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To contact Customer Service, e-mail [email protected], call 1- 800-234-1660, fax 1-800-901-9075, or mail correspondence to: Wolters Kluwer Attn: Order Department PO Box 990 Frederick, MD 21705 eISBN 978-1-4548-9768-2 Library of Congress Cataloging-in-Publication Data Names: Ferrera, Gerald R. author. | Alexander, Mystica M., 1965- author. | Kirschner, Cheryl, 1960- author. | Wiggins, William P., author. | Darrow, Jonathan J., author. Title: The legal and ethical environment of business : an integrated approach / Gerald R. Ferrera, Mystica M. Alexander, Cheryl Kirschner, William P. Wiggins, Jonathan J. Darrow. Description: Second edition. | New York : Wolters Kluwer, [2018] | Includes bibliographical references and index. Identifiers: LCCN 2018001578 | eISBN 9781454897682 Subjects: LCSH: Industrial laws and legislation—United States. | Trade regulation —United States. | Commercial law—United States. | Business ethics—United States. | Trade regulation—Moral and ethical aspects. Classification: LCC KF1600 .F47 2018 | DDC 346.73/065—dc23 LC record available at https://lccn.loc.gov/2018001578 About Wolters Kluwer Legal & Regulatory U.S. Wolters Kluwer Legal & Regulatory U.S. delivers expert content and solutions in the areas of law, corporate compliance, health compliance, reimbursement, and legal education. Its practical solutions help customers successfully navigate the demands of a changing environment to drive their daily activities, enhance decision quality and inspire confident outcomes. Serving customers worldwide, its legal and regulatory portfolio includes products under the Aspen Publishers, CCH Incorporated, Kluwer Law International, ftwilliam.com and MediRegs names. They are regarded as exceptional and trusted resources for general legal and practice-specific knowledge, compliance and risk management, dynamic workflow solutions, and expert commentary. To my dear wife, Judith, and to our beloved granddaughter, Sophia Asha, and her beloved dog, Logan. —G.R.F. To my grandparents, who were my first teachers; to my mom, who is a constant source of support; and to my son, Michael, who has brought such happiness into my life. —M.M.A. With much love, to my wonderful sons, Michael, Philip, and Adam; to my dear, supportive husband, Roger; to my dependable mother; and to the memory of my beloved father. Like so many things in life, this would not have been possible without all of you. —C.K. To my lovely wife, Joanne, and our four wonderful children, Erik, Jonathan, Hannah, and Mark, for their endless love, encouragement, and support. —W.P.W. To my parents, Marion and Roselyn, and my brother, Stephen, for all their love and support. —J.J.D. Contents Preface A Note to Students Acknowledgments Art Credits About the Authors Part I: Legal and Ethical Overview Chapter 1 The United States Legal System Chapter 2 Ethics in the Business Environment Chapter 3 Constitutional Issues in Business Chapter 4 Administrative Law Chapter 5 Legal Aspects of the Global Business Environment Chapter 6 Corporate Social Responsibility Part II: The Business Chapter 7 Business Organizations Chapter 8 Intellectual Property Chapter 9 Sale of Securities and Investor Protection Chapter 10 Business Crimes Chapter 11 Antitrust Part III: The Employee Chapter 12 Agency Law Chapter 13 Employment Law Chapter 14 Discrimination in the Workplace Part IV: The Business Sale Chapter 15 Contracts: Contract Formation Chapter 16 Contracts: Contract Performance Chapter 17 Sales Law, Consumer Protection, and E-Commerce Chapter 18 The Debtor-Creditor Relationship Part V: Business Liability Chapter 19 Business Torts Chapter 20 Product Liability and Warranties Chapter 21 Environmental Law and Sustainability Glossary Table of Cases Index Preface A Note to Students Acknowledgments Art Credits About the Authors PART I: LEGAL AND ETHICAL OVERVIEW Chapter 1: The United States Legal System What Is the Law? The U.S. Legal System Understanding the Federalist System Sources of Law The U.S. Constitution Treaties Statutory Law Administrative Law Case Law Understanding the Branches of Government and the Balance of Power The Balance of Power in Action An Example of the Balance of Power It All Begins with Congress Next Stop: The President The Role of the EPA It Is All in the Interpretation The Court Steps In The Court System The Federal Court System District Court Court of Appeals The U.S. Supreme Court The State Court System Entry-Level Courts Intermediate Appellate Court Highest Court Right of Appeal to the U.S. Supreme Court Understanding Jurisdiction Subject Matter Jurisdiction Jurisdiction over Persons Jurisdiction over Property Online Jurisdiction Venue and Standing to Sue The Litigation Process The Pleadings Motions Discovery Trial Appeal Alternative Dispute Resolution Negotiation Mediation Arbitration Practical Application of Arbitration in Business Transactions Global Perspective: Comparative Law and Legal Systems Summary Questions for Review Further Reading Chapter 2: Ethics in the Business Environment Practical Applications of Business Ethics Business Ethics An Ethical Insight: Ethics and the “Newspaper Test” Ethical Corporate Culture Ethical Corporate Culture and the Good Reputation of the Company Ethical Corporate Culture and “Doing the Right Thing”