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SOLUTION MANUAL
The Legal Environment of Business, 14th Edition
by Roger E. Meiners, Verified Chapters 1 - 22, Complete
The Legal Environment of Business, 14th Edition
, =
TABLE OF CONTENTS
Chapter 1. Today’s Business Environment: Law and Ethics
Chapter 2. The Court Systems
Chapter 3. Trials and Resolving Disputes
Chapter 4. The Constitution: Focus on Application to Business
Chapter 5. Criminal Law and Business
Chapter 6. Elements of Torts
Chapter 7. Business Torts and Product Liability
Chapter 8. Real and Personal Property
Chapter 9. Intellectual Property
Chapter 10. Contracts
Chapter 11. Domestic and International Sales
Chapter 12. Business Organizations
Chapter 13. Negotiable Instruments, Credit, and Bankruptcy
Chapter 14. Agency and the Employment Relationship
Chapter 15. Employment and Labor Regulations
Chapter 16. Employment Discrimination
Chapter 17. The Regulatory Process
Chapter 18. Securities Regulation
Chapter 19. Consumer Protection
The Legal Environment of Business, 14th Edition
, =
Chapter 20. Antitrust Law
Chapter 21. Environmental Law
Chapter 22. The International Legal Environment of Business
CHAPTER 1
Table of Contents
Answer to Discussion Question ................................................................................................................................. 1
Answers to Case Questions ......................................................................................................................................... 1
Answers to Ethics and Social Questions ................................................................................................................. 3
Answer to Discussion Question
Should the common law maxim “Ignorance of the law is no excuse” apply to an immigrant who speaks
little English and was not educated in the United States? How about for a tourist who does not speak
English? Everyone knows criminal acts are prohibited, but what about subtler rules that differ across
countries and so may be misunderstood by foreigners?
Answer: It is generally true that ignorance of the law is no excuse. Citizens are deemed to have
constructive knowledge of the law. Yet, as well known as this rule is, it is surprising how often it is
proffered as an excuse. (A Westlaw search cases finds hundreds of examples). Examples include:
Deluco v. Dezi (Conn. Super) (lack of knowledge regarding the state‘s usury laws is no excuse for the
inclusion of an illegal interest rate in a sales contract); and Plumlee v. Paddock (ignorance of thefact
that the subject matter of the contract was illegal was not excuse). The courts have provided a small
exception to the rule when it comes to people in lack of English language skills. Consider Flanery v.
Kuska, (defendant did not speak English was advised by a friend that an answer to a complaint was
not required); Ramon v. Dept. of Transportation, (no English and an inability to understand the law
required for an excuse); Yurechko v. County of Allegheny, (Ignorance and with the fact that the
municipality suffered no hardship in late lawsuit filing was an excuse).
Answers to Case Questions
1. Facts from an English judge’s decision in 1884: “The crew of an English yacht ............ were cast away in
a storm on the high seas . . . and were compelled to put into an open boat. ........ They had no supply
of water and no supply of food. . . . That on the eighteenth day . . . they ........ suggested that one
should be sacrificed to save the rest. . . . That next day . . . they . . . went to the boy ............ put a knife
into his throat and killed him . . . the three men fed upon the body ....... of the boy for four days; [then]
The Legal Environment of Business, 14th Edition
, =
the boat was picked up by a passing vessel, and [they] were rescued. . . . and committed for trial. . . .
if the men had not fed upon the body of the boy they would probably not have survived to be
sopicked up and rescued, but would....have died of famine. The boy, being in a much weaker
condition, was likely to have died before them ......... The real question in this case [is] whether killing
under the conditions set forth....... be or be not murder.” Do you consider the acts to be immoral?
[Regina v. Dudley and Stephens, 14 Queens Bench Division 273 (1884)]
Answer: This points out that the legal system has limits. Its acceptability is dictated by legal culture--which
determines whether law will be enforced, obeyed, avoided, or abused. It is limited by the informal
rules of the society--its customs and values. One limit is the extent to which society will allow the
formal rules to be imposed when a crime is committed in odd circumstances. Here there was an
intentional murder. Does the motive for the murder, the effort to save several lives by sacrificing one
The Legal Environment of Business, 14th Edition
, =
life, make it a crime that should be punished? Not all crimes are treated the same. It also raises
questions about the desirability of not giving judges flexibility in sentencing.
There was a precedent for a light sentence in this case in U.S. law: U.S. v. Holmes, 20 F. Cas. 360 (No.
15383) (C.C.E.D. Pa. 1842). The case involved a sinking ocean liner. Several passengers madeit to the
only lifeboat, which was far too overcrowded. The captain decided to save the women and children
and threw several men overboard. The lifeboat was rescued. The grand jury refused to indict the
captain from murder, only for manslaughter. He got a six month sentence.
The British judge in the case here imposed the death penalty upon the person who survived. The
judge found it difficult to rule that every man on board had the right to make law by his own
hand.The Crown reduced the sentence to six months.
2. Smoking is a serious health hazard. Cigarettes are legal. Should cigarette manufacturers be liable for
the serious illnesses and untimely deaths caused by their unavoidably dangerous products, even
though they post a warning on the package and consumers voluntarily assume the health risks by
smoking? [Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)]
Answer: The general rule that exists now is that since the government has ordered the posting of warning
labels on cigarettes, and since the dangers of smoking are well known, consumers have been
warned and are not due compensation if they kill themselves by smoking. The Cippoline case, since
reviewed by the Supreme Court, appears to be of limited impact since the victim was adjudged to
have become addicted to cigarettes before the warning label was ordered in 1964. If cigarette
makers were held responsible for all health problems associated with cigarettes, then, like alcohol
and other dangerous products, the damages would likely be so high it would effectively ban the
products. Presumably, in a free society if adults are clearly informed of the risks of products that
cannot be made safe, they accept the risk. Tobacco and alcohol producers cannot take the dangers
out of the products except at the margin by encouraging responsible drinking and the like. Are
drugs like cocaine different?
3. Two eight-year-old boys were seriously injured when riding Honda mini-trail bikes. The boys were
riding on public streets, ran a stop sign, and were hit by a truck. The bikes had clear warning labels
on the front stating they were only for off-road use. The manual stated the bikes were not to be
usedon public streets. The parents sued Honda. The supreme court of Washington said one basic
issue existed: “Is a manufacturer liable when children are injured while riding one of its mini-trail
bikes on apublic road in violation of manufacturer and parental warnings?” Is it unethical to make
products like mini-trail bikes children will use when we know accidents like this will happen? [Baughn
v. Honda Motor Co., 727 P.2d 655 Sup. Ct, Wash., (1986)]
Answer: The court found no liability for the manufacturers. There was no defect; the product was safe for
intended use. Safety instructions were clear; the parents let the boys ride the bikes. Anything can be
dangerous--baseballs are dangerous when they hit the head, swings are dangerous when kids jump
out of them; there is only so much that can be done to make the government the ―national nanny‖
asthe Washington Post once said about excessive consumer protection. Parents must accept a high
degree of responsible for their own children.
4. Johnson Controls adopted a “fetal protection policy” that women of childbearing age could not
work in the battery-making division of the company. Exposure to lead in the battery operation could
causeharm to unborn babies. The company was concerned about possible legal liability for injury
sufferedby babies of mothers who had worked in the battery division. The Supreme Court held the
companypolicy was illegal. It was an “excuse for denying women equal employment opportunities.”
The Legal Environment of Business, 14th Edition
, =
Is the Court forcing the company to be unethical by allowing pregnant women who ignore the
warnings to expose their babies to the lead? [United Auto Workers v. Johnson Controls, 499 U.S. 187
(1991)]
Answer: The Court held it a form of sex discrimination to prevent women of child-bearing age from
holding the more dangerous jobs. The company argued that it did this to protect itself from
possibleliability in case of damage to babies and that the decision was ethical. The replacements
for these workers were often men or more senior women, who tended to be higher income
workers, so this
The Legal Environment of Business, 14th Edition
, =
was not a current cost-saving move. Note that a 2002 ruling related to the ADA
significantly restricted this earlier case.
5. 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 violate the policy but that he was evasive and violated the company’s personal ethics code. He
was fired and sued for wrongful termination, contending that if he did not violate sexual
harassment rules he should not have been subject to termination. Do standards of law and ethics
need to be thesame for an employer? [McGrory v. Applied Signal Technology, 152 Cal.Rptr.3d 154
(2013)]
Answer: The appeals court affirmed that the employer had the right to terminate the employee for failure
to be fully cooperative in the investigation of the complaint of sexual harassment that had been filed
against him. While he was not found to have violated the harassment policy, he was evasive and
uncooperative, which violated the company‘s code of ethics, which was a justification for termination.
6. 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 employees must adhere to the highest ethical standards when using the Internet. Eleven years
later, she was fired for excessive surfing on the Internet during working hours. She contended she
did not know about the policy. Is that an adequate defense for her? [ Baker v. Minnesota Supreme
Court, 2016 WL 102513 (2016)]
Answer: The Minnesota high court held that Baker‘s termination was proper. She violated standards
expected of employees. She had been warned about excessive personal Internet use during work
time, including buying and selling goods for a little business she ran. The claim that she did not know
about the ethics of Internet use was not credible as the policy was posted for all employees who
received e-mails about any changes to the policy. The fact that the term ―ethical‖ was used in the
policy does not likely impact this decision.
Answers to Ethics and Social Questions
1. The federal tax code is riddled with special-interest loopholes. Most of these exist because firms and
trade associations lobby Congress and provide campaign support to members of Congress to gain
special favors to individual firms or industries. Is it ethical for firms to seek special privilege?
Answer: The nature of our political system forces firms to participate in the political process. Those that
fail to do so, if they are of any size, are more likely to be subject to political attack. In a sense, firms
―buy‖ protection by keeping a flow of contributions going, especially to incumbent members of
Congress. Competition also means that if a firm does not lobby for special privilege, then it may
suffer if competitors achieve such status in the tax code or some area of regulation. Many business
leaders do not much care for the Washington, D.C. operations their firms support but know that it is
apart of the modern legal environment of business.
2. “Fair trade” goods have become popular, as some people are willing to pay more to know the
goodscome from workers paid a decent price for their efforts. However, some retailers who sell fair
trade goods mark them up substantially more than nonfair trade goods. One study showed that
coffee growers got an average of 44 cents a pound more for fair trade coffee, but the coffee at retail
was marked up an additional $3.46 per pound. At one supermarket chain, fair trade bananas that
cost anextra 3.6 cents per pound were marked up four times the price of non-fair trade bananas.
The Legal Environment of Business, 14th Edition
SOLUTION MANUAL
The Legal Environment of Business, 14th Edition
by Roger E. Meiners, Verified Chapters 1 - 22, Complete
The Legal Environment of Business, 14th Edition
, =
TABLE OF CONTENTS
Chapter 1. Today’s Business Environment: Law and Ethics
Chapter 2. The Court Systems
Chapter 3. Trials and Resolving Disputes
Chapter 4. The Constitution: Focus on Application to Business
Chapter 5. Criminal Law and Business
Chapter 6. Elements of Torts
Chapter 7. Business Torts and Product Liability
Chapter 8. Real and Personal Property
Chapter 9. Intellectual Property
Chapter 10. Contracts
Chapter 11. Domestic and International Sales
Chapter 12. Business Organizations
Chapter 13. Negotiable Instruments, Credit, and Bankruptcy
Chapter 14. Agency and the Employment Relationship
Chapter 15. Employment and Labor Regulations
Chapter 16. Employment Discrimination
Chapter 17. The Regulatory Process
Chapter 18. Securities Regulation
Chapter 19. Consumer Protection
The Legal Environment of Business, 14th Edition
, =
Chapter 20. Antitrust Law
Chapter 21. Environmental Law
Chapter 22. The International Legal Environment of Business
CHAPTER 1
Table of Contents
Answer to Discussion Question ................................................................................................................................. 1
Answers to Case Questions ......................................................................................................................................... 1
Answers to Ethics and Social Questions ................................................................................................................. 3
Answer to Discussion Question
Should the common law maxim “Ignorance of the law is no excuse” apply to an immigrant who speaks
little English and was not educated in the United States? How about for a tourist who does not speak
English? Everyone knows criminal acts are prohibited, but what about subtler rules that differ across
countries and so may be misunderstood by foreigners?
Answer: It is generally true that ignorance of the law is no excuse. Citizens are deemed to have
constructive knowledge of the law. Yet, as well known as this rule is, it is surprising how often it is
proffered as an excuse. (A Westlaw search cases finds hundreds of examples). Examples include:
Deluco v. Dezi (Conn. Super) (lack of knowledge regarding the state‘s usury laws is no excuse for the
inclusion of an illegal interest rate in a sales contract); and Plumlee v. Paddock (ignorance of thefact
that the subject matter of the contract was illegal was not excuse). The courts have provided a small
exception to the rule when it comes to people in lack of English language skills. Consider Flanery v.
Kuska, (defendant did not speak English was advised by a friend that an answer to a complaint was
not required); Ramon v. Dept. of Transportation, (no English and an inability to understand the law
required for an excuse); Yurechko v. County of Allegheny, (Ignorance and with the fact that the
municipality suffered no hardship in late lawsuit filing was an excuse).
Answers to Case Questions
1. Facts from an English judge’s decision in 1884: “The crew of an English yacht ............ were cast away in
a storm on the high seas . . . and were compelled to put into an open boat. ........ They had no supply
of water and no supply of food. . . . That on the eighteenth day . . . they ........ suggested that one
should be sacrificed to save the rest. . . . That next day . . . they . . . went to the boy ............ put a knife
into his throat and killed him . . . the three men fed upon the body ....... of the boy for four days; [then]
The Legal Environment of Business, 14th Edition
, =
the boat was picked up by a passing vessel, and [they] were rescued. . . . and committed for trial. . . .
if the men had not fed upon the body of the boy they would probably not have survived to be
sopicked up and rescued, but would....have died of famine. The boy, being in a much weaker
condition, was likely to have died before them ......... The real question in this case [is] whether killing
under the conditions set forth....... be or be not murder.” Do you consider the acts to be immoral?
[Regina v. Dudley and Stephens, 14 Queens Bench Division 273 (1884)]
Answer: This points out that the legal system has limits. Its acceptability is dictated by legal culture--which
determines whether law will be enforced, obeyed, avoided, or abused. It is limited by the informal
rules of the society--its customs and values. One limit is the extent to which society will allow the
formal rules to be imposed when a crime is committed in odd circumstances. Here there was an
intentional murder. Does the motive for the murder, the effort to save several lives by sacrificing one
The Legal Environment of Business, 14th Edition
, =
life, make it a crime that should be punished? Not all crimes are treated the same. It also raises
questions about the desirability of not giving judges flexibility in sentencing.
There was a precedent for a light sentence in this case in U.S. law: U.S. v. Holmes, 20 F. Cas. 360 (No.
15383) (C.C.E.D. Pa. 1842). The case involved a sinking ocean liner. Several passengers madeit to the
only lifeboat, which was far too overcrowded. The captain decided to save the women and children
and threw several men overboard. The lifeboat was rescued. The grand jury refused to indict the
captain from murder, only for manslaughter. He got a six month sentence.
The British judge in the case here imposed the death penalty upon the person who survived. The
judge found it difficult to rule that every man on board had the right to make law by his own
hand.The Crown reduced the sentence to six months.
2. Smoking is a serious health hazard. Cigarettes are legal. Should cigarette manufacturers be liable for
the serious illnesses and untimely deaths caused by their unavoidably dangerous products, even
though they post a warning on the package and consumers voluntarily assume the health risks by
smoking? [Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)]
Answer: The general rule that exists now is that since the government has ordered the posting of warning
labels on cigarettes, and since the dangers of smoking are well known, consumers have been
warned and are not due compensation if they kill themselves by smoking. The Cippoline case, since
reviewed by the Supreme Court, appears to be of limited impact since the victim was adjudged to
have become addicted to cigarettes before the warning label was ordered in 1964. If cigarette
makers were held responsible for all health problems associated with cigarettes, then, like alcohol
and other dangerous products, the damages would likely be so high it would effectively ban the
products. Presumably, in a free society if adults are clearly informed of the risks of products that
cannot be made safe, they accept the risk. Tobacco and alcohol producers cannot take the dangers
out of the products except at the margin by encouraging responsible drinking and the like. Are
drugs like cocaine different?
3. Two eight-year-old boys were seriously injured when riding Honda mini-trail bikes. The boys were
riding on public streets, ran a stop sign, and were hit by a truck. The bikes had clear warning labels
on the front stating they were only for off-road use. The manual stated the bikes were not to be
usedon public streets. The parents sued Honda. The supreme court of Washington said one basic
issue existed: “Is a manufacturer liable when children are injured while riding one of its mini-trail
bikes on apublic road in violation of manufacturer and parental warnings?” Is it unethical to make
products like mini-trail bikes children will use when we know accidents like this will happen? [Baughn
v. Honda Motor Co., 727 P.2d 655 Sup. Ct, Wash., (1986)]
Answer: The court found no liability for the manufacturers. There was no defect; the product was safe for
intended use. Safety instructions were clear; the parents let the boys ride the bikes. Anything can be
dangerous--baseballs are dangerous when they hit the head, swings are dangerous when kids jump
out of them; there is only so much that can be done to make the government the ―national nanny‖
asthe Washington Post once said about excessive consumer protection. Parents must accept a high
degree of responsible for their own children.
4. Johnson Controls adopted a “fetal protection policy” that women of childbearing age could not
work in the battery-making division of the company. Exposure to lead in the battery operation could
causeharm to unborn babies. The company was concerned about possible legal liability for injury
sufferedby babies of mothers who had worked in the battery division. The Supreme Court held the
companypolicy was illegal. It was an “excuse for denying women equal employment opportunities.”
The Legal Environment of Business, 14th Edition
, =
Is the Court forcing the company to be unethical by allowing pregnant women who ignore the
warnings to expose their babies to the lead? [United Auto Workers v. Johnson Controls, 499 U.S. 187
(1991)]
Answer: The Court held it a form of sex discrimination to prevent women of child-bearing age from
holding the more dangerous jobs. The company argued that it did this to protect itself from
possibleliability in case of damage to babies and that the decision was ethical. The replacements
for these workers were often men or more senior women, who tended to be higher income
workers, so this
The Legal Environment of Business, 14th Edition
, =
was not a current cost-saving move. Note that a 2002 ruling related to the ADA
significantly restricted this earlier case.
5. 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 violate the policy but that he was evasive and violated the company’s personal ethics code. He
was fired and sued for wrongful termination, contending that if he did not violate sexual
harassment rules he should not have been subject to termination. Do standards of law and ethics
need to be thesame for an employer? [McGrory v. Applied Signal Technology, 152 Cal.Rptr.3d 154
(2013)]
Answer: The appeals court affirmed that the employer had the right to terminate the employee for failure
to be fully cooperative in the investigation of the complaint of sexual harassment that had been filed
against him. While he was not found to have violated the harassment policy, he was evasive and
uncooperative, which violated the company‘s code of ethics, which was a justification for termination.
6. 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 employees must adhere to the highest ethical standards when using the Internet. Eleven years
later, she was fired for excessive surfing on the Internet during working hours. She contended she
did not know about the policy. Is that an adequate defense for her? [ Baker v. Minnesota Supreme
Court, 2016 WL 102513 (2016)]
Answer: The Minnesota high court held that Baker‘s termination was proper. She violated standards
expected of employees. She had been warned about excessive personal Internet use during work
time, including buying and selling goods for a little business she ran. The claim that she did not know
about the ethics of Internet use was not credible as the policy was posted for all employees who
received e-mails about any changes to the policy. The fact that the term ―ethical‖ was used in the
policy does not likely impact this decision.
Answers to Ethics and Social Questions
1. The federal tax code is riddled with special-interest loopholes. Most of these exist because firms and
trade associations lobby Congress and provide campaign support to members of Congress to gain
special favors to individual firms or industries. Is it ethical for firms to seek special privilege?
Answer: The nature of our political system forces firms to participate in the political process. Those that
fail to do so, if they are of any size, are more likely to be subject to political attack. In a sense, firms
―buy‖ protection by keeping a flow of contributions going, especially to incumbent members of
Congress. Competition also means that if a firm does not lobby for special privilege, then it may
suffer if competitors achieve such status in the tax code or some area of regulation. Many business
leaders do not much care for the Washington, D.C. operations their firms support but know that it is
apart of the modern legal environment of business.
2. “Fair trade” goods have become popular, as some people are willing to pay more to know the
goodscome from workers paid a decent price for their efforts. However, some retailers who sell fair
trade goods mark them up substantially more than nonfair trade goods. One study showed that
coffee growers got an average of 44 cents a pound more for fair trade coffee, but the coffee at retail
was marked up an additional $3.46 per pound. At one supermarket chain, fair trade bananas that
cost anextra 3.6 cents per pound were marked up four times the price of non-fair trade bananas.
The Legal Environment of Business, 14th Edition
