted
(c) Merit and Seniority Systems are Exceptions II) Workplace Safety: OSHA
A) Occupational Health and Safety Act (OSHA) 1) Passed to ensure workplace safety precautions 2) OSHA was agency created to enforce it 3) Employers covered—all with one or more employees 4) Also created Occupational Safety and Health Review Commission (OSHRC) and the National
Institute for Occupational Health and Safety (NIOSH) B) OSHA Coverage and Duties
1) Familiarize themselves with OSHA’s requirements 2) Post employee rights 3) Require protective gear 4) Keep records of injuries 5) Report fatalities and hazards causing them 6) Post OSHA citations
C) OSHA Responsibilities 1) Promulgate workplace safety regulations 2) Can award variances for certain employers 3) Inspections
D) OSHA Penalties
1) Fine and Imprisonment Escalate With Seriousness of Violation 2) Many Employers Negotiate a Consent Decree After a Citation 3) If No Consent Decree, There is a Hearing Before an Administrative Law Judge (ALJ) 4) ALJ Makes Recommendations and OSHRC Decides 5) Can Then Be Appealed to a Court
E) State OSHA 1) State OSHA Programs
(a) States share responsibility for safety with Feds (b) Secretary of Labor must approve state’s plan
F) Impairment and Employees 1) Employment Impairment and Testing Issues
(a) If safety is an issue, U.S. Supreme Court has authorized testing by government employer without warrant and without probable cause
(b) Private employers generally free to require drug testing III) Employee Pensions, Retirement, and Social Security
A) Social Security Act of 1935 1) Every employee contributes to Federal Insurance Contributions Act (FICA) 2) Benefits under Social Security depend on work and salary range
B) Private Retirement Plans: Employment Retirement Income Security Act (ERISA) 1) Applies to employers in interstate commerce 2) Applies to medical, retirement, or deferred income plan 3) Requirements
(a) Must give employees an annual report (b) Must disclose loans made from the fund
4) ERISA does not require pension plans, only regulates employers who offer them (a) ERISA Employee Rights: Employees get vesting rights in their pensions (b) FASB 106 Retirees and Pensions: Requires corporation to expense cost of benefits for
retired employees
C) Pension Protection Act 1) Passed in Response to a Number of Large Corporate Bankruptcies That Released Employers
From Pension Obligations 2) Pension Plans Were Funded to Correct SEC Disclosure Levels, But Not According to Real
Needs of Plan 3) Stricter Funding Requirements Imposed
D) Unemployment Compensation 1) State-Administered Program 2) Employers Pay FUTA Taxes and States Administer Programs 3) Amount is Controlled by Wages and Time Working 4) Requirements
(a) –Must have been involuntarily terminated (b) –Must be able and available for work (c) –Must be seeking employment
IV) Workers’ Compensation A) Principles
1) Employees injured in scope of employment are covered 2) Fault is immaterial 3) Independent contractors are not covered 4) Benefits include expenses, lost wages, and injury compensation 5) Employees do not have right of common law suit 6) Third parties can be sued to indemnify employers 7) Administrative agency handles program 8) Every employer must carry insurance or be self-insured
B) Types of Employee Injuries 1) Primarily accidental 2) Definition has been expanded
(a) Back problems from lifting (b) Medical problems—heart attacks and nervous breakdowns (c) Stress
3) Co-worker injury (a) Covered if arises within scope of employment (b) Issue of rape is a problem; employer can be sued for the failure to screen employees
adequately C) Case 20.2Hopkins v. Uninsured Employers’ Fund (2011)
1) What are the issues related to whether Hopkins was a volunteer? 2) What impact does the use of drugs have on the court’s decision?
D) Disability Benefits 1) Partial disability—listed on schedule by rate 2) Example: 50 percent of wages 3) Total disability—generally 2/3 of salary 4) Unscheduled injuries are determined by board 5) Death benefits paid to family
E) Forfeiture of Right to Suit
1) The majority of states require employees to forfeit all other lawsuit rights in exchange for workers' compensation benefits
F) Third-Party Suits 1) Can sue product manufacturers, other third parties, but recovery must first go to reimburse
employer G) Administrative Agency
1) Each state has an agency for administration of benefits and insurance H) Insurance: Employers Must be Financially Responsible I) Problems in Workers’ Compensation Systems
1) Extent of injuries covered 2) Fraud 3) Nature of injuries changing from manufacturing injuries to stress, heart disease, and
repetitive motion 4) Long-term hazards 5) Relationship between Americans with Disability Act and workers’ compensation
V) Statutory Protections of Employees Through Labor Unions A) History and Development of Labor Legislation
1) Courts were very harsh at common law (a) Treated unions as conspiracies and allowed them to be prosecuted for such action (b) Strikes were perceived as intimidation techniques
2) Railway Labor Act of 1926 (a) First federal legislation, but limited to railroad industry (b) Allowed railroad employees to unionize (c) Still in effect today with addition of airline employees
3) Norris-LaGuardia Act of 1932 (Anti-Injunction Act) (a) Stopped federal courts from issuing injunctions to stop union strikes
4) Wagner Act—National Labor Relations Act (NLRA) of 1935 (a) Gave employees the right to unionize (b) Prohibited employers from firing or discriminating against union members (c) Established NLRB
5) Taft-Hartley Act—Labor Management Relations Act of 1947 (a) Lists unfair labor practices for unions (b) Addresses secondary boycotts (c) Provides president with authority to have pre-strike cooling-off period when public
health and safety are at issue; has been used in coal and transportation strikes 6) Landrum-Griffin Act—Labor Management Reporting and Disclosure Act of 1959
(a) Regulates union officials (b) Gives union members a bill of rights (c) Establishes penalties for misconduct
7) Union Organizing Efforts B) Selecting a union
1) Petition for union representation filed 2) Election 3) Certified union
4) Once selected, union represents all employees C) Case 20.3 United Food and Commercial Workers Union Local 24 v. NLRB (2007)
1) Evaluate the statements made by management 2) Explain what the court decides in terms of management statements
D) Union Certification
E) Union Contract Negotiations
1) Must bargain in good faith—8(d) of NLRA 2) Try to get employer contract—collective bargaining agreement 3) Mandatory or compulsory subject matters: “wage hours and other terms and conditions of
employment”
F) Labor Unions: Subject Matter for Negotiations
1) Union Contract Negotiations (a) Permissive subjects for collective bargaining
(i) Strike roles (ii) Not unfair to refuse to bargain it
(b) Cannot bargain away statutory rights (i) Example: Cannot agree to have a closed shop (refusing to hire nonunion people)
(c) Failure to bargain in good faith (i) Constitutes an unfair labor practice (ii) Can be the basis of a charge and complaint
G) Mandatory Topics
1) H) Labor Unions’ Activities
1) Union “Concerted Activities”—Economic Pressure (a) NLRA gives union right to engage in concerted activities (b) Picketing—legal (c) Strike—legal economic weapon (d) Advertising (e) The Shareholders
(i) Unions have contacted shareholders for clout (ii) Allowed shareholders to bring public attention to the issues
I) Unfair Employee Practices 1) Slowdown
(a) Not a strike or stoppage (b) Employees refuse to do certain work or use certain equipment
2) Featherbedding (a) Payment for work not actually done (b) Unfair labor practice
J) Labor Unions and Employer Rights 1) Employer Rights
(a) Freedom of Speech (b) So long as speech is accurate and not an unfair labor practice (c) Right-to-work laws; Prohibit closed shops (d) Right to an enforceable collective bargaining agreement
K) Management Do’s and Don’ts in Unionization 1) DO:
(a) Tell employees about current wages and benefits and how they compare to other firms. (b) Tell employees you will use all legal means to oppose unionization. (c) Tell employees the disadvantages of having a union (especially cost of dues,
assessments, and requirements of membership). (d) Show employees articles about unions and negative experiences others have had
elsewhere. (e) Explain the unionization process to your employees accurately. (f) Forbid distribution of union literature during work hours in work areas.
(g) Enforce in a consistent and fair manner disciplinary policies and rules. 2) DON’T:
(a) Promise employees pay increases or promotions if they vote against the union. (b) Threaten employees with termination or discriminate when disciplining employees. (c) Threaten to close down or move the company if a union is voted in. (d) Spy or have someone spy on union meetings. (e) Make a speech to employees or groups at work within twenty-four hours of the election
(before that, it is allowed). (f) Ask employees how they plan to vote or if they have signed authorization cards. (g) Urge local employees to persuade others to vote against the union (such a vote must be
initiated solely by the employee). L) Employer Weapons
1) Plant Closings (a) Congress has passed a plant closing law and many states have same laws (b) Laws require notice and time frame before plant is closed (c) Designed to eliminate shock to local economy (d) Federal law is the Worker Adjustment and Retraining Notification Act of 1988
2) Cannot Use Temporary Closing or Send Work Away (Runaway Shops) (a) Plant Flight: Management Closes Plants and Outsources Work to Foreign Countries (b) Lockout Employer Refuses to Allow Employees to Work (c) Conferring Benefits OK if Not Done Too Close to Union Election (d) Bankruptcy May Be Used to Reject Collective Bargaining Agreement
M) Economic Rights and Weapons –Employer
N) Economic Rights and Weapons –Employee
VI) International Issues inn Labor
A) International Issues 1) Federal Immigration Laws Require Employers to Verify Employee is a U.S. Citizen or Has the
Right to Work in the U.S. 2) Must Have I-9 3) Immigration Reform Requires Greater Employer Diligence 4) “Highly Skilled” Workers (H-1B Professional) Can Come and Work in High-Tech Industries 5) Labor Management Cooperation Act Provides Mediation as an Alternative 6) The Examples of NIKE and Kathie Lee Gifford:
(a) Sweatshop conditions affect consumer perception (b) International and domestic pressures (c) Stock value drops
7) Creation of Teams by Companies has Effect of Mixing Labor and Management B) National Security Issues
1) USA Patriot Act of 2002 Verification Requirements 2) Homeland Security Act of 2002
(a) Background checks (b) Security checks
3) American Competitiveness in the Twenty-First Century Act of 2000 (a) Preservation of U.S. workers’ jobs
Chapter 21 Management: Employment Discrimination
I) Employment Discrimination –Federal Law A)
B)
C)
D) History
1) No Protection Under “At-Will” Employment Doctrine 2) Civil Rights Act of 1866 3) Equal Pay Act of 1963 4) Title VII of the Civil Rights Act of 1964
(a) Prohibited discrimination in employment on the basis of race, color, religion, sex, or national origin (Amended by the Equal Employment Opportunity Act of 1972)
(b) EEOC created (c) Federal courts given jurisdiction for suits (d) Equal Employment Opportunity Act of 1972 expanded power of EEOC (e) Amended in 1975 by the Pregnancy Discrimination Act
(i) Prohibited discrimination on the basis of pregnancy or childbirth 5) Age Discrimination Act of 1967
(a) Expanded Title VII protections to include age 6) Rehabilitation Act of 1973
(a) Prohibits federal contractors from discriminating against the handicapped 7) Americans with Disabilities Act of 1990
(a) Provides protection for workers with disabilities and imposes requirements for access 8) Family and Medical Leave Act
(a) Provides Family member with right to 12 weeks unpaid leave 9) Executive Orders: Apply to Agencies and Federal Contractors
II) Employment Discrimination –Federal Law A) Title II of the Genetic Information Nondiscrimination Act of 2008
1) Prohibits employers from discriminating on the basis of genetic information B) Lilly Ledbetter Fair Pay Act
1) Effect is to change U.S. Supreme Court decision that imposed a 180-day statute of limitations on pay discrimination cases
C) Prohibits Discrimination on Basis of
1) Race 2) Color 3) Religion 4) National origin 5) Sex 6) Pregnancy
D) Application of Title VII 1) Employers with 15 or more employees (for at least 20 calendar weeks) 2) Labor unions with 15 members and/or a hiring hall 3) Employment agencies that work for covered employers 4) State and local agencies
E) Noncovered Employers 1) Employment of aliens outside the United States 2) Religious corporations, when hiring for religious positions 3) Congress 4) Federal government (they have a separate scheme) 5) Indian tribes
F) Employment Procedures Covered 1) Hiring 2) Fringe benefits 3) Compensation 4) Rules 5) Training 6) Working conditions 7) Promotion 8) Dismissals 9) Demotions 10) Employment agencies referrals 11) Transfers
III) Theories of Discrimination Under Title VII A) Disparate Treatment
1) Treating Employees or Potential Employees Differently on the Basis of Race 2) McDonnell Douglas v. Green Established the Required Elements
(a) –Plaintiff belongs to a minority group (b) –Plaintiff applied for and was qualified for job (c) –Plaintiff was rejected (despite qualifications) (d) –Job remained open (e) –Employer’s burden of proof to show nondiscriminatory reason for the non-hire
3) Case 21.1Chescheir v. Liberty Mutual Ins. Co. (1983) (a) What employer rule is at issue? (b) Were there examples of disparate use of the rule? (c) Is there a prima facie case?
B) Disparate Impact 1) Not Intentional Discrimination
2) Rule Results in Different Effect on Groups (a) Example: Dothard v. Rawlinson—minimum height and weight requirement for prison
guards had the effect of eliminating women 3) Mostly Statistical Cases Showing Impact
(a) In Wards Cove Packing Co., Inc. v. Atonio (1989), the Supreme Court put greater burdens of proof on Title VII plaintiffs
4) Civil Rights Act of 1991 (a) Key provisions of the bill include a provision for jury trials in discrimination cases (b) Provides compensatory damages whereas now the only remedies are back pay and
reinstatement (c) Employers required to carry the burden of business necessity in establishing a defense
to a Title VII case (d) 1991 Amendments also require the plaintiff employee to show causation between the
practice of the employer and the disparate impact 5) Case 21.2 Ricci v. DeStefano (2009)
(a) Deals with use of testing (b) Tests must be validated (c) Once used, cannot be ignored
IV) Specific Applications of Title VII A) Pattern or Practice of Discrimination
1) Generally involves a statistical comparison Example: 38 percent of work force in a community is black; 6 percent of an employer’s work force is black
B) Sex Discrimination: “Protective” Legislation is Prohibited 1) Examples: Lifting (30 lbs..) restrictions, safety restrictions, height/weight requirement; ads
cannot specify male or female 2) Sexual Harassment
(a) Covered by EEOC Guidelines (b) Employers Must Have Policies on Harassment (c) Possible Liability for
(i) Demands for sexual favors—“quid pro quo” (ii) Environment of sexual suggestion (iii) Hostile conduct for refusal to provide sexual favors (iv) Verbal or physical suggestions
(d) Cannot be Fired for Refusal to Accept Sexual Advances (e) Managers and Companies Have Liability for Failure to Take Action on Complaints of
Sexual Harassment (f) Case 21.3 Burlington Industries, Inc. v. Ellerth (1998)
(i) When will an employer be held liable for sexual harassment despite a lack of knowledge?
(ii) What major issues does the dissenting opinion raise? 3) Pregnancy Discrimination Act
(a) Coverage and protections (i) Cannot require pregnant employee to quit (ii) Cannot demote upon return to work
(iii) Cannot refuse to allow employee to return to work (iv) Same sick rules for pregnancy as other ailments (v) Same insurance coverage (vi) No promotion or hiring refusals because of pregnancy
4) Case 21.4 International Union v. Johnson Controls, Inc. (1991) (a) Are circumstance given when sex is a BFOQ? (b) What is the Court’s position on tort liability of the company with respect to the fetus?
C) Religious Discrimination 1) Permitted When Religious Organization is Hiring People as Pastors or for Religious Duties 2) Employers Must Make Reasonable Accommodations for Employees
(a) Case 21.5Cloutier v. Costco(2004) (i) How could AT&T have accommodated the Plaintiff?
V) Antidiscrimination Laws and Affirmative Action A) What is Affirmative Action?
1) Affirmative action is a remedial step taken to ensure that those who have been victims of discrimination in the past are given the opportunity to get work
2) It is neither required nor prohibited under Title VII 3) Any employer can have an affirmative action program; cannot use quotas but can set goals
B) Who is Required to Have Affirmative Action Programs? 1) Those who have been subject to court orders or consent decrees 2) Those who are state and local agencies, colleges and universities receiving federal funds 3) Those who are government contractors 4) Those who are businesses that work on federal projects
C) Preparing an Affirmative Action Program 1) Begin with equal employment opportunity statement 2) Appoint an affirmative action officer 3) Conduct an internal audit 4) Establish overall goals and even goals for certain areas
D) Affirmative Action: Backlash 1) Gratz v. Bollinger(2003) 2) Grutter v. Bollinger(2003)
(a) The opposite decisions in the case left affirmative actions in admissions in confusion 3) Fischer v. University of Texas at Austin (2013)
(a) Court sent the case back to apply the strict scrutiny standard to affirmative action programs
VI) The Defense to a Title VII Charge A) Bona Fide Occupational Qualification (BFOQ)
1) Qualification of sex or religion is necessary for job (a) Examples: Pastor of Methodist churches must be Methodist, actors and actresses for
parts 2) Customer preference is not a BFOQ
B) Seniority 1) Sometimes a valid defense to Title VII 2) Must be bona fide
3) Must apply to all employees 4) Origins of the system cannot be discriminatory 5) Cannot be used to perpetuate discrimination
C) Aptitude 1) Tests must be validated 2) Job-related 3) Do not eliminate certain races 4) Validate by following employees for correlation between test scores and job performance
D) Misconduct 1) Defense that there was a valid reason for termination or different treatment 2) Employer could even use misconduct by employee discovered after termination 3) Case 21.6McKennon v. Nashville Banner Publishing Co. (1995)
(a) Does Banner deny discriminatory intent? (b) Is reinstatement a remedy?
VII) Enforcement of Title VII A) EEOC is Responsible
1) Five-member commission 2) Appointed by president/approved by Senate 3) No more than three from same party
B) Steps in an EEOC Case 1) Complaint
(a) Filed by employee (b) Must be done within 180 days from the violation (c) Filed with EEOC or state agency
2) Employer is notified of the charge 3) EEOC has 180 days from filing of complaint to take action 4) If case not settled within 180 days, employee gets right-to-sue letter 5) 180 days from discriminatory act, and each paycheck is an act –Lily Ledbetter law
C) Remedies 1) Injunctions 2) Back pay 3) Punitive damages 4) Affirmative action 5) Attorneys’ fees
VIII) Other Antidiscrimination Laws A) Age Discrimination in Employment Act of 1967
1) Applies to employers with 20 or more employees 2) Protects those who are 40 years of age
B) Case 21.7 Gonzalez v. El Dia, Inc. (2002) 1) What remarks were made about Ms. Gonzalez related to her age? 2) What was it not discrimination?
C) Equal Pay Act of 1963 1) Equal pay for equal work
D) Communicable Diseases in the Workplace
1) Arlinecase held that employer could not discriminate on the basis of tuberculosis E) Rehabilitation Act of 1973
1) Protection for handicapped 2) Enforced by Labor Department 3) Must make reasonable accommodations for handicapped 4) Employers covered:
(a) Federal contacts over $2,500 (b) States and municipalities
5) Covers: Diabetes, epilepsy, heart diseases, cancer, retardation, blindness, deaf persons, former drug addicts and alcoholics
F) Americans with Disabilities Act 1) Applies to employers with 15 or more employees 2) Required to make reasonable accommodations for handicapped
(a) Cost, size of work force, nature of operations 3) Cannot use tests to screen out handicapped applicants 4) Local governments required to make transportation available to handicapped
G) ADA Obligations 1) Minimizing an Employer’s ADA Risks
(a) Post notices describing the provisions of the ADA in your workplace. (b) Review job requirements to ensure that they bear a direct relationship to the ability to
perform the essential functions of the job in question. (c) Identify, in writing, the "essential functions" of a job before advertising for or
interviewing potential candidates. (d) Before rejecting an otherwise qualified applicant or terminating an employee on the
basis of a disability, first determine that (a) the individual cannot perform the essential duties of the position, or (b) the individual cannot perform the essential duties of the position without imminent and substantial risk of injury to self or others, and (c) the employer cannot reasonably accommodate the disability.
(e) Articulate factors, other than an individual's disability, that are the basis of an adverse employment decision. Document your findings and the tangible evidence on which a decision to reject or terminate was based; make notes of accommodations considered.
(f) Ask the disabled individual for advice on accommodations. This shows the employer's good faith and a willingness to consider such proposals.
(g) Institute programs of benefits and consultation to assist disabled employees in effectively managing health, leave, and other benefits.
(h) Check with insurance carriers regarding coverage of disabled employees and attempt (within economic reason) to maintain provided coverage or arrange for separate coverage.
(i) Keep disabled individuals in mind when making structural alterations or purchasing office furniture and equipment.
(j) Document all adverse employment actions, including reasons for the employment action with respect to disabled employees; focus on the employee's inability to do the job effectively rather than any relation to the employee's disability.
H) ADA Job Interview Questions and Issues
1) Legal (a) Do you have 20/20 corrected vision? (b) How well can you handle stress? (c) Can you perform this function with or without reasonable accommodation? (d) How many days were you absent from work last year? (e) Are you currently illegally using drugs? (f) Do you regularly eat three meals per day? (g) Do you drink alcohol?
2) Illegal (a) What is your corrected vision? (b) Does stress ever affect your ability to be productive? (c) Would you need reasonable accommodation in this job? (d) How many days were you sick last year? (e) What medications are you currently taking? (f) Do you need to eat a number of small snacks at regular intervals throughout the day in
order to maintain your energy level? (g) How much alcohol do you drink per week?
I) Family and Medical Leave Act 1) Twelve weeks’ unpaid leave each year for birth or adoption of child, illness of spouse,
parent, or child 2) Must return to same job or equivalent
IX) The Global Workforce A) Companies Must Follow Restrictions of Host Country
1) UN treaties support equal pay and nondiscriminatory treatment 2) EU follows all the treaties
Chapter 7 International Law I) Sources of International Law
A) Types of International Law Systems 1) Common Law
(a) England (b) United States
2) Civil or Code Law (a) Statutes or codes are very detailed; little reliance on precedent (b) France, Germany, Spain
3) Islamic Law (a) Religious tenets integrated (b) Combination of Islamic law and colonizers’ laws
4) Former Communist Countries (a) In Transition
B) Nonstatutory Sources of International Law (LESCANT) 1) (L)anguage 2) (E)nvironment & Technology 3) (S)ocial Organization 4) (C)ontexting 5) (A)uthority 6) (N)onverbal Behavior 7) (T)ime Concept
C) Contracts for the International Sale of Goods (CISG) 1) Governs the sale of goods internationally 2) Currently adopted by 53 countries, including the United States 3) Similar to Article 2 of the Uniform Commercial Code
D) Treaties, Trade Organizations, and Controls on International Trade 1) European Union (EU)
(a) Created by treaty of Rome (b) Set as major goal unified monetary and fiscal policies and the creation of the Euro Dollar
2) Treaties (a) General Agreement on Tariffs and Trade (GATT) (b) Multilateral treaty with 150 member nations that created the Work Trade Organization
(WTO) 3) North American Free Trade Agreement (NAFTA)
(a) Became effective in 1994 (b) Treaty between Canada, Mexico and the United States (c) Eliminated most tariffs between member countries with 15 years
4) Prohibition on Trade: Individual Nation Sanctions 5) International Monetary Fund
(a) Goal of expanding international trade through a bank with a lending system designed to bring stability to national currencies
6) The Kyoto Treaty (a) Global Warming Treaty
7) Organization of Petroleum Exporting Countries (OPEC) (a) Control oil supplies and production, prices, and taxes
8) International Monetary Fund (IMF) and the World Bank (a) The IMF is designed to foster International trade through currency stability. The IMF
creates the International Bank for Reconstruction and Development (The World Bank) which allows members to draw on line of credit to stabilizes currency exchange rates.
II) Trust, Corruption, Trade, and Economics A) Focus on Reducing Bribery B) OECD C) Foreign Corrupt Practices Act (FCPA)
1) Applies to all 1934 Act companies 2) Making, authorizing, promising payments or gifts of money or anything of value with intent
to corrupt 3) Applies to gifts to government officials, parties, candidates, NGOs and anyone who
transmits money to these persons/entities 4) Grease or facilitation payments under FCPA
(a) Securing a permit or license (b) Obtaining paper processing (c) Securing police protection (d) Providing phone, water or power services
5) Use of agents 6) Companies need to screen 7) Follow “four eyes” rule –two people must sign off on payments
III) Resolution of International Disputes IV) Principles of International Law
A) Expropriation: Act of State Doctrine 1) Act of foreign governments are recognized as valid whether or not such actions would be
legal in the United States B) Sovereign Immunity
1) Each nation is sovereign 2) Other nations do not take jurisdiction over a country’s internal operations, laws, and people 3) Does not apply to contractual relations
C) Case 7.1U.S. v. Giffen(2004) 1) Business owner made payments to government officials and received contracts 2) Business owner then given a government official 3) Can you claim sovereign immunity from FCPA violations if you are made a government
official? D) Hickenlooper Amendment to Foreign Assistance Act of 1962
1) Allows president to sanction countries that take property of U.S. companies E) Treaties Afford Protections
F) Overseas Private Investment Corporation (OPIC) -federal agency that provides insurance for U.S. businesses against expropriation
G) Repatriation 1) Limits on removal of profits from country where they are earned
(a) Considered acts of state; cannot be litigated H) Forum Non Conveniens
1) Dismisses cases brought in wrong court (a) Example: India was proper forum to bring suit against Union Carbide for what happened
in Bhopal, India I) Checklist for Doing Business In Another Country
1) What is the economic climate? 2) What is the government structure? 3) What are the cultural attitudes about economic development? 4) What are the feelings of the indigenous peoples toward U.S. businesses? 5) What is the legal structure of the country? 6) How are laws passed? 7) How are disputes resolved? 8) What is the structure of the court system? 9) What commercial laws do they have? 10) What have been the experiences of other companies working there?
J) Conflicts of Law 1) No two countries have the exact same commercial laws 2) Some countries have no commercial codes
(a) Uniform Commercial Code is widely used K) Resolving Conflicts of Law
1) If the parties agree, autonomy controls 2) If parties have not agreed, law of country where the contract is performed will apply
L) Case 7.2Tiffany and Company v. Andrew (2012) 1) What is the impact of counterfeiting? 2) How can banks help in preventing counterfeiting?
V) Protections in International Competition A) Antitrust Laws
1) All firms doing business here are subject to antitrust jurisdiction 2) Export Trading Company Act
(a) Allows joint ventures among competitors (b) For business in other countries
B) Protections for Intellectual Property 1) International protections of intellectual property are constantly being refined 2) Worldwide registration of patents, trademarks and copyrights may be within reach
C) Criminal Law Protections 1) All those present in a country are subject to that country’s criminal law 2) Subject to all regulations as well
Chapter 11 Environmental Regulation and Sustainability
I) Common Law Remedies and the Environment A) Nuisances
1) Interference with use and enjoyment 2) Damages and injunction possible 3) Balancing test employed
B) Case 11.1Spur Industries, Inc. v. Del E. Webb Dev. Co. (1972) 1) What is “moving to the nuisance”? 2) Who wins? Who pays?
II) Statutory Environmental Laws A) Air Pollution Regulation
1) Air Pollution Control Act (1955) 2) Clean Air Act (1963) 3) Air Quality Act (1977/1990) 4) Clean Air Act Amendments of 1970
(a) EPA authorized to establish standards (b) States required to adopt implementation plans (SIPs) (c) EPA approval required for plans (d) Economic and technological issues
5) Clean Air Act Amendments of 1977 (a) Non-attainment areas (b) Prevention of significant deterioration (PSD) areas
6) Economic Controls for Nonattainment Areas (a) New plants must have greatest possible emission control (b) All other operations must be in compliance (c) New plant emissions must be offset with reduction elsewhere (d) Follows bubble concept; for new plant to begin operations, its pollution must be offset
by reduction in the area 7) Control in PSD areas
(a) Prevention of significant deterioration (i) EPA has right to review proposed plant construction (ii) Plant has to show that there will not be significant deterioration
8) 1990 Amendments to Clean Air Act (a) Focuses on smog, alternative fuels, toxic emissions, and acid rain (b) Federal implementation plan (FIP) EPA Plan to reduce pollution in cities failing to submit
adequate SIP (c) Plans must use maximum achievable control technology (MACT) (d) Acid rain covered
(i) Sulfur dioxide pollution from factories and coal-fired generating plants (ii) Established market for excess sulfur dioxide emissions (iii) Affected small businesses such as dry cleaners, paint shops, and bakeries
B) Water Pollution Regulation 1) Water Quality Act of 1965
(a) Created Federal Water Pollution Control Administration (FWPCA) (b) States required to establish water quality standards (c) No enforcement procedures—states did little
2) Rivers and Harbors Act of 1899 (a) Prohibited discharges into navigable waters (b) Used for enforcement since other laws had no teeth (c) Most industries got around the act quickly by obtaining the permits required under the
act 3) Federal Water Pollution Control Act of 1972
(a) Federal government responsible for standards and control (b) Emissions controlled by industrial groups (c) Ranges for groups referred to as effluent guidelines (d) National Pollution Discharge Elimination Permit (NPDES) (e) Renamed Clean Water Act in 1977
C) Other Water Regulation 1) Safe Drinking Water Act
(a) Passed in 1986 (b) States responsible for enforcement but must have minimum federal standards for
drinking water systems 2) Oil Pollution Act of 1990
(a) Passed in response to huge spills like Exxon Valdez (b) Companies must either clean up spill or pay federal government its costs for the clean-
up (c) Applies to all navigable waters up to 200 miles offshore
D) Solid Waste Disposal Regulation 1) Toxic Substances Control Act of 1976
(a) Response to chemical dumping (b) EPA controls manufacture and disposal of toxic substances
2) Resource Conservation and Recovery Act of 1976 (a) Regulates methods of disposal through a permit system (b) Discourages dumping
3) “SUPERFUND”: Comprehensive Environmental Response, Compensation, & Liability Act (CERCLA) (a) Suit can be brought to recover funds expended from company responsible for the
dumping (b) 1986 amendments Superfund Amendment and Reauthorization Act (c) EPA can now sue to recover clean-up funds from those who are responsible (d) Liability For Clean-Up Cost May Extend to Lenders
(e) Under the Asset Conservation, Lenders Liability, and Deposit Insurance Protection Act of 1966, Lenders are Protected From Liability So Long as They Do Not Participate in the Management of the Property
(f) Four Cases of Responsible Parties (i) Owners and operates at the time of contamination (ii) Current owners and operators –whether they were responsible for the
contamination or not (iii) Transporters of the hazardous material (iv) Those who arranged for transport of the hazardous materials
(g) Case 11.2Burlington Northern Railway/Shell Oil Co. v. U.S. (2009) (i) What is the meaning of “arranger” for purposes of CERCLA liability? (ii) What is the basis for allocation of liability for CERCLA clean-ups?
(h) Due Diligence and EPA Standards (i) “All appropriate inquiries” pursuant to CERCLA section 101(35)(B) must be
conducted within one year prior to the date of acquisition of the subject property and must include: • An inquiry by an environmental professional as defined in §312.10, as provided
in §312.21; • The collection of information pursuant to §312.22by persons identified under
§312.1(b); and • Searches for recorded environmental cleanup liens, as required in §312.2511-16
(ii) The following components of the all appropriate inquiries must be conducted or updated within 180 days of and prior to the date of acquisition of the subject property: • Interviews with past and present owners, operators, and occupants (see
§312.23); • Searches for recorded environmental cleanup liens (see §312.25); • Reviews of federal, tribal, state, and local government records (see §312.26); • Visual inspections of the facility and of adjoining properties (see §312.23); and • The declaration by the environmental professional (see §312.21(d))
(i) Guidelines for Self-Audits (i) The violations were uncovered as part of a self-audit or due diligence done on
property (ii) The violations were uncovered voluntarily (iii) The violations were reported to the EPA within 10 days (iv) The violations were discovered independently and disclosed independently, not
because someone else was reporting or threatening to report (v) There is correction of the violations within 60 days (vi) There is a written agreement that the conduct will not recur (vii) There can be no repeat violations or patterns of violations (viii) There is no serious harm to anyone as a result of the violation
(ix) The company cooperates completely with the EPA (j) Brownfield Issues
(i) Many CERCLA Sites That are Abandoned and/or Unused (ii) Fear of Liability Precludes Development and Use (iii) Cost of Cleanup is Prohibitive For Projects (iv) Federal, State, and Local Programs to Encourage Redevelopment
E) Environmental Quality Regulation 1) National Environmental Policy Act of 1969
(a) Requires federal agencies to file environmental impact statements for all major actions (EISs)
2) Content of EIS (a) Environmental impact (b) Adverse effects (c) Alternatives (d) New effects -short term versus long term (e) Irreversible effects
3) Case 11.3 Sierra Club v. United States Department of Transportation(1985) (a) What is the basis for the appeal? (b) What has the FAA allowed? (c) Is another EIS ordered?
F) Other Federal Environmental Laws 1) Other Regulations
(a) Surface Mining and Reclamation Act of 1977 requires mining company to restore land (b) The Fracking Issue (c) Noise Control Act of 1972; EPA and FAA regulate noise pollution for aircraft (d) Pesticide Control Act
(i) Must register with EPA to ship (ii) Must label all pesticides
(e) OSHA (i) Responsible for work place environment and safety issues
(f) Asbestos Hazard Emergency Response Act (AHERA) (i) Schools must inspect for asbestos and take action (ii) Asbestos is a toxic pollutant and community right-to-know substance (iii) Duty to disclose presence of asbestos
(g) Endangered Species Act: (i) Powerful tool for environmentalists (ii) Habitats cannot be disturbed
(h) Case 11.4Babbitt v. Sweet Home Chapter of Communities for a Great Oregon(1995) (i) Did Congress intend to give the secretary authority to shut down an industry?
III) State Environmental Laws A) State EPA
1) Regulation of fuel used
2) Incentives for carpooling IV) Enforcement of Environmental Laws
A) Parties Responsible for Enforcement 1) Environmental Protection Agency—EPA 2) Council on Environmental Quality—CEQ
(a) Part of executive branch (b) Sets national policies and makes recommendations
3) Other agencies (a) Atomic Energy Commission (b) Federal Power Commission (c) HUD (d) Department of Interior (e) Forest Service (f) Bureau of Land Management (g) Department of Commerce
B) Criminal Sanctions and Penalties for Violations 1) Clean Air Act
(a) $25,000 per day, up to one year in prison, or both (b) 15 years for willful or repeat violations (c) $10,000 rewards for reporting violations
2) Clean Water Act (a) $25,000 per day, up to one year in prison, or both
3) Resource Conservation and Recovery Act (a) $250,000 and/or fifteen years for intentional
4) Criminal Sanctions (a) Oil Pollution Act
(i) $25,000 per day or $1,000 per barrel (ii) $3,000 per barrel if willful or negligent (iii) $250,000 and/or 5 years for failure to report
5) Civil Liability (a) Environmental groups can bring suits
(i) Sierra Club (ii) Environmental Defense Fund (iii) League of Conservation Voters
6) Case 11.5U.S. v. Apollo Energies, Inc. (2010) (a) Did Congress intend to prosecute the failure to take action to protect birds and other
species from injury? (b) Is there strict liability when animals are injured or killed by conditions on private
property? V) International Environmental Issues
A) EU Has European Environment Agency B) ISO 14000
C) LEED Certification D) Eco-Audit Stickers
1) Shows products environmental impact 2) International Organization for Standardization (ISO) developed ISO 14000, a series of
environmental standards (a) Companies seek ISO 14000 certification
E) United Nations Framework Convention for Climate Change (UNFCC) 1) A group of governmental and environmental leaders concern with the issue of global
warning F) The Precautionary Principle in Regulation
VI) BP and the Troubling History on Budget Cuts A) Texas City Refinery
1) 15 deaths; 170 workers injured 2) 4,000 suits totaling $2.1 billion in damages 3) OSHA found 271 safety violations at the plant; they were not addressed prior to the
explosion; post-explosion, 439 “willful and egregious violations” 4) $87 million OSHA fine (4X the last largest fine) 5) $50 million fine to EPA
B) Prudhoe Bay Pipeline Burst: No Smart-Pigging C) Findings on BP Atlantis Problems
1) “Put off repairing the pump in the context of a tight cost budget.” 2) “Leadership did not clearly question the safety impact of the delay in repair.” 3) Employee safety officer: “You only ever got questioned on why you couldn’t spend less.”
D) BP Headlines 1) “BP Crew Focused on Costs” Wall Street Journal, June 15, 2010, p. A1. 2) “Unusual Decisions Set Stage for BP Disaster,” Wall Street Journal, May 27, 2010, p. A1. 3) “Oil Execs: BP Didn’t Meet Standards,” USA Today, June 16, 2010, p. 1B. 4) “Members of Past Disaster Panels See Recurring Pattern,” Wall Street Journal, June 16,
2010, p. A4. 5) “The Five Shortcuts That Prioritized Time and Money Over Safety,” Wall Street Journal, June
16, 2010, p. A4. 6) “BP Chose Riskier of Two Options for Well Casing,” Wall Street Journal, May 27, 2010, p. A1. 7) “Safety and Cost Drives Clashed As CEO Hayward Remade BP,” Wall Street Journal, June 30,
2010, p. A1. 8) “BP Relied on Cheaper Wells,” Wall Street Journal, June 19-20, 2010, p. A1.
- Module 1 Notes- Business ILEJE
- Module 2 Notes- Business ILEJE
- Module 3 Notes- Business ILEJE
- Module 5 Notes- Business ILEJE
- Module 6 Notes- Business ILEJE
- Module 7 Notes- Business ILEJE
- Module 8 Notes- Business ILEJE
