Students will select a current business law related legal issue/problem and write a Reflective Paper on that issue.? The paper will include at least 3 current sources and a personal reflectio

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MNGT 140 Business Law I – Open Educational Resource Textbook

Authors: Donna, Mandl, JD, Tim Faith, JD, & Jill Burke, MLIS

Preface This textbook is for use with MNGT 140 Business Law I, a business law survey course covering a variety of legal topics, including sources of law, contracts, torts, criminal law, employment law, agency law, intellectual property and business ethics. The authors of this open educational resource text based the content on “Business and the Legal Environment” located at http://2012books.lardbucket.org/books/business-and-the-legal- environment/ pursuant to a Creative Commons license CC BY-NC-SA. Additional content has been provided by the authors under the same license, and third party content has been curated in sections below where noted. The Second Edition of this text includes updates by the authors to the content, and includes new legal research on recent cases and changes to the law since the original edition was published for use in the classroom in 2018. In addition, new tables and figures have been added to the text, and a table of cases cited throughout the text has been added for quick reference. Materials here are from other sources, but any errors that remain in the content provided remain the responsibility of the authors.

Preface ………………………………………………………………………………………………………………………………………………. 1 Figures, Tables & Cases …………………………………………………………………………………………………………………….. 4 Introduction: Law and Legal Systems ………………………………………………………………………………………………. 12 Classifications of Law ………………………………………………………………………………………………………………………. 12

What Is Law? ……………………………………………………………………………………………………………………………….. 12 Schools of Legal Thought …………………………………………………………………………………………………………………. 12

Legal Positivism: Law as Sovereign Command ………………………………………………………………………………… 13 Natural Law …………………………………………………………………………………………………………………………………. 13 Types of Laws ……………………………………………………………………………………………………………………………… 15 Constitutions ………………………………………………………………………………………………………………………………… 15 Statutes and Treaties in Congress ……………………………………………………………………………………………………. 16 Delegating Legislative Powers: Rules by Administrative Agencies …………………………………………………….. 16 State Statutes and Agencies: Other Codified Law …………………………………………………………………………….. 17 Judicial Decisions: The Common Law …………………………………………………………………………………………….. 17 Civil versus Criminal Cases …………………………………………………………………………………………………………… 18 Substance versus Procedure …………………………………………………………………………………………………………… 19

Governmental Powers ……………………………………………………………………………………………………………………… 19 General Structure of the Constitution ………………………………………………………………………………………………. 19 Separation of Powers and Judicial Review ………………………………………………………………………………………. 20 Priority of Laws ……………………………………………………………………………………………………………………………. 22 Commerce Clause …………………………………………………………………………………………………………………………. 23 Early Commerce Clause Cases ……………………………………………………………………………………………………….. 23 From the New Deal to the New Frontier and the Great Society:1930s–1970 ………………………………………… 24 The Substantial Effects Doctrine: World War II to the 1990s …………………………………………………………….. 25

Bill of Rights and Businesses …………………………………………………………………………………………………………….. 28 First Amendment ………………………………………………………………………………………………………………………….. 28 Fourth Amendment ……………………………………………………………………………………………………………………….. 30 Fifth Amendment ………………………………………………………………………………………………………………………….. 31

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Fourteenth Amendment: Due Process and Equal Protection Guarantees ……………………………………………… 32 Common Law ………………………………………………………………………………………………………………………………….. 34

Our English Tradition ……………………………………………………………………………………………………………………. 34 Equitable Remedies versus Legal Remedies …………………………………………………………………………………….. 35 Legal and Political Systems of the World ………………………………………………………………………………………… 36

Role of Judiciary ……………………………………………………………………………………………………………………………… 36 Robinson v. Audi ………………………………………………………………………………………………………………………….. 37 State Court Systems ………………………………………………………………………………………………………………………. 38 Limited Jurisdiction Courts ……………………………………………………………………………………………………………. 38 General Jurisdiction Courts ……………………………………………………………………………………………………………. 39 Appellate Courts …………………………………………………………………………………………………………………………… 39 The Federal Court System ……………………………………………………………………………………………………………… 40 Jurisdiction ………………………………………………………………………………………………………………………………….. 41 Legal Procedure, Including Due Process and Personal Jurisdiction …………………………………………………….. 46 Alternative Dispute Resolution ………………………………………………………………………………………………………. 50

Torts ……………………………………………………………………………………………………………………………………………….. 52 Overview of Tort Law …………………………………………………………………………………………………………………… 52 Definition of Tort …………………………………………………………………………………………………………………………. 52 Kinds of Torts ………………………………………………………………………………………………………………………………. 53 Dimensions of Tort Liability ………………………………………………………………………………………………………….. 53 Damages ……………………………………………………………………………………………………………………………………… 55 Intentional Torts Against Persons …………………………………………………………………………………………………… 56 Intentional Torts Against Property ………………………………………………………………………………………………….. 64 Negligence …………………………………………………………………………………………………………………………………… 66 Strict Liability ………………………………………………………………………………………………………………………………. 72

Criminal Law ………………………………………………………………………………………………………………………………….. 74 Types of Crimes …………………………………………………………………………………………………………………………… 76 Major Offenses against the Person ………………………………………………………………………………………………….. 76 Theft and Related Property Offenses ………………………………………………………………………………………………. 78 Offenses against Property and Other Public Order Offenses ………………………………………………………………. 80 The Nature of the Criminal Act ………………………………………………………………………………………………………. 85 Defenses to Criminal Liability ……………………………………………………………………………………………………….. 86 Criminal Procedure and Constitutional Safeguards …………………………………………………………………………… 89

Common Law Contracts Introduction ………………………………………………………………………………………………. 94 The Role of Contracts in Modern Society ………………………………………………………………………………………… 94 The Definition of Contract …………………………………………………………………………………………………………….. 95 Overview of the Contracts Materials ……………………………………………………………………………………………….. 95 Sources of Contract Law ……………………………………………………………………………………………………………….. 96 Basic Classification of Contracts …………………………………………………………………………………………………….. 98 Formal Contracts v. Informal Contracts …………………………………………………………………………………………… 98 Explicitness ………………………………………………………………………………………………………………………………….. 99 Mutuality …………………………………………………………………………………………………………………………………… 100 Enforceability …………………………………………………………………………………………………………………………….. 101 Terminology: Suffixes Expressing Relationships ……………………………………………………………………………. 102

Contract Formation ……………………………………………………………………………………………………………………….. 103 Offer and Acceptance – The Agreement ………………………………………………………………………………………….. 103 Consideration ………………………………………………………………………………………………………………………………… 116

A Definition of Consideration ………………………………………………………………………………………………………. 116 Legal Sufficiency ………………………………………………………………………………………………………………………… 117 Promises Enforceable without Consideration …………………………………………………………………………………. 122

Legality ………………………………………………………………………………………………………………………………………….. 125 Agreements in Violation of Statute ……………………………………………………………………………………………….. 126 The Statute of Frauds ……………………………………………………………………………………………………………………. 132

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Defenses to Contract Formation ……………………………………………………………………………………………………… 140 Duress ……………………………………………………………………………………………………………………………………….. 140 Mistake ……………………………………………………………………………………………………………………………………… 147 Capacity …………………………………………………………………………………………………………………………………….. 149

Contract Interpretation, Performance & Breach …………………………………………………………………………….. 153 The Parol Evidence Rule ……………………………………………………………………………………………………………… 153 Interpretation of Agreements: Practicalities versus Legalities …………………………………………………………… 155 Discharge by Performance (or Nonperformance) of the Duty …………………………………………………………… 157 Discharge by Conditions …………………………………………………………………………………………………………………. 160 Discharge by Agreement of the Parties ……………………………………………………………………………………………….. 162 Discharge When Performance Becomes Impossible or Very Difficult …………………………………………………………. 163

Third Parties to Contracts ……………………………………………………………………………………………………………… 168 Assignment of Rights ………………………………………………………………………………………………………………….. 168 Delegation of Duties ……………………………………………………………………………………………………………………. 174 Third-Party Beneficiaries …………………………………………………………………………………………………………….. 176

Contract Remedies …………………………………………………………………………………………………………………………. 179 Purpose of Remedies …………………………………………………………………………………………………………………… 179 Legal Remedies: Damages …………………………………………………………………………………………………………… 180 Equitable Remedies …………………………………………………………………………………………………………………….. 183 Limitations on Contract Remedies ………………………………………………………………………………………………… 185

The Uniform Commercial Code (UCC) …………………………………………………………………………………………… 191 Scope of the UCC ……………………………………………………………………………………………………………………….. 192 Scope of Articles 2 and 2A and Definitions ……………………………………………………………………………………. 192 Sales Law Compared with Common Law Contracts ……………………………………………………………………….. 195

Title and Risk of Loss Under the UCC ……………………………………………………………………………………………. 200 Transfer of Title ………………………………………………………………………………………………………………………….. 200 Goods Identified to the Contract …………………………………………………………………………………………………… 201 Title from Nonowners …………………………………………………………………………………………………………………. 204 Risk of Loss ……………………………………………………………………………………………………………………………….. 207 Insurable Interest ………………………………………………………………………………………………………………………… 210

UCC Performance & Remedies ………………………………………………………………………………………………………. 211 Performance by the Seller ……………………………………………………………………………………………………………. 211 Performance by Buyer …………………………………………………………………………………………………………………. 214 Remedies …………………………………………………………………………………………………………………………………… 218 Seller’s Remedies ……………………………………………………………………………………………………………………….. 219 Buyer’s Remedies ……………………………………………………………………………………………………………………….. 222 Excuses for Non-Performance ………………………………………………………………………………………………………. 225

Product Liability & Warranties ……………………………………………………………………………………………………… 226 History of Products-Liability Law …………………………………………………………………………………………………. 226 Current State of the Law ………………………………………………………………………………………………………………. 228

Warranties …………………………………………………………………………………………………………………………………….. 228 Types of Warranties ……………………………………………………………………………………………………………………. 229 Problems with Warranty Theory …………………………………………………………………………………………………… 231 Conflict between Express and Implied Warranties ………………………………………………………………………….. 232 The Magnuson-Moss Act and Phantom Warranties …………………………………………………………………………. 233 Privity ……………………………………………………………………………………………………………………………………….. 234 Contributory Negligence, Comparative Negligence, and Assumption of Risk …………………………………….. 236

Negligence ……………………………………………………………………………………………………………………………………… 237 Typical Negligence Claims: Design Defects and Inadequate Warnings ……………………………………………… 237 Problems with Negligence Theory ………………………………………………………………………………………………… 238

Strict Liability in Tort ……………………………………………………………………………………………………………………. 239 Strict Liability Defined ………………………………………………………………………………………………………………… 239 Section 402A Elements ……………………………………………………………………………………………………………….. 240

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Agency …………………………………………………………………………………………………………………………………………… 245 Types of Agents ………………………………………………………………………………………………………………………….. 245 A. Formation & Duties ………………………………………………………………………………………………………………… 248 B. Scope of Agent Authority ………………………………………………………………………………………………………… 253 C. Agent Liability ……………………………………………………………………………………………………………………….. 255 D. Principal Liability …………………………………………………………………………………………………………………… 257 E. Terminating the Agency Relationship ……………………………………………………………………………………….. 261

Business Ethics ………………………………………………………………………………………………………………………………. 262 How Do Law and Ethics Differ? …………………………………………………………………………………………………… 263 Why Should an Individual or a Business Entity Be Ethical? …………………………………………………………….. 264 Captive Customers ………………………………………………………………………………………………………………………. 265 What Is Business Ethics? ……………………………………………………………………………………………………………… 266 Bringing Ethics to Kickback Textbooks …………………………………………………………………………………………. 266 Argument and Counterargument …………………………………………………………………………………………………… 267 A. Ends v. Means ………………………………………………………………………………………………………………………… 269 B. Rights Theories ………………………………………………………………………………………………………………………. 269 C. Duty-Based Ethics ………………………………………………………………………………………………………………….. 274 D. Duty-Based Ethics – Categorical Imperative ………………………………………………………………………………. 279 E. Outcome-Based Ethics …………………………………………………………………………………………………………….. 281 F. Corporate Social Responsibility ………………………………………………………………………………………………… 282 G. Making Ethical Decisions ………………………………………………………………………………………………………… 289

Employment Law …………………………………………………………………………………………………………………………… 292 Employment at Will ……………………………………………………………………………………………………………………. 292 Contract Modification of Employment at Will ……………………………………………………………………………….. 294 A. Employment Statutes ………………………………………………………………………………………………………………. 294 B. Workers Compensation ……………………………………………………………………………………………………………. 300 C. Employment Discrimination …………………………………………………………………………………………………….. 306 D. Enforcing Title VII / EEOC ……………………………………………………………………………………………………… 315

Intellectual Property ………………………………………………………………………………………………………………………. 319 A. Patents …………………………………………………………………………………………………………………………………… 321 B. Trademarks ……………………………………………………………………………………………………………………………. 325 C. Copyright ………………………………………………………………………………………………………………………………. 333 D. Trade Secrets …………………………………………………………………………………………………………………………. 336

Figures, Tables & Cases

Figure 1 Basic Organization of Federal Government …………………………………………………………………………….. 20 Figure 2 Examples of Different Levels of Scrutiny Under 14th Amendment ……………………………………………. 33 Figure 3 The Federal Judicial Circuits …………………………………………………………………………………………………. 41 Figure 4 Dimensions of Tort Liability …………………………………………………………………………………………………. 54 Figure 5 Contract Sources of Law ………………………………………………………………………………………………………. 98 Figure 7 When Is Communication Effective? ……………………………………………………………………………………… 113 Figure 8 Contracts Required to Be in Writing …………………………………………………………………………………….. 134 Figure 9 Assignment of Rights …………………………………………………………………………………………………………. 169 Figure 10 Successive Assignments ……………………………………………………………………………………………………. 173 Figure 11 Delegation of Duties …………………………………………………………………………………………………………. 175 Figure 12 Governing Law of Contracts ……………………………………………………………………………………………… 194 Figure 13 Sales by Nonowners …………………………………………………………………………………………………………. 204 Figure 14 Voidable Title ………………………………………………………………………………………………………………….. 206 Figure 15 Entrustment ……………………………………………………………………………………………………………………… 207

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Figure 16 Broken Smart Phone Needs Repair …………………………………………………………………………………….. 226 Figure 17 Major Products Liabilities Theories ……………………………………………………………………………………. 228 Figure 18 "Money Back Guarantee" ………………………………………………………………………………………………….. 229 Figure 19 Chain of Distribution ………………………………………………………………………………………………………… 235 Figure 20 The Reasonable Design Balance ………………………………………………………………………………………… 238 Figure 21 Differences between Warranty & Strict Liability ………………………………………………………………….. 240 Figure 22 Principal's Tort Liability ……………………………………………………………………………………………………. 258 Figure 23 "Pollution!" by aguscr License CC BY 2.0 ………………………………………………………………………….. 283 Figure 24 An Advertisement for PSA Airlines ……………………………………………………………………………………. 317 Figure 25 Top Cell Phone Manufacturers Revenue Comparison …………………………………………………………… 320 Figure 26 The “Air Phone No. 4” ……………………………………………………………………………………………………… 320 Figure 27 McDonald's Trademark …………………………………………………………………………………………………….. 325 Figure 28 Categories of Trademark Protection ……………………………………………………………………………………. 327 Figure 29 OPI's Nail Polish Bottle …………………………………………………………………….

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