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 SMITH & ROBERSON’S

Business Law
S E V E N T E E N T H E D I T I O N

RICHARD A. MANN
Professor of Business Law
The University of North Carolina at Chapel Hill
Member of the North Carolina Bar

BARRY S. ROBERTS
Professor of Business Law
The University of North Carolina at Chapel Hill
Member of the North Carolina and Pennsylvania Bars

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

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 R
Smith & Roberson’s Business Law, ª 2018, 2015 Cengage LearningV
Seventeenth Edition
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 About the Authors

Richard A. Mann received a B.S. in mathematics from Barry S. Roberts received a B.S. in business administration
the University of North Carolina at Chapel Hill and a J.D. from Pennsylvania State University, a J.D. from the Uni-
from Yale Law School. He is professor emeritus of business versity of Pennsylvania, and an LL.M. from Harvard Law
law at the Kenan-Flagler School of Business, University of School. He served as a judicial clerk for the Pennsylvania
North Carolina at Chapel Hill, and is past president of Supreme Court prior to practicing law in Pittsburgh. Barry
the Southeastern Regional Business Law Association. He Roberts is professor of business law at the Kenan-Flagler
is a member of Who’s Who in America, Who’s Who in School of Business, University of North Carolina at Chapel
American Law, and the North Carolina Bar. Hill, and is a member of Who’s Who in American Law
Professor Mann has written extensively on a number of and the North Carolina and Pennsylvania Bars.
legal topics, including bankruptcy, sales, secured transac- Professor Roberts has written numerous articles on
tions, real property, insurance law, and business associa- such topics as antitrust, products liability, constitutional
tions. He has received the American Business Law Journal’s law, banking law, employment law, and business asso-
award both for the best article and for the best comment ciations. He has been a reviewer and staff editor for
and has served as a reviewer and staff editor for the publica- the American Business Law Journal. He is coauthor of
tion. Professor Mann is a coauthor of Business Law and Business Law and the Regulation of Business (Twelfth
the Regulation of Business (Twelfth Edition), Essentials of Edition), Essentials of Business Law and the Legal Envi-
Business Law and the Legal Environment (Twelfth Edition), ronment (Twelfth Edition), and Contemporary Business
and Contemporary Business Law. Law.

iii

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 Contents in Brief

Preface xiv PART 3

Table of Cases xviii Agency 365
Table of Illustrations xxii 19 Relationship of Principal and Agent 366
20 Relationship with Third Parties 389
PART 1
PART 4
The Legal Environment of Business 1
1 Introduction to Law 2 Sales 415
2 Business Ethics and the Social Responsibility 21 Introduction to Sales and Leases 416
of Business 14 22 Performance 438
3 Civil Dispute Resolution 42 23 Transfer of Title and Risk of Loss 459
4 Constitutional Law 67 24 Products Liability: Warranties and Strict
5 Administrative Law 90 Liability in Tort 477
6 Criminal Law 107 25 Sales Remedies 504
7 Intentional Torts 126 PART 5
8 Negligence and Strict Liability 147 Negotiable Instruments 529
26 Form and Content 530
PART 2
27 Transfer and Holder in Due Course 546
Contracts 171 28 Liability of Parties 577
9 Introduction to Contracts 172
29 Bank Deposits, Collections, and Funds
10 Mutual Assent 189 Transfers 597
11 Conduct Invalidating Assent 211
PART 6
12 Consideration 231
13 Illegal Bargains 250
Unincorporated Business Associations 619
30 Formation and Internal Relations of
14 Contractual Capacity 269
General Partnerships 620
15 Contracts in Writing 284
31 Operation and Dissolution of General
16 Third Parties to Contracts 309 Partnerships 644
17 Performance, Breach, and Discharge 327 32 Limited Partnerships and Limited Liability
18 Contract Remedies 345 Companies 671

iv

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CONTENTS IN BRIEF v

PART 7 PART 10
Corporations 697 Property 1051
33 Nature, Formation, and Powers 698 47 Introduction to Property, Property
34 Financial Structure 722 Insurance, Bailments, and Documents
of Title 1052
35 Management Structure 745
48 Interests in Real Property 1079
36 Fundamental Changes 776
49 Transfer and Control of Real Property 1099
PART 8 50 Trusts and Decedents’ Estates 1116
Debtor and Creditor Relations 795
Appendices A-1
37 Secured Transactions and Suretyship 796
A The Constitution of the United States
38 Bankruptcy 829
of America A-2
PART 9 B Uniform Commercial Code
(Selected Provisions) B-1
Regulation of Business 859
C Dictionary of Legal Terms C-1
39 Protection of Intellectual Property 860
40 Antitrust 882 Index I-1
41 Consumer Protection 905
42 Employment Law 931
43 Securities Regulation 964
44 Accountants’ Legal Liability 1001
45 Environmental Law 1015
46 International Business Law 1034

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 Contents

Preface xiv Alternative Dispute Resolution 53

Table of Cases xviii Chapter Summary 56
Table of Illustrations xxii Cases 58
Questions 63
PART 1 Case Problems 64
The Legal Environment of Business 1 Taking Sides 66

1 Introduction to Law 2 4 Constitutional Law 67

Nature of Law 2 Basic Principles of Constitutional Law 68
Classification of Law 4 Powers of Government 69
Sources of Law 5 Limitations on Government 72
Legal Analysis 9 Chapter Summary 77
Chapter Summary 11 Cases 78
Cases 12 Questions 86
Case Problems 87
2 Business Ethics and the Social Taking Sides 89
Responsibility of Business 14
Law Versus Ethics 15 5 Administrative Law 90
Ethical Theories 15 Operation of Administrative Agencies 91
Ethical Standards in Business 18 Limits on Administrative Agencies 94
Ethical Responsibilities of Business 19 Chapter Summary 96
Corporate Governance 20 Cases 97
Chapter Summary 23 Case Problems 103
Cases 24 Taking Sides 106
Questions 24
6 Criminal Law 107
Business Ethics Cases 26
Nature of Crimes 107
3 Civil Dispute Resolution 42 White-Collar Crime 110
The Court System 42 Crimes Against Business 111
The Federal Courts 42 Defenses to Crimes 114
State Courts 44 Criminal Procedure 115
Jurisdiction 45 Chapter Summary 117
Subject Matter Jurisdiction 45 Cases 118
Jurisdiction Over the Parties 47 Questions 123
Civil Dispute Resolution 49 Case Problems 124
Civil Procedure 50 Taking Sides 125

vi

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CONTENTS vii

7 Intentional Torts 126 Acceptance of Offer 195

Intent 127 Communication of Acceptance 196
Harm to the Person 128 Variant Acceptances 197
Harm to the Right of Dignity 130 Chapter Summary 199
Harm to Property 132 Cases 200
Harm to Economic Interests 133 Questions 206
Defenses to Intentional Torts 134 Case Problems 208
Chapter Summary 136 Taking Sides 210
Cases 137 11 Conduct Invalidating Assent 211
Questions 143 Duress 211
Case Problems 144 Undue Influence 212
Taking Sides 146 Fraud 212
8 Negligence and Strict Liability 147 Nonfraudulent Misrepresentation 215
Negligence 148 Mistake 216
Breach of Duty of Care 148 Chapter Summary 218
Factual Cause 153 Cases 219
Scope of Liability (Proximate Cause) 153 Questions 226
Harm 154 Case Problems 227
Defenses to Negligence 155 Taking Sides 230
Strict Liability 156 12 Consideration 231
Activities Giving Rise to Strict Liability 157 Legal Sufficiency 231
Defenses to Strict Liability 158 Bargained-For Exchange 236
Chapter Summary 158 Contracts without Consideration 237
Cases 160 Chapter Summary 240
Questions 167 Cases 241
Case Problems 168 Questions 246
Taking Sides 170 Case Problems 248
Taking Sides 249
PART 2
13 Illegal Bargains 250
Contracts 171
Violations of Statutes 250
9 Introduction to Contracts 172 Violations of Public Policy 252
Development of the Law of Contracts 172 Effect of Illegality 254
Definition of a Contract 174 Chapter Summary 255
Requirements of a Contract 174 Cases 256
Classification of Contracts 175 Questions 264
Promissory Estoppel 178 Case Problems 265
Quasi Contracts or Restitution 178 Taking Sides 267
Chapter Summary 179
14 Contractual Capacity 269
Cases 180
Questions 186 Minors 269
Case Problems 186 Incompetent Persons 272
Taking Sides 188 Intoxicated Persons 272
Chapter Summary 273
10 Mutual Assent 189 Cases 273
Offer 189 Questions 279
Essentials of an Offer 190 Case Problems 281
Duration of Offers 192 Taking Sides 283

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viii CONTENTS

15 Contracts in Writing 284 Questions 361

Statute of Frauds 284 Case Problems 362
Contracts within the Statute of Frauds 285 Taking Sides 363
Compliance with the Statute of Frauds 290
Effect of Noncompliance 291 PART 3
Parol Evidence Rule 292 Agency 365
The Rule 292
Situations to Which the Rule Does 19 Relationship of Principal and Agent 366
Not Apply 292 Nature of Agency 366
Supplemental Evidence 293 Creation of Agency 368
Interpretation of Contracts 293 Duties of Agent to Principal 369
Chapter Summary 295 Duties of Principal to Agent 372
Cases 297 Termination of Agency 374
Questions 304 Chapter Summary 376
Case Problems 305 Cases 378
Taking Sides 308 Questions 385
Case Problems 386
16 Third Parties to Contracts 309
Taking Sides 388
Assignment of Rights 309
Delegation of Duties 313 20 Relationship with Third Parties 389
Third-Party Beneficiary Contracts 314 Relationship of Principal and Third Persons 389
Chapter Summary 316 Contract Liability of Principal 389
Cases 318 Tort Liability of Principal 396
Questions 323 Criminal Liability of Principal 398
Case Problems 324 Relationship of Agent and Third Persons 399
Taking Sides 326 Contract Liability of Agent 399
17 Performance, Breach, and Discharge 327 Tort of Liability of Agent 401
Conditions 327 Rights of Agent Against Third Person 401
Discharge by Performance 329 Chapter Summary 401
Discharge by Breach 329 Cases 403
Discharge by Agreement of the Parties 331 Questions 410
Discharge by Operation of Law 332 Case Problems 411
Chapter Summary 334 Taking Sides 413
Cases 336
Questions 340 PART 4
Case Problems 342 Sales 415
Taking Sides 344
21 Introduction to Sales and Leases 416
18 Contract Remedies 345 Nature of Sales and Leases 417
Interests Protected by Contract Remedies 345 Definitions 417
Monetary Damages 345 Fundamental Principles of Article 2 and Article 2A 418
Remedies in Equity 349 Formation of Sales and Lease Contracts 421
Restitution 350 Manifestation of Mutual Assent 421
Limitations on Remedies 352 Consideration 424
Remedies for Misrepresentation 353 Form of the Contract 425
Chapter Summary 354 Chapter Summary 427
Cases 355 Cases 428

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CONTENTS ix

Questions 434 PART 5

Case Problems 435 Negotiable Instruments 529
Taking Sides 437
26 Form and Content 530
22 Performance 438 Negotiability 531
Performance by the Seller 438 Types of Negotiable Instruments 532
Performance by the Buyer 443 Formal Requirements of Negotiable Instruments 534
Obligations of Both Parties 445 Chapter Summary 539
Chapter Summary 448 Cases 540
Cases 449 Questions 543
Questions 454 Case Problems 544
Case Problems 455 Taking Sides 545
Taking Sides 458
27 Transfer and Holder in Due Course 546
23 Transfer of Title and Risk of Loss 459 Transfer 546
Transfer of Title 459 Negotiation 546
Risk of Loss 463 Indorsements 549
Sales of Goods in Bulk 466 Holder in Due Course 553
Chapter Summary 468 Requirements of a Holder in Due Course 553
Cases 469 Holder in Due Course Status 557
Questions 473 The Preferred Position of a Holder in Due Course 557
Case Problems 475 Limitations Upon Holder in Due Course Rights 560
Taking Sides 476 Chapter Summary 563
Cases 565
24 Products Liability: Warranties Questions 572
and Strict Liability in Tort 477 Case Problems 574
Warranties 477 Taking Sides 576
Types of Warranties 478
Obstacles to Warranty Actions 480 28 Liability of Parties 577
Strict Liability in Tort 483 Contractual Liability 577
Requirements of Strict Liability 484 Signature 578
Obstacles to Recovery 486 Liability of Primary Parties 579
Restatement of Torts (Third): Products Liability 487 Liability of Secondary Parties 579
Chapter Summary 489 Termination of Liability 583
Cases 491 Liability Based on Warranty 583
Questions 498 Warranties on Transfer 583
Case Problems 500 Warranties on Presentment 584
Taking Sides 503 Chapter Summary 587
Cases 588
25 Sales Remedies 504 Questions 594
Remedies of the Seller 504 Case Problems 596
Remedies of the Buyer 509 Taking Sides 596
Contractual Provisions Affecting Remedies 513
Chapter Summary 515 29 Bank Deposits, Collections,
Cases 517 and Funds Transfers 597
Questions 523 Bank Deposits and Collections 597
Case Problems 525 Collection of Items 598
Taking Sides 527 Relationship between Payor Bank and its Customer 601

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x CONTENTS

Electronic Fund Transfer 604 Continuation After Dissolution 655

Types of Electronic Funds Transfers 604 Chapter Summary 655
Consumer Funds Transfers 605 Cases 658
Wholesale Funds Transfers 606 Questions 666
Chapter Summary 609 Case Problems 668
Cases 610 Taking Sides 670
Questions 614
32 Limited Partnerships and Limited
Case Problems 616
Liability Companies 671
Taking Sides 617
Limited Partnerships 671
Limited Liability Companies 676
PART 6
Other Types of Unincorporated Business
Unincorporated Business Associations 682
Associations 619 Chapter Summary 683
Cases 686
30 Formation and Internal Relations
Questions 693
of General Partnerships 620
Case Problems 695
Choosing a Business Association 620
Taking Sides 696
Factors Affecting the Choice 621
Forms of Business Associations 622 PART 7
Formation of General Partnerships 624 Corporations 697
Nature of Partnership 624
Formation of a Partnership 625 33 Nature, Formation, and Powers 698
Relationships Among Partners 628 Nature of Corporations 699
Duties Among Partners 629 Corporate Attributes 699
Rights Among Partners 630 Classification of Corporations 700
Chapter Summary 634 Formation of a Corporation 702
Cases 636 Organizing the Corporation 702
Questions 641 Formalities of Incorporation 704
Case Problems 642 Recognition or Disregard of Corporateness 705
Taking Sides 643 Defective Incorporation 706
Piercing the Corporate Veil 707
31 Operation and Dissolution Corporate Powers 708
of General Partnerships 644 Sources of Corporate Powers 708
Relationship of Partnership and Partners Ultra Vires Acts 709
with Third Parties 644 Liability for Torts and Crimes 709
Contracts of Partnership 644 Chapter Summary 709
Torts and Crimes of Partnership 647 Cases 712
Notice to a Partner 648 Questions 717
Liability of Incoming Partner 648 Case Problems 718
Dissociation and Dissolution of General Taking Sides 721
Partnerships under the RUPA 648
Dissociation 648 34 Financial Structure 722
Dissolution 649 Debt Securities 723
Dissociation Without Dissolution 651 Authority to Issue Debt Securities 723
Dissolution of General Partnerships under the Types of Debt Securities 723
UPA 653 Equity Securities 724
Dissolution 654 Issuance of Shares 724
Winding Up 654 Classes of Shares 727

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CONTENTS xi

Dividends and Other Distributions 728 Priorities among Competing Interests 804
Types of Dividends and Other Distributions 729 Default 808
Legal Restrictions on Dividends and Other Suretyship 810
Distributions 730 Nature and Formation 810
Declaration and Payment of Distributions 733 Duties of Surety 812
Liability for Improper Dividends and Distributions 733 Rights of Surety 813
Chapter Summary 734 Defenses of Surety and Principal Debtor 813
Cases 736 Chapter Summary 816
Questions 741 Cases 819
Case Problems 743 Questions 824
Taking Sides 744 Case Problems 826
35 Management Structure 745 Taking Sides 828
Corporate Governance 745 38 Bankruptcy 829
Role of Shareholders 748 Federal Bankruptcy Law 829
Voting Rights of Shareholders 748 Case Administration—Chapter 3 830
Enforcement Rights of Shareholders 751 Creditors, the Debtor, and the Estate—Chapter 5 832
Role of Directors and Officers 753 Liquidation—Chapter 7 837
Function of the Board of Directors 753 Reorganization—Chapter 11 841
Election and Tenure of Directors 755 Adjustment of Debts of Individuals—Chapter 13 843
Exercise of Directors’ Functions 755 Creditors’ Rights and Debtor’s Relief Outside
Officers 757 of Bankruptcy 845
Duties of Directors and Officers 757 Creditors’ Rights 845
Chapter Summary 761 Debtor’s Relief 846
Cases 763 Chapter Summary 847
Questions 772 Cases 849
Case Problems 774 Questions 855
Taking Sides 775 Case Problems 856
Taking Sides 858
36 Fundamental Changes 776
Charter Amendments 776 PART 9
Combinations 777 Regulation of Business 859
Dissolution 781
Chapter Summary 783
39 Protection of Intellectual Property 860
Cases 784 Trade Secrets 860
Questions 790 Trade Symbols 862
Case Problems 791 Trade Names 865
Taking Sides 793 Copyrights 865
Patents 868
PART 8 Chapter Summary 870
Debtor and Creditor Relations 795 Cases 871
Questions 878
37 Secured Transactions and Suretyship 796 Case Problems 879
Secured Transactions in Taking Sides 881
Personal Property 796
Essentials of Secured Transactions 797 40 Antitrust 882
Classification of Collateral 797 Sherman Act 882
Attachment 799 Clayton Act 887
Perfection 801 Robinson-Patman Act 890

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xii CONTENTS

Federal Trade Commission Act 891 Chapter Summary 1007

Chapter Summary 892 Cases 1008
Cases 893 Questions 1012
Questions 901 Case Problems 1013
Case Problems 902 Taking Sides 1014
Taking Sides 904
45 Environmental Law 1015
41 Consumer Protection 905 Common Law Actions for Environmental
State and Federal Consumer Protection Agencies 905 Damage 1015
Consumer Purchases 909 Nuisance 1015
Consumer Credit Transactions 912 Trespass to Land 1016
Creditors’ Remedies 917 Strict Liability for Abnormally Dangerous
Activities 1016
Chapter Summary 918
Problems Common to Private Causes of Action 1016
Cases 920
Federal Regulation of the Environment 1016
Questions 927
The National Environmental Policy Act 1017
Case Problems 928
The Clean Air Act 1018
Taking Sides 930
The Clean Water Act 1020
42 Employment Law 931 Hazardous Substances 1022
Labor Law 931 International Protection of the Ozone Layer 1024
Employment Discrimination Law 933 Chapter Summary 1026
Employee Protection 939 Cases 1028
Chapter Summary 942 Questions 1031
Cases 944 Case Problems 1032
Questions 958 Taking Sides 1033
Case Problems 959 46 International Business Law 1034
Taking Sides 963
The International Environment 1034
43 Securities Regulation 964 Jurisdiction Over Actions of Foreign
Governments 1036
Securities Act of 1933 965
Transacting Business Abroad 1037
Definition of a Security 966
Forms of Multinational Enterprises 1042
Registration of Securities 966
Chapter Summary 1043
Exempt Securities 968
Cases 1044
Exempt Transactions for Issuers 969
Questions 1047
Exempt Transactions for Nonissuers 973
Case Problems 1048
Liability 975
Taking Sides 1050
Securities Exchange Act of 1934 976
Disclosure 977 PART 10
Liability 982
Property 1051
Chapter Summary 987
Cases 989 47 Introduction to Property, Property
Questions 998 Insurance, Bailments, and Documents
Case Problems 999 of Title 1052
Taking Sides 1000 Introduction to Property and Personal Property 1052
Kinds of Property 1053
44 Accountants’ Legal Liability 1001 Transfer of Title to Personal Property 1054
Common Law 1001 Property Insurance 1056
Federal Securities Law 1004 Fire and Property Insurance 1056

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CONTENTS xiii

Nature of Insurance Contracts 1057 Private Restrictions Upon Land Use 1106
Bailments and Documents of Title 1059 Chapter Summary 1107
Bailments 1059 Cases 1109
Documents of Title 1062 Questions 1113
Chapter Summary 1065 Case Problems 1114
Cases 1068 Taking Sides 1115
Questions 1073
50 Trusts and Decedents’ Estates 1116
Case Problems 1076
Taking Sides 1077 Trusts 1116
Types of Trusts 1116
48 Interests in Real Property 1079 Creation of Trusts 1118
Freehold Estates 1079 Decedents’ Estates 1120
Leasehold Estates 1081 Wills 1120
Concurrent Ownership 1085 Intestate Succession 1123
Nonpossessory Interests 1087 Administration of Estates 1124
Chapter Summary 1090 Chapter Summary 1125
Cases 1091 Cases 1126
Questions 1096 Questions 1132
Case Problems 1097 Case Problems 1133
Taking Sides 1098 Taking Sides 1134
49 Transfer and Control of Real Property 1099
Transfer of Real Property 1099 Appendices A-1
Contract of Sale 1099 Appendix A: The Constitution of the
Deeds 1101 United States of America A-2
Secured Transactions 1102 Appendix B: Uniform Commercial Code
Adverse Possession 1104 (Selected Provisions) B-1
Public and Private Controls 1104 Appendix C: Dictionary of Legal Terms C-1
Zoning 1104
Eminent Domain 1105 Index I-1

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 Preface

T
he format of the Seventeenth Edition follows the tra- case making the Patient Protection and Affordable Care Act’s
dition established by prior editions, in that chapters tax credits available in those States that have a Federal
contain narrative text, illustrations, cases consisting Exchange. The new Restatement (Third) of Torts: Liability
of selected court decisions, chapter summaries, and end-of- for Economic Harm is covered in Chapters 7, 8, 11, 18, and
chapter questions and case problems. 44. The new Restatement (Third) of Restitution and Unjust
Enrichment is covered in Chapters 9, 11, 13, 14, 15, 17, 18,
Topical Coverage 19, and 50. Coverage of limited liability companies has been
updated and expanded in Chapter 32. Coverage of benefit
This text is designed for use in business law and legal
corporations has been added in Chapter 33. Coverage of
environment of business courses generally offered in univer-
suretyship in Chapter 37 has been updated and expanded.
sities, colleges, schools of business and commerce, commu-
The Intellectual Property chapter (Chapter 39) includes the
nity colleges, and junior colleges. By reason of the text’s
new Defend Trades Secrets Act of 2016 and the 2016 amend-
broad and deep coverage, instructors may readily adapt this
ments to the Economic Espionage Act of 1996. The Consumer
text to specially designed courses in business law or the legal
Protection chapter (Chapter 41) covers the FCC’s net-neutrality
environment of business by assigning and emphasizing dif-
rule. The Employment Law chapter (Chapter 42) covers the
ferent combinations of chapters.
Genetic Information Nondiscrimination Act and the U.S.
Furthermore, this text covers the following parts of the
Supreme Court case holding that in disparate-treatment claims,
CPA Exam: (1) the business law area and the legal duties
an employer may not make an applicant’s religious practice a
and responsibilities of accountants area of the Regulation
factor in employment decisions. The chapter on Securities Reg-
Section and (2) the corporate governance area of the Busi-
ulation (Chapter 43) covers the U.S. Securities and Exchange
ness Environment and Concepts Section.
Commission’s new Regulation A and Regulation Crowdfunding
Emphasis has been placed upon the regulatory environ-
exemptions. The Environmental Law chapter (Chapter 45)
ment of business law: the first eight chapters introduce the
includes coverage of the EPA’s regulation of greenhouse gases
legal environment of business, and Part 9 (Chapters 39
and the 2016 amendments to the Toxic Substances Control Act.
through 46) addresses government regulation of business.
The International Business Law chapter (Chapter 46) covers the
Up-to-Date United Nations Convention on the Law of the Sea (UNCLOS).

The constitutional law chapter (Chapter 4) discusses recent Readability of Narrative Text
U.S. Supreme Court decisions in cases challenging the
constitutionality of (1) a Federal statute restricting how To make the text as readable as possible, all unnecessary
much money an individual donor may contribute in total “legalese” has been omitted, and necessary legal terms have
to all candidates or committees during a political cycle, been printed in boldface and clearly defined, explained, and
(2) Michigan’s constitutional amendment banning affirma- illustrated. Each chapter is carefully organized with sufficient
tive action in admissions to the State’s public universities, levels of subordination to enhance the accessibility of the
and (3) States’ refusal to license a marriage between two material. The text is enriched by numerous illustrative hypo-
people of the same sex and to recognize a marriage between thetical and case examples, which help students relate the
two people of the same sex when their marriage was lawfully material to real-life experiences. The end-of-chapter cases are
licensed and performed out of state. The Administrative Law cross-referenced in the text, as are related topics covered in
chapter (Chapter 5) discusses the recent U.S. Supreme Court other chapters.
xiv

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
PREFACE xv

Chapter Objectives major concepts. Almost all of the chapters include one or
more new questions and/or case problems. We have used the
Each chapter begins with a list of learning objectives for students. questions (based on hypothetical situations) and the case
problems (taken from reported court decisions) in our own
Applying the Law classrooms and consider them excellent stimulants to class-
room discussion. Students, in turn, have found the questions
The Applying the Law feature provides a systematic legal anal-
and case problems helpful in enabling them to apply the
ysis of a realistic situation that focuses on a specific concept
basic rules of law to factual situations.
presented in the chapter. It consists of (1) the facts of a hypo-
thetical case, (2) an identification of the broad legal issue pre-
sented by those facts, (3) a statement of the applicable rule, Taking Sides
(4) the application of the rule to the facts, and (5) a legal con- Each chapter—except for Chapters 1 and 2—has an end-of-
clusion in the case. The Applying the Law feature appears in chapter feature that requires students to apply critical-think-
fourteen chapters. We wish to acknowledge and thank Profes- ing skills to a case-based fact situation. Students are asked to
sor Ann Olazabal, University of Miami, for her contribution identify the relevant legal rules and develop arguments for
in preparing this feature. both parties to the dispute. In addition, students are asked to
explain how they think a court would resolve the dispute.
Practical Advice
Each chapter has a number of statements that illustrate how Appendices
legal concepts covered in the chapter can be applied to com-
mon business situations. The appendices include the Constitution of the United States
(Appendix A), the Uniform Commercial Code (Appendix B),
Case Treatment and a comprehensive Dictionary of Legal Terms (Appendix C).

All the cases have been edited carefully to preserve the actual Pedagogical Benefits
language of the court and to show the essential facts of the case,
the issue or issues involved, the decision of the court, and the Classroom use and study of this book should provide
reason for its decision. We have retained the landmark cases students with the following benefits and skills:
from the prior edition. In addition, we have incorporated
twenty-seven recent cases, including the following U.S. Supreme 1. Perception and appreciation of the scope, extent, and im-
Court cases: DIRECTV, Inc. v. Imburgia; Perez v. Mortgage portance of the law.
Bankers Ass’n.; Omnicare, Inc. v. Laborers District Council Con- 2. Basic knowledge of the fundamental concepts, principles,
struction Industry Pension Fund; Husky International Electron- and rules of law that apply to business transactions.
ics, Inc., v. Ritz; Harris v. Viegelahn; Young v. United Parcel 3. Knowledge of the function and operation of courts and
Service, Inc.; Environmental Protection Agency v. EME Homer government administrative agencies.
City Generation, L. P; and OBB Personenverkehr Ag v. Sachs. 4. Ability to recognize the potential legal problems which
may arise in a doubtful or complicated situation and the
Illustrations necessity of consulting a lawyer and obtaining competent
We have used more than 210 classroom-tested figures, dia- professional legal advice.
grams, charts, tables, and chapter summaries. The figures 5. Development of analytical skills and reasoning power.
and diagrams help students conceptualize the many abstract
concepts in the law; the charts and tables not only summa- Additional Course Tools
rize prior discussions but also help to illustrate relationships
among legal rules. Moreover, each chapter has a summary in
MINDTAP
the form of an annotated outline of the entire chapter,
including key terms. New for Smith and Roberson’s Business Law, 17th edition,
MindTap is a personalized teaching experience with relevant
End-of-Chapter Questions and assignments that guide students to analyze, apply, and
Case Problems improve thinking, allowing instructors to measure skills
and outcomes with ease. Teaching becomes personalized
Classroom-proven questions and case problems appear at through a pre-built Learning Path designed with key student
the end of chapters to test the student’s understanding of objectives and the instructor syllabus in mind. Applicable
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
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