Torts, Crirnes, and Internet Law .63 5 Torts and Cyber Privacy .64

Contents

Preface

XVII

PART 1

_{Legal Environrnent}

ofBusiness

and E-Cornrnerce

1

1 Legal Heritage and Critical Legal

Thinking

2

What Is Law?

. . . .3

InternetLaw&OnlineCommerce

.

StudentsPlugIn to the Internet . . . ,4

LandmarkLaw. Brownv. Boardof Edueation 6 Schools 01 Jurlsprudentlal Thought

. . . .6

ContemporaryTrend

.

ModernSehoolsof Jurisprudential Thought 7 Hlstory 01American Law 8 Intemational Law' The CivilLaw System . . . .9

Sources 01 Law In the Unlted States

. . . .9

Contemporary Trend

.

Department of Homeland Seeurity .11 Crltlcal Legal Thlnklng .12 Case 1.1' U.S.SupremeCourtPGATour,lne.v.Martin.. .14

Worklng the Web Internet Exerclses

. . . .18

Business Law Cases. . . .18

Issues In Business Ethlcs

. . . .. . . . .19

2 Court Systerns and Jurisdiction

. . . .20

State CourtSystems .21 ContemporaryTrend

.

SpeeializedCourts HearCommereial Disputes . . . .23

Federal Court System

. . . .23

U.S.SupremeCourt .25 ContemporaryTrend

.

"1'1/TakeYouto theU.S.Supreme Courtl" . . . .27

SUbject Matter Jurlsdlctlon 01 Courts .27 Personal Jurlsdlctlon 01 Courts

... . . .28

Case2.1 . U.S.SupremeCourt CarnivalCruiseUnes,Ine. v.Shute 30 Worklng the Web Internet Exerclses

. . . .31

Business Law Cases. . . .31

Issues In Business Ethlcs . . . .32

3 Litigation and Alternative Dispute

Resolution

.33

Pretrlal Litlgatlon Process .34 InternetLaw & Online Commerce

.

E-Rlings.. . . .36

BusinessEthics'Statute of Umitations 37 Dlsmlssals and Pretrlal Judgments .38 Settlement Conlerence 39 ContemporaryTrend

.

Cost-BenefitAnalysis of a Lawsuit 39 Trial . . . .39

Case3.1' Ferlitov.Johnson&Johnson Produets,lne. ,41 Appeal . . . ,41

Alternatlve Dispute Resolutlon ,42 IntemationalLaw' Japan'sLegalSystem ,43 Worklng the Web Internet Exerclses

. . . .44

Business Law Cases. . . .44

Issues In Business Ethlcs . . . .45

4 Constitutional Law for Business

and Online Cornrnerce

46

Constltutlon 01 the Unlted States 01 Amerlca 47 Supremacy Clause .49 Case4.1' U.S.SupremeCourt Geierv.AmerieanHonda Motor Company, Ine. . . .49

Commerce Clause .50 Case4.2 . U.S.SupremeCourt Reno,AttorneyGeneral of theUnitedStatesv.Condon,AttorneyGeneral of SouthCarolina 51 InternationalLaw

.

ForeignCommereeClause 52 BIII 01 Rlghts 52 Freedom 01 Speech . . . .53

BusinessEthics

.

CommereialSpeeeh 54 Case4.3 . U.S.SupremeCourt UnitedStatesv.Playboy EntertainmentGroup,lne.. . . .55

InternetLaw&OnlineCommerce.BroadFreeSpeeeh RightsGrantedin Cyberspaee

. .56

Freedom 01 Rellglon .56 Equal Protectlon Clause

. . . .57

Case4.4. U.S.SupremeCourt Grutterv.Bo/linger andtheUniversityofMiehiganLawSehool 58 Due Process Clause

. . . .59

Prlvlleges

andImmunltles

Clause

.59

Worklng the Web Internet Exerclses

. . . .60

BusinessLawCases. . . .60

Issues In Business Ethlcs

. . . .62

Torts, Crirnes, and Internet

Law

.63

5 Torts and Cyber Privacy

.64

Intentlonal Torts Agalnst Persons

. . . .65

BusinessEthics

.

Wal-MartLosesFalseImprisonment Case . . . .66

ContemporaryTrend .Eminem Not Uable for Slander . . . .68

Case5.1' Roaehv.Stern .69 Intentlonal Torts Agalnst Property 70 UnlntentlonalTorts(Negllgence) 71 BusinessEthics'Oueh!TheCoffee'sTooHot!

.. ...72

Case5.2. Wilhelmv.Rores 73

PART 11

Case5.3 .Jamesv.MeowMedia,Ine. 73 landmarkLaw

.

Palsgrafv.TheLongIslandRai/road

Company .75

Speclal Negllgence Doctrlnes

...75

Case5.4 . Matthiasv.AeeorEeonomyLodging,Ine. andMotel6 OperatingL.P. 79 Defenses Agalnst Negllgence

. ... ... ... ... ...79

Case5.5' Lilyav.TheGreaterGulfStateFair,Ine. .80 Strlct Llablllty .81 Case5.6' Cookv.Whitsell-Sherman. . . .82

Worklng the Web Internet Exerclses

...83

BusinessLawCases.. . . .83

Issues In Business Ethlcs

. . . .85

6

Strict Liability and Product Liability

. . .86

Negllgenceand Fault .87 Case6.1.Benediv.MeNei/-P.P.C.,Ineorporated .88 Strlct Llablllty .89 Contemporary Trend .Striet Liability . . . .90

Defect In Manufacture .91 Case6.2 .ShoshoneCoca-ColaBottlingCo.v.Dolinski. . . .92

Defect In Deslgn .92 Case

6.3.

Lakinv.SeneoProduets,Ine. 93 BusinessEthics

.

Design Defeet in Pool Equipment

.. .... .94

Fallure to Warn .94 DefectIn Packaglng. . . .95

Case6.4' Elsrothv.Johnson&Johnson 95 Defenses to Product Llablllty 96 BusinessEthics

.

GeneralMotors Liable for Design Defeet.. . . .97

Worklng the Web Internet Exerclses

... ... ... ..99

BusinessLawCases.. . . .99

Issues In Business Ethlcs

. . . .100

7 Intellectual Property and Internet

Law

.102

Trade Secrets . . . .103

Internetlaw &OnlineCommerce

.

TheEeonomie Espionage Aet . . . .104

Patents and Cyber Patents

. . . .104

Case 7.1' U.S. Supreme Court J.E.M.Ag Supply,lne., d.b.a. FarmAdvantage, Ine. v. Pioneer Hi-Bred International.Ine. 105 Internetlaw & OnlineCommerce

.

CyberBusinessPlans ArePatentable 106 BusinessEthics' PatentInfringement. . . .107

Copyrlghtsand SoftwareCopyrlghts .107 ContemporaryTrend' CopyrightProteetion . . . .108

Internet law & Online Commerce .The NET Aet: Criminal CopyrightInfringement .109 Case7.2' Newtonv.BeastieBoys .109 BusinessEthics' CopyrightInfringement .110 Internetlaw &OnlineCommerce

.

Eneryption Teehnology .110 Trademarks and Onllne Commerce .111 Case 7.3 . U.S.SupremeCourt TwoPesos, Ine. v. Taco Cabana, Ine. . . .113

The Internet.

. . . .116

Case 7.4 . John Doe v. GTE Corporation . . . .117

Domaln Names

. . . .118

Internetlaw & OnlineCommerce

.

Eleetronie Communieations PrivaeyAet .119 Internationallaw . International Proteetion of Intelleetual Property Rights . . . .. .. . . .119

Worklngthe WebInternet Exerclses

.. .. ..119

BusinessLawCases.. . . .120

Issues In Business Ethlcs

. . . .121

8 Business and Online

Crimes

.123

Deflnltlon of a Crlme

. . . .124

Business Ethics' Martha Stewart Gui/ty of a Crime . . . .127

Criminal Procedure . . . .127

Case8.1' U.S.SupremeCourtAtwaterv. Lago Vista, Texas .128 Internetlaw &OnlineCommerce

.

CyberCrimes .129

Common

Crlmes.. . ...

... . ... . ... ... .130

Whlte-CollarCrlmes .131 Internationallaw' ForeignCorruptPraetieesAet .132 Internetlaw & OnlineCommerce'CyberIdentityFraud. .133 ContemporaryTrend

.

MoneyLaundering .134 Corporate Criminal Llablllty

. . . .134

Protectlon Agalnst Unreasonable Search and Selzure .135 Case8.2 . U.S.SupremeCourt Kyllov.UnitedStates.. .136

Case8.3 . U.S.SupremeCourt Cityof Indianapolisv. Edmond . . . .137

ContemporaryTrend

.

FederalAntiterrorismAet .138 Prlvllege Agalnst Self-Incrlmlnatlon and Other Protectlons .138 Worklng the Web Internet Exerclses

.. . . .140

Business Law Cases . . . .140

Issues In Business Ethlcs . . . .141

PARTIII

Traditional and E-Commerce

Contracts

. . . .143

9 Nature ofTraditional and Online

Contracts

. . . .144

Deflnltlon of Contract

. . . '.' . . . .145

ContemporaryTrend.TheEvolution of the Modern Law of Contraets .146 Sources of Contract Law

. . . .147

Case9.1' Cityof Everett,Washingtonv.Mitehell. . . .148

Internetlaw & OnlineCommerce

.

UniformEleetronie CommereeAetAdopted .149 Classlflcatlons of Contracts .149 Case9.2' WrenehLLCv.TacoBellCorporation. . . .150

Equlty .153 BusinessEthics'EquitySavesContraetingParty .153 InternationalLaw. TheUnitedNationsConventionon Contraets for the International Sale of Goods . . . .154

Worklng the Web Internet Exerclses

. . . .154

Business Law Cases. . . .155

10 Agreement . . . .156

Agreement . . . .157

Offer .157 BusinessEthics'AContractIsa ContractIs a Contract

. .158

Speclal Offers .159 Case10.1'Mesarosv.UnitedStates .159 Case10.2' Limv.The.TVCorporationInternational. . . .161

Termlnatlon of Offers .162 ContemporaryTrend

.

OptionContracts .164 Acceptance .164 InternetLaw&OnlineCommerce

.

Nondisc/osure Agreements .167 Worklng the Web Internet Exerclses

. . . .167

Business Law Cases. . . .167

Issues In Business Ethlcs

. . . .168

11 Consideration and Equity

. . . .170

Conslderatlon . . . .171

CaseU.l'Alden v.Presley .172 CaseU.2 . Cooperv.Smith .173 ContemporaryTrend

.

WhenIs Consideration Inadequate? .174 Contracts Lacklng Conslderatlon .174 Case11.3' Dementasv.Estate ofTallas. . . .175

Contemporary Trend

.Special Business Contraets

.177 Settlement of Clalms .177 Equlty: Promlssory Estoppel .177 Worklng the Web Internet Exerclses

.. . . .179

Business Law Cases. . . .179

Issues In Business Ethlcs

... . . .180

12 Capacity and Legality

.182

Mlnors . . . .183

Case12.1. Jonesv.FreeFlightSportAviation,Ine.. . . .185

ContemporaryTrend

.

SpeeialTypesof Minors' Contraets .186 Mentally Incompetent Persons .186 Intoxlcated Persons .187 Legallty .187 Case12.2. Roodv.Fidelity& GuarantyLife Insuranee Co. . . .. . . .. . . .189

Case12.3.Rynov.1jra .190 Lawfulness of Speclal Business Contracts

. . . .191

BusinessEthics

.

An UnlieensedContraetorGetsDunked.192 Case 12.4 . Zivieh v. Mentor Soceer Club,Ine. . . .193

ContemporaryTrend

.

CovenantNot to Compete .194 Unconsclonable Contracts .194 Worklngthe Web Internet Exerclses

. . . .195

Business Law Cases. . . .195

Issues In Business Ethlcs

. . . .197

13 Genuineness of Assent

.198

Mlstake . . . .199

Case13.1' WellsFargoCreditCorp.v.Martin. . . .200

Fraud . . . .201

Case13.2. Wilsonv.WesternNationalLife Insuranee Co. . . .203

Undue Influence . . . .204

CONTENTS ix Duress . . . .205

BusinessEthics

.

EeonomieDuress .205 Worklng the Web Internet Exerclses

.. . . .206

Business Law Cases . . . .206

Issues In Business Ethlcs

. . . .207

14 Writing and Formality

. . . .209

Statute of Frauds .210 Contracts That Must Be In Wrltlng .211 Case 14.1' Sutton v. Warner. . . .212

BusinessEthics

.

An OralContraetIsn't Worth the Paper It's WrittenOn .214 Formalltyofthe Wrltlng .215 International Law' ChineseChopsand JapaneseHankos as Signatures .215 Parol Evldence Rule .217 Worklng the Web Internet Exerclses

... . . .218

Business Law Cases. . . .218

Issues In Business Ethlcs . . . .220

15 Third-Party Rights and Discharge

.. .221

Asslgnment of Rlghts

. . . .222

Case 15.1' AeeruedFinaneialServiees,Ineorporated v. Prime Retail, Ineorporated . . . .224

ContemporaryTrend

.

SueeessiveAssignments of the Same Right . . . .. .225

Delegatlon of Dutles

. . . .225

Thlrd-Party Beneflclarles . . . .226

Case 15.2 . Bain v. Gillispie . . . .229

Covenants and Condltlons .229 Dlscharge of Performance. . . .231

Worklng the Web Internet Exerclses

. . . .233

Business Law Cases . . . .234

Issues In Business Ethlcs . . . .235

16 Remedies for Breach ofTraditional

and Online Contracts

.236

Performance and Breach .237 Case16.1' Chodosv.WestPublishingCompany, Ine. . . . . . . .239

Monetary Damages .240 Case 16.2' Parkerv.TwentiethCentury-FoxFilm Corp... .242

Case 16.3' Californiaand HawaiianSugarCo. v. SunShip,Ine. .243 Resclsslon and Restltutlon

. . . .245

ContemporaryTrend

.

Musta WeddingRingBeReturned if the Engagement Is Broken Off? . . . .245

Equltable Remedies .246 Torts Assoclated wlth Contracts

. . . .246

BusinessEthics

.

Interferencewith a Contraet .247 Case16.4' O'Neillv.GallantInsuraneeCompany

. . . .248

Worklng the Web Internet Exerclses

. . . .249

Business Law Cases . . . .249

Issues In Business Ethlcs . . . .251

17 E-Contracts and Licensing

.. . . .253

Domaln Names

. ... . ... ...

... ...

.255

Internet Law &Online Commerce

.

DomainName AntieybersquattingAet .256 Case17.1. E.&l.GalloWineryv.SpiderWebsLtd. .257 Internet Law & Online Commerce .Armani Outmaneuvered for Domain Name . . . .257

E-Contracts .258 Internet Law & Online Commerce

.

E-Contraets Writing Requirement . . . .258

InternetLaw& OnlineCommerce'E-Signatures .258 E-Llcenslng .259 InternetLaw&OnlineCommerce

.

Counteroffers IneffeetualAgainstEleetronieAgents .260 InternetLaw&OnlineCommerce

.

ConsumersSaved from EleetronieErrors .261 Internet Law & Online Commerce

.

Eleetronie Self-Help .262 Case17.2. M.A.MortensonCompany,Ine.V.Timberline SoftwareCorporation .263 Worklng the Web Internet Exerclses

... . . .265

BusinessLawCases . . . .265

Issues In Business Ethlcs . . . .266

Domestic and International

Sales and Lease Contracts

. . .269

18 Formation of Salesand Lease

Contracts . . . .270

UnlformCommerclal Code (UCC) .271 Artlcle 2 (Sales) . . . .272

Case18.1' Heetorv. Cedars-SinaiMediealCenter

. . . .273

Artlcle2A(Leases) .274 Formatlon of Sales and Lease Contracts: Offer

. .275

Contemporary Trend

.

UCC "Firm Offer" Rule . . . .276

Formatlon of Sales and Lease Contracts: Acceptance .277 Contemporary Trend

.

UCCPermitsAdditional Terms

. . . . .277

ContemporaryTrend

.

"Battle of the Forms' .278 UCC Statute of Frauds .278 Contemporary Trend

.

UCC Written Confirmation Rule ... .279

InternationalLaw'Lettersof Creditin InternationalTrade.281 Worklng the Web Internet Exerclses

.. . . .281

BusinessLawCases . . . .282

Issues In Business Ethlcs

. . . .283

PARTIV

19 Performance of Sales and Lease

Contracts

. . . .284

Identlflcatlon and Passage of Tltle .285 Rlsk of Loss: No Breach of Sales Contract

. . . .286

ContemporaryTrend

.

ShippingTerms .287 Rlsk of Loss: Condltlonal Sales

. . . .288

Case 19.1' Prewitt V.Numismatie Funding Corp. .289 Rlsk of Loss: Breach of Sales Contract .290 Rlsk of Loss: Lease Contracts

. . . .290

ContemporaryTrend'Insuring AgainstLoss of Goods

.. ..290

Sales by Nonowners

. . . .291

InternationalLaw'InternationalTradeTerms .292 Worklng the Web Internet Exerclses

.. . . .292

Business Law Cases . . . .293

Issues In Business Ethlcs

. . . .294

20 Remedies for Breach of Sales

and Lease Contracts

.295

Seller's and Lessor's Performance

. . . .296

Case20.1' loe OilUSA,Ine.V.ConsolidatedEdisonCo. of NewYork,Ine. .298 BusinessEthics'GoodFaithandReasonableness .300 Buyer's and Lessee's Performance .300 Seller's and Lessor's Remedies

. . . .302

ContemporaryTrend

.

LostVolumeSeller .304 Buyer's and Lessee's Remedies .305 Addltlonal Performance Issues .307 BusinessEthics

.

UneonseionableContraet .308 Worklng the Web Internet Exerclses

... . . .309

Business Law Cases . . . .310

Issues In Business Ethlcs

. . . .311

21 Sales and Lease Warranties

.312

Express Warranty . . . .313

Case 21.1 . Daughtrey V.Ashe. . . .314

Implled Warranty of Merchantablllty .315 Case21.2' DennyV.FordMotor Company .316 Implled Warranty of Fltness for a Particular Purpose . . . .317

Case21.3' MaekMasseyMotors,Ine.V.Garniea .318 Warranty Dlsclalmer

. . . .319

InternetLaw &OnlineCommerce

.Warranty Diselaimers

in Software Lieenses . . . .319

Magnuson-Moss Warranty Act .320 Speclal Warrantles of Tltle and Possesslon .320 Worklng the Web Internet Exerclses

. . . .322

Business Law Cases . . . .322

Issues In Business Ethlcs . . . .323

Negotiable Instruments

and Electronic Banking . . . . .325

22 Creation ofNegotiable

Instruments

.326

Negotlable

Instruments

.327

Types of Negotlable Instruments

. . . .328

Creatlng a Negotlable Instrument

.. . . .332

ContemporaryTrend

.

AuthorizedRepresentative's Signature

.333

Uncondltlonal Promlse or Order to Pay .333 Contemporary Trend

.

Payable to Order or to Bearer

. . . . .334

Flxed Amount of Money .335 Payable On Demand or at a Deflnlte Time .336 Nonnegotlable Contract .337 InternationalLaw' NegotiableInstrumentsPayable in Foreign Curreney . . . .338

Worklng the Web Internet Exerclses

. . . .338

Business LawCases. . . .338

Issues In Business Ethlcs . . . .340

23 Transferability and Holder in Due

Course

. . . .341

Transfer by Asslgnment .342 Transfer by Negotlatlon

. . . .343

Indorsement . . . .344

Types of Indorsements .345 Holder In Due Course (HDC) .349 Requlrements for HDC Status

.. . . .350

Contemporary Trend.Shelter Principie.. . . .352

Worklngthe Web Internet Exerclses

. . . .353

Business Law Cases

. . . .353

Issues In Business Ethlcs

. . . .354

24 Liability, Defenses, and Discharge

. . . .355

Slgnature Llablllty .356 Case24.1.GrandIs/andProductionCreditAssn. v. Humphrey . . . .357

Forged Indorsement .361 Business Ethics 'Imposter Rule . . . .361

Business Ethics. Rctitious Payee Rule . . . .362

Warranty Llablllty . . . .362

Defenses .363 Contemporary Trend

.

FrCRuleUmits HDCStatus .366 Dlscharge .367 Worklngthe Web Internet Exerclses

... . . .367

Business Law Cases. . . .367

25 Checks, Banking, and Wire Transfers .371

The Bank-Customer Relatlonshlp .372 OrdlnaryChecks . . . .373

InternetLaw& OnlineCommerce

.

ElectronicFund Transfer Systems . . . .374

Speclal Types ofChecks .374 InternetLaw &OnlineCommerce' Bank Debit Cards . . . .377

HonorlngChecks 377 ContemporaryTrend

.

Federal Currency Reporting Law. . .379

Forged Slgnatures and Altered Checks .379 The Collectlon Process . . . .381

Commerclal Wlre Transfers . . . .384

Worklng the Web Internet Exerclses

.. . . .385

Business Law Cases . . . .386

Issues In Business Ethlcs

. . . .387

PARTVI

_{Credit and Bankruptcy}

_.389

26 Credit and Security Interests in Real

Property

. . . .390

Introductlon to Credlt

. . . .391

Contemporary Trend

.

Unsecured Credit . . . .392

Securlty Interest In Real Property

. . . .392

RecordlngStatute .394 Case26.1.Bankof SouthPalmBeachesv.Stockton, Whatley,Davin& Company. . . .394

Foreclosure .395 MaterialPerson's Llen .397 Worklng the Web Internet Exerclses

. . . .398

Business Law Cases . . . .398

Issues In Business Ethlcs

. . . .399

CONTENTS xi

27 Secured Transactions and Security

Interests in Personal Property

.400

Securlty Interest In Personal Property

. . . .401

Secured Transactlon-Revlsed Artlcle 9 of the UCC . . . .401

Creatlng a Securlty Interest .403 Perfectlng a Securlty Interest . . . .404

Case27.1'ln re GreenbeltCooperative,Inc. .405 Case 27.2 'In re Phi/lips . . . .406

Prlorlty of Clalms .407 Default and Remedies .409 Artlsan's or Mechanlc's Llens 411 Surety and Guaranty Arrangements

. . . .411

Case27.3. GeneralMotorsAcceptanceCorporation v.Daniels .412 Worklng the Web Internet Exerclses

. . . .413

Business Law Cases . . . .413

Issues In Business Ethlcs . . . .415

28 Bankruptcy and the Bankruptcy Abuse

Prevention and Consumer Protection

Act of2005

.416

Bankruptcy Abuse Preventlon and Consumer Protectlon Act of 2005

. . . .417

BankruptcyProcedure .419 The Bankruptcy Estate

. . . .424

ContemporaryTrend

.

2005Act Umits the Homestead Exemption .425 Preferentlal and Fraudulent Transfers .426 Chapter 7-Uquldatlon . . . .428

Case28.1. U.S.SupremeCourt Kawaauhau v. Geiger . . . .433

ContemporaryTrend

.

DischargeofStudentLoans .434 Chapter 13-Adjustment of Debts of an Individual wlth Regular Income

. . . .435

Chapter 11-Reorganlzatlon

. . . .438

ContemporaryTrend

.

SmallBusinessBankruptcy .443 Chapter12-Famlly Farmerand Famlly FlshermanBankruptcy .443 BusinessEthics

.

BankruptcyFraud .446 Speclal Forms of Bankruptcy .446 Worklng the Web Internet Exerclses . . . .446

Business Law Cases. . . .447

Issues In Business Ethlcs

. . . .448

PARTVII

Agencyand Employment

.. .449

29 Agency Formation and Termination

. .450

Agency .451 Formatlon of an Agency .453 Business Ethics

.

Apparent Agency . . . .454

Prlnclpal's and Agent's Dutles . . . .455

Termlnatlonofan Agency .457 Worklng the Web Internet Exerclses

. . . .460

Business Law Cases . . . .460

30 Liability of Principals and Agents

. . . .462

Agent's Duty of Loyalty to the Principal

. . . .463

Contract Llabllltyto ThlrdPartles .464 Tort Llablllty to Thlrd Partles . . . .466

Case30.1' EdgewaterMotels,Ine.v.Gatzke andWalgreenCo. 467 Case30.2. DesertCabIne.v.Marino. . . .469

Independent Contractor .470 Case 30.3' Torres v. Reardon . . . .472

BusinessEthics'PrincipalLiableforRepoMan'sTort

...

.473

Worklng the Web Internet Exerclses

... . . .473

BusinessLawCases. . . .473

Issues In Business Ethlcs

. . . .475

31 Employment and Worker Protection

Laws

.477

Employmentat WIII .478 Workers' Compensatlon 479 Case31.1. Smithv.Workers'CompensationAppeals Board . . . .480

Occupatlonal Safety . . . .480

FalrLaborStandardsAct (FLSA) .481 BusinessEthics' MicrosoftViolatesEmploymentLaw

. . . .482

Famlly and Medlcal Leave Act

. . . .482

Consolldated Omnlbus Budget Reconclllatlon Act (COBRA) .483 Employment Retlrement Income Securlty Act (ERISA) .483 Immlgratlon Reform and Control Act (lRCA) ... .483

ContemporaryTrend

.

DrugTestingand Polygraph Tests . . . .483

Government Programs .484 Worklngthe Web Internet Exerclses

. .485

Business LawCases . . . .485

Issues In Business Ethlcs ... . . .487

32 Labor Law

. . . .489

LaborLaw .490 Organlzlnga UnIon .491 Case32.1' U.S.SupremeCourt Leehmere,lne. v. NationalLaborRe/ationsBoard.. . . .492

Case32.2. U.S.SupremeCourt NationalLabor RelationsBoardv.ExehangePartsCo. .493 Collectlve Bargaining

... . . .494

Case32.3. U.S.SupremeCourt Marquezv.Sereen AetorsGuild,Ine. .495 ContemporaryTrend

.

State Right-to-WorkLaws .496 Strlkes and Plcketlng

. . . .496

InternalUnlonAffalrs .498 Worklng the Web Internet Exerclses

.. . . .498

Business LawCases . . . .498

Issues In Business Ethlcs . . . .500

33 Equal Opportunity

in Employment

.501

Equal Employment Opportunlty Commlsslon (EEOC) .502 Tltle VII of the Civil Rlghts Act .502 Case33.1' NationalAssoeiationfortheAdvaneementof Co/oredPeople,NewarkBranehv.Townof Harrison, New Jersey . . . .504

Case33.2. Barbanov.MadisonCounty. . . .505

Case33.3. U.S.SupremeCourt Harrisv.Forklift Systems,Ine. .506 ContemporaryTrend

.

Employer'sDefenseto a Charge of Sexual Harassment . . . .... . . .507

Case33.4' U.S.SupremeCourt InternationalUnion,United Automobile,AerospaeeandAgrieulturallmplement WorkersofAmeriea,UAWv.JohnsonContro/s,Ine. .. .508

Civil Rlghts Act of 1866

. . . .510

Equal Pay Act . . . .510

Age Dlscrlmlnatlon In Employment Act 511 Amerlcans wlth Dlsabllltles Act 511 Case33.5. U.S.SupremeCourt PGATour.Ine.v.Martin .512 Afflrmatlve Actlon .513 State and Local Government Antldlscrlmlnatlon Laws .514 InternationalLaw'InternationalReaehof U.S. AntidiseriminationLaws .514 Worklngthe Web Internet Exerclses

. . . .514

Business Law Cases. . . .515

Issues In Business Ethlcs . . . .516

PARTVIII

Business Organizations

and Ethics

.517

34 Entrepreneurship, Sole Proprietorships, and General Partnerships

. . . .518

Entrepreneurshlp .519 Sole Proprletorshlp

. . . .520

ContemporaryTrend. d.b.a-"DoingBusinessAs"

. ... ...520

Case34.1' Vernonv.Sehuster.d/b/a DiversityHeating and Plumbing . . . .521

GeneralPartnershlp .522 Case34.2.Vohlandv.Sweet .524 Rlghts and Duties of General Partners . . . .525

Llabllltyof General Partners .527 Case 34.3 . Zuekerman v. Antenueei . . . .528

Case34.4. EdwardA.KemmlerMemorialFoundation v. Mitehell . . . .529

Dlssolutlon of a General Partnershlp .530 ContemporaryTrend

.

Rightof Survivorship .532 Worklng the Web Internet Exerclses

. . . .532

Business Law Cases . . . .532

Issues In Business Ethlcs

. . . .534

35 Limited Partnerships

. . . .535

Llmlted Partnershlp .536 Formatlon of a Llmlted Partnershlp .537 Contemporary Trend

.

Master Limited Partnership . . . .540

Llablllty of General and Llmlted Partners

. . . .540

Business Law Cases . . . .543

Issues In Business Ethlcs . . . .544

36 Domestic and Multinational Corporations .545 Nature ofthe Corporatlon

. . . .546

ContemporaryTrend

.

Seleetinga CorporateName

...549

IncorporatlonProcedures .550 Contemporary Trend .SCorporations . . . .555

Flnanclngthe Corporatlon .555 ContemporaryTrend

.

Stock Optionsand Stock Warrants.557 ContemporaryTrend'CloseCorporation .559 Corporate Powers . . . .559

Dlssolutlon and Termlnatlon of Corporatlons

... .560

InternationalLaw'International BranehOffiees .561 InternationalLaw'International SubsidiaryCorporation

..561

Worklng the Web Internet Exerclses .562 Business Law Cases . . . .562

Issues In Business Ethlcs

. . . .564

37 Corporate Directors, Officers, and Shareholders

. . . .565

Shareholders .566 Case37.1'KinneyShoeCorp.v.Polan . . . .572

Internet Law & Online Comrnerce

.

Corporation Codes ReeognizeEleetronieCommunieations 572 Board of Dlrectors .573 BusinessEthics

.

Sarbanes-OxleyAet ImposesOuties on Audit Committee . . . .575

CorporateOfflcers .576 BusinessEthics

.

Sarbanes-OxleyAetImprovedCorporate Governanee .577 Llablllty of Dlrectors and Offlcers .577 Case37.2' Smithv.VanGorkom .579 ContemporaryTrend

.

Indemnifieationand 0&0 Insuranee Proteetion . . . .582

CriminalLlablllty .582 Worklng the Web Internet Exerclses

. . . .582

Business Law Cases. . . .583

Issues In Business Ethlcs

. . . .584

38 Corporate Mergers, Tender Offers, and Shareholder Resolutions

.586

Proxy Sollcltatlon . . . .587

Shareholder Resolutlon . . . .589

Business Ethics.Shareholder Resolution . . . .589

Mergers and Acqulsltlons . . . .590

Case38.1 . In.the Matter of theAppraisalof Shel/Oil Company .593 Tender Offers .594 Contemporary Trend.Leveraged Buyouts . . . .595

Case38.2. ParamountCommunieationsIne.v.QVC NetworkIne. .597 State Antltakeover Statutes . . . .598

Case38.3. U.S.SupremeCourt CTSCorporation v.OynamiesCorporationofAmeriea .598 InternationalLaw'TheExon-RorioLaw .599 CONTENTS X1ll Worklng the Web Internet Exerclses .599 Business Law Cases . . . .600

Issues In Business Ethlcs

. . . .602

39

Limited Liability Companies

and Limited Liability Partnerships

.. .604

Llmlted Llablllty Company (LLC) .605 ContemporaryTrend

.

OreamWorksSKG,LLC .606 Member'sLlmlted Llablllty .606 Case 39.1' page v. Roseoe,LLC .. . . .. .. .607

Case39.2. CreativeResoureeManagement,Ine. v. Soskin . . . .609

Formatlon of an LLC .610 ContemporaryTrend

.

WhyOperatea Business as a Limited Liability Company (LLC)? . . . .613

Management of an LLC . . . .613

Dlssolutlonof an LLC .616 Llmlted LlabllltyPartnershlp (LLP) .617 ContemporaryTrend

.

AeeountingFirms Operate as LLPs . .. .. .. . . .. . . .. . . .. .619

Worklng

the Web Internet Exerclses .619 Business Law Cases. . . .619

Issues In Business Ethlcs

. . . .621

40

Franchises and Special Forms

ofBusiness . . . .622

Franchlse . . . .623

International Law'International Franehising .628 Llabllltyof Franchlsor and Franchlsee .628 Case40.1' Cislawv. SouthlandCorporation. . . .629

Case 40.2 . Martin v. MeOonald's Corporation . . . .630

Case40.3' HolidayInns, Ine.v.Shelburne. . .. . . .631

Llcenslng . . . .632

JolntVenture

.633 InternationalLaw' Chinese-U.S. International Joint Venture . . . .634

Strateglc Alllance . . . .635

Internet Law & OnlineCommerce

.

StrategieInternet Allianees in China .. . . .635

Worklngthe Web Internet Exerclses

... ..635

Business Law Cases . . . .636

Issues In Business Ethlcs

. . . .637

41 Investor Protection and Online Securities Transactions

. . . .639

The Securltles and Exchange Commlsslon (SEC) . . . .640

Case41.1' U.S.SupremeCourt Seeurities andExehangeCommissionv.Edwards .641 Golng Publlc-The Securltles Act of 1933

. . . .642

Internet Law& OnlineCommerce

.

GoingPublieover the Internet. . . . .643

ContemporaryTrend

.

Smal/CorporateOffering Registration Form (SCOR) . . . .645

Case41.2.Eseottv. BarChrisConstruetionCorp.. . . .646

Tradlng In Securltles- The Securltles Exchange

Act of 1934 . . . .649

Case

41.3.

SeeuritiesandExehangeCommissionv.Texas

Gulf Sulphur Co. . . .. . . .650 Case41.4. U.S.SupremeCourt UnitedStates

v.O'Hagan .651

Short-Swlng Proflts .653

State Securltles Laws

. . . .654

BusinessEthics

.

Sarbanes-OxleyAet Ereetsa Wall

BetweenInvestmentBankersandSeeurity

Analysis .654

Worklng the Web Internet Exerclses

... . . .655

Business Law Cases. . . .655 Issues In Business Ethlcs

. . . .657

42 Ethics and Social Responsibility

ofBusiness

. . . .659

Ethlcs and the Law

. . . .660

Business Ethlcs .661

BusinessEthics'QuiTamLawsuit .661

Case42.1' Bradleyv.MeDonald'sCorporation

. . . .662

Case42.2. PizzaHut,Ine.v.PapaJohn'sInternational,

Ine. . . .664

BusinessEthics

.

EnronCorporationPlunges

intoBankruptey ..665

Social Responslblllty of Business .667

Case42.3 . Wal-MartStores,Ine.v.SamaraBrothers,

Ine. . . .667

BusinessEthics

.

StateFarm:NotSueha Good

Neighbor .669

BusinessEthics

.

Sarbanes-OxleyAetPromptsPublie

Companies to Adopt Code of Ethies . . . .670

InternationalLaw'UnitedNationsCodeofConduet

forTransnational Corporations . . . .671

Worklngthe Web Internet Exerclses .672

Issues In Business Ethlcs

. . . . .. . . .672

PARTIX

Government Regulation

... .675

43 Administrative Law

. . . .676

Admlnlstratlve Agencies. . . .. . . . .677

Admlnlstratlve Law . . . .678

Case43.1' U.S.SupremeCourtFoodandDrug Administrationv.Brown& WilliamsonTobaeeo

Corporation .680

Case43.2 . U.S.SupremeCourt NewYorkv. Burger. . . . .682

Judicial Revlew of Admlnlstratlve Agency Actlons . .683 Dlsclosure of Agency Admlnlstratlve Actlons

. . . .684

Worklng the Web Internet Exerclses .686 Business Law Cases . . . .686

Issues In Business Ethlcs

. . . .687

44 Consumer Protection . . . .689

Food, Drug, and Cosmetlc Safety .690

Contemporary Trend .Food Safety . . . .691

Business Ethics

.

Safety Warnings About Viagra .692

Product Safety . . . .692

BusinessEthics'LemonLaws .693

Unfalr and Deceptlve Practlces

. . . .693

Case44.1 . U.S.SupremeCourtFederal Trade

Commissionv.Colgate-PalmoliveCompany .694 BusinessEthics'Do-Not-CallRegistry .695

Debtor Protectlon Law .695

InternationalLaw.United Nations Biosafety Protoeol

for Genetieal/y Altered Foods . . . .697

Worklngthe Web Internet Exerclses

. . .698

BusinessLawCases . . . .698

Issues In Business Ethlcs

. . . .700

45 Environmental Protection

. . . .701

Envlronmental Protectlon 702

Alr Pollutlon . . . .703

Case45.1. U.S.SupremeCourt Whitman,Administrator of EnvironmentalProteetionAgeneyv.American

TruekingAssoeiation. . . .704

Contemporary Trend'Indoor Air Pol/ution . . . .704

WaterPollutlon .705

Case45.2. U.S.SupremeCourt SolidWasteAgeney

of NorthernCookCounty,lIIinoisv.UnitedStates

Army Corpsof Engineers 706

Business Ethics

.

lIIegal Dumping of Pol/utants . . . .707 Toxlc Substances and Hazardous Waste 707

ContemporaryTrend

.

Superfund 708

Endangered Specles . . . .709

Case 45.3 . U.S.SupremeCourtTennesseeVal/ey

Authority v. HiII, Seeretary of the Interior . . . .710

State Envlronmental Protectlon Laws 711

IntemationalLaw'KyotoProtoeol .711

Worklng the Web Internet Exerclses

. . . .712

Business Law Cases. . . .712

Issues In Business Ethlcs . . . .714

46 Antitrust Law

715

Federal Antltrust Laws .716

Restralnts of Trade-Sectlon 1 of the Sherman

Act .717

BusinessEthics

.

TheDepartmentof JustieeFIunks

the Ivy League Sehools .719

Case46.1' U.S.SupremeCourtState Oil Company

v. Khan . . . .722 ContemporaryTrend

.

Trade Assoeiation Members Avoid

AntitrustUability . . . .. . . .. . . .. .723

Monopollzatlon-Sectlon 2 of the Sherman Act

. .723

InternetLaw&OnlineCommerce

.

UnitedStates

v.MicrosoftCorporation .725

Mergers-Sectlon 7 of the Clayton Act

. . . .726

TylngArrangements-Sectlon 3 of the Clayton

Act .728

Prlce Dlscrlmlnatlon-Sectlon 2 of the Clayton

Act .729

Untalr Methods of Competltlon-Sectlon 5

ofthe Federal Trade Commlsslon Act

. . . .730

Exemptlons from Antltrust Laws

.. . . .731

State Antltrust Laws .731

PARTX

_{Property . . . .737}

47 Personal Property and Bailment 738 Personal Property

. . . .739

Acqulrlng Ownershlp of Personal Property

. . . .739

Case 47.1' Gruen v. Gruen . . . .741

Case47.2'Gihav.Giha .742 Mlslald, Lost, and Abandoned Personal Property. . . .743

Case 47.3 . WiIIsmore v. Townshipof Oceola, Michigan 744 Ballments .745 Case47.4 . Sisters of Charityof the IncarnateWord v. Meaux. . . .746

InternationalLaw'TreasureTrove .750 Worklng the Web Internet Exerclses

.. . . .751

Business Law Cases. . . .751

Issues In Business Ethlcs

. . . .753

48 Real Property . . . .754

Real Property

. . . .755

Contemporary Trend' Air Rights . . . .756

Estates InLand .756 ConcurrentOwnershlp .757 Case48.1 .Cunningham v. Hastings . . . .760

Future Interests

. . . .760

Transfer of Ownershlp of Real Property .761 Case48.2 . TheHowardSavingsBankv. Brunson. . . .762

Case48.3 . Witt v.Miller. . .. .. . .. . . .764

Nonpossessory Interests .765 Case 48.4 . Walker v. Ayres . . . .. . . .766

Worklng the Web Internet Exerclses

... . . .767

Business Law Cases. . . .767

Issues In Business Ethlcs . . . .768

49 Landlord- Tenant Relationship

and Land Use Regulation

770

Landlord-Tenant Relatlonshlp

. . . .771

Landlord'sandTenant'sDutles 773 Case 49.1 . Solow v. Wellner . . . .775

Premlse Llablllty . . . .776

Case49.2. Feldv.Merriam 776 Transfer of Rlghts to Leased Property 777 ContemporaryTrend

.

Rent Control 779 Land Use Control 780 Case49.3. Guinnanev.SanFranciscoCityPlanning Commission. . . .780

Worklng the Web Internet Exerclses

. . . .783

Business LawCases. . . .783

Issues In Business Ethlcs

. . . .784

PARTXI

_{SpecialTopics}

_.785

50 Insurance . . . .786

Insurance . . . .787

Case50.1. AmexLifeAssuranceCompanyv.Slome CapitalCorp. 789 CONTENTS xv Llfe Insurance 790 Health and Dlsablllty Insurance

. . . .792

Flreand Homeowners'Insurance .792 ContemporaryTrend

.

Mold EatsAwayat Insurers' Profits . . . .794

Automoblle Insurance . . . .794

ContemporaryTrend

.

UmbrellaInsurancePolicy 796 Business Insurance 797 Worklng the Web Internet Exerclses

.. . . .799

Business Law Cases . . . .799

Issues In Business Ethlcs

. . . .800

51 Liability of Accountants

.802

Publlc Accountlng .803 Llablllty of Accountants to Thelr Cllents .805 Llablllty of Accountants to Thlrd Partles .806 Case51.1. CreditAllianceCorporationv.Arthur Andersen&Co. .807 Case51.2.IndustrialLoanThriftGuarantyCorporation oflowav.Reese& Company,P.C. .808 Llablllty of Accountants Under Securltles Laws

. .810

BusinessEthics

.

AccountanrsDutyto ReportClienrs lIIegalActivity .811 Criminal Llablllty of Accountants

. . . .812

Accountants' Prlvllege and Work Papers . . . .813

ContemporaryTrend

.

Sarbanes-OxleyAct Regulates Accounting Practices . . . .813

Worklng the Web Internet Exerclses

. . . .814

Business Law Cases. . . .814

Issues In Business Ethlcs . . . .816

52 Wills, Trusts, and Living Wills

.817

WIII .818 ContemporaryTrend

.

VideotapedWiIIs .822 TestamentaryGlft .822 Case 52.1' Opperman v.Anderson . . . .825

Intestate Successlon .825 ContemporaryTrend

.

LivingWiIIand Hea1thCare proxy .826 Trust .826 Living Trust .829 Worklng the Web Internet Exerclses

... . . .830

Business Law Cases . . . .830

Issues In Business Ethlcs . . . .832

53 Family Law

.833

Premarrlage Issues .834 Marrlage .835 ContemporaryTrend.Same-Sex Marriage .836 Parents and Chlldren .837 ContemporaryTrend

.

Surrogacy .838 Marrlage Termlnatlon .839 Dlvlslonof Assets . . . .841

Spousal Support, ChlldSupport, and Chlld Custody

. . . .842

ContemporaryTrend

.

Family Support Act. . . .843

Worklng the Web Internet Exerclses

.. . . .845

Business Law Cases. . . .845

PART XII Global Environrnent .847

54 International and World Trade Law

. .848

The Unlted States and Forelgn Affalrs

. . . .849

Case54.1. U.S.SupremeCourtCrosby,Secretary

ofAdministrationandFinanceof Massachusetts v.NationalForeignTradeCouncil .850

Sources of Internatlonal Law . . . .850

The Unlted Natlons . . . .851

Intemationallaw

.

InternationalMonetaryFund

(IMF) .853

Intemationallaw'WorldBank .854

Reglonallnternatlonal Organlzatlons

. . . .854

Internationallaw.Free Trade Area of the Americas

(FTAA) .857

The World Trade Organlzatlon (WTO)

. . . .858

Internationallaw'China Joinsthe WTO. . . .858 Internationallaw'TheInternationalCriminalCourt .860 Natlonal Courts to Decide Internatlonal

Disputes .860

Internationallaw.JewishLawand the Torah .863

Intemationallaw'IslamicLawandtheKoran

.863

Intemationallaw'HinduLaw-Dharmasastra .864

Worklng the Web Internet Exerclses

... . . .864

Business Law Cases . . . .864

Issues In Business Ethlcs . . . .865

APPENDIX

A The Constitution

of the United States

.867

ApPENDIXB Uniforrn Cornrnercial

Code (2002 Official Text),

Artic1e 2

. . . .877

APPENDIXe Sarbanes-Ox1ey Act

of 2002 (Excerpts)

.891

Glossary

.897

Case Index . . . .925