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Chapter 1. Today’s Business Environment: Law and Ethics
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Chapter 2. The Court Systems
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Chapter 3. Trials and Resolving Disputes
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Chapter 4. The Constitution: Focus on Application to Business
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Chapter 5. Criminal Law and Business
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Chapter 6. Elements of Torts
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Chapter 7. Business Torts and Product Liability
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Chapter 8. Real and Personal Property
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Chapter 9. Intellectual Property
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Chapter 10. Contracts
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Chapter 11. Domestic and International Sales
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Chapter 12. Business Organizations
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Chapter 13. Negotiable Instruments, Credit, and Bankruptcy
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Chapter 14. Agency and the Employment Relationship
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Chapter 15. Employment and Labor Regulations
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Chapter 16. Employment Discrimination
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Chapter 17. The Regulatory Process
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Chapter 18. Securities Regulation
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Chapter 19. Consumer Protection
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Chapter 20. Antitrust Law
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Chapter 21. Environmental Law
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Chapter 22. The International Legal Environment of Business
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,CHAPTER 1 BY
Table of Contents BY BY
Answer to Discussion Question ............................................................................................................... 1
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Answers to Case Questions ..................................................................................................................... 1
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Answers to Ethics and Social Questions .................................................................................................. 3
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Answer to Discussion Question BY BY BY
Should the common law maxim “Ignorance of the law is no excuse” apply to an immigrant who speakslittle Engli
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sh and was not educated in the United States? How about for a tourist who does not speak English? Everyone
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knows criminal acts are prohibited, but what about subtler rules that differ across countries and so may be mis
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understood by foreigners? BY BY
Answer: It is generally true that ignorance of the law is no excuse. Citizens are deemed to have constructive k
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nowledge of the law. Yet, as well known as this rule is, it is surprising how often it is proffered as an exc
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use. (A Westlaw search cases finds hundreds of examples). Examples include: Deluco v. Dezi (Conn. Super)
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(lack of knowledge regarding the state‘s usury laws is no excuse for the inclusion of an illegal interest rat
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e in a sales contract); and Plumlee v. Paddock (ignorance of thefact that the subject matter of the contrac
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t was illegal was not excuse). The courts have provided a small exception to the rule when it comes to pe
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ople in lack of English language skills. Consider Flanery v. Kuska, (defendant did not speak English was ad
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vised by a friend that an answer to a complaint was not required); Ramon v. Dept. of Transportation, (no
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English and an inability to understand the law required for an excuse); Yurechko v. County of Allegheny, (I
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gnorance and with the fact that the municipality suffered no hardship in late lawsuit filing was an excuse
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).
Answers to Case Questions BY BY BY
1. Facts from an English judge’s decision in 1884: “The crew of an English yacht ................ were cast away in
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a storm on the high seas . . . and were compelled to put into an open boat.............. They had no supply
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of water and no supply of food. . . . That on the eighteenth day . . . they ........... suggested that one
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should be sacrificed to save the rest. . . . That next day . . . they . . . went to the boy.............. put a knife
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into his throat and killed him . . . the three men fed upon the body........... of the boy for four days; [then]
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the boat was picked up by a passing vessel, and [they] were rescued. . . . and committed for trial. . . .
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if the men had not fed upon the body of the boy they would probably not have survived to be sopick
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ed up and rescued, but would................. have died of famine. The boy, being in a much weaker
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condition, was likely to have died before them ............ The real question in this case [is] whether killing
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under the conditions set forth ......... be or be not murder.” Do you consider the acts to be immoral?
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[Regina v. Dudley and Stephens, 14 Queens Bench Division 273 (1884)]
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Answer: This points out that the legal system has limits. Its acceptability is dictated by legal culture--
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whichdetermines whether law will be enforced, obeyed, avoided, or abused. It is limited by the informal r
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ules of the society-- BY BY BY
its customs and values. One limit is the extent to which society will allow the formal rules to be imposed
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when a crime is committed in odd circumstances. Here there was an intentional murder. Does the motive
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for the murder, the effort to save several lives by sacrificing one
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, life, make it a crime that should be punished? Not all crimes are treated the same. It also raisesquestions a
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bout the desirability of not giving judges flexibility in sentencing.
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There was a precedent for a light sentence in this case in U.S. law: U.S. v. Holmes, 20 F. Cas. 360 (No. 153
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83) (C.C.E.D. Pa. 1842). The case involved a sinking ocean liner. Several passengers madeit to the only lifeb
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oat, which was far too overcrowded. The captain decided to save the women and children and threw sev
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eral men overboard. The lifeboat was rescued. The grand jury refused to indict the captain from murder,
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Yonly for manslaughter. He got a six month sentence.
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The British judge in the case here imposed the death penalty upon the person who survived. Thejudg
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e found it difficult to rule that every man on board had the right to make law by his own hand.The Cr
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own reduced the sentence to six months.
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2. Smoking is a serious health hazard. Cigarettes are legal. Should cigarette manufacturers be liable for the s
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erious illnesses and untimely deaths caused by their unavoidably dangerous products, eventhough they pos
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t a warning on the package and consumers voluntarily assume the health risks by smoking? [Cipollone v.
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Liggett Group, Inc., 505 U.S. 504 (1992)]
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Answer: The general rule that exists now is that since the government has ordered the posting of warninglabel
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s on cigarettes, and since the dangers of smoking are well known, consumers have been warned and are
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not due compensation if they kill themselves by smoking. The Cippoline case, since reviewed by the Supre
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me Court, appears to be of limited impact since the victim was adjudged to have become addicted to cig
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arettes before the warning label was ordered in 1964. If cigarette makers were held responsible for all he
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alth problems associated with cigarettes, then, like alcohol and other dangerous products, the damages w
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ould likely be so high it would effectively ban the products. Presumably, in a free society if adults are cle
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arly informed of the risks of products that cannot be made safe, they accept the risk. Tobacco and alcoho
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l producers cannot take the dangers out of the products except at the margin by encouraging responsible
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drinking and the like. Are drugs like cocaine different?
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3. Two eight-year-old boys were seriously injured when riding Honda mini-
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trail bikes. The boys were riding on public streets, ran a stop sign, and were hit by a truck. The bikes had c
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lear warning labels on the front stating they were only for off-
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road use. The manual stated the bikes were not to be usedon public streets. The parents sued Honda. The
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supreme court of Washington said one basic issue existed: “Is a manufacturer liable when children are inju
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red while riding one of its mini-
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trail bikes on apublic road in violation of manufacturer and parental warnings?” Is it unethical to make pr
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oducts like mini- BY BY
trail bikes children will use when we know accidents like this will happen? [Baughn v. Honda Motor Co., 7
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27 P.2d 655 Sup. Ct, Wash., (1986)]
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Answer: The court found no liability for the manufacturers. There was no defect; the product was safe for inte
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nded use. Safety instructions were clear; the parents let the boys ride the bikes. Anything can bedangero
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us--
baseballs are dangerous when they hit the head, swings are dangerous when kids jumpout of them; ther
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e is only so much that can be done to make the government the ―national nanny‖ asthe Washington Po
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st once said about excessive consumer protection. Parents must accept a high degree of responsible for t
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heir own children. BY BY
4. Johnson Controls adopted a “fetal protection policy” that women of childbearing age could not work in th
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e battery-
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making division of the company. Exposure to lead in the battery operation could causeharm to unborn ba
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bies. The company was concerned about possible legal liability for injury sufferedby babies of mothers wh
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o had worked in the battery division. The Supreme Court held the companypolicy was illegal. It was an “ex
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cuse for denying women equal employment opportunities.” Is the Court forcing the company to be unethic
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al by allowing pregnant women who ignore the warnings to expose their babies to the lead? [United Auto
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Workers v. Johnson Controls, 499 U.S. 187 (1991)]
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