Questions and Answers of The Legal Environment Of Business

Ki Corp. is in liquidation under Chapter 7 of the Federal Bankruptcy Code. The bankruptcy trustee has established a new set of books for the bankruptcy estate. After assuming custody of the estate,
What did the “Misleading Advertising Directive”adopted by the European Union’s Commission do?
Jay believes the Commerce Clause enhances the government’s power to regulate business, but Ellie believes the Commerce Clause restricts the government’s power in this regard. How could both be
Martin worked for AMA, a firm that designs and administers retirement plans for 500 clients. The client list is confidential, but no agreement about that existed. When Martin left AMA after five
Lucky Break Wishbone designed, copyrighted, and produced wishbones. While they looked like a wishbone, they were thinner in the arms, more rounded on the edges, and made of graphite. Sears then
A homebuilder registered a copyright for the floor plan of a house. Another builder built homes using the same layout of bedrooms and windows, so the homes had a very similar look. The copyright
United States Gypsum developed a new putty to use on walls and ceilings to cover cracks. A key ingredient in the compound was a silicon product made by another company. The patent application did not
Bohnsack invented a device to help drill oil wells more efficiently. He showed it to a company to see if they wanted to manufacture it. They said no, but the company then filed a patent application
Fisher was interested in buying a piece of property for $20 million. Real estate agent Scheerer brought him together with the property owner. Both promised to pay him 2 percent commission when the
Nielson, a road builder, asked Anderson how much rotomill (recycled asphalt) it had on hand as it needed some for a paving job. Anderson said it had 12,000 to 15,000 tons it would sell for $$25$ a
Izabella had a 20-year Radisson Hotel franchise.The agreement said Izabella “may not perform any construction or renovation without Radisson’s approval, except for routine maintenance and
Many companies have made positive statements about their commitment to diversity in hiring at all levels of the organizations. Is this an ethical commitment only or do companies have a legal
Contractors Source had an account at Amegy Bank.The company received monthly statements. The account agreement said Contractors must report improper checks within 30 days. A bookkeeper stole$844,000
Michael Bloomberg is the largest owner and president of Bloomberg, the media and financial information company. He was sued by an employee who claimed to have suffered sexual harassment, including
Do firms have the right to drug test all job applicants and refuse to hire applicants who test positive for drug use, even if the job in question has no safety or sensitivity concerns?
Two employees were hurt at work and taken to the hospital. Their supervisor told them to be sure to file for workers’ compensation. His supervisor told him their expenses “would be taken care
Lewis worked for a motel chain at the front desk.The company’s director of operations ordered her to be fired because she was not a “good fit” for the image the company wanted to project. She
Wyndham Hotels’ website claimed to protect customers’information. Hackers cracked Wyndham’s customer base three times in a year, costing the customers at least $10 million. The FTC sued
Apple wanted to compete more effectively with Amazon’s Kindle so more iPad owners would read books on iPads instead of Kindle. Apple met with the six largest book publishers and promised them
McGrory worked for Applied Signal Technology in a supervisory position. He was accused of violating the company’s policies on sexual harassment. An internal investigation determined he did not
Baker works as a document clerk for the Minnesota Supreme Court. After she had worked there for 13 years the Minnesota judicial branch adopted a policy concerning proper Internet use and stated that
A chemical company located a new plant in a depressed area with high unemployment in West Virginia. It built a state-of-the-art plant that had the latest pollution control technology meeting all EPA
Discussion of ethics issues focuses on company examples. What personal ethics matter? Surveys indicate that many students have cheated in classes one way or another, pad their resumes when seeking
The Zamora family from Illinois rented a house in Maine via Airbnb. When in the house, one of the Zamora children played with matches and set a fire that killed two members of the family. Zamora sued
An attorney was appointed by a judge to divide and sell property that had been jointly held by a couple that split up and could not agree on how to handle the property. One of the property owners
Should judges consider the social consequences of their decisions that go beyond legal issues? What if the case involves an individual who has committed a crime and the judge is asked to release the
The Naples paid Keystone Building $$620,000$ to build a new home. It had major defects that Keystone failed to correct despite a warranty on the house. A qualified expert said repairs would cost
Mahaney owns Headed West, a shop selling smoking accessories. He hired artists to paint murals on the building’s exterior. The murals showed musicians such as Jimi Hendrix, Jerry Garcia, and
The owners of grocery stores and convenience stores in Kentucky sued the state for violation of equal protection rights because state liquor regulations barred those stores from selling wine or
Proof in criminal cases must be “beyond a reasonable doubt” for there to be a conviction. Is such a high standard likely to lead to many defendants getting off too easily? What is the purpose of
Brogan lied when IRS agents asked if he had received gifts from a company whose employees were in his union. Brogan was convicted on federal bribery charges and for making a false statement to a
Hsu was indicted for violating the Economic Espionage Act by conspiring to steal corporate trade secrets for an anti-cancer drug. The defense requested a copy of the trade secret documents.The
Highgate LTC operated a nursing home. five employees were convicted of crimes relating to their failure to provide required care. Highgate was convicted of criminal liability for willful violation of
Farraj worked at a law firm that represented plaintiffs in a suit against tobacco companies. Plaintiffs’ lawyers prepared a trial plan over 400 pages long that included strategy, deposition
Doxie was convicted of wire fraud (cheating a company out of about a million dollars) and of tax evasion because he did not report the money he stole as income. He received 53 months in prison after
Allmendinger and Oncale ran an investment scam that imposed $100 million in losses on 800 investors.Allmendinger did not cooperate when the scam was investigated; he received 45 years in prison under
Four Rio Tinto employees in China were accused by the government of China of bribing Chinese officials. The company asserted it had no evidence that the activity took place but, nevertheless, fired
TripAdvisor publishes information about hotels. It listed Grand Resort Hotel in Pigeon Forge, Tennessee, as one of the dirtiest hotels in the country. The owner of the hotel sued for false-light
A police officer was served a hamburger at a Burger King at the checkout window. Thinking something was not right, he took off the top bun and saw that an employee had spit on the burger, which was
Miller bought a ski lift ticket at a resort in New Hampshire. He was injured when he hit some snow making equipment that was buried under snow. He sued for negligence. The resort claimed he assumed
A landlord rented a house to people who frequently had loud parties late at night and caused other problems, such as selling illegal drugs. The neighbors called the police several times to
Eating bags of microwave popcorn for years is claimed to cause “popcorn” lung from inhalation of the flavoring used on the popcorn. Plaintiffs with the medical problem sued the popcorn makers and
The Packs bought a home from a seller who claimed to have done “a complete renovation” on the house.In fact, there were major problems with the basement, foundation, electrical, and HVAC
Gish, a trucker, was to pick up a load of fertilizer.His truck had a trailer made by Timpte—an opentop hopper loaded from above. Because the downspout would not go into place into the hopper, Gish
Old Island Fumigation pumped poison into two of the three buildings in a condominium complex to kill bugs. Old Island was told that the third building was sealed from the other two, but in fact, it
The City of New York sued a web-based business, smartapartments.com, that connected people who wanted to rent their apartments for less than a month to people who want to rent apartments for less
Williams entered a Walmart nine times in 27 hours to buy multiple cans of dust remover on each visit.Employees noticed bad behavior by her while in the store, and she said on one visit that she had a
Two boys were unattended by their father in a store. They took bicycles from the rack and rode them around in the store. One crashed and required stitches in his leg. His parents sued for premises
Scherer Design Group, LLC (SDG), provides telecommunications services. Chad Schwartz, an SDG employee, sought to obtain an ownership stake in the firm. When this proved unsuccessful, Schwartz quit to
In April, several employees of Javatech, Inc., a computer hardware developer with 250 employees, started organizing the Javatech Employees Union (JEU). When Javatech refused to voluntarily recognize
Leota Sage saw a local motorcycle dealer’s newspaper advertisement offering a MetroRider EZ electric scooter for $$1,699.$ When she went to the dealership, however, she learned that the EZ model
Guy Holcomb owns and operates Oasis Goodtime Emporium, an adult entertainment establishment. Holcomb wanted to create an adult Internet system for Oasis that would offer customers adult-theme videos
Explain the role played by a board of directors of a corporation.
Define a closely held corporation.
Explain how corporations provide limited liability to their owners.
Explain the steps in forming a limited liability corporation.
Alder, Svingos, and Shaw owned an equal number of shares in a corporation that was organized to run a restaurant. They entered into a shareholders’ agreement that provided, among other things, that
Tom, Lee, John, and a group of their friends want to incorporate a nonprofit organization that will aid needy persons living in their city with food, clothing, and referrals to organizations that
Midcore and NCT, with NCT being the surviving corporation. It subsequently filed for bankruptcy.Shareholders of the twocompanies sued, claiming that the officers and directors did not pay them as
This chapter describes the common corporate forms of business organization in the United States.Business structures outside the United States, however, are often very different. Use the Internet to
Did Congress or the president create administrative agencies? Explain.
Explain the steps in the informal rulemaking process.
What are the goals of the Financial Services Authority in the United Kingdom?
Why do administrative agencies grow over time? Explain.
PLS Group is the owner of the PLS Loan Stores. FTC alleged, among other charges, that the company failed to protect consumer information in a manner that was consistent with the company’s written
The Investment Company Act of 1940 prohibits a mutual fund from engaging in certain transactions in which there may be a conflict of interest between the manager of the fund and its
This chapter introduced administrative law and several administrative agencies. There are, however, many agencies not discussed that play a significant role in creating regulations. Use the Internet
Which five family-related occurrences give an employee the right to seek FMLA leave?
Explain in what ways employers are required by at least three other countries other than the United States to provide better parental leave benefits.
Steve is an employee of Star, Inc., injured in the course of employment while operating a forklift manufactured and sold to Star by Tall Corp.The forklift had a defective design. Under the state’s
Laws that govern employment relationships indicate the ethical norms a particular country or state wishes to advance. This can be seen no more clearly than in cases of family or medical leave.Visit
How does the International Labor Office (ILO) attempt to improve working conditions for employees all over the world?
On the night of February 28, Local 94 called a strike and some of its members began picketing the New York Post’s printing facility in the Bronx, New York. For some time during that night, certain
You have learned about many laws and regulations that govern labor–management relations. Many of those laws and regulations are used in each of the NLRB’s decisions. Visit the NLRB’s website
Amy was denied employment in a certain company because she was not married. One of the company’s rules states that only married female employees are eligible for employment. There are murmurs that
Affirmative action remains a contentious issue in areas of employment, school admissions, and government policies. Yet, many companies use a form of affirmative action to create a diverse
List the elements of a successful environmental auditing program.
Under the Federal Clean Air Act, which of the following statements is correct, and why?a. Homeowners are required to remove all pollutants from their residences.b. Automobile manufacturers are
As the issue of global climate change comes to the fore in international discussions, and as countries attempt to find solutions for climate change, attention frequently turns to the Kyoto Protocol.
What must a plaintiff prove to establish a claim of misrepresentation under the Securities Act of 1933, and which affirmative defenses could a defendant raise in such a case?
Which securities must be registered under the 1933 Act? Explain.
Under Regulation S, what two conditions must be met in order for a sale or offer of securities to be defined as an offshore transaction?
Fab Corporation previously issued 300,000 shares of its common stock. The shares are now actively traded on a national securities exchange. The original offering was exempt from registration under
The SEC brings civil lawsuits against individuals who are accused of violating one or more securities laws, regulations, or rules. Using the Internet, visit the Securities and Exchange Commission’s
How is the approach of the Chicago School to antitrust policies different from the approach of the Harvard School?
Dentsply International, Inc., is one of a dozen manufacturers of artificial teeth for dentures and other restorative devices. Dentsply sells its teeth to 23 dealers of dental products. The dealers
The Wisconsin Unfair Sales Act mandated that gasoline retailers mark up gasline prices at least 9.18 percent over wholesale prices. As gasoline prices increased, Flying J, a company that operates
On August 1, 1957, Procter & Gamble, the nation’s leading manufacturer of soaps, detergents, and other high turn-over household products, acquired Clorox Chemical Company, the nation’s leading
MacDonald Group, Ltd., owned and operated the Fresno Fashion Fair Mall and leased space to Edmond’s, a California retail jeweler. The lease contained a covenant that limited MacDonald to one
What is meant by the term garnishment when used in a debtor–creditor context? Explain.
When a party files for bankruptcy, which creditor activities are automatically stayed?
As e-commerce continues to grow in the United States and abroad, new consumer protection laws are needed. Now that you know something about current consumer protection laws in the United States, use
This chapter introduces the common forms of business organization in the United States. Business structures outside the United States, however, are often very different. Use the Internet to determine
List the criteria used by the courts in determining lost profits.
Why are e-contracts important to present and future businesspeople?
What is meant by “compensatory damages”?Explain.
Explain what is meant by the “rescission” of a contract.
Under the UCC, what remedies are available only to (a) the buyer and (b) the seller when there is a breach of contract?
Explain what the two significant differences are between the CSIG and the UCC.
A builder agreed to build 78 houses in eight months at a fixed price. Due to bad weather conditions and unexpected labor shortages, the work took 22 months and cost $107,000 more than

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