Questions and Answers of Business Law Legal Environment

Eric Schmidt, former CEO of Google, has written:The communication technologies we use today are invasive by design, collecting our photos, comments and friends into giant databases that are
Congress passed the Protection for Lawful Commerce in Arms Act which provides that gun manufacturers and retailers cannot be sued for injuries arising from the criminal misuse of a weapon. Critics
Recall the Texas case Del Lago v. Smith from Chapter 1. In that case, a bartender served drinks when it was obvious that drunken patrons were about to engage in a dangerous bar fight. Smith, who
Self-driving cars are no longer science fiction. These vehicles are programmed to use lasers, sensors, software, and maps to drive themselves. A handful of states have passed laws allowing driverless
The Supreme Court has defined public figures as those who have “voluntarily exposed themselves to increased risk of injury by assuming an influential role in ordering society.” When deciding
Many retailers have policies that instruct employees not to attempt to stop shoplifters. Some store owners fear false imprisonment lawsuits and possible injuries to workers more than losses related
With a national debt in the trillions, people are desensitized to "mere" billions. Stop for a moment and consider$1 billion dollars. If you had that sum, invested it conservatively, and got a 5%
You have most likely heard of the Liebeck v. McDonald’s case. Liebeck spilled hot McDonald's coffee in her lap, and suffered third degree burns. At trial, evidence showed that her cup of coffee was
The Supreme Court has held that businesses can force consumers to arbitrate rather than bring class actions. But at least one study found that individuals rarely sue on their own because it is too
In the Tony Caruso case described throughout this chapter, the defendant offers to settle the case as several stages. Knowing what you do now about litigation, would you have accepted any of the
This chapter is filled with examples of statutes that have been struck down by the courts. Do you like the fact that courts can void laws that they determine to be in violation of the Constitution?
The Supreme Court has stated that “although one may find sexually explicit material tasteless and even immoral, it is constitutionally protected so long as it is not obscene.“ This chapter
What is the proper role of a judge in interpreting the Constitution? Do you believe in judicial activism or judicial restraint?
James Obergefell and John Alarmed at the reported use of drones to kill human targets, the American Civil Liberties Union (ACLU) submitted a broad request under the Freedom of Information Act
During live national coverage of a Super Bowl half-time show, Justin Timberlake tore off part of Janet Jackson’s shirt, exposing her breast for nine-sixteenths of a second. Television network CBS
This chapterpresents various examples where the law intersects with ethics. Jerry and his friends were rude and refused to help. Cher and Nicole Ritchie uttered profanity on live national television
Courts generally follow precedent, but in the Tarasoff case discussed early in this chapter, they did not. Consider the opening scenario based on the Seinfeld season finale. Should Jerry and his
After reading this chapter, do you believe that international law exists? Has your concept of law and legal rules changed?
Cosmetic companies often use gift-with-purchase offers to promote their products. For example, with any $35 Estee Lauder purchase at Nordstrom’s, you can choose a free gift of creams and makeup
Disney decided that only healthy foods could be advertised on its children’s television channels, radio stations, and websites. Candy, fast food, and sugared cereals were banned from its parks. Its
Yanni is the CEO of Butterfly, Inc., which manufactures tractors. A tornado recently destroyed one of the company’s plants which was near Farmfield, Arkansas, a town with a population of roughly
I was a plant manager at a factory that used a lot of steel equipment. When a piece of equipment failed and was not worth repairing, it was sold for scrap. Plant managers usually kept the scrap money
I was working on a trading desk. One year, my team did not make its number, which meant no bonuses and maybe even some of us would be fired. My boss was a good friend of the head of our division so
Beatrix Szeremi immigrated to the U.S. from Hungary. But her American dream turned into a nightmare when she married Charles Wierdsma. He repeatedly beat her and threatened to suffocate and drown
What percentage of your income should you donate to charities? Which charities are most worthwhile? Peter Singer, a Princeton professor, argues that people should give away one-third of their income
Many socially responsible funds are now available to investors who factor their values into their investment choices. For example, the Appleseed Fund avoids tobacco products, alcoholic beverages,
You are negotiating a new labor contract with union officials. The contract covers a plant that has experienced operating losses over the past several years. You want to negotiate concessions from
Steve supervises a team of account managers. One night at a company outing, Lawrence, a visiting account manager, made some wildly inappropriate sexual remarks to Maddie, who is on Steve’s team.
Darby has been working for 14 months at Holden Associates, a large management consulting firm. She is earning $95,000 a year, which sounds good, but does not go very far in New York City. It turns
The late Supreme Court Justice Antonin Scalia argued that because courts are not elected representative bodies, they have no business determining certain cr4itical social issues. He
You have most likely heard of the Liebeck v. McDonalds case. Liebeck spilled hot McDonald's coffee in her lap, and suffered third degree burns. At trial, evidence showed that her cup of coffee was
If you click an “I agree” box, odds are that its terms are binding on you, even if the box contains dozens or even hundreds of lines of dense text. Is this fair? Should the law change to limit
Courts stick to objective (reasonable person) standards when evaluating offers and acceptances. Juries are not asked to “get inside someone’s head”, they are instructed to determine what a
When it comes to giving gifts, which is better -- the Japanese or American rule?
Blair Co.’s top officers approached an investment bank to find a buyer for the company. The Bank sent an engagement letter to Blair with the following language:If, within 24 months after the
Billionaire Warren Buffett said that children should inherit enough money so that they can do anything but not so much that they can do nothing. Is it good for people to inherit money? How much? At
Is an asset protection trust fair? Should wealthy people be able to avoid paying their liabilities? What about perpetual trusts that avoid estate taxes forever? If you were a state legislator, how
Common carriers are not usually liable when property is damaged, but they are not liable for “acts of God” – floods, hurricanes, and the like. Is this fair? If you send a friend an important
In the case of a gratuitous bailment, the bailee is only liable if he is grossly negligent. Is this good policy? If you agree to watch someone’s property, shouldn’t you be required to be careful
Is it sensible to distinguish between inter vivos gifts and gifts causa mortis? Should someone “on his deathbed” be able to change his mind so easily?
Consider revocable gifts. The example early in the chapter was, “The mule is yours from now on, but if you ever start acting stupid again, I’m taking her back.” In such a case, the giver still
When landlords wrongfully withhold security deposits, they can often be sued for three times the amount of the security deposit. Is this reasonable? Should a landlord have to pay $3000 for a $1000
Donny Delt and Sammy Sigma are students and roommates. They lease a house in a neighborhood near campus. Few students live on the block. The students do not have large parties, but they often
The Estates is a suburb outside of Los Angeles. Local zoning ordinances require that lots be “at least one acre in size”. Al owns a one acre lot in The Estates which has never been developed. He
Should Amazon be able to patent the One-Click method of ordering? What about Facebook’s patent on a process that “dynamically provides a news feed about a user of a social network?” Were these
Do you agree with the court that the band Furious George violated the copyright of Curious George?
For much of history, the copyright term was limited to 28 years. Now it is as long as 120 years. What is a fair copyright term? Some commentators argue that, because so much intellectual property is
Virtually any TV show, movie, or song can be downloaded for free on the Internet. Most of this material is copyrighted and was very expensive to produce. Most of it is also available for a fee
Tracking tools provide benefits to consumers but they also carry risks. Should Congress regulate them? If so, what should the law provide?
The Winter case deals with the balance between national security and the environment. Consider these additional issues. What if the President felt it was important to national security to store
Many of the environmental statutes permit citizen suits. As a result, environmental groups bring many lawsuits against both the EPA and polluters, alleging violations of these statutes. Are these
Look at the section entitled “Credit Card Act of 2009 on page 986. All of these activities used to be legal. Which ones were unethical?
The fee on a debit card overdraft can be as high or higher than the amount drawn out. Instead of overdrawing their accounts, consumers would be much better off either not spending the money, using a
Should employers use credit checks as part of the hiring process? On the one hand, each year employers suffer losses of $55 million because of workplace violence while retailers lose $30 billion a
In Boston, 50 restaurants threatened to stop accepting the American Express card if the company refused to reduce the commission it charged on each purchase. Visa International, one of American
Pricegrabber.com is a website that helps online shoppers find the lowest price goods on the Internet. But it cannot always find the cheapest items because some online sellers are afraid to list their
Is it appropriate for U. S. antitrust laws to apply overseas? Should businesspeople who never set foot in the United States be liable for activities they conducted in their own countries?
In the Grisham case, the debtor had virtually no income but owed about $200,000 in debts that could not be discharged. What kind of fresh start is that? Should limits be placed on the total debt that
A bankrupt who owns a house has the option of either paying the mortgage or losing his home. The only advantage of bankruptcy is that his debt to the bank is discharged. The House of Representatives
Some states permit debtors an unlimited exemption on their homes. Is it fair for bankrupts to be allowed to keep multimillion dollar homes, while their creditors remain unpaid? But other states allow
Mary Price went for a consultation about a surgical procedure to remove abdominal fat. When Robert Britton met with her, he wore a nametag that identified him as a doctor, and was addressed as
The SEC believes that anyone in possession of nonpublic material information about a company should be required to disclose it before trading on the stock of that enterprise. Instead, the courts have
Do you agree with the court’s decision in the Stoneridge case?
The company, Facebook, is valued at more than $50 billion. Yet, because it is still privately held, it is not required to make any disclosure about its finances. Once the number of its shareholders
Would the following initiatives improve corporate governance? Can you think of others that would?Shareholder proposals: require the board of directors to implement shareholder proposals that receive
Prior to the DuPont Co.’s annual shareholder meeting, Friends of the Earth Oceanic Society submitted a proposal requiring the company to (1) accelerate its phaseout of the production of
Ford Motor Co. and TheFacebook, Inc. have both created dual classes of stock so that the founders can continue to control their company even after it goes public. Should corporate laws permit this?
In the Bigmar case, the court clearly believed that the directors had lied on the witness stand. Should the directors have been charged with perjury? Did they do the right thing when they lied on the
In the Loudeye case, the court ruled that if the charter has an exculpatory clause, directors are not liable unless they are grossly negligent, motivated by an actual intent to do harm or
Think of a business concept that would be appropriate for each of: a sole proprietorship, a corporation, and a limited liability company.
Strikes and lockouts frequently make the news, especially when a professional sports league is involved. Pro athletes tend to be highly compensated. Does that fact change your opinions about labor
Weigh in on the “card check” controversy. Imagine a company with 100 workers. After union organizers talk to the employees, 55 of them sign an authorization card. Should that be enough to
Union membership has fallen steadily in recent decades in part because many unionized manufacturing jobs have been shipped overseas. Do you believe that unions will make a comeback in new industries?
Union workers earn an average of $200 per week more than non-union workers. Many people believe that unions are an essential part of creating a broad middle class, while others argue that they create
Once a union is recognized, it acts as the exclusive representative for all workers in a bargaining unit, even if some of them do not want the union to represent them. Is this reasonable? Should
Mercedes has just begun work at Photobook.com. What a great place to work! Although the salary is not high, the company has fabulous perks. The dining room provides great food from 7a.m. to midnight,
Are the SOX rules on consulting services sufficiently strict? Should auditing firms be prohibited from performing any consulting services to companies that they audit?
Should the IFRS be adopted in the United States?
As the court discusses in the Couchot case, many accommodation parties and guarantors do not understand their liability when they sign an instrument. (As the saying goes, “Nothing is more dangerous
Banks are liable for forged checks except in the case of the three rules (Imposter Rule, Fictitious Payee Rule, and the Employee Indorsement Rule). Do you think this is the proper allocation of
In desperate financial trouble and fearful of losing his house, Abbott asked his friend Taylor for help. Taylor had been an officer of the Bank, so she put Abbott in touch with some of her former
In the Antuna case, the Antunas were foolish to sign an agreement with an unlicensed contractor to install aluminum siding. There is no evidence that TMS was acting in bad faith. Why should it suffer
A perfected security interest is far from perfect. We examined several exceptions to normal perfection rules involving BIOCs, consumer goods, and so on. Are the exceptions reasonable? Should the UCC
After reading this chapter, will your future behavior as a businessperson change? What specific steps will you be most careful to take to protect your interests?
After reading this chapter, will your behavior as a consumer change? Are there any types of transactions that you might be more inclined to avoid?
In the opening scenario, the bank demanded $5000 from poor Sam for his Jeep that had been repossessed and sold to someone else. As we have seen, Article 9 gives the bank the right to demand this
Review the section “Damages for Non-Acceptance”. In that section’s example, Refinery refused Oilko’s shipment on November 1, when the oil was worth $99 per barrel. Oilko waited three months
The opening scenario presented the true story of a man who paid a great deal of money for a Plymouth Prowler. Do you agree with the court’s decision to award him nearly $30,000 in damages? Or do
Are the UCC’s rules related to cure sensible? If a seller ships goods that are not what you ordered, should you (in many circumstances) be required to give them a chance to “make it right?”
Consider the UCC’s exceptions to the perfect tender rule: usage of trade, course of dealing, and course of performance. Do these all seem reasonable, or are they too lenient on sellers who deliver
“Lemon laws” usually only cover cars. Are there other products that should be covered by similar laws? If so, which ones?
Assume that two computer manufacturers - Alpha and Beta - deliver identical shipments of malfunctioning laptops. The defective machines each cause customers $10,000 in direct damages and $50,000 in
After learning more about implied warranties and disclaimers, would you ever buy an item sold “as is”? Imagine a car salesman who offers you a car for $8,000, but who also says that he can knock
Consider the opening scenario in which a diner cracked a tooth on a fragment of bone hidden in a hamburger. Would society be better off if lawsuits over such injuries were more difficult to win and
Greg manufactures and sells t shirts. As a seller, would he be better off if his contracts indicated “FOB (place of shipment)”, or “FOB (place of destination)”. Explain your answer.
You are about to move, and you take your furniture to a consignment shop. The shop’s creditors seize everything in the store, including your furniture. You demand that the creditors give back your
Imagine that your laptop gets a virus, and you take it to a local computer repair shop. The shop sells your computer to Heidi. Under the entrustment rules in the UCC, Heidi is a buyer in the ordinary
In the Bakalar case involving artwork stolen during World War II, do you agree with the court’s decision? Should the heirs get a chance to recover the drawing that was stolen from their ancestor?
In the opening scenario with the con artist and the cattle, we learned that the original owner would be left out in the cold under the UCC. Is this a fair result? Would it be better to require
This chapter revisits the idea of unconscionability. Courts will sometimes refuse to enforce deals that are, as UCC 2-302 states it, “shocking and fundamentally unfair”. Consider the following

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