Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Chapter Word Outlines
Chapter Word Outline Menu

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

1. Chapter Preview Summary

introduce Bill and Ann

overview of law

11. Chapter Objectives

III. Introduction

exposure to broad framework of law

why law is necessary

how law may impact Bill and Ann

IV. Definition of law




V. Jurisprudence

A. Natural Law

law based on absolute right and wrong

B. Legal Positivism

law is what sovereign says it is

C. Legal Realism

law is what experience dictates

D. Sociological Theory

law is compromise between conflicting societal considerations

Vl. Sources of Law

A. Constitution

Supremacy Clause

conflicting laws

tripartite system

checks and balances

B. Treaties

agreements between government & another government

high precedence

C. Statutes

often codify common law

passed by legislature ordinances

D. Common Law

British origins

common sense

brought to US by settlers

stare decisis

E. Judicial Law

law is skeleton

judges flesh out skeleton

stare decisis & precedent

binding in jurisdiction

Supreme Court binding on all

F. Administrative Law

delegation of authority

limitations on agencies

quasi-legislative & quasijudicial


G. Executive Orders

chief executive's power

effect of law

H. Justice and Morals

not law

may underlie law

VII. Classifications of Law

A. Civil and Criminal Law .

private- state interests


no loss of rights-loss of rights



B Substantive and Procedural Law

substantive - rights

procedural - how to pursue rights

C. Public and Private Law

involves government

involves only citizens

D. Law and Equity

no violation necessary to seek relief in equity

generally no trial by jury for equity

VIII. Areas of Law

A. Civil and Criminal Law

compensate v. punish

private v. public

money v. incarceration

felony v. misdemeanor

voluntary v. involuntary

litigation harmed party v. state bringing action

B Tort Law

civil wrongs


strict liability

intentional torts

C. Contracts Low

voluntary agreements

must meet requirements

D. Property

real property

personal property

tangible, intangible


duty of care

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 2



I. Chapter Preview Summary

Ann & Bill learn about principles underlying our laws

II. Chapter Objectives

III. Introduction

discussion of concepts that run throughout all laws

IV. Important Legal Concepts

A. Adversarial System

parties advocates for own side

sharpens debate

nonadversarial approaches gaining in popularity (see Ch. 3)

B. Police Power Ad

states' broad authority

broad, not absolute

regulation of safety, welfare, morals

C. Due Process of Law

process which is reasonable under circumstances

notice and opportunity to be heard

loss of life, liberty, property

5th amendment applies it to federal government, 14th to states

limitation on government, not private sector

procedural due process-faimess of notice and opportunity to be heard

substantive due process- fairness of law or its application

D. Equal Protection of the Law

all treated equally by government unless justifiable not to

limitation on government actions, not private sector

unless private sector acting in governmental capacity

difference analyzed by tests geared to group involved

1. rational basis test

business or economic interest is reason for difference

state need only show rational basis for law

difference subjected to minimum rational basis test

is law rationally related to achieving goal of law

Minnesota v. Clover Leaf Creamery Company

2. compelling state interest test

racial differences - compelling state interest test

very high standard

court applies strict scrutiny

justified if it

serves a compelling state interest

is narrowly drawn to accomplish purpose

Wvgant v. Jackson Board of Education

E. Regulation of Interstate Commerce

Congressional power to regulate commerce among the states

broad power

often used as a kind of federal police power

enables Congress to do things it otherwise couldn't

important source of business regulation

F. Taxation

allows Congress to' do what it otherwise could not

important source of business regulation

G. Preemption

Congress is only authority which can act on preempted area

states cannot pass laws in preempted areas

H. Ethics

should be a part of every decision

personal rules rather than public laws

codes of ethics increasingly a part of business

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700 - The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 3



I. Chapter Preview Summary

II. Chapter Objectives

the court system

how a case proceeds through court

alternative dispute resolution

administrative hearing process

III. Introduction

few cases that are filed with court are litigated

system ensures fairness and impartiality

IV. Structure of the Court System

A. Overview

federal and state courts are hierarchical

trial courts are fact-finders

heard by jury or judge

intermediate courts hears appeals

legal briefs and oral arguments form basis of appeals record

supreme courts are highest level

B. Federal Courts

lowest court is federal district court

have original jurisdiction over federal questions

circuit courts hear appeals from district

courts original jurisdiction for claims against the federal government

United States Supreme Court is highest court in the land

request for review is writ of certiorari

1. Federal Subject Matter Jurisdiction

hears federal question cases and diversity of citizenship cases

diversity cases involving citizens of different states

2. Limitations of Federal Courts

every case must state case or controversy

standing to sue

political questions

C. State Courts

lowest are courts of limited jurisdiction

next are courts of general jurisdiction

many states have intermediate appellate courts

final jurisdiction is in state supreme court

1. Small Claims Court

to allow resolution without lawyers or trial

limited jurisdictional amount

V. Litigation as a Means of Dispute Resolution

A A Civil Case

procedural rules vary

federal and state rules of procedure

begins when a lawyer is contacted

some cases require a retainer

some cases have a contingency fee arrangement

B. Pursuing a Case Through Trial

1. Filing the Pleadings

pleadings consist of all the papers filed before trial

complaint, summons, answer, reply, motions

counterclaim is claim asserted by dependent against plaintiff

crossclaim is claim by plaintiffs against third party

affirmative defense says all is true but no case

moving party files motion

2. Pre-trial

period before trial but after pleadings

discovery allows parties to find out about case

deposition is statement made under oath

request for production of documents

interrogatories are written requests for information

3. Jury or Nonjury

voir dire is jury selection

challenge for cause

peremptory challenge

limited by constitution and in number

Batson v. Kentucky

4. Trial

opening statement, direct examination, cross exam, closing arguments

burden of proof is preponderance of evidence

if case serious, then clear and convincing evidence required

5. Appeal

used by party who loses

jnov asks that judgment be set aside

motion for new trial alleges errors in trial

party seeking appeal is appellant

C. Remedies

remedies distinguish between legal and equitable cases

l . Legal Damages

three types: compensatory, punitive, and nominal

compensatory pays for actual harm caused

punitive designed to punish and deter

nominal agrees with principle, but awards no damages

2. Liquidated Damages

used in contract to specify amount

cannot be punitive in nature

3. Equitable Remedies

equitable remedies ordered by decrees

specific performance, injunction and accounting

specific performance orders party to perform

injunction orders party to do or stop doing something

temporary restraining order is emergency order

preliminary injunction halts act temporarily

permanent injunction terminates act permanently

D. A Criminal Case

begins with an arrest of dependent

can be by arrest warrant or grand jury

1. Constitutional Protections

implicates 4th, 5th, 6th, and 8th amendments mainly

unreasonable searches and seizures


right to legal counsel

cruel and unusual punishment

evidence obtained in violation is inadmissible at trial

2. Applications to Business

businesses subjected to same constitutional protections

3. A Criminal Trial

conducted same as civil trial except dependent not required to


burden of proof is beyond a reasonable doubt

protected against double jeopardy

some cases entitled to appeal, others optional

V1. Alternative Dispute Resolution



less adversarial

helps court backlog

can be more suited to specific needs

A. Conciliation

first step

just between parties

try to agree


B. Mediation

third party intervention

third party intervention

more formal

less formal than court



majority rule

commercial v. labor arbitration

court-annexed arbitration

Rodriguez De Ouijas v. Shearson/American Express

C. Other Alternatives

1. Mock trials

"pretend" trial

reality check for parties

2. Minitrials

business setting

those hearing case are familiar with business

allows for better negotiation

3. Regulatory negotiation

administrative agencies

prevents protracted resistance to regulations

4. Summary jury trial

six-person jury

summary presentation of case

facilitates negotiation

VII. Administrative Adjudication

quasi-judicial power

quasi-legislative power

administrative law judges

exhaustion of administrative remedies

judicial review

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Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 4



I. Chapter Preview Summary


white collar crime

II. Chapter Objectives

social responsibility

profit maximizing

ethical considerations

white collar crime

computer crime

III. Introduction

considerations of ethics in all business decisions

crimes committed against businesses

computer crimes

IV. Ethics

individual character

social rules


business ethics

A. Ethics and Law

law is the floor; ethics may be above the law

B. Theories of Ethics


most good for individual


most good for most people

good will

act from duty

prima facie obligations

balancing of moral obligations

C. Corporate Ethics

corporate culture

1. Can Ethics Be Taught?

requires individual values be transposed to corporation

2 Do Corporations Have Ethics?

represents a collection of individual ethics

V. Social Responsibility

A. Profit maximization

if allowed to operate for maximum profits, will ultimately benefit society

B. Businesses as Citizens

enormous power result in responsibility to society

Ultra Vires Acts

limits scope of corporate outside activities other than for profit

D. Applications of Ethical Analysis

looking beyond profit to other effects

Vl. White Collar Crimes

crimes by and against business

victimless crimes

corporations can be liable and punished monetarily

executives and managers can be fined and imprisoned

U.S. v. Park

VII. Computer Crimes

laws unable to meet sophistication of crimes

many laws inapplicable because of traditional elements

A. Federal Laws

Access Device and Computer Fraud and Abuse Act of 1984

Comprehensive Crime Control Act of 1984

Computer Fraud and Abuse Act of 1986

B. State Law

formulating new elements for computer crimes

C Ethical Problems

new on the horizon; e-mail, intemet, and on-line services

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 5



I. Chapter Preview Summary

II. Chapter Objectives

III. Introduction

IV. Strict Liability


virtually no defense

voluntary assumption of the risk

keeping wild animals


Klein v. Pyrodyne Corp.

V. Negligence

standard of care

A. Defenses

contributory negligence

assumption of the risk

comparative negligence

B. Proximate Cause

legal cause

actual cause

VI. Intentional Torts

A. Intentional Torts Against Property

l. Personal Property

Real Property

B. Intentional Torts Against the Person

1. Assaults

unpermitted touching

damages unnecessary

2. Battery

fear or apprehension

3. Defamation

4. False Imprisonment

5. Intentional Infliction of Emotional Distress

Drum v. Vaccaro

6. Invasion of Privacy

a. Intrusion upon seclusion

b. Appropriation of name or likeness

c. False light

d. Publication of private facts

VII. Business Torts

A. Disparagement

U. S. Healthcare Inc. v. Blue Cross of Greater Phila.

B. intentional interference with contractual relations

C. Theft oftrade secrets

D. Palming off

E. Trademark Infringement

F. Patent Infringement

G. Copyright Infringement

VIII. Responsibility for Tortious Activity

IX. Defenses to Torts

X. Damages

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700 - The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 6



I. Chapter Preview Summary

II. Chapter Objectives

III. Introduction

IV. Sources of Contract Law

Restatement/Common Law


V. Classifications of Contracts

A. 1. Valid

meets 4 requirements

can still be unenforceable

2. Void


fraud in the execution

3. Voidable


fraud in the inducement

4. Unenforceable

Statute of Frauds

Parol Evidence Rule

B. 1. Executory

future performance

2. Executed

completed performance

partial performance

C. l. Unilateral

promise for act

2. Bilateral

promise tor promise


D. 1. Express

communication of parties

can be written or oral

2. Implied in Fact

acts of parties

3. Implied in Law Contracts

quasi contract

unjust enrichment

quantum meruit/reasonable value

Vl. Remedies

Purpose - as if contract performed

Legal-money to make non-breaching party whole



must notify party before of consequences



not generally awarded


malice, ill will


can't be too high or considered punitive


Equitable-action to make non-breaching party whole

specific performance

unique no adequate remedy at law



Stambovsky v. Ackley

VII. Requirements for a Valid Contract

A. Mutual Assent

1. Offer

a. Requirements

i. definiteness

Common Law

quality, quantity, price

requirement contract

output contract




ii. intent



great excitement

iii. communication

b. Termination of offers Pneumonic: DDRRIIL

I. Death

ii. Destruction of subject matter

iii. Rejection by offerer



act inconsistent with acceptance

knew or reason to know

common law


mirror-image rule

battle of forms


counteroffer if stated, otherwise:

acceptance with varied terms is contract if



not conditioned on O'ee's accep

different terms

proposals for addition to contract

must be negotiated in

additional terms


treated same as different terms

between merchants

automatic inclusion in K unless

offer limited to its terms

O'or objects w/1 10 days

material alteration

then same as different terms

iv. Revocation by offeror

Gen. Rule: OK any time prior to acceptance, unless

option contract

consideration needed

not down payment unless agreed

unilateral offer upon which performance begun

merchant's firm offer

v. illegality

vi. insanity

vii. Lapse of stated or reasonable time

2. Acceptance

a. General

Common law


b. UCC

acceptance with varied terms - see rejection above

c. Genuiness of Assent

fraud in the execution

fraud in the inducement

undue influence




B. Consideration

Definition - bargained for legal detriment exchanged between the parties

In consideration of I'll give you

1. Adequacy of Consideration

generally amount not an issue unless fraud alleged

2. Inadequate Consideration

gratuitous promises

past consideration

pre-existing legal or contractual obligation

moral obligation

illusory promises

3. Substitute for consideration

promissory estoppel

4. No need for consideration

merchant's firm offer

debt barred by statute of limitations

exclusion of debt from bankruptcy

C. Capacity

General Rule- contracts voidable


only at option of one under incapacity

infant only before or reasonable time after majority


indirect - act inconsistent with ratification


upon reaching majority


lucid moment



food, clothing, shelter

other, if supported by circumstances

fraud regarding age

status quo


voluntary v. involuntary

ratification after sobriety


adjudicated incompetent

lucid moment

D. Legality



covenants not to compete

sale of business

competing employer

reasonableness as to



licensing statutes



Johnson v. Calvert

VIII. Enforceability of Contracts

A. Statute of Frauds Pneumonic MYLOEGS



except leases of year of less


partial performance doctrine

Other than goods


security agreements

Executory contracts of $S000+

intangibles - assignment of royalties, patents

Executor's promise to be personally liable

Goods of $500+

specially manufactured goods & performance begun

part performance

limited to what was done

written consternation between merchants

binds both

admissions in court documents

limited to what is admitted

Surety personal benefit rule exception

B. Parol Evidence Rule

applies only to written contracts

applies only to fully integrated contracts

only prior or contemporaneous evidence covered by rule

includes oral, written

subsequent agreements not covered by rule

showing fraud OK-not varying teens

explaining terms OK-not varying terms

IX. Contracts Involving Third Parties

A. Assignments

assignment of rights

delegation of duties

no formal requirements

Statute of Frauds applies

assignee steps into assignor's shoes

no better rights

warranties of assignment

assignor still liable


obliger can't refuse

increases burden

too personal

B. Third Party Beneficiary Contracts

intended beneficiaries

donee beneficiary

can't sue donor

can sue obliger

creditor beneficiary

can sue both

unintended beneficiaries

can sue neither

X. Contract Performance





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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 7



I. Chapter Preview Summary

Ann and Bill expand into the international market

ways of conducting business discussed

II. Chapter Objectives

III. Introduction

expanding into the international market

knowledge of export regulations

respecting multiculturalism

IV. Defining the Scope of the International Legal Environment

sources of international law

regulation of world trade

conducting international business


resolving international disputes

remedies for unfair trade practices

V. Sources of International Law

A. Custom

well-developed practice

B. Treaties and Other Agreements

contracts between countries



executive orders

Vienna Convention


C. Organizations

European Common Market




Gulf Cooperation Council




Vl. International Regulation of World Trade

motivated by increased world trade for the U.S.

A. The General Agreement on Tariff and Trade

multilateral instrument (104 nations)

negotiated through rounds

principle is to expand world trade

most favored nation status

imposes tariffs according to status of country

now known as the World Trade Organization (WTO)

B. Organization for Economic Cooperation and Development

major concern is industrialized countries

C. ISO 9000

international standards of quality

symbol to identify quality goods

imposed by many European businesses

VII. U.S. Regulation of World Trade

export licenses



regulates type and flow of goods in and out of country

VIII. Regulation By Federal Agencies

variety of federal regulations

A. U.S. Trade Representative

formulates trade policy for the U.S.

B. U.S. Customs Service

responsible for collecting customs, duties, taxes, fees, and penalties

C. International Trade Administration

promotes world trade and strengthens position of U.S.

D. International Trade Commission

imposes tariffs and import quotas on industries

IX. Methods of Conducting International Business

how to sell in foreign markets controlled by amount of risk and capital

A. Direct Sales



Convention on the International Sale of Goods

B. Indirect Export Sales

export trading company

export management company

Licensing Agreements

contract that gives permission to use product or service

most often involves intellectual property

the Paris Convention

D The Services Area


services outproduces goods in many countries

E. Joint Venture

agreements between two or more companies to operate in one

company's country or a third country

X. Multinational Enterprises

large company that engages with economically significant business in host country

A Regulation of the Multinational Enterprise

Codes of conduct for MNE's

UN Commission on Transnational corporations


B. Expropriation and Nationalization

nationalized property is run by government

expropriated property is taken by government

confiscated property is taken without payment by government

C. Act-of-State Doctrine and Sovereign Immunity

act of state by government cannot be reviewed by U.S. courts

foreign governments are out of reach of U. S. courts

XI. Resolution of International Disputes

no such thing as international commercial litigation

litigants must agreed on who will hear disputes

A. Arbitration

less restrictive rules than litigation

free to fashion remedy

B. Litigation

multinational litigation occurs in more than one courtroom in more than


country based on same dispute

XII. Unfair Trade Practices and Their Remedies

usually result in higher tariffs or import duties being imposed

A. Dumping

sold for less in other country than at home

undercuts competition and can create monopoly

B Countervailing Duty

duty imposed to offset subsidies

used to offset competitive edge

C. Gray Market Goods

goods made with valid trademark, but sold invalidly in U.S.

X111. Multicultural Implications

cultural considerations when doing business in another country

should not intentionally offend cultures because could lose business

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Dawn D. Bennett-Alexander


Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 8



I. Chapter Preview Summary

Ann & Bill learn forms of business available to them

II. Chapter Objectives

know types of business organizations; advantages, disadvantages

III. Introduction

IV. Forms of Business Organizations

needs of owner

amount of risk


A. Sole Proprietorship

single owner




100% control

100% profits

ease of start up


100% liability

personal assets at risk

limited financial resources

limited worker resources

limited duration

B. Co-owners

importance of agreement

C. Partnerships

Uniform Partnership Act


General Partnership



more available

human capital v. investment

specialization of labor

profit and loss sharing

not only one owner


liability for acts of other partners

respondent superior

unlimited personal liability

joint and several liability


marshaling of assets

c. Partnership Agreement

no formalities

d. Writing Requirement

generally none

still should have one

include necessary provisions


e. Right to Participate in Management

generally equal, need not be

f. Transfer of partnership interest & dissolution

may be limited

g. Legal Status of Partnership

legal entity rather than aggregate of individuals

profits & losses on individual tax return

unanimity of decisions

unlimited partner liability

Limited Partnerships

a. partnership name

can't have limited partner name

b. right to participate in management of partnership

can't participate in management

registration required

c. transferability and duration


Limited Liability Partnerships

general partners jointly liable in contract

liable in tort only for own negligence or those they control

Joint Venture

limited time

limited purpose

partnership rules apply

D. Corporations

ownership and management separate

several different types

Model Business Corporation Act


a. legal status of corporations

b. corporate ownership and governance

c. the corporate veil

protection of personal assets

d. duration of the corporation

unlimited duration

e. identity protection

protected by law


a. management

not directly by owners

b. double taxation of corporations

taxed as income, taxed as dividends

Types of Corporations

Fairly new phenomenon to have number of choices

Tax as impetus

a. Statutory Close Corporations

like partnership informal

b. S corporations

like partnership

IRS tax election

taxed as partnership

election requirements

taxed at individual, not corporate rate

c. Professional Associations (PA)

license-holding shareholders only

liability for negligence not limited

Shareholder Rights

need protection since ownership and management separate

a. Fiduciary Duties act on behalf of corporate interest

b. The Corporate Veil in Smaller Settings

more closely watched

easy to mix personal and business

c. Minority Shareholder Rights

pre-emptive rights

cumulative voting

straight voting

right to inspect corporate books

appraisal rights

d. Dividend Rights



dividends - rules of declaration

Business Judgment Rule

protection for directors

duty from board to shareholders

burden of proof in past-pm shareholders to show no good .faith

burden of proof present-board shows good faith

S&L bailout fiasco & excesses

E. Regulation of Securities

purpose of law is disclosure

blue sky laws

definition of security

1933 Securities Act

attempt to recover investor confidence after 1929 crash

disclosure of accurate information to investors

registration unless exempted

civil liability for misleading or omitted material information


"due diligence"

Registration Exemptions

Interstate exemption B

stock issued & purchased by residents of state of


9-month restriction on selling

80% rule

Small offering exemption

Regulation A

issue not exceeding $ 1.5 million in 12-month period

Regulation D

Rule 504-issue not exceeding $500,000 in 12 months

Rule 505-issue not exceeding $5 million in 12 months

no more than 35 non-accredited purchasers

unlimited accredited purchasers

1934 Securities Act

esale, not initial issue

disclosure & reporting requirements

current, quarterly (1 OQ) & annual (1 OK) reports

proxy solicitations

tender offers

fraud provisions - Section 10 & Rule ]O(b)(5)

short swing trades


Foreign Corrupt Practices Act

F. Limited Liability Companies

S Corporation without the restrictions

limited liability

increased financial capital

specialization of labor

tax law treats as partnership

flow through of profits & losses to partners

lower tax rates

G. Franchises

lease of right to operate business


FTC disclosure rules

V External Factors

A. Nature and Classification of Business

service, professional, trade, retail, manufacturing, mixed

different levels of risk

historical classifications

B Benefits, Profits, Losses & Tax Laws

retirement plan contribution options for corporations, partners

C. Start up Costs and Taxation

depends on type of business

D. Projected Levels of Profits and taxation

profits exceeding $50,000

effects on taxation

V1. Applications


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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700 - The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 9



I. Chapter Preview Summary

Bill and Ann learn many of the particulars of starting a business

II. Chapter Objectives

learn about:

sources of business advice disabled accessibility

business name, environmental audit business licenses

real property tax ID number

signature liability internal controls


III. Introduction

practical approach

high new business failure rate

IV. Sources of Information

importance of seeking advice



business professors

college business practices


chambers of commerce

V. The Business Plan


essential for planning & loans

Vl. Financing the New Enterprise


borrowing from family, friends

borrowing from banks, S&Ls, venture capitalists

based on type of ownership and business

VII. Legal Issues - Start-up

A. Choosing the Business Name

unique name

receives protection in several ways

common law Protection

establishing exclusive use for extended period

secondary meaning

use by others would cause confusion to consumers

risk of use during establishment

should 1 st conduct research

should notify businesses of proposed name

Lanham Act Protection

major source of statutory tradename protection

names should be distinctive, not generic

development of secondary meaning covered also

protection lost by allowing common usage

best if over large area

Protection by incorporation

can reserve corporate name

can't be similar to existing name

The Yellow Pages

placement important

difficult to undo


B. The Business Location

need this before

ordering checks

obtaining business license

arrange for utilities & services

Zoning Laws

restricts property use

impacts where business can be located, advertising used

In-Home Offices

exception/special permission from zoning office

granted if nonintrusive


Accessibility considerations under the ADA

ADA requirements

consider when deciding location

tax implications

Environmental Concerns

waste management needs

accessibility to pickup

environmental audit

CERCLA, Superfind

Lease vs. Purchase

estates in land- what real estate interest is held

fee simple absolute

conditional fee simple

life estate, waste

estates in land - how real estate interest is held

joint tenants with right of survivorship

tenants in common

tenants by the entirety

undivided interest

limitations on disposal


tenants from period to period

tenants at will

tenants for a stated period

tenants at sufferance

Other considerations

tax implications



no equity built

C. Business Licenses

varies from state to state

inspection of business site

D. Other Licenses and Permits

depends on nature of business

E. Federal & State Tax ID Numbers

needed for business accounts

F. Business Records

necessary to keep track of various reporting requirements

necessary to know how business is going

separate bank accounts

commingling funds

G. Business Banking Accounts

liability of signatures

liability on negotiable instruments

fictitious payee rule

impostor rule

internal controls

H. Acquisition of Business Equipment

Lease v. Purchase

tax implications

financing implications

changing technology

Requirements for Acquisition

security agreement

promissory note

secured transaction

Liability on Acquisition Agreements

joint and several liability

joint liability

several liability

VIII. Business Insurance

Insurable interests

necessary for obtaining insurance


Replacement Value vs. Fair Market Value

hazard insurance


professional insurance

car insurance

IX. Bulk Transfers

purchase of ongoing business

creditor notification


public notice alternative

buyer notification to creditors

X. Franchises

reputation already made by franchiser

startup/buy-in costs

FTC Franchise Disclosure Rules

state laws

XI. Bankruptcy

federal law

state law


Chapter 7-straight bankruptcy

Chapter 11-reorganization

Chapter 13-wage earner bankruptcy

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 10



I. Chapter Preview Summary

Ann and Bill learn about implications of having employees

II. Chapter Objectives

To learn about the legal issues involved in employment, agency, independent

contractors, various types of principles

III. Introduction

many ways someone can work for another

independent contractor



IV. Types of Employment Relationships

concern about legal liability for acts of employee

concern about contractual issues of employment

A. Independent Contractor

expertise of contractor-deals with particulars

independent contractor employed by principal

common law test

a. Torts

contractor responsible for own

except if dangerous or not delegable

b. Contracts

bind principal only if so arranged

principal's contracts generally his/her own responsibility

B. Agency

principal and agent

agent acts on behalf of principal mainly for contracting

acts are those of principal, if done correctly

principal responsible for agent's torts w/I scope

a. Types of principals



partially disclosed

b. Types of agents



c. Types of authority

express-oral or written



notice of end of relationship

actual notice

constructive notice

C. Employees

hired to perform functions

receive instructions from employer

employer responsible for torts w/l scope

employer not responsible for criminal acts unless ordered

V. Employment at Will/Unjust Dismissal

most employment relationships

A. The Employment At Will Doctrine

DeMarco v. Publix Supermarkets. Inc.

B. Situations Not Covered by the At-Will Doctrine

contract employees

government employees

breach of good faith

Pugh v. Sees Candies, Inc.

Fortune v. National Cash Register Co.

C. Model Employment Termination Act


termination only for good cause

limited remedies

Vl. Defamation in the employment termination setting

law provides employer with conditional privilege to give info

if conditions met, employer protected

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 11



I. Chapter Preview Summary

Ann and Bill team about wages, hours, workers' camp and labor law

II. Chapter Objectives

III. Introduction


passed in 1938

passed in response to the Great Depression

A. Minimum Wages and Hours

wages-sets minimum amount per hour employees must receive

hours-if more than 40 p/wk, must be paid time and a half

administered by Wage & Hour Div. of DOL

state laws


B. Child Labor

restricts hours and jobs children can work

under 14- generally can't work

14-1 6-can work at jobs that don't interfere

16- can generally start to work

18-minimum age for hazardous jobs






general duty clause

retaliation provisions

unannounced inspections

requirements for training, ventilation, medical exams, etc.



VI. Workers' Compensation

pre-statutory means of recovery for injuries

employer defenses

financing the fund

effect of statutes on defenses

arising from or in course of business

retaliation provisions

recovery schedules

keeping down costs

Beluev. Prewitt Mills Distribution Center

The Ramada Inn SurEside & Adjustco Inc. v. Swanson

VII. Family and Medical Leave Act

became effective 8/5/93

50+ employees up to 12 weeks unpaid leave per year

serious illness of spouse, employee, child, parents, adoption

maintenance of benefits, job

employed at least 1250 hours during year before leave

exemption often 10%

ok to require verification

US Dept. of Labor

VIII. Labor Law

previously illegal to work in concert for benefits

four main federal laws





A. Norris-LaGuardia Act

prohibited courts from issuing injunctions

outlawed yellow dog contracts

B. Wagner/National Labor Relations Act

authorized collective bargaining

prohibited ULPs

non-managerial employees only, for unions


types of unions

community of interests

bargaining unit

l. Good Faith Bargaining

mandatory subjects of bargaining

permissive subjects of bargaining

need not ultimately agree

2. Duty of Fair Representation

not defined-catchall

union must fairly represent all in bargaining unit

including non-union members

3. Collective Bargaining Agreements

no set form it must take

union security for labor, freedom from strikes for management

4. Unfair Labor Practices

activities which would tend to control, influence or interfere


actual interference need not be shown

management can't promise or give goodies

Electromation, Inc. v. NLRB

C. Taft-Hartley Act

amended NLRA

to curb union excesses

union ULPs

D. Landrum-Griffin Act

established basic rules of union operation

provided union member bill of rights

ensured democratic process

regulated actions of union officers and fiends

E. Labor Relations in the Public Sector

NLRA applies only to private sector

Civil Service Reform Act of 1978 - federal employees

states also have laws governing state public employees

no strikes

no bargaining over wages, hours, benefits

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 12



I. Chapter Preview Summary

Bill and Ann learn what employment discrimination is and how to avoid it

II. Chapter Objectives

learn different types of employment discrimination

III. Introduction

5+ employees

may be less under state law

can't just hire, fire, etc., whomever for whatever reason

IV. Applicable Laws

Civil Rights Act of 1964

race, color, gender, pregnancy, sexual harassment, religion, national origin

state fair employment practice laws

Age Discrimination in Employment Act (ADEA)

Americans with Disabilities Act (ADA)

Civil Rights Act of l99l

jury trials

compensatory & punitive damages

Executive Order 1 1246 & affirmative action

equal employment opportunity v. equal employment

reasons for needing anti-discrimination laws

omnipresent vestiges of slavery

100-year pre-1964 legalized discrimination

need not be intentional

V. Discrimination Theories under Title VII

must be one or the other

A. Disparate Treatment

individual theory

intentional discrimination

obvious policy of discrimination

B. Disparate impact

group theory

unintentional discrimination

neutral policy with. disparate negative impact on a group

screening devices

four-fifths rule

Bradley v. Pizzaco of Nebraska. Inc. dba Domino's

VI. Protected categories under Title VII

A. Race

protects all, not just blacks and minorities

many manifestations are subtle

McDonald v. Santa Fe Transportation Co.

B. Gender

much discrimination based on ingrained notions

be vigilant about unexpected manifestations

1. In General


Price Waterhouse v. Hopkins

2. Affinity Orientation

not covered by Title VII

state and local law coverage

constitutional equal protection

3. Equal Pay and Comparable Worth

Equal Pay Act

comparable worth of job to employer

4. Pregnancy

must treat as any employee with short term disability

providing more relief is not illegal

California Fed. Savings Ass'n. v. Guerra

5. Sexual Harassment

quid pro quo

hostile environment requirements for making out case

Rabidue v. Osceola Refining Co.

C. Religion

duty to reasonably accommodate

undue hardship

closely held belief

employee must help in accommodation

employer protected if legitimate attempts

TWA v. Hardison

D. National Origin


English-only rules

citizenship v. national origin

E. Age


F. Disability

interference with a major life function

actual disability, record of it, perceived as disabled

School Board of Nassau County v. Arline

VII. Defenses to Employment Discrimination Cases


very narrowly construed

legalized discrimination

must be reasonably necessary to employer's business

race can't be BFOQ

B. Business Necessity

OK if actually necessary for job

VIII. Affirmative Action and "Reverse" Discrimination

Executive Order 1 1246

government contractors of $10,000+

affirmative action plans for $50,000+

as a remedy in court cases


goals, not quotas


requirements for valid plans

"reverse discrimination"

United Steelworkers v. Weber

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 13



I. Chapter Preview Summary

Ann and Bill learn of several issues on the workplace horizon

II. Chapter Objectives

to learn what is involved in each & whether it is worth implementing

III. Introduction

different roles of employment in history

presently want to mesh home and work

causes workplace innovations

increased productivity, efficiency, loyalty, less turnover

IV. Valuing Diversity\Multiculturalism

"Workplace 2000" study

affirmative action got different employees into the workplace

valuing diversity deals with learning to live well together once there

not "political correctness"

lessens lawsuits and workplace conflicts

"different from" v. "less than"

V. Flex Time

flexible times for reporting to work

considerations for adoption

VI. Job Sharing

one job-two employees hold it

benefit to employee

benefit to employer

VII. Temporary/Leased Employees

growing area

no longer just clericals

saves on benefits

quick expertise

VIII. Domestic Partnerships

heterosexuals as well as same-gender couples

not required

only where available


IX. Support Groups

inexpensive but effective

doesn't take the place of qualified experts

indicates employer concern


efficiency, loyalty

X. Workplace Privacy

increased surveillance technology

constitutional protection for government employees

no similar right for private employees

disseminate only on need to know basis

regulating after-hours behavior

Rulon-Miller v. IBM Corp.

XI. Workplace Testing

drug and alcohol testing

balancing employer's interest against employee's

preemployment tests for competency

four-fifths rule

professional validation

Griggs v. Duke Power Co.

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 14




I. Chapter Preview Summary

government regulations to protect consumers

credit guidelines

II. Chapter Objectives

Federal Trade Commission

bait and switch

advertising limits

debt collection practices

electronic fund transfers

III. Introduction

business's legal responsibility to consumers

handling of credit information

IV. The Federal Trade Commission

enforces antitrust laws

protects consumers

prohibits unfair competition

unfair or deceptive practices or acts

Orkin Exterminating v. FTC

A. Exempt Industries

other heavily regulated industries, i.e., banking

B. Regulating Advertising Practices Under the FTC

FTC issues guidelines to alert sellers to deceptive practices

1. Bait and Switch lit.

ads for products vendors don't intend to sell

2. Door-to-Door Sales

cooling off periods

strict notification requirements

main exceptions: real property and securities

3. 900 Numbers

Telephone Disclosure and Dispute Resolution Act

ads to children under 12 prohibited

requires disclosure of costs up front

V. Federal Statutory Protection for the Consumer

Consumer Credit Protection Act

designed to inform consumers of cost of credit

Act is a series of subchapters

A. The Truth in Lending Act

forced credit to adopt uniform language to ease understanding

requires disclosure of any finance charges in connection with sale

creditor is one who extends credit

consumer is one who is offered credit

B. The Fair Credit Billing Act

primarily to provide means for resolving errors

C. The Fair Credit Reporting Act

regulates credit reports

requires notification of consumer credit disputes to those who inquire

certain privacy provisions

D. The Equal Credit Opportunity Act

eliminated discrimination in credit on basis of sex

business credit excluded from this act

E. The Fair Debt Collection Practices Act

purpose is to eliminate abusive debt collection practices

debt collector is one who uses commerce to collect debt of another

excludes in-house collector

limits contacts between debtor and debt collector

United States v. ACB Sales and Services

F. Electronic Fund Transfers

transfer of funds other than by check

Electronic Funds Transfer Act

objective is to provide individual rights against institutions

includes ATM's, pay-by-phone, etc.

gives specific disclosure requirements re: costs, liabilities, etc.

Vl. State Statutory Protection for the Consumer

Unfair and Deceptive Practices Act

patterned after federal statutes

cover sale of goods or services

excludes credit transactions

A. Door-to-Door Sales

provides cooling off period

B. Lemon Laws

applies to purchase and sale of automobiles for consumer use

provides guidelines for resolving disputes

used car rule gives disclosure requirements for used cars

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 15



I. Chapter Preview Summary

II. Chapter Objectives

what patents, copyrights, and trademarks are

intellectual property protection

III. Introduction

intellectual property

patents protect inventions

trademarks protect goods and services

copyrights protect authors and the like

IV. Copyright

Copyright Reform Act gives exclusive use to copyright holders

copyright lasts for life + 50 years

does not cover works in public domain

A. Notice and Registration

requires word, date, and author to be protected

registration not necessary, attaches at creation

B. Infringement

can infringe by using without owner's permission

C. Fair Use Doctrine

judicially created exception

measures purpose and character, nature of work, amount, and qualitative

and quantitative use of work

normally applies to criticism, comment, news reporting, teaching, scholarship, and research

D. Fair Use and Photocopying

three tests apply: brevity, spontaneity, and cumulative effect

E. Work-for-Hire

work prepared within the scope of employment

usually owned by employer if done at work

F. Computer Software

two needs allows copying: utilization and protection against destruction

software defined as literary work

V. Patents

strongest type of protection; virtually absolute

protects for 17 years

A. Types of Patents

utility patent for new process, machine, or manufacture or composition of


design patent for new design for an article of manufacture

plant patent for new varieties of plants

B. Objects Not Subject to Patent

laws of nature, fundamental scientific formulas, and math not patentable

anything discovered, not invented not patentable

C. Requirements for Patent Protection

novelty, non-obviousness, and utility needed for patentability

D. Patent Infringement

remedies are injunction, damages, attorney's fees, and costs

Vl. Trademarks

no limited term; protected as long as useful

operates to avoid confusion

A. Technical Trademarks

Lanham Act allows owners to register them with Patent and Trademark


B. Service Marks

mark used in sale or advertising of services that distinguishes one from the


differs from trademark in that it identifies services rather than goods

C. Titles and Character Names

creative characters also covered as trademarks

D. Trade Names

name of business different from trademark in that it identifies producers

rather than products

cannot be registered under Lanham Act because not trademarks

E. Trade Dress

refers to total image of product

protects almost any feature if identifiable with product

protected under Lanham Act

F. Trademark Infringement

exists if 2 marks makes confusion of public likely

G. Certification Marks

mark used to indicate origination or nature of product

available to anyone who meets Qualifications

H. Collective Marks

mark indicating production by a certain group or group member

I. Trade Secrets

any information used in business that gives one a competitive edge

protection a matter of state law

protects only against improper discovery or use

Uniform Trade Secrets Act used by some states for protection

J. State versus Federal Registration

state registration used for local geographic use or for areas not protected

by federal law

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 Dawn D. Bennett-Alexander

Terry College of Business >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>University of Georgia

LEGL 2700- The Legal Environment of Business

Dr. Bennett-Alexander

Word Outlines

Chapter 16



I. Chapter Preview Summary

II. Chapter Objectives

what warranties are

environmental responsibilities of business

III. Introduction

liability for products

liability for business practices

liability for environment

IV. Liability for Goods Sold: Warranties

consumers given protection from faulty products

federal protection adds to state warranty law

A. Federal Warranty Law - The Magnuson Moss Warranty Act

protects consumers by regulating language and content of warranties

limited to written warranties

full warranty must meet minimum federal standards

can be limited, but must meet other Magnuson-Moss requirements

prohibits limiting of implied warranty of merchantability

provides consumer with remedies for breach

B. State Warranty Protection - The Uniform Commercial Code

Article 2 provides framework for breach of warranty on goods

warranty of title assures buyer of clean title

warranty of quality gives buyer assurance of quality of product

1. Express Warranties

may be oral or written

puffery not an express warranty

2, Implied Warranties

implied by law, even if seller does not express it

two types: fitness for a particular purpose and merchantability

a. Warranty of Merchantability

implies fitness for ordinary purposes

requires a sale, for goods, by a merchant

b. Implied Warranty of Fitness for a Particular Purpose

three conditions

seller must know of buyer's purpose

seller must know of buyer's reliance on seller's judgment

buyer must rely on sellers judgment in fact

3. Disclaimer of Warranty Under the Uniform Commercial Code

disclaimers must meet requirements to be disclaimed

V. Liability for Possession of Goods: Bailments

bail Kent is rightful possession of goods by another

person with possession is bailee

person who owns property is bailer

A. Types of Bailments

bailment for the benefit of the bailee = bailee gets benefit of possession

bailment for the benefit of the bailer = bailer gets benefit of possession

mutual benefit bailment = both benefit from possession

B. Disclaimers

some disclaimers are traditional and well recognized by law

VI. Liability for Services: Professional Responsibility

persons with superior knowledge held to higher standard

A. Common Law

held to standard of reasonable expert

B. Accountant's Liability

most fully developed professional standard because of reliance in business


VII. Liability for Business Practices: Antitrust

regulates competition between businesses

A. The Sherman Antitrust Act

prohibits contracts in restraint of trade

only prohibits unreasonable restraints

governed by rule of reason

1. Per se violations of the Sherman Antitrust Act

inherently unreasonable = per se violations

horizontal violations occur between two competitors

vertical violations occur between buyers and sellers

price fixing is an agreement to fix prices (per se illegal)

division of territory carves up territory

group boycott: agreement not to deal with third party competitor

resale price maintenance dictates a price an item must be sold

exclusive dealing arrangement is where buyer must but second product

to get the first desired product

all above are per se violations

2. Monopolies

power to control prices or exclude competition

not all monopolies are illegal

B. The Clayton Act

regulates price discrimination, tying arrangements, and corporate mergers

C. The Robinson-Patman Act

amends the Clayton Act and prohibits price discrimination

price discrimination is different prices of the same product during the same

time period

two price discrimination defenses are cost justification, defense and meeting

competition defense

FTC also recognizes practical availability defense to price discrimination

predatory pricing is selling below price to eliminate competition

Federal Trade Commission v. Borden

VIII. Liability for the Environment: Environmental Protection

environment is a major concern for business because of regulations

A. Comprehensive Environmental Response, Compensation, and Liability Act of


known as Superfund

cleans up sites where hazardous substances are located

requires current owners to clean up property even if they did not cause waste

imposes strict liability on responsible parties

defense are act of God, act of war, or innocent landowner

United States v. Serafina

B. Resource Conservation and Recovery Act

covers hazardous wastes

regulates generation, storage, transport, or disposal

objective is to not allow creation of hazardous site

1984 amendments closed loopholes for many hazardous wastes, but

imposed regulations on many small businesses

C. Clean Water Act

prohibits discharge of pollutants in water without a permit

effluent limitations

point source

D. Clean Air Act

establishes air quality standards

only ambient (outdoor) air pollution from stationary and mobile sources

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 Dawn D. Bennett-Alexander