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vi cOntents
chapter 7 chapter 10
Securities Law and Agency Liability and Termination 176
Corporate Governance 112 scope of agent’s authority 176
The securities act of 1933 112 spotlight on apparent authority of managers
managerial strategy The SEC’s New Pay-Ratio case 10.1 Lundberg v. Church Farm, Inc. (1986) 178
Disclosure Rule 114 Liability for Contracts 180
case 7.1 Omnicare, Inc. v. Laborers District Council Liability for Torts and Crimes 182
Construction Industry Pension Fund (2015) 118 global insight Islamic Law and Respondeat Superior 184
The securities exchange act of 1934 119 case 10.2 Asphalt & Concrete Services, Inc. v. Perry (2015) 185
classic case 7.2 SEC v. Texas Gult Sulphur Co. (1968) 120 case analysis 10.3 M.J. v. Wisan (2016) 187
case analysis 7.3 Rand-Heart of New York, Inc. Termination of an agency 189
v. Dolan (2016) 124
state securities Laws 127 chapter 11
Corporate Governance 127 Employment, Immigration,
Unit One application and ethics: and Labor Law 195
Business Start-Ups Online 134
employment at will 195
wages, Hours, and Layoffs 196
Unit two ethics today Is It Fair to Dock Employees’ Pay
Human ResouRCes 137 for Bathroom Breaks? 198
case 11.1 Bailey v. TitleMax of Georgia, Inc. (2015) 198
Family and Medical Leave 200
chapter 8 case 11.2 Ballard v. Chicago Park District (2014) 200
Tort Law 138 Health, safety, and income security 202
employee Privacy Rights 204
The Basis of Tort Law 138
immigration Law 206
intentional Torts against Persons 139
Labor unions 208
case analysis 8.1 Blake v. Giustibelli (2016) 141
case analysis 11.3 Contemporary Cars, Inc. v. National
digital Update Revenge Porn and Invasion of Privacy 145
Labor Relations Board (2016) 210
case 8.2 Revell v. Guido (2015) 146
managerial strategy Union Organizing Using a Company’s
intentional Torts against Property 149
E-Mail System 212
unintentional Torts—negligence 151
Defenses to negligence 155
spotlight on the seattle mariners chapter 12
case 8.3 Taylor v. Baseball Club of Seattle, LP (2006) 155 Employment Discrimination 218
Title Vii of the Civil Rights act 218
chapter 9 digital Update Hiring Discrimination Based
Agency Formation and Duties 160 on Social Media Posts 222
case analysis 12.1 Bauer v. Lynch (2016) 223
agency Relationships 160
case 12.2 Young v. United Parcel Service, Inc. (2015) 224
case 9.1 Coker v. Pershad (2013) 162
case 12.3 Roberts v. Mike’s Trucking, Ltd. (2014) 227
ethics today Is It Fair to Classify Uber and Lyft Drivers
Discrimination Based on age 229
as Independent Contractors? 163
Discrimination Based on Disability 230
Formation of the agency Relationship 164
Discrimination Based on Military status 233
Duties of agents and Principals 165
Defenses to employment Discrimination 234
spotlight on taser international
affirmative action 235
case 9.2 Taser International, Inc. v. Ward (2010) 167
Unit two application and ethics:
case analysis 9.3 NRT New England, LLC v. Jones (2016) 170
Health Insurance and Small Business 239
Rights and Remedies of agents and Principals 172
cOntents vii
Unit three chapter 16

CommeRCiaL TRansaCTions Transferability and
and CRediT 243 Holder in Due Course 305
negotiation 305
chapter 13 indorsements 306
case 16.1 In re Bass (2013) 306
The Formation of
case analysis 16.2 AS Peleus, LLC v. Success, Inc. (2016) 308
Sales and Lease Contracts 244 Holder in Due Course (HDC) 313
The uniform Commercial Code 244 spotlight on Holder in due course
The scope of articles 2 (sales) and 2a (Leases) 245 case 16.3 Georg v. Metro Fixtures Contractors, Inc. (2008) 315
digital Update Taxing Web Purchases 247 Holder through an HDC 318
The Formation of sales and Lease Contracts 249
case 13.1 C. Mahendra (N.Y.), LLC v. National Gold chapter 17
& Diamond Center, Inc. (2015) 252 Liability, Defenses, and Discharge 323
classic case 13.2 Jones v. Star Credit Corp. (1969) 259
Contracts for the international sale of Goods 260 signature Liability 323
case analysis 13.3 VLM Food Trading International, Inc. case analysis 17.1 Envision Printing, LLC v. Evans (2016) 327
v. Illinois Trading Co. (2016) 260 warranty Liability 330
Defenses and Limitations 333
case analysis 17.2 Mills v. Chauvin (2013) 335
chapter 14
Discharge 337
Performance and Breach
of Sales and Lease Contracts 267 chapter 18
Obligations of the seller or Lessor 267 Banking in the Digital Age 342
case 14.1 Garziano v. Louisiana Log Home Co. (2014) 268
Checks 342
Obligations of the Buyer or Lessee 272
The Bank-Customer Relationship 344
Remedies of the seller or Lessor 275
case 18.1 Royal Arcanum Hospital Association of Kings County,
Remedies of the Buyer or Lessee 277
Inc. v. Herrnkind (2014) 344
case analysis 14.2 Genesis Health Clubs, Inc. v. LED Solar
The Bank’s Duty to Honor Checks 345
& Light Co. (2016) 280
case analysis 18.2 Legg v. West Bank (2016) 346
spotlight on baseball cards
The Bank’s Duty to accept Deposits 351
case 14.3 Fitl v. Strek (2005) 282
case 18.3 Shahin v. Delaware Federal Credit Union (2015) 353
additional Provisions affecting Remedies 283
electronic Fund Transfers 356
Dealing with international Contracts 284
Online Banking and e-Money 357
digital Update Electronic Payment Systems Are Reducing
chapter 15 the Use of Checks 358
Negotiable Instruments 288
Types of negotiable instruments 288 chapter 19
case 15.1 Silicon Valley Bank v. Miracle Faith World Creditors’ Rights and Remedies 362
Outreach, Inc. (2013) 290
Laws assisting Creditors 362
Requirements for negotiability 292
case analysis 19.1 Picerne Construction Corp. v. Villas (2016) 363
digital Update Pay with Your Smartphone 294
Mortgages 366
case analysis 15.2 OneWest Bank, FSB v. Nunez (2016) 295
ethics today Creditors’ Rights When Debtors Move
Factors That Do not affect negotiability 299
to Another State 367
case 15.3 Charles R. Tips Family Trust v. PB Commercial,
spotlight on Foreclosures
LLC (2015) 300
case 19.2 McLean v. JPMorgan Chase Bank, N.A. (2012) 369
suretyship and Guaranty 370
case 19.3 HSBC Realty Credit Corp. (USA) v. O’Neill (2014) 372
Protection for Debtors 374
viii cOntents
chapter 20 chapter 23
Secured Transactions 378 Administrative Agencies 448
The Terminology of secured Transactions 378 The Practical significance of administrative Law 448
Creation of a security interest 378 agency Creation and Powers 449
case 20.1 Royal Jewelers, Inc. v. Light (2015) 379 case 23.1 Loving v. Internal Revenue Service (2014) 452
Perfection of a security interest 381 digital Update Imposing a 1930s Regulatory Law
digital Update Secured Transactions—Escrow Services on Broadband Operators 454
Online 381 The administrative Process 454
The scope of a security interest 387 case 23.2 Craker v. Drug Enforcement Administration (2013) 458
case 20.2 In re Tusa–Expo Holdings, Inc. (2016) 388 Judicial Deference to agency Decisions 459
Priorities 390 case analysis 23.3 Olivares v. Transportation Security
Rights and Duties of Debtors and Creditors 392 Administration (2016) 460
Default 394 Public accountability 462
case analysis 20.3 Smith v. Firstbank Corp. (2013) 396
chapter 24
chapter 21 Consumer Law 467
Bankruptcy Law 402 advertising, Marketing, and sales 467
The Bankruptcy Code 402 case 24.1 POM Wonderful, LLC v. Federal Trade
Liquidation Proceedings 403 Commission (2015) 468
case 21.1 In re Anderson (2016) 409 digital Update Regulating “Native” Ads on the Internet 471
ethics today Should There Be More Relief for Student case 24.2 Lexmark International, Inc. v. Static Control
Loan Defaults? 412 Components, Inc. (2014) 472
case 21.2 In re Cummings (2015) 413 Labeling and Packaging Laws 474
Reorganizations 414 Protection of Health and safety 475
Bankruptcy Relief under Chapter 12 and Chapter 13 416 Credit Protection 476
case analysis 21.3 In re Welsh (2013) 417 case analysis 24.3 Santangelo v. Comcast Corporation (2016) 478
Unit three application and ethics:
Federal Student Loans—Default and Discharge 424 chapter 25
Environmental Protection 484
Unit Four Common Law actions 484
goveRnmenT ReguLaTion 427 Federal, state, and Local Regulations 485
case analysis 25.1 Friends of Animals v. Clay (2016) 485
air Pollution 488
chapter 22 case 25.2 United States v. O’Malley (2014) 490
Professional Liability water Pollution 491
and Accountability 428 case 25.3 Entergy Corp. v. Riverkeeper, Inc. (2009) 492
Toxic Chemicals and Hazardous waste 494
Potential Liability to Clients 428
ethics today What Are an Attorney’s Responsibilities
chapter 26
for Protecting Data Stored in the Cloud? 429
Potential Liability to Third Parties 432 Antitrust Law 500
case analysis 22.1 Perez v. Stern (2010) 434 The sherman antitrust act 500
The sarbanes-Oxley act 435 section 1 of the sherman act 501
Potential Liability of accountants under securities Laws 437 section 2 of the sherman act 504
spotlight on accountant’s duty to correct mistakes case analysis 26.1 McWane, Inc. v. Federal Trade
case 22.2 Overton v. Todman & Co., CPAs (2007) 439 Commission (2015) 506
Confidentiality and Privilege 442 spotlight on weyerhaeuser
case 22.3 Commonwealth of Pennsylvania v. Schultz case 26.2 Weyerhaeuser Co. v. Ross-Simmons Hardwood
(2016) 443 Lumber Co. (2007) 508
cOntents ix
The Clayton act 509 chapter 29

enforcement and exemptions 512 Intellectual Property 566
case 26.3 TransWeb, LLC v. 3M Innovative Properties
Co. (2016) 512 Trademarks and Related Property 566
u.s. antitrust Laws in the Global Context 515 classic case 29.1 The Coca-Cola Co. v. The Koke Co.
digital Update Google Faces an Antitrust Complaint of America (1920) 566
from the European Union 516 case 29.2 LFP IP, LLC v. Hustler Cincinnati, Inc. (2016) 569
Unit Four application and ethics: Patents 573
Climate Change 520 digital Update The Problem of Patent Trolls 575
Copyrights 576
case analysis 29.3 Winstead v. Jackson (2013) 577
Unit Five Trade secrets 580
international Protection for intellectual Property 582
PRoPeRTy and
iTs PRoTeCTion 523
chapter 30
Insurance 586
chapter 27
insurance Terminology and Concepts 586
Personal Property and Bailments 524 case 30.1 Breeden v. Buchanan (2015) 588
Personal Property versus Real Property 524 The insurance Contract 589
case 27.1 Corbello v. DeVito (2015) 524 Types of insurance 593
acquiring Ownership of Personal Property 526 case analysis 30.2 Estate of Luster v. Allstate Insurance
digital Update The Exploding World of Digital Property 526 Co. (2010) 595
classic case 27.2 In re Estate of Piper (1984) 528
Mislaid, Lost, and abandoned Property 530 chapter 31
Bailments 532 Wills and Trusts 602
Ordinary Bailments 533
case analysis 27.3 Zissu v. IH2 Property Illinois, L.P. (2016) 536 wills 602
special Types of Bailments 538 case analysis 31.1 Peterson v. Harrell (2010) 606
intestacy Laws 610
Trusts 611
chapter 28
case 31.2 Dowdy v. Dowdy (2016) 613
Real Property and Other estate-Planning issues 617
Landlord-Tenant Law 543 Unit Five application and ethics:
The nature of Real Property 543 Business Planning for Divorce 622
Ownership and Other interests in Real Property 545
case 28.1 Main Omni Realty Corp. v. Matus (2015) 546 appendices
Transfer of Ownership 550 a How to analyze Legal Disputes a-1
spotlight on sales of Haunted Houses b answers to the Issue Spotters a-3
case 28.2 Stambovsky v. Ackley (1991) 551 C sample answers for
case analysis 28.3 Montgomery County v. Bhatt (2016) 554 Business Case Problems with Sample Answer a-9
Limitations on the Rights of Property Owners 556
ethics today Should Eminent Domain Be Used to Promote Glossary G-1
Private Development? 557
Zoning and Government Regulations 558
Table of Cases TC-1
Landlord-Tenant Relationships 560 Index I-1
Concept Summaries
4.1 special Business Forms 67 17.1 signature Liability 331

5.1 Classification of Corporations 79 17.2 Transfer warranty Liability for
6.1 Roles of Directors and Officers 95 Transferors who Receive Consideration 332
6.2 Duties and Liabilities of Directors and Officers 101 18.1 Basic Rules for Honoring Checks 352
6.3 Role, Rights, and Liability of shareholders 108 19.1 Remedies available to Creditors 371
8.1 intentional Torts against Persons 148 20.1 Creating security interest 381
8.2 intentional Torts against Property 152 20.2 Perfecting a security interest 387
9.1 Formation of the agency Relationship 166 20.3 Remedies of the secured Party
10.1 authority of an agent to Bind the Principal on the Debtor’s Default 398
and a Third Party 180 21.1 Forms of Bankruptcy Relief Compared 420
10.2 agency Termination by Operation of Law 191 22.1 Common Law Liability of accountants
13.1 Offer, acceptance, and Consideration and Other Professionals 436
under the uCC 255 22.2 statutory Liability of accountants and Other
13.2 The Parol evidence Rule 258 Professionals 442
14.1 Obligations of the seller or Lessor 273 27.1 acquisition of Personal Property 530
15.1 Requirements for negotiability 301 27.2 Rights and Duties of the Bailee and the Bailor 540
16.1 Types of indorsements and Their effect 311 31.1 wills 609
16.2 Requirements for HDC status 319 31.2 Trusts 616
xi
Exhibits
2–1 The FTC’s Franchise Rule Requirements 26 16–7 Taking for Value 314
3–1 Provisions Commonly included 17–1 Time for Proper Presentment 325
in a Partnership agreement 37 17–2 Defenses against Liability on negotiable instruments 333
3–2 a Comparison of General Partnerships and 18–1 a Cashier’s Check 343
Limited Partnerships 48 18–2 an american express Traveler’s Check 344
4–1 Management of an LLC 59 18–3 The Check-Collection Process 355
4–2 Provisions Commonly included 18–4 a sample substitute Check 356
in an LLC Operating agreement 61 19–1 Methods of avoiding Foreclosure 368
5–1 sample articles of incorporation 80 19–2 suretyship and Guaranty Parties 371
5–2 How Do stocks and Bonds Differ? 86 20–1 secured Transactions—Concept and Terminology 379
5–3 Common and Preferred stocks 88 20–2 a uniform Financing statement sample 382
6–1 Directors’ Management Responsibilities 93 20–3 selected Types of Collateral and Methods
6–2 Results of Cumulative Voting 105 of Perfection 386
7–1 exemptions for securities Offerings 20–4 Priority of Claims to a Debtor’s Collateral 393
under the 1933 securities act 116 21–1 Collection and Distribution of Property
7–2 Comparison of Coverage, application, and Liability in Most Voluntary Bankruptcies 411
under seC Rule 10b-5 and section 16(b) 123 22–1 Three Basic Rules of an accountant’s Liability to
7–3 some Key Provisions of the sarbanes-Oxley act Third Parties 434
Relating to Corporate accountability 130 22–2 Key Provisions of the sarbanes-Oxley act
9–1 Duties of the agent 167 Relating to Public accounting Firms 437
9–2 Duties of the Principal 169 23–1 executive Departments and important
10–1 a sample General Power of attorney 177 subagencies 450
10–2 Termination by act of the Parties 189 23–2 selected independent Regulatory agencies 451
11–1 Good Faith versus Bad Faith 23–3 The Formal administrative agency
in Collective Bargaining 213 adjudication Process 457
12–1 Coverage of employment Discrimination Laws 233 24–1 selected areas of Consumer Law Regulated
13–1 The Law Governing Contracts 246 by statutes 468
13–2 Major Differences between 25–1 Major Federal environmental statutes 487
Contract Law and sales Law 257 25–2 environmental impact statements 488
14–1 The Perfect Tender Rule and its exceptions 270 25–3 Pollution-Control equipment standards under
14–2 Obligations of the Buyer or Lessee 274 the Clean air act and the Clean water act 492
14–3 a Letter-of-Credit Transaction 284 26–1 Required elements of a sherman act Violation 501
15–1 Basic Types of negotiable instruments 289 26–2 exemptions to antitrust enforcement 514
15–2 a Typical Time Draft 290 27–1 Mislaid, Lost, and abandoned Property 532
15–3 a Typical Promissory note 292 27–2 Degree of Care Required of a Bailee 535
15–4 a sample Certificate of Deposit 293 28–1 interests in Real Property 550
16–1 a Blank indorsement 306 29–1 Forms of intellectual Property 581
16–2 a special indorsement 308 30–1 selected insurance Classifications 587
16–3 a Qualified indorsement 309 30–2 insurance Contract Provisions and Clauses 590
16–4 “For Deposit Only” and “For Collection Only” 30–3 Typical Fire insurance Policies 595
indorsements 310 31–1 excerpts from Michael Jackson’s will 603
16–5 Trust (agency) indorsements 311 31–2 Per Stirpes Distribution 611
16–6 Converting an Order instrument to a Bearer 31–3 Per Capita Distribution 612
instrument and Vice Versa 312 31–4 a Revocable Living Trust arrangement 612
xiii
Preface
The study of business law and the legal environment of uniform CPa exam.” in addition to more focus on criti-
business has universal applicability. a student entering any cal thinking, authentic applications, and problem solv-
field of business must have at least a passing understanding, the content of the exam will change to an extent.
ing of business law in order to function in the real world. The Fourteenth edition of Business Law: Commercial
Business Law: Text and Cases: Commercial Law for Accoun- Law for Accountants incorporates information on the
tants, Fourteenth edition, provides the information that new topics on the CPa exam, specifically addressing the
students need in an interesting and contemporary way. following:
This exciting text is tailor-made for those entering
• Agency law (worker classification and duties of
the field of accounting and includes topics from Business
principals and agents)
Law that accountants need to know. The text focuses
• Employment law (Affordable Care Act)
on the basics of business law for accountants—including
• Business organizations (corporate governance
subjects on the revised 2017 CPa exam. it has a strong
issues, including sarbanes-Oxley compliance
emphasis on business organizations, securities law and
and criminal liability for organizations and
corporate governance, agency and employment, sales and
management)
lease contracts, creditors’ rights and bankruptcy, profes-
sional liability, government regulation, and property. in addition, the Fourteenth edition continues to
For the Fourteenth edition, i have spent a great deal cover topics that are essential to new CPas who are
of effort making this best-selling text more modern, excit- working with sophisticated business clients, regardless of
ing, and visually appealing than ever before. i have added whether the CPa exam covers these topics. i recognize
twenty-seven new features, sixty new cases, and eleven that today’s business leaders must often think “outside
new exhibits. The text also contains nearly one hundred the box” when making business decisions. For this rea-
and fifty new highlighted and numbered Cases in Point son, i strongly emphasize business and critical thinking
and Examples, and seventy-three new case problems. spe- elements throughout the text. i have carefully chosen
cial pedagogical elements within the text focus on legal, cases, features, and problems that are relevant to busi-
ethical, global, and corporate issues while addressing core ness operations. almost all of the features and cases con-
curriculum requirements. clude with some type of critical thinking question. For
those teaching future CPas, this is consistent with the
new CPa exam’s focus on higher-order skills, such as
critical thinking and problem solving.
Highlights of the
Fourteenth edition a variety of new and exciting Features
instructors have come to rely on the coverage, accuracy, The Fourteenth edition of Business Law: Commercial
and applicability of Business Law: Commercial Law for Law for Accountants is filled with many new features
Accountants. To make sure that this text engages your specifically designed to cover current legal topics of high
students, solidifies their understanding of legal concepts, interest. each feature is related to a topic discussed in the
and provides the best teaching tools available, i now offer text and ends with Critical Thinking or Business Ques-
the following. tions. suggested answers to all the Critical Thinking
and Business Questions are included in the Solutions
Manual for this text.
new Coverage of Topics
1. Ethics Today These features focus on the ethical
on the Revised 2017 CPa exam aspects of a topic discussed in the text to empha-
in 2016, the american institute of CPas (aiCPa) issued size that ethics is an integral part of a business law
its final report on “Maintaining the Relevance of the course. examples include:
xv
xvi PReFace
• Should an Innocent General Partner Be Jointly an actual case and then describe the court’s decision
Liable for Fraud? (Chapter 3) and rationale. These two features are uniquely designed
• Is It Fair to Classify Uber and Lyft Drivers as and consecutively numbered throughout each chapter
independent Contractors? (Chapter 9) for easy reference. The Examples and Cases in Point are
• Is It Fair to Dock Employees’ Pay for Bathroom integrated throughout the text to help students better
Breaks? (Chapter 11) understand how courts apply legal principles in the real
• Should There Be More Relief for Student Loan world.
Defaults? (Chapter 21)
2. Global Insight These features illustrate how other
nations deal with specific legal concepts to give new unit-ending
students a sense of the global legal environment. Application and Ethics Features
subjects include: For the Fourteenth edition, i have created an entirely
• Does Cloud Computing Have a Nationality? new feature that concludes each of the five units in the
(Chapter 5) text. each of these Application and Ethics features pro-
• Anti-Bribery Charges Take Their Toll on U.S. vides additional analysis on a topic related to that unit
and Foreign Corporations (Chapter 6) and explores its ethics ramifications. each of the features
• Islamic Law and Respondeat Superior (Chapter 10) ends with two questions—a Critical Thinking and an
3. new Digital Update These features are designed Ethics Question. some topics covered by these features
to examine cutting-edge cyberlaw topics, such as the include the following:
following:
• Revenge Porn and Invasion of Privacy (Chapter 8) • Business Start-Ups Online (Unit 1)
• Should Employees Have a “Right of Disconnect- • Health Insurance and Small Business (Unit 2)
ing”? (Chapter 11) • Federal Student Loans—Default and Discharge
• Hiring Discrimination Based on Social Media (unit 3)
Posts (Chapter 12) • Business Planning for Divorce (Unit 5)
• Pay with Your Smartphone (Chapter 15) suggested answers to the questions in Application and
• Google Faces an Antitrust Complaint from the Ethics features are included in the Solutions Manual
european union (Chapter 26) for this text.
4. Managerial Strategy These features emphasize the
management aspects of business law and the legal
environment. Topics include: new Cases and Case Problems
• Can a Person Who Is Not a Member of a Pro- For the Fourteenth edition of Business Law: Commercial
tected Class sue for Discrimination? (Chapter 4) Law for Accountants, i have added sixty new cases and
• The SEC’s New CEO Pay-Ratio Disclosure seventy-three new case problems, most from 2016 and
Rule (Chapter 7) 2015. The new cases and case problems have been care-
• Union Organizing Using Your Company’s E-Mail fully selected to illustrate important points of law and
system (Chapter 11) to be of high interest to students and instructors. i have
made it a point to find recent cases that enhance learning
and are relatively easy to understand.
Highlighted and numbered Examples
1. Spotlight Cases and Classic Cases. Certain cases
and Case in Point illustrations and case problems that are exceptionally good
Many instructors use cases and examples to illustrate how teaching cases are labeled as Spotlight Cases and
the law applies to business. students understand legal Spotlight Case Problems. examples include Spotlight
concepts better in the context of their real-world applica- on Baseball Cards, Spotlight on Holiday Inns, and
tion. Therefore, for this edition of Business Law: Com- Spotlight on the Seattle Mariners. instructors will
mercial Law for Accountants, i have expanded the number find these Spotlight Cases useful to illustrate the
of highlighted numbered Examples and Cases in Point in legal concepts under discussion, and students will
every chapter. i have added 103 new Cases in Point and enjoy studying the cases because they involve inter-
43 new Examples. esting and memorable facts. Other cases have been
Examples illustrate how the law applies in a specific chosen as Classic Cases because they establish a legal
situation. Cases in Point present the facts and issues of precedent in a particular area of law.
P R e Fac e xvii
2. Critical Thinking section. each case concludes with The Special Case Analysis questions are designed
a Critical Thinking section, which normally includes to build students’ analytical skills. They test students’
two questions. The questions may address Legal ability to perform iRaC (issue, Rule, application, and
Environment, E-Commerce, Economic, Environmental, Conclusion) case analysis. students must identify the le-
Ethical, Global, Political, or Technological issues, or gal issue presented in the chapter’s Case Analysis, under-
they may ask What If the Facts Were Different? each stand the rule of law, determine how the rule applies to
Classic Case has a section titled Impact of This Case on the facts of the case, and describe the court’s conclusion.
Today’s Law and one Critical Thinking question. instructors can assign these questions as homework or
3. Longer excerpts for Case Analysis. i have also use them in class to elicit student participation and teach
included one longer case excerpt in every chapter— case analysis. suggested answers to the Special Case
labeled Case Analysis—followed by three Legal Analysis questions can be found in the Solutions
Reasoning Questions. The questions are designed to Manual for this text.
guide students’ analysis of the case and build their
legal reasoning skills. These Case Analysis cases may
be used for case-briefing assignments and are also Reviewing Features in every Chapter
tied to the Special Case Analysis questions found in in the Fourteenth edition of Business Law: Commercial
every unit of the text. Law for Accountants, i continue to offer a Reviewing fea-
ture at the end of every chapter to help solidify students’
suggested answers to all case-ending questions and
understanding of the chapter materials. each Reviewing
case problems are included in the Solutions Manual
feature presents a hypothetical scenario and then asks
for this text.
a series of questions that require students to identify
the issues and apply the legal concepts discussed in the
Business Case Problem with Sample chapter.
These features are designed to help students review
Answer in each Chapter the chapter topics in a simple and interesting way and
in response to those instructors who would like students see how the legal principles discussed in the chapter af-
to have sample answers available for some of the ques- fect the world in which they live. an instructor can use
tions and case problems, i include a Business Case Prob- these features as the basis for in-class discussion or en-
lem with Sample Answer in each chapter. The Business courage students to use them for self-study prior to com-
Case Problem with Sample Answer is based on an actual pleting homework assignments. suggested answers to
case, and students can find a sample answer at the end of the questions posed in the Reviewing features can be
the text. suggested answers to the Business Case Prob- found in the Solutions Manual for this text.
lems with Sample Answers are provided in appendix
C at the end of the text and in the Solutions Manual
for this text. Two Issue Spotters
at the conclusion of each chapter, i have included a spe-
cial section with two Issue Spotters related to the chap-
new exhibits and Concept summaries ter’s topics. These questions facilitate student learning
For this edition, we have spent considerable effort and review of the chapter materials. suggested answers
reworking and redesigning all of the exhibits and Con- to the Issue Spotters in every chapter are provided in
cept Summaries in the text to achieve better clarity and appendix b at the end of the text and in the Solutions
more visual appeal. in addition, we have added eleven Manual for this text.
new exhibits.
Legal Reasoning Group Activities
Special Case Analysis Questions For instructors who want their students to engage in
For one chapter in every unit of the text, i provide a group projects, each chapter of the Fourteenth edition
Special Case Analysis question that is based on the Case includes a special Legal Reasoning Group Activity. each
Analysis excerpt in that chapter. These special questions activity begins by describing a business scenario and then
appear in the Business Case Problems section at the ends poses several specific questions pertaining to the scenario.
of selected chapters. each question is to be answered by a different group of
xviii PReFace
students based on the information in the chapter. These problem and then adding in a critical think-
projects may be used in class to spur discussion or as ing section based on “what if the Facts were
homework assignments. suggested answers to the Legal Different?” These now include a third section,
Reasoning Group Activities are included in the Solu- a writing component, which requires students
tions Manual for this text. to demonstrate their ability to forecast the legal
implications of real-world business scenarios.
• Personalized student Plan with multimedia
study tools and videos.
supplements/digital • New Adaptive Test Prep helps students study
for exams.
Learning systems • Test Bank.
Business Law: Commercial Law for Accountants, Four- • Reporting and Assessment options.
teenth edition, provides a comprehensive supplements
package designed to make the tasks of teaching and learn- By using the MindTap system, students can complete
ing more enjoyable and efficient. The following supple- the assignments online and can receive instant feedback
ments and exciting new digital products are offered in on their answers. instructors can utilize MindTap to up-
conjunction with the text. load their course syllabi, create and customize homework
assignments, and keep track of their students’ progress. By
hiding, rearranging, or adding content, instructors con-
mindTap trol what students see and when they see it to match the
Learning Path to their course syllabus exactly. instructors
MindTap for Business Law: Commercial Law for Accoun-
can also communicate with their students about assign-
tants, Fourteenth edition, is a fully online, highly person-
ments and due dates, and create reports summarizing the
alized learning experience built upon Cengage Learning
data for an individual student or for the whole class.
content. MindTap combines student learning tools—
such as readings, multimedia, activities, and assessments
from CengagenOw—into a singular Learning Path that Cengage Learning Testing
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instructors can personalize the experience by cus- Powered by Cognero
tomizing authoritative Cengage Learning content and Cengage Learning Testing Powered by Cognero is a flexible,
learning tools. MindTap offers instructors the ability to online system that allows you to do the following:
add their own content in the Learning Path with apps
that integrate into the MindTap framework seamlessly • Author, edit, and manage Test Bank content from
with Learning Management systems (LMs). multiple Cengage Learning solutions.
MindTap includes: • Create multiple test versions in an instant.
• Deliver tests from your LMS, your classroom, or
• An Interactive Book with Whiteboard Videos wherever you want.
and interactive Cases.
• Automatically graded homework with the fol-
lowing consistent question types: Start Right Away! Cengage Learning Testing Powered
• Worksheets—interactive worksheets prepare by Cognero works on any operating system or browser.
students for class by ensuring reading and • No special installs or downloads are needed.
comprehension. • Create tests from school, home, the coffee shop—
• Video Activities—Real-world video
anywhere with internet access.
exercises make business law engaging and
relevant.
What Will You Find?
• Brief Hypotheticals—These applications pro-
vide students practice in spotting the issue and • Simplicity at every step. a desktop-inspired inter-
applying the law in the context of a short, fac- face features drop-down menus and familiar intu-
tual scenario. itive tools that take you through content creation
• Case Problem Analyses—These promote and management with ease.
deeper critical thinking and legal reasoning by • Full-featured test generator. Create ideal assess-
guiding students step-by-step through a case ments with your choice of fifteen question
P R e Fac e xix
types—including true/false, multiple choice, and social media, and discusses stakeholders and
opinion scale/Likert, and essay). Multi-language corporate social responsibility. The chapter also
support, an equation editor, and unlimited meta- provides step-by-step guidance on making ethi-
data help ensure your tests are complete and cal business decisions and includes materials on
compliant. global business ethics. a new Digital Update fea-
• Cross-compatible capability. import and export ture examines whether employees should have the
content to and from other systems. right to disconnect from their electronic devices
after work hours.
• Chapters 2 through 7 (the remaining chapters of
instructor’s Companion web site the Law and Business Management unit)—This
The web site for the Fourteenth edition of Business unit has been thoroughly revised and updated
Law: Commercial Law for Accountants can be found by to improve flow and clarity and to provide more
going to www.cengagebrain.com and entering isBn practical information and recent examples. i have
9781305967281. The instructor’s Companion web site included fifteen new cases and twenty new Cases
contains the following supplements: in Point throughout the unit. after discussing eth-
• Instructor’s Manual. includes sections entitled ics in the first chapter, i start off discussing small
“additional Cases addressing This issue” at the business forms, then move to partnerships, limited
end of selected case synopses. liability companies, and finally corporations. all
• Solutions Manual. Provides answers to all ques- of the chapters in the unit include new features.
tions presented in the text, including the ques- For instance, in Chapter 5, there is a Global
tions in each case and feature, the Issue Spotters, Insight feature on whether cloud computing has a
the Business Scenarios and Business Case Problems, nationality and a Digital Update feature on soft-
and the unit-ending features. ware programs that can predict employee miscon-
• Test Bank. a comprehensive test bank that conduct. i discuss crowdfunding and venture capital
tains multiple-choice, true/false, and short essay in that chapter as well. i have added new exhibits
questions. and key terms. in the chapter on securities law
• Case-Problem Cases. (Chapter 7), i have updated the materials on
• Case Printouts. Regulation a offerings because the cap went from
• PowerPoint Slides. 5 million to 50 million in 2015. i also discuss how
• Lecture Outlines. to deal with the seC’s new CeO pay-ratio disclo-
sure rule in a Managerial Strategy feature.
• Chapter 9 (Agency Formation and Duties) and
Chapter 10 (agency Liability and Termination)—
For users of the Thirteenth edition These two chapters have been updated to reflect
the realities of the gig economy in which many
First of all, i want to thank you for helping make Business people are working as independent contractors. a
Law the best-selling business law text in america today. new Ethics Today feature continues that emphasis
second, i want to make you aware of the numerous addi- with a discussion of whether uber and Lyft driv-
tions and changes that have been made in this edition— ers should be considered employees rather than
many in response to comments from reviewers. independent contractors. There is also a new
every chapter of the Fourteenth edition has been re- Global Insight feature in Chapter 10 concerning
vised as necessary to incorporate new developments in islamic law and respondeat superior. in addi-
the law or to streamline the presentations. Other ma- tion, five new Examples, five new Cases in Point,
jor changes and additions for this edition include the and five new case problems have been added in
following: these two chapters to help students comprehend
• Chapter 1 (Business Ethics)—This chapter con- the important issues and liability in agency
tains two new cases, two new Issue Spotters, three relationships.
new Cases in Point (including a case involving • Chapter 11 (Employment, Immigration, and
Tom Brady’s suspension from the nFL as a result Labor Law) and Chapter 12 (employment
of “deflategate”), and three new case problems. Discrimination)—These two chapters covering
The chapter includes a section on business ethics employment law have been thoroughly updated to
xx PReFace
include discussions of legal issues facing employ- Summaries, key terms, Examples, and Cases in
ers today. Chapter 11 has three new cases, three Point to better clarify concepts. Chapter 20
new Cases in Point, three new Examples (including (secured Transactions) was substantially reworked
one involving wage claims of the Oakland Raid- to clarify the general principles and exceptions.
ers cheerleaders), and three new case problems. i Chapter 21 (Bankruptcy Law) includes updated
have added two new features—an Ethics Today on dollar amounts of various provisions of the Bank-
whether employees should receive paid bathroom ruptcy Code, six new Cases in Point, and an Ethics
breaks and a Managerial Strategy on union orga- Today feature on whether there should be more
nizing using company e-mail systems. Chapter 12 relief for student loan debt.
has a new section discussing discrimination based • Chapter 22 (Professional Liability and
on military status and new coverage of same-sex accountability)—The discussion of global
discrimination and discrimination against trans- accounting rules has been updated and i have
gender persons. all three cases are new. There included new subheads to discuss actual and
are seven new Cases in Point, five new Examples, constructive fraud. i have created a new exhibit
a new exhibit, and three new case problems. a to clarify the three basic rules of an accountant’s
Digital Update feature discusses hiring discrimina- liability to third parties, as well as three new Cases
tion based on social media posts. i discuss relevant in Point and one new Example. There is also a
united states supreme Court decisions affecting new Ethics Today feature discussing a profession-
employment issues throughout both chapters. al’s responsibilities with respect to protecting data
• Chapter 13 (The Formation of Sales and Lease stored in the cloud.
Contracts) and Chapter 14 (Performance and • Chapter 24 (Consumer Law) and Chapter 26
Breach of sales and Lease Contracts)—The cover- (antitrust Law)—These two chapters include
age of the uniform Commercial Code has been all new cases, and both have been significantly
streamlined and simplified. i have added four updated with new coverage, Examples, and Cases
new cases and ten new Cases in Point to increase in Point. a Digital Update in Chapter 24 deals
student comprehension, as well as new business with “native” ads on the internet, and a Digital
scenarios and case problems. Update in Chapter 26 discusses the european
• Chapters 15 through 17 (the negotiable instru- union’s antitrust complaint against Google.
ments chapters)—The three negotiable instru- • Chapter 27 (Personal Property and Bailments)
ments chapters have been revamped and and Chapter 28 (Real Property and Landlord-
simplified. i have added numerous new Cases in Tenant Law)—i have rearranged the materials in
Point and Examples to clarify difficult topics for the property chapters somewhat and now cover
students. a Digital Update feature discusses pay- fixtures in the real property chapter. each chapter
ing with smartphones. includes two new cases as well as a Classic Case or
• Chapter 18 (Banking in the Digital Age)—I have Spotlight Case. There are six new Examples, seven
updated this entire chapter to reflect the realities new Cases in Point, two new exhibits, and seven
of banking in today’s digital world. all three cases new case problems in these two chapters. Both
are new and recent. There are three new Cases chapters also include new features (an Ethics Today
in Point, a new Issue Spotter, and three new case and a Digital Update).
problems. a new Digital Update feature explains • Chapter 29 (Intellectual Property)—The materials
how electronic payment systems are reducing the on intellectual property rights have been thor-
use of checks. oughly revised and updated to reflect the most
• Chapter 19 (Creditors’ Rights and Remedies), current laws and trends. The 2016 case involves
Chapter 20 (secured Transactions), and Chap- the Hustler Club and a trademark infringement
ter 21 (Bankruptcy Law)—These three chapters claim between brothers. a Digital Update feature
have been revised to be more up to date and examines the problem of patent trolls. There are
comprehensible. each chapter has two new cases eleven new Cases in Point, including cases involv-
and a new feature. we have also streamlined the ing Fedex’s color and logo, Google’s digitalization
materials to focus on those concepts that students of books, and how the sherlock Holmes copyright
need to know. i have added new exhibits, Concept fell into the public domain.
P R e Fac e xxi
Acknowledgments for Previous Editions

since this project began many years ago, a sizable number of business law professors and others have helped us in revis-
ing the book, including the following:
Jeffrey E. Allen Elizabeth K. Brunn, Esq. William H. Daughtrey, Jr.

University of Miami University of Baltimore; University of Virginia Commonwealth University
Judith Anshin Maryland University College
Michael DeAngelis
Sacramento City College William J. Burke University of Rhode Island
Thomas M. Apke University of Massachusetts, Lowell
James Doering
California State University, Fullerton Kenneth Burns University of Wisconsin, Green Bay
Raymond August University of Miami
John V. Dowdy
Washington State University Daniel R. Cahoy University of Texas at Arlington
William Auslen Pennsylvania State University
Michele A. Dunkerley
San Francisco City College Rita Cain University of Texas at Austin
Mary B. Bader University of Missouri—Kansas City
Julia M. Dunlap, Esq.
Moorhead State University Jeanne A. Calderon University of California, San Diego
Frank Bagan New York University
Paul Dusseault
County College of Morris Joseph E. Cantrell Herkimer Community College (SUNY)
John J. Balek DeAnza College, California
Maria Elena Ellison
Morton College, Illinois Donald Cantwell Florida Atlantic University
Michael G. Barth University of Texas at Arlington
Nena Ellison
University of Phoenix Arthur J. Casey
Florida Atlantic University
David L. Baumer San Jose State University, College of
North Carolina State University Business, Organization and Management O. E. Elmore
Texas A&M University
Barbara E. Behr Thomas D. Cavenagh
Bloomsburg University of Pennsylvania North Central College—Naperville, Illinois Robert J. Enders
California State Polytechnic University,
Robert B. Bennett, Jr. Robert Chatov
Pomona
Butler University State University of New York, Buffalo
Corey Ciocchetti Michael Engber
Robert C. Bird
University of Denver Ball State University
University of Connecticut
Nanette C. Clinch David A. Escamilla
Heidi Boerstler
San Jose State University, California University of Texas at Austin
University of Colorado at Denver
Maria Kathleen Boss Robert J. Cox Denise M. Farag
California State University, Los Angeles Salt Lake Community College Linfield College
Lawrence J. Bradley Thomas Crane James S. Fargason

University of Notre Dame University of Miami Louisiana State University
Dean Bredeson Angela Crossin Frank S. Forbes

University of Texas at Austin Purdue University, Calumet University of Nebraska at Omaha
Kylar William Broadus, Esq. Kenneth S. Culott Joe W. Fowler
Lincoln University in Missouri University of Texas at Austin Oklahoma State University
Doug Brown Larry R. Curtis Stanley G. Freeman
Montana State University Iowa State University University of South Carolina
Kristi K. Brown Richard Dalebout Joan Gabel
University of Texas at Austin Brigham Young University Florida State University
xxii PReFace
Christ Gaetanos June A. Horrigan M. Alan Lawson

State University of New York, Fredonia California State University, Sacramento Mt. San Antonio College
Chester S. Galloway John P. Huggard Leslie E. Lenn
Auburn University North Carolina State University St. Edwards University
Bob Garrett Terry Hutchins Susan Liebeler
American River College, California Pembroke State University, North Carolina Loyola University
Gary L. Giese Robert Jesperson Robert B. Long
University of Colorado at Denver University of Houston Oakland Community College
Thomas Gossman Debra M. Johnson Stuart MacDonald
Western Michigan University Montana State University—Billings University of Central Oklahoma
John D. Grigsby Bryce J. Jones Thomas E. Maher
Pennsylvania College of Technology Northeast Missouri State University California State University, Fullerton
Dr. J. Keaton Grubbs Margaret Jones Sal Marchionna
Stephen F. Austin State University Southwest Missouri State College Triton College, Illinois
Patrick O. Gudridge Peter A. Karl III Gene A. Marsh
University of Miami School of Law SUNY Institute of Technology at Utica University of Alabama
Paul Guymon Jack E. Karns Michael Martin, J.D., M.B.A., LL.M.
William Rainey Harper College East Carolina University University of Northern Colorado,
Jacqueline Hagerott Anne E. Kastle Monfort College of Business
Franklin University Edmonds Community College Karen Kay Matson
James M. Haine Tamra Kempf University of Texas at Austin
University of Wisconsin, Stevens Point University of Miami Woodrow J. Maxwell
Gerard Halpern Judith Kenney Hudson Valley Community College,
University of Arkansas University of Miami New York
Christopher L. Hamilton Barbara Kincaid Bruce E. May
Golden West College, California Southern Methodist University University of South Dakota
JoAnn W. Hammer Carey Kirk Diane May
University of Texas at Austin University of Northern Iowa Winona State University, Minnesota
Charles Hartman Nancy P. Klintworth Gail McCracken
Wright State University, Ohio University of Central Florida University of Michigan, Dearborn
Richard A. Hausler Kurtis P. Klumb John W. McGee
University of Miami School of Law University of Wisconsin at Milwaukee Southwest Texas State University
Harry E. Hicks Kathleen M. Knutson Cotton Meagher
Butler University, Indianapolis College of St. Catherine, St. Paul, University of Nevada at Las Vegas
Janine S. Hiller Minnesota Christopher Meakin
Virginia Polytechnic Institute and Lisa Quinn Knych University of Texas at Austin
State University Syracuse University, Whitman School Roger E. Meiners
Rebecca L. Hillyer of Management University of Texas at Arlington
Chemeketa Community College Peter Kwiatkowski, Esq. Gerald S. Meisel
E. Clayton Hipp, Jr. Baldwin Wallace University Bergen Community College,
Clemson University Meg Costello Lambert New Jersey
Anthony H. Holliday, Jr. Oakland Community College— Jennifer Merton, J.D.
Howard University Auburn Hills Campus University of Massachusetts at Amherst
Telford Hollman Vonda M. Laughlin Richard Mills
University of Northern Iowa Carson-Newman College Cypress College
P R e Fac e xxiii
David Minars Thomas L. Palmer Dana Blair Smith

City University of New York, Brooklyn Northern Arizona University University of Texas at Austin
Leo Moersen Charles M. Patten Michael Smydra
The George Washington University University of Wisconsin, Oshkosh Oakland Community College—Royal Oak
Alan Moggio Patricia Pattison Arthur Southwick
Illinois Central College Texas State University, San Marcos University of Michigan
Violet E. Molnar Peyton J. Paxson Sylvia A. Spade
Riverside City College University of Texas at Austin University of Texas at Austin
James E. Moon Carlton Perkins John A. Sparks
Meyer, Johnson & Moon, Minneapolis Texas Southern University Grove City College, Pennsylvania
Melinda Ann Mora Darren A. Prum Robert D. Sprague
University of Texas at Austin The Florida State University University of Wyoming
Bob Morgan Ralph L. Quinones
Eastern Michigan University Elisabeth Sperow
University of Wisconsin, Oshkosh
California Polytechnic University, San
Barry S. Morinaka Carol D. Rasnic Luis Obispo
Baker College—Michigan Virginia Commonwealth University
Brenda Steuer
Melanie Morris Marvin H. Robertson North Harris College, Houston
Raritan Valley Community College Harding University
Craig Stilwell
Joan Ann Mrava
Bert K. Robinson Michigan State University
Los Angeles Southwest College
Kennesaw State University
Dwight D. Murphey Irwin Stotsky
Norberto Ruiz University of Miami School of Law
Wichita State University
Chabot College
Daniel E. Murray Larry Strate
Gary K. Sambol University of Nevada at Las Vegas
University of Miami School of Law
Rutgers State University
Paula C. Murray Charles R. B. Stowe
Rudy Sandoval
University of Texas Sam Houston State University
University of Texas, San Antonio
Gregory J. Naples Raymond Mason Taylor
Marquette University Sidney S. Sappington
North Carolina State University
York College of Pennsylvania
George A. Nation III Thomas F. Taylor
Lehigh University Martha Sartoris
Campbell University
North Hennepin Community College
Caleb L. Nichols Ray Teske
Western Connecticut State University Barbara P. Scheller
Temple University University of Texas at San Antonio
John M. Norwood H. Allan Tolbert
University of Arkansas S. Alan Schlact
Kennesaw State University, Georgia Central Texas College
Jamie O’Brien
Lorne H. Seidman Jesse C. Trentadue
University of Notre Dame
University of Nevada at Las Vegas University of North Dakota
Dr. Kelly E. O’Donnell, J.C.D
California Lutheran University, Ira Selkowitz Edwin Tucker
Thousand Oaks, California University of Colorado at Denver University of Connecticut
Michael J. O’Hara Roscoe B. Shain Gary Victor

University of Nebraska at Omaha Austin Peay University Eastern Michigan University
Rick F. Orsinger Bennett D. Shulman William H. Volz
College of DuPage, Illinois Lansing Community College, Michigan Wayne State University
Daniel J. O’Shea S. Jay Sklar David Vyncke
Hillsborough Community College Temple University Scott Community College, Iowa
xxiv PReFace
William H. Walker, Marshall Wilkerson Norman Gregory Young

Indiana University–Purdue University, University of Texas at Austin California State Polytechnic University,
Fort Wayne Melanie Stallings Williams Pomona
Diana Walsh California State University— Ronald C. Young
County College of Morris Northridge Kalamazoo Valley Community College,
Robert J. Walter Arthur D. Wolfe Michigan
University of Texas at El Paso Michigan State University Bob Zaffram
Gary Watson Elizabeth A. Wolfe Erie Community College, Buffalo,
California State University, Los Angeles University of Texas at Austin New York
Katherine Hannan Wears, J.D. Daniel R. Wrentmore

Clarkson University School of Business Santa Barbara City College
John L. Weimer Eric D. Yordy
Nicholls State University, Louisiana Northern Arizona University
as in all past editions, i owe a debt of extreme grati- who co-authored the Instructor’s Manual and the Test
tude to the numerous individuals who worked directly Bank, for his excellent research efforts. i am grateful
with me or at Cengage Learning. in particular, i wish for the efforts of Vickie Reierson and Roxanna Lee for
to thank Vicky True-Baker, senior product manager; their proofreading and other assistance, which helped to
suzanne wilder, managing content developer; sarah ensure an error-free text. Finally, i thank suzanne Jasin
Huber, content developer; and ann Borman, senior of K & M Consulting for her many special efforts on
content project manager. i also thank Katie Jergens in this project.
marketing and Michelle Kunkler, art director. i am in- Through the years, i have enjoyed an ongoing corre-
debted as well to the staff at Lachina, the compositor, for spondence with many of you who have found points on
accurately generating pages for this text and making it which you wish to comment. i continue to welcome all
possible for me to meet an ambitious printing schedule. comments and promise to respond promptly. By incor-
i especially wish to thank Katherine Marie sils- porating your ideas, i can continue to write a business
bee for her management of the entire project, as well law text that is best for you and best for your students.
as for the application of her superb research and edito-
rial skills. i also wish to thank william eric Hollowell, R.L.M.
To Dan Benjamin,
I continue to marvel
at your ability to
improve my work.
Thanks.
R.L.M.
Unit One
Law and Business

Management
1. Business Ethics
2. Small Businesses and Franchises
3. All Forms of Partnerships
4. Limited Liability Companies and Special Business Forms
5. Corporate Formation and Financing
6. Corporate Directors, Officers, and Shareholders
7. Securities Law and Corporate Governance
Chapter 1
Business Ethics
O
ne of the most complex issues scandals arise from conduct that is software detected when the car was
businesspersons and corpo- both illegal and unethical. being tested and changed its perfor-
rations face is ethics. It is not Consider, for example, Volkswa- mance to improve the test outcome.
as well defined as the law, and yet gen’s corporate executives, who were As a result, the diesel cars showed
it can have substantial impacts on a accused of cheating on the pollu- low emissions—a feature that made
firm’s finances and reputation, espe- tion emissions tests of millions of the cars more attractive to today’s
cially when the firm is involved in a vehicles that were sold in the United consumers. Ultimately, millions of
well-publicized scandal. Some scan- States. Volkswagen admitted in 2015 Volkswagen vehicles were recalled,
dals arise from activities that are legal, that it had installed “defeat device” and the company suffered its first
but are ethically questionable. Other software in its diesel models. The quarterly loss in fifteen years.
goal or duty of a corporation was to maximize profits.

1–1 Business Ethics Although many people today may view this idea as greedy
At the most basic level, the study of ethics is the study of or inhumane, the rationale for the profit-maximization
what constitutes right or wrong behavior. It is a branch of theory is still valid.
philosophy focusing on morality and the way moral prin-
ciples are derived and implemented. Ethics has to do with Profit Maximization In theory, if all firms strictly
the fairness, justness, rightness, or wrongness of an action. adhere to the goal of profit maximization, resources flow
The study of business ethics typically looks at the to where they are most highly valued by society. Corpora-
decisions businesses make or have to make and whether tions can focus on their strengths, and other entities that
those decisions are right or wrong. It has to do with how are better suited to deal with social problems and perform
businesspersons apply moral and ethical principles in charitable acts can specialize in those activities. The gov-
making their decisions. Those who study business eth- ernment, through taxes and other financial allocations,
ics also evaluate what duties and responsibilities exist or can shift resources to those other entities to perform pub-
should exist for businesses. lic services. Thus, in an ideal world, profit maximization
In this book, we include an Application and Ethics fea- leads to the most efficient allocation of scarce resources.
ture at the end of each unit to expand on the concepts of
business ethics discussed in that unit. We also cover ethi- The Rise of Corporate Citizenship Over the years,
cal issues in Ethics Today features that appear in a number as resources purportedly were not sufficiently reallocated to
of chapters. cover the costs of social needs, many people became dis-
satisfied with the profit-maximization theory. Investors and
1–1a Why Is Studying others began to look beyond profits and dividends and to
consider the triple bottom line—a corporation’s profits, its
Business Ethics Important? impact on people, and its impact on the planet. Magazines
Over the last hundred years, the public perception of the and Web sites began to rank companies based on their envi-
corporation has changed from an entity that primarily ronmental impacts and their ethical decisions. The corpo-
generates revenues for its owners to an entity that partici- ration came to be viewed as a “citizen” that was expected to
pates in society as a corporate citizen. Originally, the only participate in bettering communities and society.
2
C hap t e r 1 Business ethics 3
Even so, many still believe that corporations are fun- The Internet Can Ruin Reputations In the past,
damentally profit-making entities that should have no negative information or opinions about a company might
responsibility other than profit maximization. remain hidden. Now, however, cyberspace provides a
forum where disgruntled employees, unhappy consum-
ers, or special interest groups can post derogatory remarks.
1–1b The Importance of Ethics Thus, the Internet has increased the potential for a major
in Making Business Decisions corporation (or other business) to suffer damage to its
Whether one believes in profit maximization or corporate reputation or loss of profits through negative publicity.
citizenship, ethics is important in making business deci- Wal-Mart and Nike in particular have been frequent
sions. When making decisions, a business should evaluate: targets for advocacy groups that believe those corporations
exploit their workers. Although some of these assertions
1. The legal implications of each decision. may be unfounded or exaggerated, the courts generally
2. The public relations impact. have refused to consider them defamatory (a tort giving
3. The safety risks for consumers and employees. rise to a civil lawsuit). Most courts regard online attacks as
4. The financial implications. expressions of opinion protected by the First Amendment.
This four-part analysis will assist the firm in making Even so, corporations often incur considerable expense in
decisions that not only maximize profits but also reflect running marketing campaigns to thwart bad publicity and
good corporate citizenship. may even face legal costs if the allegations lead to litigation.
Long-Run Profit Maximization In attempting to Image Is Everything The study of business ethics is
maximize profits, corporate executives and employees concerned with the purposes of a business and how that
have to distinguish between short-run and long-run profit business achieves those purposes. Thus, business ethics is
maximization. In the short run, a company may increase concerned not only with the image of the business, but
its profits by continuing to sell a product even though also with the impact that the business has on the envi-
it knows that the product is defective. In the long run, ronment, customers, suppliers, employees, and the global
though, because of lawsuits, large settlements, and bad economy.
publicity, such unethical conduct will cause profits to Unethical corporate decision making can negatively
suffer. Thus, business ethics is consistent only with long- affect suppliers, consumers, the community, and society
run profit maximization. An overemphasis on short-term as a whole. It can also have a negative impact on the repu-
profit maximization is the most common reason that ethi- tation of the company and the individuals who run that
cal problems occur in business. company. Hence, an in-depth understanding of business
■ Case in pOint 1.1 When the powerful narcotic ethics is important to the long-run viability of any cor-
painkiller OxyContin was first marketed, its manufac- poration today.
turer, Purdue Pharma, claimed that it was unlikely to
lead to drug addiction or abuse. Internal company docu-
ments later showed that the company’s executives knew 1–1c The Relationship of Law and Ethics
that OxyContin could be addictive, but kept this risk Because the law does not codify all ethical requirements,
a secret to boost sales and maximize short-term profits. compliance with the law is not always sufficient to deter-
Subsequently, Purdue Pharma and three former exec- mine “right” behavior. Laws have to be general enough
utives pleaded guilty to criminal charges that they had to apply in a variety of circumstances. Laws are broad in
misled regulators, patients, and physicians about Oxy- their purpose and their scope. They prohibit or require
Contin’s risks of addiction. Purdue Pharma agreed to pay certain actions to avoid significant harm to society.
$600 million in fines and other payments. The three for- When two competing companies secretly agree to set
mer executives agreed to pay $34.5 million in fines and prices on products, for instance, society suffers harm—
were barred from federal health programs for a period of typically, the companies will charge higher prices than
fifteen years. Thus, the company’s focus on maximizing they could if they continued to compete. This harm
profits in the short run led to unethical conduct that hurt inflicted on consumers has negative consequences for the
profits in the long run.1 ■ economy, and so colluding to set prices is an illegal activ-
ity. Similarly, when a company is preparing to issue stock,
the law requires certain disclosures to potential investors.
1. United States v. Purdue Frederick Co., 495 F.Supp.2d 569 (W.D.Va.
2007). This requirement is meant to prevent harms that come
4 U ni t One Law and Business Management
with uninformed investing. Such harms occurred in the merely comply with the law, they are acting at the low-
1920s and may have contributed to the stock market est ethical level society will tolerate. The study of ethics
crash and the Great Depression. goes beyond those legal requirements to evaluate what is
right for society. The following case illustrates some con-
Moral Minimum Compliance with the law is some- sequences of a businessperson’s failure to meet the moral
times called the moral minimum. If people and entities minimum.
Case 1.1
scott v. Carpanzano
United States Court of Appeals, Fifth Circuit, 556 Fed.Appx. 288 (2014).
Background and Facts Rick Scott deposited $2 million into an escrow account maintained by a
company owned by Salvatore Carpanzano. Immediately after the deposit was made, in violation of
the escrow agreement, the funds were withdrawn. When Scott was unable to recover his money, he
filed a suit against Salvatore Carpanzano and others, including Salvatore’s daughter Carmela Carpan-
zano. In the complaint, Scott made no allegations of acts or knowledge on Carmela’s part.
Salvatore failed to cooperate with discovery and did not respond to attempts to contact him by
certified mail, regular mail, or e-mail. Salvatore also refused to make an appearance in the court and
did not finalize a settlement negotiated between the parties’ attorneys. Carmela denied that she was
involved in her father’s business or the Scott transaction. The court found that the defendants had in-
tentionally failed to respond to the litigation and issued a judgment for more than $6 million in Scott’s
favor. The defendants appealed to the U.S. Court of Appeals for the Fifth Circuit.
In the Language of the Court

PER CURIAM [By the Whole Court].
****
A willful default is an intentional failure to respond to litigation. The district court found that [the]
Defendants willfully defaulted based on evidence that the Defendants were aware of the proceedings
against them and that [their] attorneys were specifically instructed not to enter an appearance [partici-
pate] in this case. [Emphasis added.]
The evidence substantially supports the district court’s finding as to Mr. Carpanzano. First, Mr.
Carpanzano’s first attorney withdrew [from the case] because Mr. Carpanzano failed to cooperate with
the discovery process and refused to appear as requested and ordered. Second, * * * Mr. Carpanzano
instructed his second set of attorneys to negotiate settlement of this matter but not to enter an appear-
ance in the district court. Significantly, Mr. Carpanzano never denies this allegation. Third, * * * Mr.
Carpanzano and his attorneys were well aware that the case was proceeding toward default and * * *
were in communication with each other during this time. Fourth, * * * once final execution of settle-
ment papers was at hand, Mr. Carpanzano also ceased communication with his second set of attorneys
and did not finalize the settlement. Finally, other than ambiguously suggesting that a health condition
(unsupported by any evidence of what the condition was) and absence from the country (unsupported
by any evidence that electronic communication was not possible from that country) prevented him
from defending this action, Mr. Carpanzano offers no real reason why he did not answer the * * *
complaint.
****
By contrast, the record does not support the district court’s finding that * * * Ms. [Carmela] Carpan-
zano also willfully defaulted.
* * * Ms. Carpanzano repeatedly indicated that [she was] relying on Mr. Carpanzano * * * to make
sure [her] interests were protected. Nothing in the record contradicts this assertion. While [her] reliance
on Mr. Carpanzano acting with the attorneys he retained may have been negligent, it does not amount
to an intentional failure to respond to litigation.
Case 1.1 Continued ****

* * * [Furthermore] the * * * complaint * * * contains no factual allegations of acts or omissions on
the part of Ms. Carpanzano. It does not allege that she ever was in contact with Scott, that she was in
control of the * * * escrow account, or that she wrongfully transferred any funds out of the account. Nor
does it allege any intent or knowledge on the part of Ms. Carpanzano * * *. Indeed, an examination of
the complaint reveals that there is not a sufficient basis in the pleadings for the judgment * * * entered
against Ms. Carpanzano.
The defenses presented by Ms. Carpanzano to the district court assert that she had no knowledge of
the details of her father’s business transactions, she did not personally enter into any contracts with Scott
or seek to defraud him, and * * * she had limited involvement in the facts of this case.
****
* * * Even if Scott were able to prove the entirety of the * * * complaint, we fail to see how it would
justify a judgment * * * against Ms. Carpanzano.
Decision and Remedy The U.S. Court of Appeals for the Fifth Circuit affirmed the judgment against
Salvatore, but reversed the decision against Carmela. Scott had made no allegations of acts on Carmela’s
part.
Critical Thinking
• Ethical Are Salvatore’s actions likely to affect his business’s ability to profit in the long run? Discuss.
• Legal Environment Did Carmela Carpanzano meet the minimum acceptable standard for ethical
business behavior? Explain.
Ethical Requirements The study of ethics goes It even has a dog policy. The company takes a stand
beyond legal requirements to evaluate what is right for against employment discrimination that goes further
society. Businesspersons thus must remember that an than the law requires—it prohibits discrimination based
action that is legal is not necessarily ethical. For instance, on sexual orientation, gender identity or expression, and
a company’s refusal to negotiate liability claims for alleged veteran status. ■
injuries because of a faulty product is legal. But it may not
be ethical if the reason the business refuses to negotiate Industry Ethical Codes Numerous industries have
is to increase the injured party’s legal costs and force the also developed their own codes of ethics. The American
person to drop a legitimate claim. Institute of Certified Public Accountants (AICPA) has
a comprehensive Code of Professional Conduct for the
Private Company Codes of Ethics Most compa- ethical practice of accounting. The American Bar Associa-
nies attempt to link ethics and law through the creation tion has model rules of professional conduct for attorneys,
of internal codes of ethics. Company codes are not law. and the American Nurses Association has a code of ethics
Instead, they are rules that the company sets forth that it that applies to nurses. These codes can give guidance to
can also enforce (by terminating an employee who does decision makers facing ethical questions.
not follow them, for instance). Codes of conduct typi- Violation of an industry code may result in discipline
cally outline the company’s policies on particular issues of an employee or sanctions against a company from the
and indicate how employees are expected to act. industry organization. Remember, though, that these
■ exaMpLe 1.2 Google’s code of conduct starts with internal codes are not laws, so their effectiveness is deter-
the motto “Don’t be evil.” The code then makes general mined by the commitment of the industry or company
statements about how Google promotes integrity, mutual leadership to enforcing the codes.
respect, and the highest standard of ethical business con- ■ Case in pOint 1.3 National Football League (NFL)
duct. Google’s code also provides specific rules on a num- rules require footballs to be inflated to a minimum air
ber of issues, such as privacy, drugs and alcohol, conflicts pressure (pounds per square inch, or psi) as measured by
of interest, co-worker relationships, and confidentiality. the referees. This rule gained attention when the New
6 U ni t One Law and Business Management
England Patriots played the Indianapolis Colts for the participate in social media. Given that the vast majority
American Football Conference championship in early of younger people do use social media, some employers
2015. After Tom Brady, the Patriots quarterback, threw have decided that the failure to do so raises a red flag.
a pass that was intercepted, officials became suspicious In either case, many people believe that judging a job
that the football was underinflated. The game continued candidate based on what she or he does outside the work
after NFL officials verified the psi in all the footballs, and environment is unethical.
the Patriots won.
Nevertheless, allegations continued that Brady and
the Patriots had deflated balls during the game—a con- 1–2b The Use of Social Media
troversy popularly known as “deflategate.” The NFL to Discuss Work-Related Issues
performed an investigation, and after arbitration, the Because so many Americans use social media daily, they
league announced that Brady would be suspended for often discuss work-related issues there. Numerous com-
four games. Brady appealed, and a federal district court panies have strict guidelines about what is appropriate
vacated the arbitrator’s decision to suspend, but a federal and inappropriate for employees to say when making
appellate court reinstated Brady’s suspension in 2016. posts on their own or others’ social media accounts. A
The reviewing court held that the arbitrator had grounds number of companies have fired employees for such
to suspend Brady for being generally aware that the team activities as criticizing other employees or managers
had intentionally released air from the game balls.2 ■ through social media outlets. Until recently, such disci-
plinary measures were considered ethical and legal.
“Gray Areas” in the Law Because it is often highly
subjective and subject to change over time without any Responsibility of Employers Today, in con-
sort of formal process, ethics is less certain than law. But trast, a ruling by the National Labor Relations Board
the law can also be uncertain. Numerous “gray areas” in (NLRB—the federal agency that investigates unfair
the law make it difficult to predict with certainty how a labor practices) has changed the legality of such
court will apply a given law to a particular action. In addi- actions. ■ exaMpLe 1.4 At one time, Costco’s social
tion, laws frequently change. media policy specified that its employees should not
make statements that would damage the company,
harm another person’s reputation, or violate the com-
pany’s policies. Employees who violated these rules were
1–2 Business Ethics subject to discipline and could be fired.
and Social Media The NLRB ruled that Costco’s social media policy
violated federal labor law, which protects employees’
Most young people may think of social media—Facebook, right to engage in “concerted activities.” Employees can
Flickr, Instagram, Tumblr, Twitter, Pinterest, Google+, freely associate with each other and have conversations
LinkedIn, VR, and the like—as simply ways to commu- about common workplace issues without employer inter-
nicate rapidly. Businesses, though, often face ethical issues ference. This right extends to social media posts. There-
with respect to these same social media platforms. fore, an employer cannot broadly prohibit its employees
from criticizing the company or co-workers, supervisors,
or managers via social media. ■
1–2a Hiring Procedures
In the past, to learn about a prospective employee, an Responsibility of Employees While most of the
employer would ask the candidate’s former employers discussion in this chapter concerns the ethics of busi-
for references. Today, employers are likely to also con- ness management, employee ethics is also an important
duct Internet searches to discover what job candidates issue. For instance, is it ethical for employees to make
have posted on their Facebook pages, blogs, and tweets. negative posts in social media about other employees
On the one hand, job candidates may be judged or, more commonly, about managers? After all, nega-
by what they post on social media. On the other tive comments about managers reflect badly on those
hand, though, they may be judged because they do not managers, who often are reluctant to respond via social
media to such criticism. Disgruntled employees may
2. National Football League Management Council v. National Football League exaggerate the negative qualities of managers whom they
Players Association, 820 F.3d 527 (2d Cir. 2016). do not like.
Some may consider the decision by the National dominant religious tradition in the United States, the Ten
Labor Relations Board outlined in Example 1.4 to be too Commandments of the Old Testament establish these
lenient toward employees and too stringent toward man- fundamental rules for moral action. The principles of the
agement. There is likely to be an ongoing debate about Muslim faith are set out in the Qur’an, and Hindus find
how to balance employees’ right to free expression against their principles in the four Vedas.
employers’ right to prevent the spreading of inaccurate Religious rules generally are absolute with respect to
negative statements across the Internet. the behavior of their adherents. ■ exaMpLe 1.5 The
commandment “Thou shalt not steal” is an absolute
mandate for a person who believes that the Ten Com-
mandments reflect revealed truth. Even a benevolent
1–3 Ethical Principles motive for stealing (such as Robin Hood’s) cannot justify
the act because the act itself is inherently immoral and
and Philosophies thus wrong. ■
As Dean Krehmeyer, executive director of the Business For businesses, religious principles can be a unify-
Roundtable’s Institute for Corporate Ethics, once said, ing force for employees or a rallying point to increase
“Evidence strongly suggests being ethical—doing the employee motivation. They can also present problems,
right thing—pays.” Even if ethics “pays,” though, instill- however, because different owners, suppliers, employees,
ing ethical business decision making into the fabric of a and customers may have different religious backgrounds.
business organization is no small task. Taking an action based on religious principles, especially
How do business decision makers decide whether a when those principles address socially or politically con-
given action is the “right” one for their firms? What ethi- troversial topics, can lead to negative publicity and even
cal standards should be applied? Broadly speaking, ethi- to protests or boycotts.
cal reasoning—the application of morals and ethics to
a situation—applies to businesses just as it does to indi- Principles of Rights Another view of duty-based
viduals. As businesses make decisions, they must analyze ethics focuses on basic rights. The principle that human
their alternatives in a variety of ways, one of which is the beings have certain fundamental rights (to life, freedom,
ethical implications of each alternative. and the pursuit of happiness, for example) is deeply
Generally, the study of ethics is divided into two embedded in Western culture.
major categories—duty-based ethics and outcome- Those who adhere to this principle of rights, or
based ethics. Duty-based ethics is rooted in the idea “rights theory,” believe that a key factor in determining
that every person has certain duties to others, including whether a business decision is ethical is how that decision
both humans and the planet. Outcome-based ethics affects the rights of others. These others include the firm’s
focuses on the impacts of a decision on society or on key owners, its employees, the consumers of its products or
stakeholders. services, its suppliers, the community in which it does
business, and society as a whole.
1–3a Duty-Based Ethics Conflicting Rights. A potential dilemma for those who
Duty-based ethics focuses on the obligations of the cor- support rights theory is that they may disagree on which
poration. It deals with standards for behavior that tra- rights are most important. When considering all those
ditionally were derived from revealed truths, religious affected by a business decision to downsize a firm, for
authorities, or philosophical reasoning. These standards example, how much weight should be given to employ-
involve concepts of right and wrong, duties owed, and ees relative to shareholders? Which employees should be
rights to be protected. Corporations today often describe laid off first—those with the highest salaries or those who
these values or duties in their mission statements or stra- have worked there for less time (and have less seniority)?
tegic plans. Some companies base their statements on a How should the firm weigh the rights of customers rela-
nonreligious rationale, while others derive their values tive to the community, or employees relative to society as
from religious doctrine. a whole?
Religious Ethical Principles Nearly every religion Resolving Conflicts. In general, rights theorists believe
has principles or beliefs about how one should treat that whichever right is stronger in a particular cir-
others. In the Judeo-Christian tradition, which is the cumstance takes precedence. ■ exaMpLe 1.6 Murray
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DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI
Newala, too, suffers from the distance of its water-supply—at least

the Newala of to-day does; there was once another Newala in a lovely
valley at the foot of the plateau. I visited it and found scarcely a trace
of houses, only a Christian cemetery, with the graves of several
missionaries and their converts, remaining as a monument of its
former glories. But the surroundings are wonderfully beautiful. A
thick grove of splendid mango-trees closes in the weather-worn
crosses and headstones; behind them, combining the useful and the
agreeable, is a whole plantation of lemon-trees covered with ripe
fruit; not the small African kind, but a much larger and also juicier
imported variety, which drops into the hands of the passing traveller,
without calling for any exertion on his part. Old Newala is now under
the jurisdiction of the native pastor, Daudi, at Chingulungulu, who,
as I am on very friendly terms with him, allows me, as a matter of
course, the use of this lemon-grove during my stay at Newala.
FEET MUTILATED BY THE RAVAGES OF THE “JIGGER”
(Sarcopsylla penetrans)
The water-supply of New Newala is in the bottom of the valley,

some 1,600 feet lower down. The way is not only long and fatiguing,
but the water, when we get it, is thoroughly bad. We are suffering not
only from this, but from the fact that the arrangements at Newala are
nothing short of luxurious. We have a separate kitchen—a hut built
against the boma palisade on the right of the baraza, the interior of
which is not visible from our usual position. Our two cooks were not
long in finding this out, and they consequently do—or rather neglect
to do—what they please. In any case they do not seem to be very
particular about the boiling of our drinking-water—at least I can
attribute to no other cause certain attacks of a dysenteric nature,
from which both Knudsen and I have suffered for some time. If a
man like Omari has to be left unwatched for a moment, he is capable
of anything. Besides this complaint, we are inconvenienced by the
state of our nails, which have become as hard as glass, and crack on
the slightest provocation, and I have the additional infliction of
pimples all over me. As if all this were not enough, we have also, for
the last week been waging war against the jigger, who has found his
Eldorado in the hot sand of the Makonde plateau. Our men are seen
all day long—whenever their chronic colds and the dysentery likewise
raging among them permit—occupied in removing this scourge of
Africa from their feet and trying to prevent the disastrous
consequences of its presence. It is quite common to see natives of
this place with one or two toes missing; many have lost all their toes,
or even the whole front part of the foot, so that a well-formed leg
ends in a shapeless stump. These ravages are caused by the female of
Sarcopsylla penetrans, which bores its way under the skin and there
develops an egg-sac the size of a pea. In all books on the subject, it is
stated that one’s attention is called to the presence of this parasite by
an intolerable itching. This agrees very well with my experience, so
far as the softer parts of the sole, the spaces between and under the
toes, and the side of the foot are concerned, but if the creature
penetrates through the harder parts of the heel or ball of the foot, it
may escape even the most careful search till it has reached maturity.
Then there is no time to be lost, if the horrible ulceration, of which
we see cases by the dozen every day, is to be prevented. It is much
easier, by the way, to discover the insect on the white skin of a
European than on that of a native, on which the dark speck scarcely
shows. The four or five jiggers which, in spite of the fact that I
constantly wore high laced boots, chose my feet to settle in, were
taken out for me by the all-accomplished Knudsen, after which I
thought it advisable to wash out the cavities with corrosive
sublimate. The natives have a different sort of disinfectant—they fill
the hole with scraped roots. In a tiny Makua village on the slope of
the plateau south of Newala, we saw an old woman who had filled all
the spaces under her toe-nails with powdered roots by way of
prophylactic treatment. What will be the result, if any, who can say?
The rest of the many trifling ills which trouble our existence are
really more comic than serious. In the absence of anything else to
smoke, Knudsen and I at last opened a box of cigars procured from
the Indian store-keeper at Lindi, and tried them, with the most
distressing results. Whether they contain opium or some other
narcotic, neither of us can say, but after the tenth puff we were both
“off,” three-quarters stupefied and unspeakably wretched. Slowly we
recovered—and what happened next? Half-an-hour later we were
once more smoking these poisonous concoctions—so insatiable is the
craving for tobacco in the tropics.
Even my present attacks of fever scarcely deserve to be taken
seriously. I have had no less than three here at Newala, all of which
have run their course in an incredibly short time. In the early
afternoon, I am busy with my old natives, asking questions and
making notes. The strong midday coffee has stimulated my spirits to
an extraordinary degree, the brain is active and vigorous, and work
progresses rapidly, while a pleasant warmth pervades the whole
body. Suddenly this gives place to a violent chill, forcing me to put on
my overcoat, though it is only half-past three and the afternoon sun
is at its hottest. Now the brain no longer works with such acuteness
and logical precision; more especially does it fail me in trying to
establish the syntax of the difficult Makua language on which I have
ventured, as if I had not enough to do without it. Under the
circumstances it seems advisable to take my temperature, and I do
so, to save trouble, without leaving my seat, and while going on with
my work. On examination, I find it to be 101·48°. My tutors are
abruptly dismissed and my bed set up in the baraza; a few minutes
later I am in it and treating myself internally with hot water and
lemon-juice.
Three hours later, the thermometer marks nearly 104°, and I make
them carry me back into the tent, bed and all, as I am now perspiring
heavily, and exposure to the cold wind just beginning to blow might
mean a fatal chill. I lie still for a little while, and then find, to my
great relief, that the temperature is not rising, but rather falling. This
is about 7.30 p.m. At 8 p.m. I find, to my unbounded astonishment,
that it has fallen below 98·6°, and I feel perfectly well. I read for an
hour or two, and could very well enjoy a smoke, if I had the
wherewithal—Indian cigars being out of the question.
Having no medical training, I am at a loss to account for this state
of things. It is impossible that these transitory attacks of high fever
should be malarial; it seems more probable that they are due to a
kind of sunstroke. On consulting my note-book, I become more and
more inclined to think this is the case, for these attacks regularly
follow extreme fatigue and long exposure to strong sunshine. They at
least have the advantage of being only short interruptions to my
work, as on the following morning I am always quite fresh and fit.
My treasure of a cook is suffering from an enormous hydrocele which
makes it difficult for him to get up, and Moritz is obliged to keep in
the dark on account of his inflamed eyes. Knudsen’s cook, a raw boy
from somewhere in the bush, knows still less of cooking than Omari;
consequently Nils Knudsen himself has been promoted to the vacant
post. Finding that we had come to the end of our supplies, he began
by sending to Chingulungulu for the four sucking-pigs which we had
bought from Matola and temporarily left in his charge; and when
they came up, neatly packed in a large crate, he callously slaughtered
the biggest of them. The first joint we were thoughtless enough to
entrust for roasting to Knudsen’s mshenzi cook, and it was
consequently uneatable; but we made the rest of the animal into a
jelly which we ate with great relish after weeks of underfeeding,
consuming incredible helpings of it at both midday and evening
meals. The only drawback is a certain want of variety in the tinned
vegetables. Dr. Jäger, to whom the Geographical Commission
entrusted the provisioning of the expeditions—mine as well as his
own—because he had more time on his hands than the rest of us,
seems to have laid in a huge stock of Teltow turnips,[46] an article of
food which is all very well for occasional use, but which quickly palls
when set before one every day; and we seem to have no other tins
left. There is no help for it—we must put up with the turnips; but I
am certain that, once I am home again, I shall not touch them for ten
years to come.
Amid all these minor evils, which, after all, go to make up the
genuine flavour of Africa, there is at least one cheering touch:
Knudsen has, with the dexterity of a skilled mechanic, repaired my 9
× 12 cm. camera, at least so far that I can use it with a little care.
How, in the absence of finger-nails, he was able to accomplish such a
ticklish piece of work, having no tool but a clumsy screw-driver for
taking to pieces and putting together again the complicated
mechanism of the instantaneous shutter, is still a mystery to me; but
he did it successfully. The loss of his finger-nails shows him in a light
contrasting curiously enough with the intelligence evinced by the
above operation; though, after all, it is scarcely surprising after his
ten years’ residence in the bush. One day, at Lindi, he had occasion
to wash a dog, which must have been in need of very thorough
cleansing, for the bottle handed to our friend for the purpose had an
extremely strong smell. Having performed his task in the most
conscientious manner, he perceived with some surprise that the dog
did not appear much the better for it, and was further surprised by
finding his own nails ulcerating away in the course of the next few
days. “How was I to know that carbolic acid has to be diluted?” he
mutters indignantly, from time to time, with a troubled gaze at his
mutilated finger-tips.
Since we came to Newala we have been making excursions in all
directions through the surrounding country, in accordance with old
habit, and also because the akida Sefu did not get together the tribal
elders from whom I wanted information so speedily as he had
promised. There is, however, no harm done, as, even if seen only
from the outside, the country and people are interesting enough.
The Makonde plateau is like a large rectangular table rounded off
at the corners. Measured from the Indian Ocean to Newala, it is
about seventy-five miles long, and between the Rovuma and the
Lukuledi it averages fifty miles in breadth, so that its superficial area
is about two-thirds of that of the kingdom of Saxony. The surface,
however, is not level, but uniformly inclined from its south-western
edge to the ocean. From the upper edge, on which Newala lies, the
eye ranges for many miles east and north-east, without encountering
any obstacle, over the Makonde bush. It is a green sea, from which
here and there thick clouds of smoke rise, to show that it, too, is
inhabited by men who carry on their tillage like so many other
primitive peoples, by cutting down and burning the bush, and
manuring with the ashes. Even in the radiant light of a tropical day
such a fire is a grand sight.
Much less effective is the impression produced just now by the
great western plain as seen from the edge of the plateau. As often as
time permits, I stroll along this edge, sometimes in one direction,
sometimes in another, in the hope of finding the air clear enough to
let me enjoy the view; but I have always been disappointed.
Wherever one looks, clouds of smoke rise from the burning bush,
and the air is full of smoke and vapour. It is a pity, for under more
favourable circumstances the panorama of the whole country up to
the distant Majeje hills must be truly magnificent. It is of little use
taking photographs now, and an outline sketch gives a very poor idea
of the scenery. In one of these excursions I went out of my way to
make a personal attempt on the Makonde bush. The present edge of
the plateau is the result of a far-reaching process of destruction
through erosion and denudation. The Makonde strata are
everywhere cut into by ravines, which, though short, are hundreds of
yards in depth. In consequence of the loose stratification of these
beds, not only are the walls of these ravines nearly vertical, but their
upper end is closed by an equally steep escarpment, so that the
western edge of the Makonde plateau is hemmed in by a series of
deep, basin-like valleys. In order to get from one side of such a ravine
to the other, I cut my way through the bush with a dozen of my men.
It was a very open part, with more grass than scrub, but even so the
short stretch of less than two hundred yards was very hard work; at
the end of it the men’s calicoes were in rags and they themselves
bleeding from hundreds of scratches, while even our strong khaki
suits had not escaped scatheless.
NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAHUTA
I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.
MAKONDE LOCK AND KEY AT JUMBE CHAURO

This is the general way of closing a house. The Makonde at Jumbe
Chauro, however, have a much more complicated, solid and original
one. Here, too, the door is as already described, except that there is
only one post on the inside, standing by itself about six inches from
one side of the doorway. Opposite this post is a hole in the wall just
large enough to admit a man’s arm. The door is closed inside by a
large wooden bolt passing through a hole in this post and pressing
with its free end against the door. The other end has three holes into
which fit three pegs running in vertical grooves inside the post. The
door is opened with a wooden key about a foot long, somewhat
curved and sloped off at the butt; the other end has three pegs
corresponding to the holes, in the bolt, so that, when it is thrust
through the hole in the wall and inserted into the rectangular
opening in the post, the pegs can be lifted and the bolt drawn out.[50]
MODE OF INSERTING THE KEY
With no small pride first one householder and then a second

showed me on the spot the action of this greatest invention of the
Makonde Highlands. To both with an admiring exclamation of
“Vizuri sana!” (“Very fine!”). I expressed the wish to take back these
marvels with me to Ulaya, to show the Wazungu what clever fellows
the Makonde are. Scarcely five minutes after my return to camp at
Newala, the two men came up sweating under the weight of two
heavy logs which they laid down at my feet, handing over at the same
time the keys of the fallen fortress. Arguing, logically enough, that if
the key was wanted, the lock would be wanted with it, they had taken
their axes and chopped down the posts—as it never occurred to them
to dig them out of the ground and so bring them intact. Thus I have
two badly damaged specimens, and the owners, instead of praise,
come in for a blowing-up.
The Makua huts in the environs of Newala are especially
miserable; their more than slovenly construction reminds one of the
temporary erections of the Makua at Hatia’s, though the people here
have not been concerned in a war. It must therefore be due to
congenital idleness, or else to the absence of a powerful chief. Even
the baraza at Mlipa’s, a short hour’s walk south-east of Newala,
shares in this general neglect. While public buildings in this country
are usually looked after more or less carefully, this is in evident
danger of being blown over by the first strong easterly gale. The only
attractive object in this whole district is the grave of the late chief
Mlipa. I visited it in the morning, while the sun was still trying with
partial success to break through the rolling mists, and the circular
grove of tall euphorbias, which, with a broken pot, is all that marks
the old king’s resting-place, impressed one with a touch of pathos.
Even my very materially-minded carriers seemed to feel something
of the sort, for instead of their usual ribald songs, they chanted
solemnly, as we marched on through the dense green of the Makonde
bush:—
“We shall arrive with the great master; we stand in a row and have
no fear about getting our food and our money from the Serkali (the
Government). We are not afraid; we are going along with the great
master, the lion; we are going down to the coast and back.”
With regard to the characteristic features of the various tribes here
on the western edge of the plateau, I can arrive at no other
conclusion than the one already come to in the plain, viz., that it is
impossible for anyone but a trained anthropologist to assign any
given individual at once to his proper tribe. In fact, I think that even
an anthropological specialist, after the most careful examination,
might find it a difficult task to decide. The whole congeries of peoples
collected in the region bounded on the west by the great Central
African rift, Tanganyika and Nyasa, and on the east by the Indian
Ocean, are closely related to each other—some of their languages are
only distinguished from one another as dialects of the same speech,
and no doubt all the tribes present the same shape of skull and
structure of skeleton. Thus, surely, there can be no very striking
differences in outward appearance.
Even did such exist, I should have no time
to concern myself with them, for day after day,
I have to see or hear, as the case may be—in
any case to grasp and record—an
extraordinary number of ethnographic
phenomena. I am almost disposed to think it
fortunate that some departments of inquiry, at
least, are barred by external circumstances.
Chief among these is the subject of iron-
working. We are apt to think of Africa as a
country where iron ore is everywhere, so to
speak, to be picked up by the roadside, and
where it would be quite surprising if the
inhabitants had not learnt to smelt the
material ready to their hand. In fact, the
knowledge of this art ranges all over the
continent, from the Kabyles in the north to the
Kafirs in the south. Here between the Rovuma
and the Lukuledi the conditions are not so
favourable. According to the statements of the
Makonde, neither ironstone nor any other
form of iron ore is known to them. They have
not therefore advanced to the art of smelting
the metal, but have hitherto bought all their
THE ANCESTRESS OF
THE MAKONDE
iron implements from neighbouring tribes.
Even in the plain the inhabitants are not much
better off. Only one man now living is said to
understand the art of smelting iron. This old fundi lives close to
Huwe, that isolated, steep-sided block of granite which rises out of
the green solitude between Masasi and Chingulungulu, and whose
jagged and splintered top meets the traveller’s eye everywhere. While
still at Masasi I wished to see this man at work, but was told that,
frightened by the rising, he had retired across the Rovuma, though
he would soon return. All subsequent inquiries as to whether the
fundi had come back met with the genuine African answer, “Bado”
(“Not yet”).
BRAZIER
Some consolation was afforded me by a brassfounder, whom I

came across in the bush near Akundonde’s. This man is the favourite
of women, and therefore no doubt of the gods; he welds the glittering
brass rods purchased at the coast into those massive, heavy rings
which, on the wrists and ankles of the local fair ones, continually give
me fresh food for admiration. Like every decent master-craftsman he
had all his tools with him, consisting of a pair of bellows, three
crucibles and a hammer—nothing more, apparently. He was quite
willing to show his skill, and in a twinkling had fixed his bellows on
the ground. They are simply two goat-skins, taken off whole, the four
legs being closed by knots, while the upper opening, intended to
admit the air, is kept stretched by two pieces of wood. At the lower
end of the skin a smaller opening is left into which a wooden tube is
stuck. The fundi has quickly borrowed a heap of wood-embers from
the nearest hut; he then fixes the free ends of the two tubes into an
earthen pipe, and clamps them to the ground by means of a bent
piece of wood. Now he fills one of his small clay crucibles, the dross
on which shows that they have been long in use, with the yellow
material, places it in the midst of the embers, which, at present are
only faintly glimmering, and begins his work. In quick alternation
the smith’s two hands move up and down with the open ends of the
bellows; as he raises his hand he holds the slit wide open, so as to let
the air enter the skin bag unhindered. In pressing it down he closes
the bag, and the air puffs through the bamboo tube and clay pipe into
the fire, which quickly burns up. The smith, however, does not keep
on with this work, but beckons to another man, who relieves him at
the bellows, while he takes some more tools out of a large skin pouch
carried on his back. I look on in wonder as, with a smooth round
stick about the thickness of a finger, he bores a few vertical holes into
the clean sand of the soil. This should not be difficult, yet the man
seems to be taking great pains over it. Then he fastens down to the
ground, with a couple of wooden clamps, a neat little trough made by
splitting a joint of bamboo in half, so that the ends are closed by the
two knots. At last the yellow metal has attained the right consistency,
and the fundi lifts the crucible from the fire by means of two sticks
split at the end to serve as tongs. A short swift turn to the left—a
tilting of the crucible—and the molten brass, hissing and giving forth
clouds of smoke, flows first into the bamboo mould and then into the
holes in the ground.
The technique of this backwoods craftsman may not be very far
advanced, but it cannot be denied that he knows how to obtain an
adequate result by the simplest means. The ladies of highest rank in
this country—that is to say, those who can afford it, wear two kinds
of these massive brass rings, one cylindrical, the other semicircular
in section. The latter are cast in the most ingenious way in the
bamboo mould, the former in the circular hole in the sand. It is quite
a simple matter for the fundi to fit these bars to the limbs of his fair
customers; with a few light strokes of his hammer he bends the
pliable brass round arm or ankle without further inconvenience to
the wearer.
SHAPING THE POT
SMOOTHING WITH MAIZE-COB
CUTTING THE EDGE

FINISHING THE BOTTOM
LAST SMOOTHING BEFORE

BURNING
FIRING THE BRUSH-PILE

LIGHTING THE FARTHER SIDE OF
THE PILE
TURNING THE RED-HOT VESSEL
NYASA WOMAN MAKING POTS AT MASASI

Pottery is an art which must always and everywhere excite the
interest of the student, just because it is so intimately connected with
the development of human culture, and because its relics are one of
the principal factors in the reconstruction of our own condition in
prehistoric times. I shall always remember with pleasure the two or
three afternoons at Masasi when Salim Matola’s mother, a slightly-
built, graceful, pleasant-looking woman, explained to me with
touching patience, by means of concrete illustrations, the ceramic art
of her people. The only implements for this primitive process were a
lump of clay in her left hand, and in the right a calabash containing
the following valuables: the fragment of a maize-cob stripped of all
its grains, a smooth, oval pebble, about the size of a pigeon’s egg, a
few chips of gourd-shell, a bamboo splinter about the length of one’s
hand, a small shell, and a bunch of some herb resembling spinach.
Nothing more. The woman scraped with the
shell a round, shallow hole in the soft, fine
sand of the soil, and, when an active young
girl had filled the calabash with water for her,
she began to knead the clay. As if by magic it
gradually assumed the shape of a rough but
already well-shaped vessel, which only wanted
a little touching up with the instruments
before mentioned. I looked out with the
MAKUA WOMAN closest attention for any indication of the use
MAKING A POT. of the potter’s wheel, in however rudimentary
SHOWS THE a form, but no—hapana (there is none). The
BEGINNINGS OF THE embryo pot stood firmly in its little
POTTER’S WHEEL
depression, and the woman walked round it in
a stooping posture, whether she was removing
small stones or similar foreign bodies with the maize-cob, smoothing
the inner or outer surface with the splinter of bamboo, or later, after
letting it dry for a day, pricking in the ornamentation with a pointed
bit of gourd-shell, or working out the bottom, or cutting the edge
with a sharp bamboo knife, or giving the last touches to the finished
vessel. This occupation of the women is infinitely toilsome, but it is
without doubt an accurate reproduction of the process in use among
our ancestors of the Neolithic and Bronze ages.
There is no doubt that the invention of pottery, an item in human
progress whose importance cannot be over-estimated, is due to
women. Rough, coarse and unfeeling, the men of the horde range
over the countryside. When the united cunning of the hunters has
succeeded in killing the game; not one of them thinks of carrying
home the spoil. A bright fire, kindled by a vigorous wielding of the
drill, is crackling beside them; the animal has been cleaned and cut
up secundum artem, and, after a slight singeing, will soon disappear
under their sharp teeth; no one all this time giving a single thought
to wife or child.
To what shifts, on the other hand, the primitive wife, and still more
the primitive mother, was put! Not even prehistoric stomachs could
endure an unvarying diet of raw food. Something or other suggested
the beneficial effect of hot water on the majority of approved but
indigestible dishes. Perhaps a neighbour had tried holding the hard
roots or tubers over the fire in a calabash filled with water—or maybe
an ostrich-egg-shell, or a hastily improvised vessel of bark. They
became much softer and more palatable than they had previously
been; but, unfortunately, the vessel could not stand the fire and got
charred on the outside. That can be remedied, thought our
ancestress, and plastered a layer of wet clay round a similar vessel.
This is an improvement; the cooking utensil remains uninjured, but
the heat of the fire has shrunk it, so that it is loose in its shell. The
next step is to detach it, so, with a firm grip and a jerk, shell and
kernel are separated, and pottery is invented. Perhaps, however, the
discovery which led to an intelligent use of the burnt-clay shell, was
made in a slightly different way. Ostrich-eggs and calabashes are not
to be found in every part of the world, but everywhere mankind has
arrived at the art of making baskets out of pliant materials, such as
bark, bast, strips of palm-leaf, supple twigs, etc. Our inventor has no
water-tight vessel provided by nature. “Never mind, let us line the
basket with clay.” This answers the purpose, but alas! the basket gets
burnt over the blazing fire, the woman watches the process of
cooking with increasing uneasiness, fearing a leak, but no leak
appears. The food, done to a turn, is eaten with peculiar relish; and
the cooking-vessel is examined, half in curiosity, half in satisfaction
at the result. The plastic clay is now hard as stone, and at the same
time looks exceedingly well, for the neat plaiting of the burnt basket
is traced all over it in a pretty pattern. Thus, simultaneously with
pottery, its ornamentation was invented.
Primitive woman has another claim to respect. It was the man,
roving abroad, who invented the art of producing fire at will, but the
woman, unable to imitate him in this, has been a Vestal from the
earliest times. Nothing gives so much trouble as the keeping alight of
the smouldering brand, and, above all, when all the men are absent
from the camp. Heavy rain-clouds gather, already the first large
drops are falling, the first gusts of the storm rage over the plain. The
little flame, a greater anxiety to the woman than her own children,
flickers unsteadily in the blast. What is to be done? A sudden thought
occurs to her, and in an instant she has constructed a primitive hut
out of strips of bark, to protect the flame against rain and wind.
This, or something very like it, was the way in which the principle
of the house was discovered; and even the most hardened misogynist
cannot fairly refuse a woman the credit of it. The protection of the
hearth-fire from the weather is the germ from which the human
dwelling was evolved. Men had little, if any share, in this forward
step, and that only at a late stage. Even at the present day, the
plastering of the housewall with clay and the manufacture of pottery
are exclusively the women’s business. These are two very significant
survivals. Our European kitchen-garden, too, is originally a woman’s
invention, and the hoe, the primitive instrument of agriculture, is,
characteristically enough, still used in this department. But the
noblest achievement which we owe to the other sex is unquestionably
the art of cookery. Roasting alone—the oldest process—is one for
which men took the hint (a very obvious one) from nature. It must
have been suggested by the scorched carcase of some animal
overtaken by the destructive forest-fires. But boiling—the process of
improving organic substances by the help of water heated to boiling-
point—is a much later discovery. It is so recent that it has not even
yet penetrated to all parts of the world. The Polynesians understand
how to steam food, that is, to cook it, neatly wrapped in leaves, in a
hole in the earth between hot stones, the air being excluded, and
(sometimes) a few drops of water sprinkled on the stones; but they
do not understand boiling.
To come back from this digression, we find that the slender Nyasa
woman has, after once more carefully examining the finished pot,
put it aside in the shade to dry. On the following day she sends me
word by her son, Salim Matola, who is always on hand, that she is
going to do the burning, and, on coming out of my house, I find her
already hard at work. She has spread on the ground a layer of very
dry sticks, about as thick as one’s thumb, has laid the pot (now of a
yellowish-grey colour) on them, and is piling brushwood round it.
My faithful Pesa mbili, the mnyampara, who has been standing by,
most obligingly, with a lighted stick, now hands it to her. Both of
them, blowing steadily, light the pile on the lee side, and, when the
flame begins to catch, on the weather side also. Soon the whole is in a
blaze, but the dry fuel is quickly consumed and the fire dies down, so
that we see the red-hot vessel rising from the ashes. The woman
turns it continually with a long stick, sometimes one way and
sometimes another, so that it may be evenly heated all over. In
twenty minutes she rolls it out of the ash-heap, takes up the bundle
of spinach, which has been lying for two days in a jar of water, and
sprinkles the red-hot clay with it. The places where the drops fall are
marked by black spots on the uniform reddish-brown surface. With a
sigh of relief, and with visible satisfaction, the woman rises to an
erect position; she is standing just in a line between me and the fire,
from which a cloud of smoke is just rising: I press the ball of my
camera, the shutter clicks—the apotheosis is achieved! Like a
priestess, representative of her inventive sex, the graceful woman
stands: at her feet the hearth-fire she has given us beside her the
invention she has devised for us, in the background the home she has
built for us.
At Newala, also, I have had the manufacture of pottery carried on
in my presence. Technically the process is better than that already
described, for here we find the beginnings of the potter’s wheel,
which does not seem to exist in the plains; at least I have seen
nothing of the sort. The artist, a frightfully stupid Makua woman, did
not make a depression in the ground to receive the pot she was about
to shape, but used instead a large potsherd. Otherwise, she went to
work in much the same way as Salim’s mother, except that she saved
herself the trouble of walking round and round her work by squatting
at her ease and letting the pot and potsherd rotate round her; this is
surely the first step towards a machine. But it does not follow that
the pot was improved by the process. It is true that it was beautifully
rounded and presented a very creditable appearance when finished,
but the numerous large and small vessels which I have seen, and, in
part, collected, in the “less advanced” districts, are no less so. We
moderns imagine that instruments of precision are necessary to
produce excellent results. Go to the prehistoric collections of our
museums and look at the pots, urns and bowls of our ancestors in the
dim ages of the past, and you will at once perceive your error.
MAKING LONGITUDINAL CUT IN
BARK
DRAWING THE BARK OFF THE LOG
REMOVING THE OUTER BARK

BEATING THE BARK
WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

SOFT
MANUFACTURE OF BARK-CLOTH AT NEWALA

To-day, nearly the whole population of German East Africa is
clothed in imported calico. This was not always the case; even now in
some parts of the north dressed skins are still the prevailing wear,
and in the north-western districts—east and north of Lake
Tanganyika—lies a zone where bark-cloth has not yet been
superseded. Probably not many generations have passed since such
bark fabrics and kilts of skins were the only clothing even in the
south. Even to-day, large quantities of this bright-red or drab
material are still to be found; but if we wish to see it, we must look in
the granaries and on the drying stages inside the native huts, where
it serves less ambitious uses as wrappings for those seeds and fruits
which require to be packed with special care. The salt produced at
Masasi, too, is packed for transport to a distance in large sheets of
bark-cloth. Wherever I found it in any degree possible, I studied the
process of making this cloth. The native requisitioned for the
purpose arrived, carrying a log between two and three yards long and
as thick as his thigh, and nothing else except a curiously-shaped
mallet and the usual long, sharp and pointed knife which all men and
boys wear in a belt at their backs without a sheath—horribile dictu!
[51]
Silently he squats down before me, and with two rapid cuts has
drawn a couple of circles round the log some two yards apart, and
slits the bark lengthwise between them with the point of his knife.
With evident care, he then scrapes off the outer rind all round the
log, so that in a quarter of an hour the inner red layer of the bark
shows up brightly-coloured between the two untouched ends. With
some trouble and much caution, he now loosens the bark at one end,
and opens the cylinder. He then stands up, takes hold of the free
edge with both hands, and turning it inside out, slowly but steadily
pulls it off in one piece. Now comes the troublesome work of
scraping all superfluous particles of outer bark from the outside of
the long, narrow piece of material, while the inner side is carefully
scrutinised for defective spots. At last it is ready for beating. Having
signalled to a friend, who immediately places a bowl of water beside
him, the artificer damps his sheet of bark all over, seizes his mallet,
lays one end of the stuff on the smoothest spot of the log, and
hammers away slowly but continuously. “Very simple!” I think to
myself. “Why, I could do that, too!”—but I am forced to change my
opinions a little later on; for the beating is quite an art, if the fabric is
not to be beaten to pieces. To prevent the breaking of the fibres, the
stuff is several times folded across, so as to interpose several
thicknesses between the mallet and the block. At last the required
state is reached, and the fundi seizes the sheet, still folded, by both
ends, and wrings it out, or calls an assistant to take one end while he
holds the other. The cloth produced in this way is not nearly so fine
and uniform in texture as the famous Uganda bark-cloth, but it is
quite soft, and, above all, cheap.
Now, too, I examine the mallet. My craftsman has been using the
simpler but better form of this implement, a conical block of some
hard wood, its base—the striking surface—being scored across and
across with more or less deeply-cut grooves, and the handle stuck
into a hole in the middle. The other and earlier form of mallet is
shaped in the same way, but the head is fastened by an ingenious
network of bark strips into the split bamboo serving as a handle. The
observation so often made, that ancient customs persist longest in
connection with religious ceremonies and in the life of children, here
finds confirmation. As we shall soon see, bark-cloth is still worn
during the unyago,[52] having been prepared with special solemn
ceremonies; and many a mother, if she has no other garment handy,
will still put her little one into a kilt of bark-cloth, which, after all,
looks better, besides being more in keeping with its African
surroundings, than the ridiculous bit of print from Ulaya.
MAKUA WOMEN

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4.1 special Business Forms 67 17.1 signature Liability 331

Acknowledgments for Previous Editions

Jeffrey E. Allen Elizabeth K. Brunn, Esq. William H. Daughtrey, Jr.

Lawrence J. Bradley Thomas Crane James S. Fargason

Dean Bredeson Angela Crossin Frank S. Forbes

Christ Gaetanos June A. Horrigan M. Alan Lawson

David Minars Thomas L. Palmer Dana Blair Smith

Michael J. O’Hara Roscoe B. Shain Gary Victor

William H. Walker, Marshall Wilkerson Norman Gregory Young

Katherine Hannan Wears, J.D. Daniel R. Wrentmore

Law and Business

2. Small Businesses and Franchises

3. All Forms of Partnerships

4. Limited Liability Companies and Special Business Forms

5. Corporate Formation and Financing

6. Corporate Directors, Officers, and Shareholders

7. Securities Law and Corporate Governance

goal or duty of a corporation was to maximize profits.

In the Language of the Court

Case 1.1 Continued ****

Newala, too, suffers from the distance of its water-supply—at least

The water-supply of New Newala is in the bottom of the valley,

NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAKONDE LOCK AND KEY AT JUMBE CHAURO

MODE OF INSERTING THE KEY

With no small pride first one householder and then a second

Some consolation was afforded me by a brassfounder, whom I

SMOOTHING WITH MAIZE-COB

CUTTING THE EDGE

LAST SMOOTHING BEFORE

FIRING THE BRUSH-PILE

TURNING THE RED-HOT VESSEL

NYASA WOMAN MAKING POTS AT MASASI

DRAWING THE BARK OFF THE LOG

REMOVING THE OUTER BARK

WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

MANUFACTURE OF BARK-CLOTH AT NEWALA

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