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Business Law: Text & Exercises

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Roger Leroy Miller
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Business Law
Text & Exercises
Te n t h E d i t i o n

Roger LeRoy Miller


Institute for University Studies
Arlington, Texas

Australia • Brazil • Canada • Mexico • Singapore • United Kingdom • United States

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Business Law: Text & Exercises, Last three editions, as applicable: © 2019, © 2017
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Contents in Brief

Unit 1 Chapter 23 Negotiable Instruments: Transfer and


Liability 287
The Law and Our Legal System 1 Chapter 24 Banking 301
Chapter 1 Introduction to the Law 2
Chapter 2 Ethics in Business 13 Unit 5
Chapter 3 The Courts and Our Legal System 27
Chapter 4 Constitutional Law 43
Agency and Employment 317
Chapter 5 Business Torts 55 Chapter 25 Agency Relationships 318
Chapter 6 Intellectual Property 67 Chapter 26 Employment, Immigration, and Labor
Law 333
Chapter 7 Business Crimes 81
Chapter 27 Employment Discrimination 347

Unit 2
Unit 6
Contracts 95
Business Organizations 361
Chapter 8 Introduction to Contracts 96
Chapter 28 Types of Business Organizations 362
Chapter 9 Offer and Acceptance 107
Chapter 29 Formation and Ownership
Chapter 10 Consideration 119
of a Corporation 377
Chapter 11 Capacity 129
Chapter 30 Management of a Corporation 393
Chapter 12 The Legality of Agreements 139
Chapter 31 Combining and Dissolving Corporations 403
Chapter 13 Voluntary Consent 151
Chapter 14 Contracts That Must Be in Writing 163
Unit 7
Chapter 15 Third Party Rights 177
Chapter 16 Termination and Remedies 189 Credit and Risk 415
Chapter 32 Security Interests and Creditors’
Unit 3 Remedies 416
Chapter 33 Mortgages 431
Sales and Leases 203
Chapter 34 Bankruptcy 441
Chapter 17 Introduction to Sales and Lease Contracts 204 Chapter 35 Insurance 453
Chapter 18 Title and Risk of Loss 217
Chapter 19 Performance and Breach 231 Unit 8
Chapter 20 Warranties and Product Liability 245
Chapter 21 Consumer Protection 259
Property 465
Chapter 36 Personal Property 466
Unit 4 Chapter 37 Bailments 477
Chapter 38 Real Property 489
Negotiable Instruments 273
Chapter 39 Landlord and Tenant Law 501
Chapter 22 The Essentials of Negotiability 274 Chapter 40 Wills and Trusts 511

iii

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iv Contents in Brief

Unit 9 Appendix
Special Topics 525 A Answers to the Issue Spotters A–1
Chapter 41 Administrative Law 526
Chapter 42 Antitrust Law 539 Glossary G–1
Chapter 43 International and Space Law 551
Table of Cases TC–1

Index I–1

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Contents

Unit 1 C h ap te r 3
The Law and Our Legal System 1 The Courts and Our Legal System 27
Jurisdiction 27
Ch apte r 1 The State Court System 28
Introduction to the Law 2 The Federal Court System 29
The State Court Case Process 32
What Is Law? 2
Highlighting the Point 32
Business Activities and the
Legal Environment 2 Real Case 33
Highlighting the Point 3 Alternative Dispute Resolution 36
Sources of American Law 3 Chapter 3—Work Set 41
Real Case 5
Highlighting the Point 6 C h ap te r 4
Civil Law Versus Criminal Law 7 Constitutional Law 43
National Law Around the World 7
The Constitutional Powers of Government 43
International Law 7
Real Case 44
Linking Business Law to Your Career:
Consulting an Expert for Advice 8 Highlighting the Point 45
Business and the Bill of Rights 46
Chapter 1—Work Set 11
Highlighting the Point 48
Due Process and Equal Protection 49
Ch apter 2
Privacy Rights 50
Ethics in Business 13
Linking Business Law to Your Career:
The Importance of Business Ethics 13 Pretexting and Marketing 51
Setting the Right Ethical Tone 14
Chapter 4—Work Set 53
Real Case 15
Highlighting the Point 15 C h ap te r 5
The Sarbanes-Oxley Act 16
Business Torts 55
Business Ethics and the Law 16
Highlighting the Point 17 The Basis of Tort Law 55
Approaches to Ethical Reasoning 18 Intentional Torts Against Persons 55
Highlighting the Point 19 Real Case 57
Business Ethics and Social Media 20 Intentional Torts Against Property 58
Highlighting the Point 21 Highlighting the Point 59
Business Ethics on a Global Level 21 Negligence 60
Highlighting the Point 22 Highlighting the Point 60
Linking Business Law to Your Career: Highlighting the Point 61
Managing a Company’s Reputation 22 Strict Liability 62
Chapter 2—Work Set 25 Chapter 5—Work Set 65
v

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vi Contents

C h a pte r 6 C h ap te r 9
Intellectual Property 67 Offer and Acceptance 107
Trademarks and Related Property 67 Requirements of the Offer 107
Highlighting the Point 68 Highlighting the Point 108
Highlighting the Point 70 Termination of the Offer 109
Patents 70 Highlighting the Point 109
Copyrights 71 Acceptance 111
Real Case 72 Highlighting the Point 111
Highlighting the Point 73 E-Contracts—Offer and Acceptance 112
Highlighting the Point 73 Real Case 113
Trade Secrets 74 Chapter 9—Work Set 117
Highlighting the Point 75
International Protection for Intellectual Property 75 C h ap te r 1 0
Linking Business Law to Your Career: Consideration 119
Trademarks and Service Marks 76
Elements of Consideration 119
Chapter 6—Work Set 79
Highlighting the Point 120
C h a pter 7 Real Case 121
Business Crimes 81 The Lack of Consideration 121
Highlighting the Point 121
Civil Law and Criminal Law 81
Settlement of Claims 123
Constitutional Safeguards 82
Highlighting the Point 123
Highlighting the Point 84
Promissory Estoppel 124
Crimes Affecting Business 84
Highlighting the Point 85
Chapter 10—Work Set 127
Highlighting the Point 85
Defenses to Criminal Liability 86
C h ap te r 1 1
Cybercrime 87 Capacity 129
Real Case 88 Minors 129
Linking Business Law to Your Career: Real Case 130
Protect Your Company Against Hacking 90 Highlighting the Point 131
Chapter 7—Work Set 93 Highlighting the Point 132
Intoxicated Persons 133
Mentally Incompetent Persons 133
Unit 2
Highlighting the Point 134
Contracts 95 Linking Business Law to Your Career:
Contracts With Minors 134
C h a pte r 8 Chapter 11—Work Set 137
Introduction to Contracts 96
The Definition of a Contract 96 C h ap te r 1 2
Real Case 97 The Legality of Agreements 139
Types of Contracts 98 Contracts Contrary to Statute 139
Highlighting the Point 99 Highlighting the Point 141
Highlighting the Point 100 Highlighting the Point 141
Interpretation of Contracts 102 Contracts Contrary to Public Policy 142
Chapter 8—Work Set 105 Real Case 142

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Contents vii

Highlighting the Point 143 C h ap te r 1 6


Highlighting the Point 144 Termination and Remedies 189
The Effect of Illegality 144
Contract Termination 189
Highlighting the Point 144
Real Case 190
Highlighting the Point 145
Highlighting the Point 191
Chapter 12—Work Set 149 Highlighting the Point 192
Contract Remedies 194
Ch apter 1 3
Highlighting the Point 195
Voluntary Consent 151
Highlighting the Point 195
Mistakes 151 Highlighting the Point 196
Real Case 152
Linking Business Law to Your Career:
Fraudulent Misrepresentation 153 Performance and Compromise 198
Highlighting the Point 154
Chapter 16—Work Set 201
Highlighting the Point 156
Undue Influence and Duress 156
Highlighting the Point 157 Unit 3
Chapter 13—Work Set 161
Sales and Leases 203
Ch apter 1 4
C h ap te r 1 7
Contracts That Must Be in Writing 163
Introduction to Sales and
The Statute of Frauds—
Writing Requirement 163 Lease Contracts 204
Highlighting the Point 165 Sales and Leases of Goods 204
Highlighting the Point 166 Highlighting the Point 205
Highlighting the Point 167 Sales and Lease Contracts 206
The Sufficiency of the Writing 168 Highlighting the Point 207
The Parol Evidence Rule 169 Highlighting the Point 208
Real Case 169 Highlighting the Point 209
Highlighting the Point 170 Highlighting the Point 209
Linking Business Law to Your Career: Real Case 210
Enforceable E-Mail and Text Contracts 172 Highlighting the Point 211
Chapter 14—Work Set 175 Chapter 17—Work Set 215

Ch apter 1 5 C h ap te r 1 8
Third Party Rights 177 Title and Risk of Loss 217
Assignments and Delegations 177 Identification 217
Highlighting the Point 179 Passage of Title 218
Highlighting the Point 180 Highlighting the Point 219
Highlighting the Point 181 Highlighting the Point 220
Third Party Beneficiaries 181 Risk of Loss 221
Real Case 182 Highlighting the Point 222
Highlighting the Point 184 Highlighting the Point 223
Linking Business Law to Your Career: Real Case 224
Assignment and Delegation 184 Insurable Interest 225
Chapter 15—Work Set 187 Highlighting the Point 225

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viii Contents

Linking Business Law to Your Career: Real Case 264


Risk Management 226 Highlighting the Point 266
Chapter 18—Work Set 229 Protection of Health and Safety 267
Chapter 21—Work Set 271
C h a pter 19
Performance and Breach 231 Unit 4
Obligations of the Seller or Lessor 231
Negotiable Instruments 273
Highlighting the Point 232
Highlighting the Point 234 C h ap te r 2 2
Highlighting the Point 235 The Essentials of Negotiability 274
Obligations of the Buyer or Lessee 235
Types of Instruments 274
Real Case 236
Real Case 277
Remedies of the Seller or Lessor 237
What Is a Negotiable Instrument? 278
Highlighting the Point 238
Highlighting the Point 280
Remedies of the Buyer or Lessee 238
Transfer of Instruments 281
Highlighting the Point 239
Highlighting the Point 281
Chapter 19—Work Set 243 Highlighting the Point 282
Chapter 22—Work Set 285
C h a pter 20
Warranties and Product Liability 245 C h ap te r 2 3

Warranties of Title 245


Negotiable Instruments: Transfer and
Highlighting the Point 246
Liability 287
Express Warranties 246 Requirements for HDC Status 287
Real Case 247 Highlighting the Point 288
Implied Warranties 248 Signature Liability 290
Highlighting the Point 248 Real Case 290
Warranty Disclaimers and Highlighting the Point 292
Limitations on Liability 249 Warranty Liability 293
Highlighting the Point 250 Highlighting the Point 294
Product Liability 251 Defenses 294
Highlighting the Point 251 Discharge 296
Highlighting the Point 253 Chapter 23—Work Set 299
Highlighting the Point 254
Linking Business Law to Your Career: C h ap te r 2 4
Quality Control Management 254
Banking 301
Chapter 20—Work Set 257
Checks and the Bank–Customer Relationship 301
Real Case 302
C h a pter 21 Honoring Checks 303
Consumer Protection 259 Highlighting the Point 305
Deceptive Advertising 259 Accepting Deposits 306
Highlighting the Point 260 Highlighting the Point 307
Highlighting the Point 261 Electronic Fund Transfers 309
Labeling Laws and Consumer Sales 262 Banking in the Digital Age 310
Credit Protection 263 Chapter 24—Work Set 315

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Contents ix

Unit 5 Defenses to Employment Discrimination 354


Real Case 354
Agency and Employment 317
Linking Business Law to Your Career:
Human Resources Management 355
Ch apte r 2 5
Chapter 27—Work Set 359
Agency Relationships 318
Principal–Agent Relationships 318 Unit 6
Highlighting the Point 319
Agency Formation 319
Business Organizations 361
Real Case 320 C h ap te r 2 8
Duties of Agents and Principals 321 Types of Business Organizations 362
Agent’s Authority 322
Sole Proprietorships 362
Highlighting the Point 323 Partnerships 363
Highlighting the Point 324 Real Case 364
Liability in Agency Relationships 324
Highlighting the Point 365
Highlighting the Point 325
Highlighting the Point 365
Termination of Agency Relationships 326
Highlighting the Point 367
Highlighting the Point 326
Highlighting the Point 368
Linking Business Law to Your Career: Highlighting the Point 368
Independent Contractors 327
Highlighting the Point 369
Chapter 25—Work Set 331 Highlighting the Point 370
Limited Liability Companies 370
Ch apter 2 6
Linking Business Law to Your Career:
Employment, Immigration, and Labor “Doing Business As” a Sole Proprietor 371
Law 333 Chapter 28—Work Set 375
Employment at Will 333
C h ap te r 2 9
Highlighting the Point 333
Worker Protections 334
Formation and Ownership
Highlighting the Point 335
of a Corporation 377
Highlighting the Point 336 Formation of a Corporation 377
Retirement Income and Security 337 Real Case 379
Highlighting the Point 339 Corporate Classifications, Powers,
and Liability 380
Immigration Law 339
Corporate Financing 381
Labor Law 340
Sales of Securities 383
Real Case 340
Highlighting the Point 383
Chapter 26—Work Set 345 Corporate Ownership—Shareholders 384
Highlighting the Point 385
Ch apter 2 7 Highlighting the Point 387
Employment Discrimination 347 Chapter 29—Work Set 391
Title VII of the Civil Rights Act 347
C h ap te r 3 0
Highlighting the Point 348
Discrimination Based on Age 351 Management of a Corporation 393
Highlighting the Point 352 Corporate Management—Directors 393
Discrimination Based on Disability 352 Highlighting the Point 395
Highlighting the Point 353 Highlighting the Point 395

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
x Contents

Corporate Management—Officers 396 C h ap te r 3 4


Duties of Directors and Officers 396 Bankruptcy 441
Real Case 397
Types of Bankruptcy Relief 441
Liability of Directors and Officers 398
Highlighting the Point 443
Chapter 30—Work Set 401 Chapter 7—Liquidation 443
Chapter 11—Reorganization 446
C h a pter 31 Chapter 13—Adjustment 447
Combining and Dissolving Real Case 447
Corporations 403 Chapter 34—Work Set 451
Mergers, Consolidations, and Share Exchanges 403
C h ap te r 3 5
Highlighting the Point 404
Real Case 405
Insurance 453
Purchase of Assets 406 Insurance Terminology and Concepts 453
Purchase of Stock 406 The Insurance Contract 455
Termination of a Corporation 408 Highlighting the Point 456
Highlighting the Point 408 Real Case 457
Chapter 31—Work Set 413 Highlighting the Point 457
Linking Business Law to Your Career:
Risk Management in Cyberspace 459
Unit 7 Chapter 35—Work Set 463

Credit and Risk 415


Unit 8
C h a pte r 32 Property 465
Security Interests and Creditors’
C h ap te r 3 6
Remedies 416
Personal Property 466
Secured Transactions 416
The Nature of Personal Property 466
Highlighting the Point 418
Property Ownership—Rights of Possession 467
Highlighting the Point 419
Acquiring Ownership of Personal Property 467
Laws Assisting Creditors 420
Mislaid, Lost, and Abandoned Property 469
Highlighting the Point 422
Real Case 469
Highlighting the Point 423
Highlighting the Point 470
Real Case 423
Highlighting the Point 425 Chapter 36—Work Set 475

Chapter 32—Work Set 429 C h ap te r 3 7


Bailments 477
C h a pter 33
The Elements of a Bailment 477
Mortgages 431 Highlighting the Point 478
Types of Mortgages 431 The Rights of the Bailee 479
Highlighting the Point 432 Highlighting the Point 480
Lender Protections 432 The Duties of the Bailee 480
Borrower Protections 433 Real Case 481
Foreclosures 434 Highlighting the Point 481
Real Case 435 The Duties of the Bailor 482
Highlighting the Point 436 Special Bailments 483
Chapter 33—Work Set 439 Chapter 37—Work Set 487

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Contents xi

Ch apte r 3 8 The Administrative Process 527


Real Property 489 Highlighting the Point 528
Controls on Agency Powers 530
The Nature of Real Property 489
Real Case 531
Ownership Interests 491
Public Accountability 532
Highlighting the Point 491
Real Case 493 Chapter 41—Work Set 537
Highlighting the Point 493
Transfer of Ownership 493 C h ap te r 4 2
Highlighting the Point 494 Antitrust Law 539
Chapter 38—Work Set 499 The Sherman Act 539
Highlighting the Point 540
Ch apter 3 9 Highlighting the Point 542
Landlord and Tenant Law 501 Real Case 543
Highlighting the Point 544
Types of Tenancy 501
The Clayton Act 544
The Lease Agreement 502
Enforcement of Antitrust Laws 545
Rights and Duties of Landlords and Tenants 503
U.S. Antitrust Laws in the
Highlighting the Point 504 Global Context 546
Real Case 505 Highlighting the Point 546
Transferring Rights to Leased Property 505
Chapter 42—Work Set 549
Terminating the Lease 506
Highlighting the Point 506
C h ap te r 4 3
Chapter 39—Work Set 509
International and Space Law 551
Ch apter 4 0 International Principles and Doctrines 551
Real Case 552
Wills and Trusts 511
Doing Business Internationally 553
Wills 511 International Contract Provisions 554
Highlighting the Point 514 Highlighting the Point 554
Intestacy Laws 516 Regulation of International
Highlighting the Point 516 Business Activities 555
Trusts 517 Space Law 556
Real Case 519 Chapter 43—Work Set 561
Chapter 40—Work Set 523

Appendix
Unit 9
A Answers to the Issue Spotters A–1
Special Topics 525
Ch apte r 4 1 Glossary G–1

Administrative Law 526 Table of Cases TC–1


Agency Creation 526 Index I–1

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface to the Instructor

T
he study of business law and the legal environment has universal applicabil-
ity. Any student entering any field of business must have at least a passing
understanding of business law in order to function in the real world. Stu-
dents going on to a business career must have an awareness of the legal and regu-
latory environment today. Even for those students who do not pursue a business
career, legal problems will arise.
In Business Law: Text & Exercises, Tenth Edition, I present business law in a
straightforward, practical manner. The essential aspects of every important topic
are covered without overburdening the reader with numerous details and expla-
nations of arcane exceptions. This new edition helps students master key legal
concepts and doctrines while providing practical experience in applying basic legal
principles to common business situations. Written in user-friendly, layperson lan-
guage, I have taken special care to provide straightforward descriptions, everyday
examples, and varied exercises to help students apply what they are reading and
learning to real-life situations.
Developed specifically for the business law survey course, this new edition’s
short, concise chapters are punctuated with illustrative and timely features, includ-
ing Highlighting the Point and Real Case summaries. Each chapter’s learning tools
clarify contemporary legal principles in a practical presentation that ensures stu-
dents gain a solid understanding of business law.

What’s New in the Tenth Edition


Instructors have come to rely on the coverage, accuracy, and applicability of
Business Law: Text & Exercises. That is why in the tenth edition I continue to
focus on engaging student interest and providing a basic understanding of business
law. In every chapter, I have incorporated significant new details, timely examples,
helpful exhibits, and recent cases.
This edition aims to provide a text that fully integrates diversity and inclusivity so
that all students (and instructors) can feel comfortable at all times while reading it.

New Chapter Content


Where appropriate, I have added new or fully revised sections. These include:
• In Chapter 5, new explanation of why the common language use of “assault”
is incorrect
• In Chapter 6, new section extension on selling counterfeit items on the
internet, in particular, involving a lawsuit by Chanel against Amazon
• In Chapter 9, new section on click-on agreements that includes forum-
selection clauses
• In Chapter 11, new section on whether minors can avoid their obligations
under smart contracts
• In Chapter 11, new section on minors’ rights and digital assets
• In Chapter 13, new section on reformation of contracts as an alternative to
judicially canceling contracts
xiii

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xiv Preface to the Instructor

• In Chapter 13, new section on innocent misrepresentation


• In Chapter 14, new section on text messaging and the enforceability of e-mail
and text contracts
• In Chapter 17, new section on rules of construction given the order of priority
of expressed terms
• In Chapter 19, new section on when a repudiation may be retracted
• In Chapter 21, new section on the TCPA and TRACED Acts, with the latter
dealing specifically with prohibited robocalls
• In Chapter 22, new section on acceleration clauses
• In Chapter 23, new section on FTC Rule 433, which effectively eliminates
holder in due course status for those holding notes pursuant to consumer
credit transactions
• In Chapter 24, new section on online and mobile banking
• In Chapter 24, new section on electronic payment systems, including eBills
• In Chapter 24, new section on artificial intelligence (AI) and its use in financial
technology (fintech)
• In Chapter 24, new section on digital lending using artificial intelligence
• In Chapter 26, new section on the Family and Medical Leave Act with respect
to families of those in the armed forces
• In Chapter 26, new section on the Affordable Care Act
• In Chapter 27, new section on the 2020 Supreme Court case Bostock v.
Clayton County concerning the inclusion of gender identity and sexual
orientation within the meaning of Title VII of the Civil Rights Act
• In Chapter 27, new section on discrimination against transgender persons
• In Chapter 27, new section on seniority systems
• In Chapter 29, new section on Reg. A+, which increased the exemption under
Reg. A from $5 million to $50 million for security offerings
• In Chapter 29, new section on the decreased use of physical stock certificates
• In Chapter 30, new section on disclosure of conflicts of interest
• In Chapter 37, new section on a bailor’s duty to reveal defects
• In Chapter 37, new section on warranty liability for defective goods
• In Chapter 38, new section on creation of an easement or profit by necessity
• In Chapter 38, new section on creation of an easement or profit by implication
• In Chapter 38, new section on creation of an easement or profit by prescription
• In Chapter 39, new section on commercial lease terms
• In Chapter 40, new section on transfer of digital assets upon death
• In Chapter 40, new section on the eight categories of digital assets that should
be of concern to students
• In Chapter 40, new section on digital executors
• In Chapter 40, new section on adding digital heirs to your accounts
• In Chapter 40, new section on using a password manager

Effective Pedagogy
The tenth edition complements its new content coverage with varied and updated
pedagogical content. To provide students with a variety of study tools for retaining
and reviewing chapter materials, I have revised the following:
• Every chapter presents all-new Real Cases, which are based on actual cases.
Eighteen are real cases from 2020 and 2021. Students can quickly read

Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface to the Instructor xv

through the Real Cases to see how courts apply legal principles to everyday
business scenarios.
• I have added Highlighting the Point features. These features help students
understand how business law can apply to common situations. There are over
a dozen new features of this type.
• I have added new Conflict Presented/Conflict Resolved features. Each chapter
opens with a brief legal Conflict Presented scenario and question. The Conflict
Resolved feature answers the Conflict Presented question. These Conflict
Resolved features are placed after the concept demonstrated is presented
within each chapter. Students can therefore more easily see the relationship
between the conflict and the legal principle that explains how it is resolved.
• Examples are very helpful for students because they illustrate and clarify legal
principles. I have added numerous new numbered examples throughout the
text.
• This edition also includes forty-three new Real Law case problems in the
chapter-ending material. Thirty of these cases are from 2020 and 2021.

Additional Practical Learning Tools


To help students review chapter materials and prepare for testing, this text provides
additional effective, practical features:
• Learning Outcomes. Every chapter starts with four to six Learning Outcomes.
Each Learning Outcome is repeated in the margin at the point where it is
discussed in the text. Additionally, each Chapter Summary includes that
chapter’s Learning Outcomes with a succinct review of the major points
students need to remember. In this edition, the end-of-chapter exercises are
also tied to the corresponding Learning Outcome.
• Linking Business Law to Your Career. Written in an easy-to-understand style,
these features emphasize tips, pitfalls, and effective strategies for students
to remember once they are working and applying their knowledge of basic
business law to real-life workplace scenarios. In selected chapters, these
features often reflect new business developments and examples.
• Glossary. For students’ convenient reference, each key term throughout the
text is defined in the Glossary.

Pedagogical Basis for the End-of-Chapter


Questions and Problems
There is a logical progression of questions and problems at the end of each chapter.
1. Straight to the Point. After the chapter summary, this section of questions
represents, as the title suggests, straightforward questions that students should
be able to answer without much effort. In a sense, these questions get the
student “warmed up” for more difficult questions.
2. Issue Spotters. These two questions are designed to make the student think
about hypothetical situations while applying the concepts learned in each
chapter. As always, the suggested answers are provided in Appendix A so that
students can recognize where their weaknesses are.
3. Real Law. Now we get into more difficult questions based on actual cases.
The cases are presented in a highly summarized manner, but they still require
more analytical reasoning than previous questions. The suggested answers to
these questions are presented in the Answers Manual for instructors.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xvi Preface to the Instructor

4. Ethical Questions. The first Ethical Question is relatively simple, and most
students should be able to answer it. The second Ethical Question, in contrast,
is similar to the difficulty incurred in the Real Law questions above. Again,
the suggested answers are provided in the Answers Manual.
5. Work Sets. As always, each chapter ends with a Work Set, an in-text study
guide designed to help students review the material covered in the chapter.
The Work Set is divided into three sections:
a. True-False Questions. If this is a homework assignment, most students
should be able to answer the true-false questions correctly. In a sense, the
Work Set starts with questions that are about the same level of difficulty as
those found in the Straight to the Point questions.
b. Multiple-Choice Questions. These questions attempt to see if students
have fine-tuned their understanding of the chapter concepts. While some
are relatively easy, others are not.
c. Answering More Legal Problems. My goal in presenting these problems
is to see how well students could be “teased” into filling in the correct
answers to hypotheticals that have multiple facets.

Teaching Materials
Business Law: Text & Exercises, Tenth Edition, provides a comprehensive supple-
ments package. The supplements were created with a single goal in mind: to make
the tasks of teaching and learning more enjoyable and efficient. The following
supplements are available for instructors.

MindTap
Today’s leading digital platform, MindTap for Business Law: Text & Exercises,
Tenth Edition, gives you complete control of your course to create unique learning
experiences that challenge students, build confidence, and elevate performance.
MindTap introduces students to core concepts from the beginning of your course
using a simplified learning path that progresses from understanding to application.
MindTap presents concepts using a blend of engaging narrative and media while
minimizing distraction with assignments that pair learning content with assess-
ments in a visually appealing side-by-side format. A distinctive, personalized study
plan, based on individual performance, helps students stay focused and enables
them to easily pinpoint areas for further study and practice.
Exclusive Instructor Tools allow you to modify the wording of questions, answer
choices, and feedback in assessments to match the specific objectives and style of
your course. New Instructor Reports provide actionable insights into student per-
formance and present opportunities for just-in-time intervention.
Use MindTap for Business Law: Text & Exercises, Tenth Edition, as-is, or cus-
tomize it to meet your specific course needs. You can also easily integrate MindTap
into your Learning Management System (LMS).

Product Features The outcomes-based learning design within MindTap propels


students from memorization to mastery. It’s the only platform today that gives
you complete ownership of your course. With MindTap, you can challenge every
student, build confidence, and empower today’s learners to be unstoppable.
Boost Comprehension with Improved Learning Design. Students can focus and
better comprehend key learnings through a Learning Path divided into groups
of short activities, all anchored to a single concept. Built upon proven learning

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface to the Instructor xvii

research and theory, MindTap presents concepts by pairing assessment and content
in a visually captivating side-by-side format.
Personalize Reports and Activities. New personalized reporting capabilities offer
targeted support activities that deliver actionable insights, content, and tools. You
have the information you need to work with students to address specific, key
learning needs and ensure their progress and success.
Provide Full Course Access on the Go. Offer your students the flexibility they need
to fit learning into their day—wherever they are and using whatever approach
works best for them. Compatible with smartphones or tablets, the Cengage Mobile
App enables students to complete activities and assignments, access and read their
eTextbook, receive due date reminders, and study anytime, anywhere, with tools
such as flashcards, quizzes, and more. Keep students connected and engaged in
your course, even on the go.
Access Everything You Need in One Place. Cut down on prep with preloaded,
organized course materials in MindTap. Teach more efficiently with interactive
media, assignments, assessments, and focused resources. With MindTap, you give
your students the power to read, listen, and complete activities on their mobile
devices, so they’re empowered to learn on their own terms.
Empower Students to Reach Their Potential. Gain actionable insights into student
engagement with distinct metrics. Identify topics troubling your entire class and
instantly communicate with struggling students. Track class performance down to
the learning objective and curate lectures in real time to respond to distinct class-
wide needs. Students can track their scores and take the guesswork out of studying
with performance reports.
Personalize Your Course to Your Objectives. Only MindTap gives you complete
control of your course. You have the flexibility to reorder textbook chapters,
add your own notes, and embed a variety of content, including Open Education
Resources (OER) and third-party content. Personalize course content to your
students’ needs—they can even read your notes, add their own, and highlight key
text to aid progress.
Count on Our Dedicated Team, Whenever You Need Them. MindTap isn’t simply
an online learning tool—it’s a network of support from a personalized team eager
to further your success. We’re ready to help, from setting up your course to tailoring
MindTap resources to meet your specific objectives. You’ll be ready to make an
impact from day one. And we’ll be right here to help you and your students
throughout the semester—and beyond.
Want More Content but Short on Time? The new Activity Builder provides instant
access to additional vetted content, such as case studies, videos, practice quizzes, and
more to further customize your course using today’s most relevant and engaging
resources.

MindTap Table of Contents


Why Does “This” Matter to Me? Activities. Immediately engage students with new
“Why Does ‘This’ Matter to Me?” activities. These activities connect the upcoming
chapter to an authentic, real-world scenario designed to pique engagement and
emphasize relevance. Use these activities to ensure students read material before
class and to trigger lively in-class discussion.
Chapter-Level eTextbook. Foster student engagement from day one with a dynamic
eTextbook that brings the value, concepts, and applications of the printed text to life.
Students open an active-learning experience as each chapter provides opportunities
to interact with content using the approach that’s best for the individual learner.

Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xviii Preface to the Instructor

Multimedia Support With “Learn It”. Easily add the excitement of multimedia
instruction to your course to supplement textbook learning. “Learn It” activities
offer small sections of instruction that highlight the most important concepts
in each chapter. Each “Learn It” activity reinforces the text’s instruction and
approaches concepts in a different way to promote student choice and autonomy
with personalized learning. You can assign Learn Its to ensure students have read
and understand key concepts before class.
Class-Tested Chapter Quizzes. Use carefully curated chapter quizzes to assess
student performance and immediately identify class-wide learning needs.
Application-Driven Chapter Assignments. Assign carefully designed, practically
focused chapter homework to ensure your students know how to apply what they
have learned.
• Case Problem Analyses offer a multi-step activity that asks students to
identify the facts in a scenario through a series of questions that promote a
critical thinking process so that students can arrive at the decision of the court.
In the second part, the facts are changed, and students apply the same critical
thinking process on their own.
• Brief Hypotheticals help students spot the issue and apply the law in the
context of a short, fictional scenario.

Additional Resources (Found at the Unit Level).


• Business Cases, designed to complement the textbook, develop students’ skills
to apply critical thinking and legal reasoning through relevant real-world
business scenarios.
• Quick Lesson Videos highlight the most important concepts in each chapter.
• PowerPoint Slides edited for student use offer visual outlines of each chapter.

Cengage Infuse
Cengage Infuse for Business Law is the first-of-its-kind digital learning solution
that uses your Learning Management System (LMS) functionality so you can enjoy
simple course setup and intuitive management tools. Offering just the right amount
of auto-graded content, you’ll be ready to go online at the drop of a hat.

Seriously Simple Course Setup Get up and running quickly and easily. Search
content organized by chapter and infuse publisher-provided readings and
assessments straight into your course in just a few clicks.

Leverages the Functionality of Your LMS No need to learn a new technology;


utilize the familiar functionality your LMS provides, enabling you to use content
as-is from day one.

Just the Right Amount of Auto-Graded Content Let us take care of the basics so you
can focus on teaching. Infuse textbook chapter readings, comprehension checks, or
end-of-chapter quizzes personalized to your text of choice.

Support at Every Step Access award-winning support 24/7, or take advantage of


on-demand resources including user guides and more.

Cengage Instructor Center


Additional instructor resources for this product are available online. Instructor
assets include an Instructor’s Manual, Educator’s Guide, PowerPoint® slides, and a
test bank powered by Cognero®. Sign up or sign in at www.cengage.com to search
for and access this product and its online resources.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface to the Instructor xix

The Cengage Instructor Center is an all-in-one resource for class preparation,


presentation, and testing. The instructor resources available for download include:
• Instructor’s Manual. Includes activities and assessments for each chapter
(including business cases with corresponding assessment activities) and
their correlation to specific learning objectives, an outline, key terms with
definitions, a chapter summary, and several ideas for engaging with students
with discussion questions, ice breakers, case studies, and social learning
activities that may be conducted in an on-ground, hybrid, or online modality.
• Answers Manual. Provides answers to all questions presented in the text,
including Straight to the Point, Issue Spotters, Real Law case problems, and
Ethical Questions. In addition, it provides the answers to each chapter’s Work
Set.
• Test Bank. A comprehensive test bank, offered in Blackboard, Moodle,
Desire2Learn, and Canvas formats, contains learning objective-specific true-
false, multiple-choice, and essay questions for each chapter. Import the test
bank into your LMS to edit and manage questions and to create tests.
• PowerPoint Slides. Presentations are closely tied to the Instructor Manual,
providing ample opportunities for generating classroom discussion and
interaction. They offer ready-to-use, visual outlines of each chapter that may
be easily customized for your lectures.
• Guide to Teaching Online. Presents technological and pedagogical
considerations and suggestions for teaching the Business Law course when you
can’t be in the same room with students.
• Educator’s Guide. Walks you through what the unique activities are in the
MindTap, where you’ll find them, and how they’re built for easier curriculum
integration.
• Transition Guide. Highlights all of the changes in the text and in the digital
offerings from the previous edition to this edition.

Cengage Testing Powered by Cognero


Cognero is a flexible online system that allows you to author, edit, and manage test
bank content from multiple Cengage solutions; create multiple test versions in an
instant; and deliver tests from your LMS, your classroom, or wherever you want.

Acknowledgments
Business Law: Text & Exercises could never have been written without the
extremely helpful criticisms, comments, and suggestions that I received from the
following professors on the previous editions:

Helena Armour Jack R. Day


Southwestern College of Business Sawyer College
David Blumberg Diamela del Castillo-Payet
LaGuardia Community University of Miami
College–CUNY
Nancy K. Dempsey
Daniel Burnstein Cape Cod Community College
Gibbs College
Joseph L. DeTorres
Jeffrey S. Chase Contra Costa College
Clinton Community College

Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xx Preface to the Instructor

Lucy Dorum Alan Questall


Clover Park Technical College Richmond Community College
Greg Drummer J. Kent Richards
Stone Child College Lake Superior College
John Elger Susan Rubisch-Gisler
Georgia State University Carlow University
Austin Emeagwai Harold V. Rucker
LeMoyne-Owen College Cuyamaca College
Linda Ferguson Steve Schneider
Virginia Wesleyan College Lake Superior College
Gary Grau Mary T. Sessom
Northeast State Community College Cuyamaca College
Myrna Gusdorf Tom Severance
Linn-Benton Community College Mira Costa College
Michael Harford Gary T. Shara
Morehead State University California State University–
Monterey Bay
James P. Hess
Ivy Technical State College Brenda A. Siragusa
Corinthian College
Sharon J. Kingrey
City College Deborah Vinecour
SUNY Rockland Community
Doris K. Loes
College
Dakota County Technical College
Al Walczak
Margaret A. Lourdes
Linn-Benton Community College
Cleary University–Howell/
Ann Arbor Ron Weston
Contra Costa College
John F. Mastriani
El Paso Community College Roger D. Westrup
Heald Business College
Arin S. Miller
Keiser University Frederick D. White
Indian River Community College
Seymour D. Mintz
Queens College Timothy G. Wiedman
Thomas Nelson Community College
Karen S. Mozengo
Pitt Community College Tom Wilson
Remington College
Barb Portzen
Mid-State Technical College

The staff at Cengage went out of their way to make sure that the tenth edition
of Business Law: Text & Exercises came out in accurate form. In particular, I wish
to thank Abbie Schultheis, Mara Vuillaume, and Lisa Elliott for their countless new
ideas, many of which have been incorporated into this new edition.
Our senior content manager, Kim Kusnerak, made sure that I had a visually
attractive edition and ensured the timely and accurate publication of all supplemen-
tal materials. I will always be in her debt. I am also indebted to project manager
Ann Borman at Straive, my compositor. Her ability to generate the pages for this
text quickly and accurately made it possible for me to meet an ambitious printing
schedule.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface to the Instructor xxi

The copyediting services of Maureen Johnson and the proofreading services of


Sheila Joyce will not go unnoticed. My appreciation goes to Suzanne Jasin for her
special efforts on the project.
I know I am not perfect. If you find something you don’t like or want me to
change, write to me via e-mail, using the text’s website. That is how I can make
Business Law: Text & Exercises an even better book in the future.

R.L.M.

About the Author


Roger LeRoy Miller is currently Director of the Institute for University Studies in
Arlington, Texas. He has served on the faculty of several universities, including the
University of Washington, Clemson University, and the University of Miami School
of Law. As a professor, he has taught intellectual property law and entertainment
law, among other subjects. A widely published and respected author, his work has
appeared in the Insurance Counsel Journal, Defense Research, California Trial
Lawyers Journal, Antitrust Bulletin, Wisconsin Law Review, and Connecticut Law
Review. He has authored or co-authored numerous authoritative textbooks on law,
including Business Law: Text & Cases; Business Law Today: Text & Summarized
Cases; and The Legal Environment Today. Professor Miller completed his studies
at the University of California at Berkeley and the University of Chicago.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Dedication

To Johnny Hagenbach,
Your athletic accomplishments will
be followed closely by
your academic excellence.

—R.L.M.

Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Business Organization
What is the most appropriate business organizational form,
and what type of personal liability does it entail?

Taxation
How will the small business be taxed, and are there ways to reduce those taxes?

Intellectual Property
Does the small business have any patents or other intellectual
property that needs to be protected, and if so, what steps should the firm take?

Administrative Law
What types of government regulations apply to the
business, and what must the firm do to comply with them?

Employment
Does the business need an employment manual,
and does management have to explicitly inform employees of their rights?

Contracts, Sales, and Leases


Will the firm be regularly entering into contracts with others,
and if so, should it hire an attorney to review those contracts?

Accounting
Do the financial statements created by an accountant need to be verified for accuracy?

Finance
What are appropriate and legal ways to raise
additional capital so that the business can grow?

Unit 1
The Law and
Our Legal System

Unit Contents

Chapter 1
Introduction to the Law
Chapter 2
Ethics in Business
Chapter 3
The Courts and Our Legal System
Chapter 4
Constitutional Law
Chapter 5
Business Torts
Chapter 6
Intellectual Property
Chapter 7
Business Crimes

Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Taxation
How will the small business be taxed, and are there ways to reduce those taxes?

Intellectual Property
Does the small business have any patents or other intellectual
property that needs to be protected, and if so, what steps should the firm take?

Administrative Law
What types of government regulations apply to the
business, and what must the firm do to comply with them?

Employment
Does the business need an employment manual,
and does management have to explicitly inform employees of their rights?

Contracts, Sales, and Leases


Will the firm be regularly entering into contracts with others,
and if so, should it hire an attorney to review those contracts?

Accounting
Do the financial statements created by an accountant need to be verified for accuracy?

Finance
What are appropriate and legal ways to raise

1
additional capital so that the business can grow?

Introduction to the Law

Learning Outcomes
Conflict Presented
The four Learning Outcomes
below are designed to help
improve your understanding of Krista created, designed, produces, and sells an antivirus facemask. Each of
the chapter. After reading this
these masks has a distinctive image of the singer Ariana Grande. Krista never
chapter, you should be able to:
asked permission to use the singer’s likeness. Ariana Grande’s lawyers file a suit
1 Define law.
against Krista.
2 List the major sources
of law. Q Can Ariana Grande obtain a court order to stop Krista’s use of her likeness and
recover payment for lost profits due to that use?
3 Identify the supreme law
of the land.
4 Distinguish different global
legal systems.
Persons entering the world of business today will find themselves subject to numerous
laws and government regulations. An acquaintance with these laws and regulations is
beneficial—if not essential—to anyone contemplating a successful career in business.
In this introductory chapter, we look at the nature of law in general. We also
examine the history and sources—both domestic and international—of American
law in particular.

1–1 What Is Law?


Learning Outcome 1 The British jurist William Blackstone (1723–80) described law as “a rule of civil
Define law. conduct, . . . commanding what is right, and prohibiting what is wrong.” There are
many sets of rules that declare what is right and what is wrong. These may come
from religion, philosophy, and other scholarly sources, or arise from peer pressure,
customs, and social conventions.
Only rules enacted by the government apply with equal force to all of the individu-
als in a society, however. Of course, to be effective, these rules must be enforced with
law penalties when they are broken. Thus, the law consists of enforceable rules governing
Enforceable rules governing relationships among individuals and between individuals and their society.
individuals and their society.

1–2 Business Activities and


the Legal Environment
To make good business decisions, knowledge of the laws and regulations govern-
ing business is essential. Businesspersons must also develop critical thinking and
reasoning skills to evaluate how the law might apply in a given situation and to
determine the best course of action. Businesspersons are also pressured to make
ethical decisions. Thus, the study of business law involves an ethical dimension.
2

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
C h a p t e r 1 Introduction to the Law 3

1–2a Many Different Laws May Affect a Single


Business Transaction
As you will see, each chapter in this textbook covers a specific area of the law and
shows how the legal rules in that area affect business activities. It is important to
remember, however, that many different laws may apply to just one transaction.
Businesspersons should be aware of this and understand enough about the law
to know when to hire an expert for advice. See the Linking Business Law to Your
Career feature later in this chapter for more on this topic.
If a dispute cannot be resolved amicably, then a lawsuit may become necessary. lawsuit
At that point, it is also important to know about the laws and the rules concerning A judicial proceeding for the
courts and court procedures. resolution of a dispute.

Highlighting the Point

Suppose that Molortron, Inc., plans to introduce a driverless car equipped with Lidar, a
radar system that relies on lasers, and with artificially intelligent cameras. Even if its tech-
nicians put the vehicle through two million miles of testing on closed courses and then
deem this vehicle low risk, Molortron cannot simply start selling rides to consumers.
What are some of the legal issues that Molortron could face? The company must first
test the cars on public roads, which requires permission from state governments. It
must also establish safety rules in conjunction with federal regulators, and it must
negotiate sustainable insurance rates. At each step, Molortron will have to adjust its
bottom line to take account of the legal costs of introducing cutting-edge, but poten-
tially dangerous technology, into the marketplace.

1–2b The Role of the Law in a Small Business


Some of you may end up working in, or owning and operating, a small business.
The small-business owner is the most general of managers. When you seek addi-
tional financing, you become a finance manager. As you go over the expenses and
revenues, you become an accountant. When you direct an advertising campaign,
you are the marketing manager. When you have employees and determine salaries
and benefits, you become a human resources (HR) manager. Each of these roles
has a link to the law. Exhibit 1.1 shows some of the legal issues that can arise in
managing a small—or large—business.

1–3 Sources of American Law


To understand the law, you need to have some understanding of its origins. One Learning Outcome 2
major source is the common law tradition that originated in medieval England. List the major sources of law.
Another is constitutional law, which includes the U.S. Constitution and the consti-
tutions of the states. Statutes—the laws enacted by Congress and the state legisla-
tures—comprise an additional source of American law. Finally, yet another source
of American law is administrative law, which consists of the regulations created by
administrative agencies.

1–3a The Common Law


In medieval England, the courts established a uniform set of rules from the customs
and traditions that had been in force in various regions of the nation. These rules—and precedent
the principles behind them—were applied to resolve similar disputes in a consistent A court decision that guides
way. Each application served as a guide for future decisions—a legal precedent. subsequent decisions.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
4 U n i t 1 The Law and Our Legal System

Exhibit 1.1 Linking Business Law to the Management of a Small Business


Business Organization
What is the most appropriate business organizational form,
and what type of personal liability does it entail?

Taxation
How will the small business be taxed, and are there ways to reduce those taxes?

Intellectual Property
Does the small business have any patents or other intellectual
property that needs to be protected, and if so, what steps should the firm take?

Administrative Law
What types of government regulations apply to the
business, and what must the firm do to comply with them?

Employment
Does the business need an employment manual,
and does management have to explicitly inform employees of their rights?

Contracts, Sales, and Leases


Will the firm be regularly entering into contracts with others,
and if so, should it hire an attorney to review those contracts?

Accounting
Do the financial statements created by an accountant need to be verified for accuracy?

Finance
What are appropriate and legal ways to raise
additional capital so that the business can grow?

common law Over several centuries, these decisions developed into a body of common law.
A body of law developed from The English colonists brought this law to America and set up legal systems based
court decisions. on the common-law method of deciding disputes. When the United States was
formed, these legal systems were the model for the new nation’s courts.
Today, the common law is still a significant source of legal authority. This body
case law of law—sometimes referred to as case law—includes court interpretations of con-
Rules of law announced in court stitutional provisions, statutes enacted by legislatures, and regulations issued by
decisions. administrative agencies.

The Doctrine of Precedent—Stare Decisis The practice of deciding new cases with
stare decisis reference to previous decisions, or precedents, forms a doctrine called stare decisis
A doctrine under which judges (pronounced ster-ay dih-si-ses), which means “to stand on decided cases.” According
follow established precedents. to this doctrine, a judge is obligated to follow the precedents established within the
jurisdiction judge’s jurisdiction.
The authority of a court to decide This practice is a cornerstone of the U.S. judicial system. The doctrine helps
a specific dispute. courts to be more efficient and makes the law more stable and predictable. Someone
bringing an action in a court can expect a result based on how the law has been
action applied in cases with similar facts.
A court proceeding to enforce
or protect a right, or redress or Departures From Precedent A court may decide that a precedent is incorrect or
prevent a wrong. that a change in society or technology has rendered it inapplicable. In that case, the
court may rule contrary to the precedent.

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C h a p t e r 1 Introduction to the Law 5

Sometimes, there is no precedent, or there are conflicting precedents. In these


situations, a court may base a decision on the principles announced in other court
decisions. The court may also consider public policy, social values, or concepts and
data from other fields of knowledge.

Equity A person brings a case to a court of law seeking a remedy, or relief from a remedy
wrong. Usually, that remedy is damages—the payment of money. The means to enforce a right
Example 1.1 Elena is injured because of Ning’s wrongdoing. If Elena files a lawsuit or compensate for a wrong.
and is successful, a court can order Ning to compensate Elena for the harm by pay- damages
ing her a certain amount of money (damages). The compensation is Elena’s remedy. Money sought as a remedy for
Money may not always be enough to make a situation right, however. Equity is a harm suffered.
a branch of the law that seeks to supply a fairer and more adequate remedy in such
a case. ■ equity
For instance, a court might issue an injunction to order a party to do specifically Equity here means fairness. Within
the law, it refers to types of relief,
what the party promised. Or a contract might be cancelled, and the contracting
such as injunctions (as opposed to
parties returned to the positions they held before the deal. legal remedies).
Historically, two distinct systems of courts were created to grant the different
types of remedies. A court of law could award only damages. A court of equity injunction
could provide other relief. Today, however, in most states, the courts of law and A court order to do or not do
equity are merged. A court may now grant either a legal or an equitable remedy, a certain act.
or both, in the same action.

Conflict Resolved

In the Conflict Presented feature at the beginning of this chapter, Krista created,
designed, produces, and sells an antivirus facemask. Each of these masks has a
distinctive image of the singer Ariana Grande. Krista never asked permission to
use the singer’s likeness. Ariana Grande’s lawyers file a suit against Krista.

A Can Ariana Grande obtain a court order to stop Krista’s use of her likeness and
recover payment for lost profits due to that use? Yes. A court can grant both types of
remedies in a single case. Krista used Ariana’s likeness without her permission. The court
can issue an injunction to stop Krista from continuing this action. If Ariana can also show
that she lost sales of her own merchandise that uses her likeness, a court may order
Krista to pay for Ariana’s lost profits.

1–3b Constitutional Law


The federal government and the states have separate constitutions that set forth Learning Outcome 3
the general organization, powers, and limits of their governments. The U.S. Con- Identify the supreme law of the
stitution is the supreme law of the land. A law in violation of the Constitution, no land.
matter what its source, will not be enforced.

Real Case

The state of Maine provides by statute that all students shall benefit from a secondary
school, whether private or public. Maine’s private schools, in order to be approved for
tuition assistance, must be nonsectarian. That is to say, they do not support any spe-
cific religious beliefs. Certain parents challenged this requirement as violating the First
Amendment of the Constitution.
(Continues)

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6 U n i t 1 The Law and Our Legal System

Does the requirement that private schools not support specific religious beliefs in
order to receive tuition-assistance payments infringe on the plaintiff’s constitutional
rights? No, in Carson v. Makin, the U.S. Court of Appeals for the First Circuit ruled that
this requirement did not violate the First Amendment free exercise clause and did not
violate the establishment clause. Rather, the limitation related to how the state’s funds
could be used. Maine did not place any limitations on religious teachings in general.
—979 F.3d 21 (1st Cir.)

Each state has its own constitution. Unless it conflicts with the U.S. Constitution,
a state constitution is supreme within the state’s borders.

Highlighting the Point

The U.S. Constitution gives Congress the authority to regulate businesses involved in
interstate commerce. Under this authority, Congress enacts a law prohibiting busi-
nesses from refusing to deal with the members of socially disadvantaged groups.
Later, a state legislature enacts a law allowing businesses in the state to refuse to deal
with members of the groups. Jill, a member of a specific socially disadvantaged group,
brings an action against the state to stop the enforcement of the new state law.
Is the state law valid? No. The law violates the U.S. Constitution because it attempts to
regulate an area over which the Constitution gives authority to the federal government.
The law also violates the constitutional rights of the members of any group against
which it discriminates. The court can order the state to stop its enforcement of the law.

1–3c Statutory Law


Statutes enacted by Congress and the state legislative bodies make up another
statutory law source of law, generally referred to as statutory law. Statutory law also includes
Laws enacted by a legislative body. the ordinances passed by cities and counties. None of these can violate the U.S.
­Constitution or the relevant state constitution.
Today, regulatory agencies assume an ever-increasing share of lawmaking. Much
of the work of modern courts consists of interpreting the intent of legislation and
then the appropriateness of the consequent regulatory rules that were declared after
statutes are passed.

Uniform Laws State laws differ from state to state. During the 1800s, the
differences among state laws made trade and commerce among the states difficult.
To counter these problems, a group of legal scholars and lawyers formed the
National Conference of Commissioners on Uniform State Laws (NCCUSL). This
organization began to draft uniform laws for the states to adopt.
Each state has the option of adopting or rejecting a uniform law. A state legisla-
ture may choose to adopt only part of a uniform law or to rewrite the sections that
are adopted. Hence, even though many states may adopt a uniform law, the law
may not be “uniform” across all these states. Once adopted by a state, a uniform
act becomes a part of the statutory law of that state.

The Uniform Commercial Code (UCC) In 1932, the Uniform Commercial Code
(UCC) was created through the joint efforts of the NCCUSL and the American Law
Institute. The UCC has been adopted in forty-nine states, the District of Columbia,

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C h a p t e r 1 Introduction to the Law 7

and the Virgin Islands. Louisiana has adopted Articles 1, 3, 4, 5, 7, 8, and 9. The
UCC facilitates commerce among the states by providing a uniform, yet flexible,
set of rules governing commercial transactions.

1–3d Administrative Law


Administrative law consists of the rules, orders, and decisions of administrative administrative law
agencies. An administrative agency is a federal, state, or local government body The rules, orders, and decisions
established to perform a specific function. Congress or a state legislature charges created by administrative agencies.
these departments, commissions, and boards with carrying out the terms of particu-
lar laws.
Rules issued by administrative agencies affect almost every aspect of a business’s
operations. Regulations govern a business’s capital structure and financing, hiring
and firing procedures, relations with employees and unions, and the making and
selling of products.

1–4 Civil Law Versus Criminal Law


The huge body of the law is broken down into several classifications. One impor-
tant classification divides law into civil law and criminal law.
Civil law spells out the rights and duties that exist between persons and between civil law
citizens and their governments. In a civil case, one party tries to make the other Law that defines and enforces
party comply with a duty or pay for the damage caused by a failure to do so. Con- all private and public rights, as
tract law is part of civil law. opposed to criminal matters.
Example 1.2 If Elijah fails to perform a contract with Mary, she may bring a
lawsuit against Craig. The purpose of the lawsuit will be either to compel Elijah to
perform as promised or, more commonly, to obtain monetary damages for Elijah’s
failure to perform. ■
Criminal law has to do with a wrong committed against the public as a whole. criminal law
Criminal acts are prohibited by local, state, or federal government statutes. In a Law that defines crimes and
criminal case, the government seeks to impose a penalty (a monetary penalty and/ subjects criminals to punishment.
or imprisonment) on an allegedly guilty person.

1–5 National Law Around the World


The common law system practiced in the United States is one of the major legal Learning Outcome 4
systems of the world. Other countries that were once colonies of Great Britain— Distinguish different global legal
such as Australia, Canada, and India—generally also use common law systems. systems.
Many nations employ a civil law system, however. The basis of the system is
codified law—a set of legal principles enacted into law by a legislature. The primary civil law system
A legal system based on a statutory
source of law is a statutory code. Precedents do not bind courts, although previous
code.
decisions may serve as guidance for judges. Most European nations, along with
many countries that were once their colonies, use civil law systems. In the United
States, Louisiana has a civil law system, due to the state’s historical ties to France.

1–6 International Law


International law can be defined as a body of written and unwritten laws observed international law
by independent nations in their relations with other nations. It governs the acts of The law that governs relations
individuals as well as governments. International customs and treaties are generally among nations.
considered to be two of the most important sources of international law.
The key difference between international law and national law (the law of a
particular nation) is that national law can be enforced by government authorities.

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8 U n i t 1 The Law and Our Legal System

No such authority exists to enforce international law. The only methods to obtain
compliance are persuasive tactics, such as sanctions, by other countries or interna-
tional organizations.
International law must accommodate two conflicting goals of individual nations.
Every nation desires to benefit economically from its dealings with individuals
and other nations. At the same time, each nation is motivated by a need to be the
final authority over its own affairs. International law attempts to balance these
national desires and needs. And individual nations agree to be governed by inter-
national law in some respects in order to benefit from international trade.

Linking Business Law to Your Career


C o n sulting an E xp ert for Advic e

Whether you own a business or work for one, you will face The general standard for compliance with the law is
many issues that touch on subjects about which you know “good faith,” but at any time, an issue may arise that can only
little. Not every manager is aware of all the information be resolved with special expertise. When your business’s
needed to manage a business. It is therefore necessary for ­reputation and profits are on the line, there is no substitute
you to know when to ask for advice from experts. for the right advice.
With respect to the law, you may know enough about the
law to prevent a potential legal dispute simply by taking the How Can You Find an Attorney?
appropriate action. In other circumstances, however, the best To choose an attorney for an issue that affects your employ-
alternative will be to seek outside counsel. er’s business, first ask for your employer’s recommendations.
There may be an advocate who works for your organization
Why Consult a Legal Expert? or with whom your employer consults on a regular basis.
It is not possible to keep up with the variety of statutes, To find an attorney for a question that concerns your own
rules, and regulations that affect the conduct of business business, obtain the recommendations of your friends, rela-
in the United States. This problem only gets worse with tives, or business associates. Ask for endorsements from those
laws that concern doing business on a global scale. It is who have had long-standing relationships with their attorneys.
possible to break a law without knowing that a law has Other sources of referrals include your local or state bar
been broken. association and online directories.

Chapter Summary—Introduction to the Law

Learning Outcome 1: Define law.


Law consists of enforceable rules governing relationships among individuals and between individuals and their
society.

Learning Outcome 2: List the major sources of law.


The common law consists of past judicial decisions. According to the doctrine of stare decisis, these decisions are
normally applied to resolve current disputes.
Constitutional law is the law expressed in the U.S. Constitution and the various state constitutions. Statutory law
consists of laws or ordinances created by federal, state, or local legislatures and governing bodies.

Learning Outcome 3: Identify the supreme law of the land.


The U.S. Constitution is the supreme law of the land. State constitutions are supreme within state borders to the
extent that they do not violate the U.S. Constitution or a federal law. No federal, state, or local statute or ordinance
can violate the U.S. Constitution or the relevant state constitution.

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C h a p t e r 1 Introduction to the Law 9

Learning Outcome 4: Distinguish different global legal systems.


The common law system involves the practice of deciding new cases with reference to previous decisions,
or precedents. A judge is obligated to follow the precedents established within the judge’s jurisdiction.
The civil law system is a legal system in which the primary source of law is a statutory code—a set of
legal principles enacted into law by a legislature or governing body. Precedents are not binding in a civil
law system.

Straight to the Point


1. Why is knowledge of business law essential for any businessperson? (See Learning Outcome 1.)
2. What is the common law? (See Learning Outcome 2.)
3. When and why does a court apply the decision of another court to determine the result in a case? (See Learning Outcome 2.)
4. What are some of the remedies that a party can obtain from a court to make a wrong situation right? (See Learning
Outcome 2.)

5. Which aspects of a business’s operation do the rules, orders, and decisions of administrative agencies affect? (See ­Learning
Outcome 2.)

Issue Spotters
Check your answers to the Issue Spotters against the answers provided in Appendix A at the end of this text.

1. Under what circumstances might a judge rely on case law to determine the intent and purpose of a statute? (See ­Learning
Outcome 2.)

2. The First Amendment of the U.S. Constitution protects the free exercise of religion. A state legislature enacts a law
that outlaws all religions that do not derive from the Judeo-Christian tradition. Is this state law valid? Why or why
not? (See Learning Outcome 2.)

Real Law

1–1. Stare Decisis. A patent is an exclusive right granted to LLC, 135 S.Ct. 2401, 192 L.Ed.2d 463 (2015)] (See Learning
the creator of an invention. Under U.S. law, a patent owner Outcome 2.)
possesses that right for twenty years. The owner can allow
another party to make and market a product based on the 1–2. Role of Law. Otto May, Jr., a pipefitter for Chrysler
invention in exchange for a payment of royalties on the Group, LLC, was the target of racist, homophobic, and
sales. According to the United States Supreme Court in a anti-Semitic remarks. He received death threats, his bike
case known as the Brulotte decision, a contract to pay roy- and car tires were punctured, and someone poured sugar
alties after a patent has expired is unenforceable. Stephen into the gas tank of his car. A dead bird was placed at his
Kimble owned the patent to a toy glove that could shoot workstation wrapped in toilet paper to look like a mem-
foam intended to look like the web of Marvel Comics’ ber of the Ku Klux Klan. Chrysler documented and inves-
­Spider-Man. Kimble agreed to allow Marvel Entertainment, tigated the incidents. Records were checked to determine
LLC, to sell its version of the toy. Marvel agreed to pay who was in the building when the incidents occurred, the
Kimble a royalty of 3 percent on the sales. Their contract graffiti handwriting was examined, and employees were
did not specify an end date. After the patent expired, Mar- reminded that harassment was not acceptable. What role
vel sued to stop the payments. What is the doctrine of stare might the law play in these circumstances? Discuss. [May
decisis? What are the arguments for and against applying v. ­Chrysler Group, LLC, 716 F.3d 963 (7th Cir. 2013)] (See
it in this case? Discuss. [Kimble v. Marvel Entertainment, Learning ­Outcome 1.)

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10 U n i t 1 The Law and Our Legal System

1–3. Constitutional Law. Under a Massachusetts statute, small wineries a competitive advantage in violation of the
large wineries could sell their products through wholesalers U.S. Constitution. Which source of law takes priority, and
or to consumers directly, but not both. Small wineries could why? [Family Winemakers of California v. Jenkins, 592 F.3d
use both methods. Family Winemakers of California filed 1 (1st Cir. 2010)] (See Learning Outcome 3.)
a suit against the state, arguing that this restriction gave

Ethical Questions

1–4. Anticipation of Legal Problems. Should legal problems identity theft was overturned because he had merely said
be anticipated? Why and why not? (See Learning Outcome 1.) that the investors had done something when they had not.
According to the court, this was not the “use” of another’s
1–5. The Doctrine of Precedent. Sandra White operated a identification.
travel agency. To obtain lower airline fares for her non- In the second case, Kathy Medlock, an ambulance service
military clients, she booked military-rate travel by forward- operator, had transported patients for whom there was no
ing fake military identification cards to the airlines. The medical necessity to do so. To obtain payment, Medlock
U.S. government charged White with identity theft, which had forged a physician’s signature. The court concluded that
requires the “use” of another’s identification. As back- this was “use” of another person’s identity. Which prece-
ground, the court in the White case had two cases that rep- dent—the Miller case or the Medlock case—is similar to
resented precedents. White’s situation, and why? How would you describe the
In the first case, David Miller obtained a loan to buy parties’ ethics in all of these cases? Discuss. [United States
land by representing that certain investors had approved of America v. Sandra Maxine White, 846 F.3d 170 (6th Cir.
the loan when, in fact, they had not. Miller’s conviction for 2017)] (See Learning Outcome 2.)

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Chapter 1—Work Set
True-False Questions

_____   1. Law consists of enforceable rules governing relationships among individuals and between individuals and
their society.
_____   2. Stare decisis refers to the practice of deciding new cases with reference to previous decisions.
_____   3. The doctrine of stare decisis illustrates how unpredictable the law can be.
_____   4. Common law is a term that normally refers to the body of law consisting of rules of law announced in court
decisions.
_____   5. Statutes are a primary source of law.
_____   6. Administrative rules and regulations have virtually no effect on the operation of a business.
_____   7. Each state’s constitution is supreme within that state’s borders even if it conflicts with the U.S. Constitution.
_____   8. The Uniform Commercial Code was enacted by Congress for adoption by the states.
_____   9. In most states, the same courts can grant both legal and equitable remedies.

Multiple-Choice Questions

_____   1. The doctrine of stare decisis performs many useful functions, including
a. efficiency.
b. uniformity.
c. stability.
d. all of the above.

_____   2. In addition to case law, when making decisions, courts sometimes consider other sources of law, including
a. the U.S. Constitution.
b. state constitutions.
c. administrative agency rules and regulations.
d. all of the above.

_____   3. Which of the following is a CORRECT statement about the distinction between law and equity?
a. Equity involves remedies different from those available at law.
b. Most states maintain separate courts of law and equity.
c. Damages may be awarded only in actions in equity.
d. None of the above.

_____   4. Under the doctrine of stare decisis, a judge compares the facts in a case with facts in
a. another case.
b. a hypothetical case.
c. the arguments of the parties involved in the case.
d. none of the above.

_____   5. To learn about the coverage of a statute and how the statute is applied, a person must
a. only read the statute.
b. only see how courts in their jurisdiction have interpreted the statute.
c. read the statute and see how courts in their jurisdiction have interpreted it.
d. none of the above.

11

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_____   6. Our common law system involves the application of legal principles applied in earlier cases
a. with different facts.
b. with similar facts.
c. whether or not the facts are similar.
d. none of the above.

_____   7. The statutory law of the United States includes


a. the statutes enacted by Congress and state legislatures.
b. the rules, orders, and decisions of administrative agencies.
c. both the statutes enacted by Congress and state legislatures and the rules, orders, and decisions
of administrative agencies.
d. none of the above.

_____   8. The U.S. Constitution takes precedence over


a. a provision in a state constitution or statute only.
b. a state supreme court decision only.
c. a state constitution, statute, or court decision.
d. none of the above.

_____   9. Civil law concerns


a. duties that exist between persons or between citizens and governments.
b. wrongs committed against the public as a whole.
c. both a and b.
d. none of the above.

_____   10. In a civil law system, the primary source of law is


a. case law.
b. the decisions of administrative agencies.
c. a statutory code.
d. none of the above.

Answering More Legal Problems

1. Dark Brew and Sparkling Ale are competitors in the results in cases with ______________ facts. In other words,
microbrewing industry. To market their competing the objective is to decide similar cases in a similar way.
wares, they use Facebook, Twitter, and other social
media. A dispute arises between these parties over the 2. In Dark Brew and Sparkling Ale’s case, the court f­ ollows
statements each makes about the other through these a doctrine that requires it to review the rules of law
sites. Dark Brew files a suit against Sparkling Ale. The established by other courts.
parties argue their respective sides of the dispute, each
What is the term for the doctrine under which a court
citing earlier cases that appear to favor their contentions.
reviews the principles suggested by the decisions of other
Each party asks the court to consider the principles of
courts in earlier cases? What are the advantages of this
law established in these cases to decide this case.
practice? The practice of deciding new cases by refer-
What is the term for these former decisions? Which ring to earlier court decisions is known as the doctrine
decisions, if any, is the court obligated to follow? The ear- of ______________ ______________. This practice is a
lier cases are known as ______________. Later cases that ______________ of the U.S. judicial system. The reasoning
involve similar principles or facts are decided with refer- in the other courts’ opinions can serve as a guide, allow-
ence to those ______________. Courts are normally obli- ing a court reviewing the cases to be more ______________.
gated to follow the ______________ established within their When the law on a subject is well settled, the application
______________. The doctrine attempts to harmonize the of this doctrine makes the law more ______________.

12

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2 Ethics in Business

Conflict Presented Learning Outcomes


The four Learning Outcomes
below are designed to help
BMI Food Enterprise makes Chuck Wagon, a plastic-wrapped meal, for children. improve your understanding of
the chapter. After reading this
Chuck Wagon meals consist of food such as bologna, chips, candy, and sugary
chapter, you should be able to:
soda. These combinations provide an unhealthful mix of fat, sugar, and salt. BMI
1 Discuss how businesses
sells Chuck Wagon meals by sponsoring television shows directed at children.
can discourage unethical
Q Is BMI’s making and marketing of Chuck Wagon meals unethical? behavior.
2 Explain the relationship
between law and ethics.
3 Compare duty-based ethics
One of the most complex issues that businesspersons and corporations face is eth- and utilitarian ethics.
ics. Ethics is not as well defined as the law, and yet it can have a tremendous impact 4 Identify ethical problems in
on a firm’s finances and reputation. Consider what happened to Wells Fargo Bank the global context.
when it imposed sales quotas on employees requiring them to unrealistically open
at least ten new accounts a day. Bank managers companywide berated and threat-
ened employees, who were told to do whatever it took to reach these quotas. As a
result, many employees resorted to opening more than 2 million “new” accounts by
transferring funds from customers’ existing accounts without their consent. These
unauthorized accounts incurred an estimated $2.5 million in bank fees.
Once this systematic unethical practice was uncovered, Wells Fargo fired thou-
sands of employees and paid $185 million in fines. Despite this fallout, the scandal
continues to affect Wells Fargo’s reputation and its bottom line.
Wells Fargo’s conduct raised several legal questions, but it clearly also raised
questions about ethics in business. Business ethics cannot be taken lightly. This
chapter examines its definitions, its philosophical bases, and its application to
today’s global business situations.

2–1 The Importance of Business Ethics


Ethics can be defined as the study of what constitutes right or wrong behavior. It ethics
is the branch of philosophy that focuses on morality and the way in which moral A set of moral principles and values
principles are derived or the way in which a given set of moral principles applies applied to social behavior.
to conduct in daily life.
Ethics has to do with questions relating to the fairness, justness, rightness, or
wrongness of an action. What is fair? What is just? What is the right thing to do in
any particular situation? These are essentially ethical questions.

13

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14 U n i t 1 The Law and Our Legal System

2–1a What Is Business Ethics?


business ethics Business ethics focuses on what constitutes right or wrong behavior in the business
A consensus of what constitutes world. It has to do with how moral and ethical principles are applied by business-
right or wrong behavior in the persons to situations that arise in their daily activities in the workplace. Business
world of business. ethics is not a separate kind of ethics. The ethical standards that guide our behavior
as students apply equally well to our activities as businesspersons.

2–1b Why Is Business Ethics Important?


Making ethical business decisions is vitally important to the long-run viability
of any company. A thorough knowledge of business ethics is also important to
the well-being of the company’s management and employees. Certainly, company
decisions and activities can also significantly affect such groups as suppliers, the
community, and society as a whole.

2–2 Setting the Right Ethical Tone


Learning Outcome 1 Many unethical business decisions are made simply because they can be made. In
Discuss how businesses can other words, the decision makers have the opportunity to make such decisions and
discourage unethical behavior. are not too concerned about being seriously sanctioned for their unethical actions.
Perhaps one of the most difficult challenges for business leaders today is to create
the right “ethical tone” in their workplaces.

2–2a The Importance of Ethical Leadership


Talking about ethical business decision making means little if management does
not set standards. Moreover, managers must apply those standards not only to the
employees of the company, but also to themselves.
One of the most important factors in creating and maintaining an ethical work-
place is the attitude of top management. Managers who are not totally committed
to maintaining an ethical workplace will rarely succeed in creating one. Employees
take their cues from management. If a firm’s managers do not violate obvious
ethical norms in their business dealings, employees will be likely to follow that
example.
In contrast, if managers act unethically, employees consequently will see little
reason to act ethically themselves. Example 2.1 Noura works at Granite Software.
If Noura observes her manager cheating on his expense account, Noura quickly
understands that such behavior is acceptable. ■

2–2b Ethical Codes of Conduct


One of the most effective ways of setting the tone of ethical behavior within an
organization is to create an ethical code of conduct. A well-written code of ethics
explicitly states a company’s ethical priorities. Its provisions must be clearly com-
municated to employees.
Most large companies and organizations have implemented ethics training pro-
grams, seminars, and face-to-face meetings to communicate the importance of ethi-
cal conduct to employees. Managers find that applying clear codes of ethics can
deter unethical behavior in the workplace, as well as in other settings, including
university campuses.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
C h a p t e r 2 Ethics in Business 15

Real Case

Soccer is the most popular sport on the planet. It is governed by a world soccer orga-
nization (officially referred to as FIFA). Country-member associations are grouped into
six continental confederations. Each geographic confederation has its own code of
ethics, modeled on FIFA’s code of ethics. Basically, all officials must act “with absolute
loyalty.” They cannot accept any improper personal or economic benefit. Nonethe-
less, numerous soccer organization officials accepted millions of dollars in bribes from
sports media and marketing companies for decades. Some of these officials were tried
and convicted in the United States, even though their unethical and illegal activities
occurred elsewhere.
Did the United States’ federal courts have the legal ability to fine and incarcerate
accused soccer officials? Yes, in U.S. v. Napout, the U.S. Court of Appeals for the Second
Circuit ruled that because the corrupt soccer officials had a relationship with both the
world and regional soccer federations, they had a fiduciary [one of trust] duty not to
accept bribes or kickbacks. This duty was explicitly presented within the international
soccer association’s code of conduct as well as within each regional association’s official
code of conduct.
—963 F.3d 163 (2nd Cir.)

2–2c Corporate Compliance Programs


In large corporations, ethical codes of conduct are usually just one part of a com-
prehensive corporate compliance program. Other components of such a program
include a corporation’s ethics committee, ethical training programs, and internal
audits to monitor compliance with applicable laws and the company’s standards
of ethical conduct.
To be effective, especially in major corporations, a compliance program must be
integrated throughout the firm. Ethical policies and programs need to be coordi-
nated and monitored by a committee that is separate from other corporate depart-
ments. Otherwise, unethical behavior in one department could easily escape the
attention of those in control of the business.

2–2d Conflicts and Trade-offs


Firms have implied ethical (and legal) duties to a number of groups, including
shareholders and employees. Because these duties may conflict, management is
constantly faced with ethical trade-offs.

Highlighting the Point

Mooseback Outfitters, Inc., a national retailer of outdoor gear and apparel, decides
to reduce costs by downsizing and restructuring its business model. While this deci-
sion may benefit the company’s shareholders, it will have a direct impact on those
employees who are laid off. Mooseback’s president suggests laying off the most senior
(Continues)

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
16 U n i t 1 The Law and Our Legal System

employees, while other managers recommend making the cuts in jobs with younger
employees. It is not illegal to fire senior employees, but ethical issues arise when mak-
ing such decisions.
Which group of employees should Mooseback management downsize first? The answer
depends on how management weighs the trade-offs involved. If the company lays off
the most senior employees, it can cut costs more quickly because they earn higher
salaries. The positive trade-off in keeping these employees is their loyalty and experi-
ence, which could help the company adjust to the downsizing more easily. A negative
trade-off is that Mooseback would have to lay off twice as many of the younger employ-
ees to make up the dollar difference in salaries because they do not earn as much. By
downsizing the younger employees, Mooseback also loses most of its expertise in new
product technology and online sales strategies.

2–3 The Sarbanes-Oxley Act


Congress enacted the Sarbanes-Oxley Act to help reduce corporate fraud and
unethical management decisions. Among other things, the act calls for a greater
degree of government oversight of public accounting practices.

2–3a The Public Company Accounting Oversight Board


To this end, the act created the Public Company Accounting Oversight Board.
Generally, the duties of the board are as follows:
1. To oversee the audit of companies, or issuers, whose securities are sold to
public investors in order to protect the interests of investors and the public.
2. To register public accounting firms that prepare audit reports for issuers.
The board also establishes standards relating to the preparation of audit reports
for issuers.

2–3b Enforcement and Penalties


To enforce compliance, the board can inspect registered public accounting firms,
investigate firms that violate the act, and discipline those firms by imposing sanc-
tions. Sanctions range from temporary or permanent suspension to civil penalties
that can be as high as $15 million for intentional violations.
The Sarbanes-Oxley Act prohibits destroying or falsifying records with the intent
to obstruct or influence a federal investigation or in relation to bankruptcy pro-
ceedings. Violation of this provision can result in a fine, imprisonment for up to
twenty years, or both.

2–4 Business Ethics and the Law


moral minimum Today, legal compliance is regarded as a moral minimum—the minimum acceptable
The minimum degree of ethical standard for ethical business behavior. Simply obeying the law does not fulfill all busi-
behavior expected of a firm. ness ethics obligations, however. In the interests of preserving personal freedom, as well
as for practical reasons, the law does not—and cannot—codify all ethical requirements.
No law says, for instance, that it is illegal to tell a lie, but it may be unethical to do so.
Learning Outcome 2 In contrast, it may seem that answering a question concerning the legality of a
Explain the relationship between given action should be simple. Either something is legal or it is not. In fact, one of
law and ethics. the major challenges businesspersons face is that the legality of a particular action
is not always clear. In part, this is because there are so many laws regulating busi-
ness that it is possible to violate one of them without realizing it.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
C h a p t e r 2 Ethics in Business 17

Conflict Resolved

In the Conflict Presented feature at the beginning of this chapter, BMI Food Enter-
prise makes Chuck Wagon, a plastic-wrapped meal, for children. Chuck Wagon
meals consist of foods that provide an unhealthful mix of fat, sugar, and salt. BMI
sells Chuck Wagon through advertising directed at children.

A Is BMI’s making and marketing of Chuck Wagon meals unethical? Yes. Consumers
generally prefer the taste of fat, sugar, and salt. Consequently, many food products are
processed to contain a tasty but unhealthful mix of these three. Adults can decide for
themselves what to eat. But children may be especially susceptible to advertising. BMI
has an ethical obligation to its targeted audience—children—to make and market its
products responsibly.

2–4a Laws Regulating Business


Today’s business firms are subject to extensive government regulation. Nearly every
action a firm undertakes—from going into business, to hiring and firing personnel,
to selling products in the marketplace—is subject to statutory law as well as regula-
tions issued by administrative agencies.
Determining whether a planned action is legal thus requires that decision makers
keep abreast of the law. Ignorance of the law will not excuse a business owner or
manager from liability for violating a statute or regulation. Normally, large busi-
ness firms have attorneys on their staffs to assist them in making key decisions.
Small firms must also seek legal advice before making important business decisions
because the consequences of just one violation may be costly.

2–4b “Gray Areas” in the Law


In many situations, business firms can predict with a fair amount of certainty
whether a given action would be legal. In some situations, though, the legality of a
particular action may be less clear. These “gray areas” in the law make it difficult
to predict with certainty how a court may apply a given law to a particular action.
Uncertainties concerning how particular laws may apply to specific factual situ-
ations have been compounded in the cyber age. The widespread use of the internet
has given rise to legal and ethical questions in circumstances that never existed
before.
In short, business decision makers need to proceed with caution and evaluate an
action and its consequences from an ethical perspective. Generally, if a company
can demonstrate that it acted in good faith and responsibly in the circumstances,
it has a better chance of successfully defending its action.

Highlighting the Point

Airway Airlines makes an online forum available to its pilots so that they can exchange
ideas and information. Some Airway pilots publish on the forum a series of harassing,
gender-based, false messages about Anita Valdez, one of Airway’s female pilots.
Could Airway be liable to Valdez for any harm caused by these messages? Yes. An
online forum can be considered similar to a company bulletin board, which is part of
(Continues)

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18 U n i t 1 The Law and Our Legal System

a workplace. If Airway knows about the messages and does nothing to stop them, the
airline can be perceived as sending Valdez the statement that the harassment is accept-
able. If the airline does not know about the postings or if it does attempt to stop them,
however, it can argue that it is acting in good faith.

2–5 Approaches to Ethical Reasoning


Each individual, when faced with an ethical dilemma, engages in ethical reasoning. In
this process, the individual links their moral convictions or ethical standards to the
particular situation at hand. Businesspersons do likewise when making decisions
with ethical implications.
Learning Outcome 3 Ethical reasoning relating to business traditionally has been characterized by two
Compare duty-based ethics and fundamental approaches. One approach defines ethical behavior in terms of duty,
utilitarian ethics. which also implies certain rights. The other approach determines what is ethical in
terms of the consequences, or outcomes, of any given action.

2–5a Duty-Based Ethics


Duty-based ethical standards often are derived from revealed truths, such as reli-
gious precepts. They can also be derived through philosophical reasoning.

Religion In the Judeo-Christian tradition, the Ten Commandments of the Old


Testament establish fundamental rules for moral action. Other religions have their
own sources of revealed truth. Religious rules generally are absolute with respect
to the behavior of their adherents.
For instance, the commandment “Thou shalt not steal” is an absolute mandate
for a person who believes that the Ten Commandments reflect revealed truth. Even
a benevolent motive for stealing (such as Robin Hood’s) cannot justify the act,
because the act itself is inherently immoral and thus wrong.
Ethical standards based on religious teachings also involve an element of com-
passion. Example 2.2 It might be profitable for Sun Valley Farms to lay off Lee,
who is a less productive employee. Lee would find it difficult to get employment
elsewhere and his family would suffer as a result, however. This potential suffer-
ing would be given substantial weight by decision makers whose ethical standards
were based on religion. ■ Compassionate treatment of others is also mandated by
the Golden Rule—Do unto others as you would have done unto you—which has
been adopted by most religions.

Philosophy Duty-based ethical standards may also be derived solely from


philosophical reasoning. The German philosopher Immanuel Kant (1724–1804),
for instance, identified principles for moral behavior based on what he believed to
be the fundamental nature of human beings.
Kant held that it is rational to assume that human beings are qualitatively dif-
ferent from other physical objects in our world. Persons are endowed with moral
integrity and the capacity to reason and conduct their affairs rationally. Therefore,
their thoughts and actions should be respected. When human beings are treated
merely as a means to an end, they are being regarded as the equivalent of objects
and are being denied their basic humanity.
Kant believed that individuals should evaluate their actions in light of the con-
sequences that would follow if everyone in society acted in the same way. This
categorical imperative categorical imperative can be applied to any action. Example 2.3 Lars is deciding
An evaluation based on the effect whether to cheat on an examination. If he adopts Kant’s categorical imperative, he
if everyone acted in the same way. will decide not to cheat, because if everyone cheated, the examination would be
meaningless. ■

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C h a p t e r 2 Ethics in Business 19

The Principle of Rights Another view of duty-based ethics focuses on basic rights.
The principle that human beings have fundamental rights, such as the rights to
life, freedom, and the pursuit of happiness, is embedded in many of the world’s
cultures.
Those who adhere to this principle of rights believe that a key factor in determin- principle of rights
ing whether a business decision is ethical is how that decision affects the rights of The principle that human beings
others. These others include the firm’s owners, its employees, its customers, its have certain fundamental rights.
suppliers, the community in which it does business, and society as a whole.
In general, rights theorists believe that the right with the highest value in a
particular circumstance takes precedence. Example 2.4 Murray Chemical has to
decide whether to keep its Utah plant open—thereby saving the jobs of one hun-
dred workers—or shut it down. Closing the plant will avoid contaminating a
nearby river with pollutants that could endanger the health of tens of thousands
of people. A rights theorist could easily choose which group to favor because the
value of the right to health and well-being is obviously stronger than the basic
right to work. ■

2–5b Outcome-Based Ethics: Utilitarianism


Utilitarianism is a philosophical theory developed by Jeremy Bentham (1748–1832) utilitarianism
and modified by John Stuart Mill (1806–73)—both British philosophers. In con- An evaluation of an action based
trast to duty-based ethics, utilitarianism is outcome oriented. It focuses on the on its “good” consequences.
consequences of an action, not on the nature of the action itself or on a set of moral
values or religious beliefs.
Those who apply utilitarian ethics believe that an action is morally correct when
it produces the greatest amount of good for the greatest number. When an action
affects the majority adversely, it is morally wrong. Applying the utilitarian theory
requires three steps:
1. A determination of which individuals will be affected by the action in
question.
2. A cost-benefit analysis—a comparison of the negative and positive effects of cost-benefit analysis
alternative actions on these individuals. Weighing the costs of a given
action against the benefits.
3. A choice among alternative actions that will produce the greatest positive
benefits for the greatest number of individuals.

Highlighting the Point

International Foods Corporation (IFC) markets baby formula in developing countries.


IFC learns that mothers in those countries often mix the formula with impure water,
to make the formula go further. As a result, babies are suffering from malnutrition,
­diarrhea, and in some instances, even death.
Is IFC in violation of the law? No. What is IFC’s ethical responsibility in this situation? If
IFC’s decision makers feel that they have an absolute duty not to harm others, then their
response will be to withdraw the product from those markets.
If they approach the problem from a utilitarian perspective, they will engage in a
cost-benefit analysis. The cost of the action (the suffering and death of babies) will be
weighed against its benefit (the availability of the formula to mothers).
Having the formula available frees mothers from the task of breastfeeding and thus
allows them to work to help raise their incomes and standards of living. The question
in a utilitarian analysis focuses on whether the benefit outweighs the cost.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
20 U n i t 1 The Law and Our Legal System

2–5c Corporate Social Responsibility


Groups concerned with employee safety, consumer protection, environmental pres-
ervation, and other causes often pressure corporations to behave responsibly with
respect to these causes. That corporations have such an obligation is the concept
corporate social responsibility of corporate social responsibility. (See this chapter’s Linking Business Law to Your
The idea that corporations should Career feature for more details on this topic.)
act ethically and be accountable
for their actions. The Stakeholder Approach One view of corporate social responsibility stresses that
corporations have a duty not just to shareholders but also to other groups affected
by corporate decisions, called stakeholders. These groups include employees,
customers, creditors, suppliers, and the community. Sometimes, one of these groups
may have a greater stake in a company decision than shareholders do.
Example 2.5 During a global virus epidemic, Delightful Salads, Inc., is forced
to operate at 50 percent capacity. In response, it implements half-time work for
some employees, unpaid vacations, voluntary wage freezes, and other cost-cutting
measures. These options can be in the best interest of some of Delightful Salads’
stakeholders, which obviously include its employees and the community in which
it does business. ■

Corporate Citizenship Another theory of social responsibility argues that


corporations should promote goals that society deems worthwhile and take steps
toward solving social problems. The idea is that business controls so much of a
country’s wealth and power that it should use that wealth and power in socially
beneficial ways.
Example 2.6 The Hitachi Group annually releases its Hitachi Sustainability
Report that outlines its environmental strategy (including its attempts to reduce
carbon dioxide emissions). The report also discusses its commitment to human
rights awareness. ■

A Way of Doing Business Corporate social responsibility attains its maximum


effectiveness if it is treated as a way of doing business rather than as a special
program. The most successful activities are relevant and significant to the
corporation’s stakeholders.
Example 2.7 Derrek Corporation is one of the world’s largest diversified metals
and mining companies. As a part of its business decision making, it invested more
than $150 million in social projects involving health care, infrastructure, and edu-
cation around the world. At the same time, it invested more than $300 million in
environmental projects, including the rehabilitation of native species in the Amazon
River Valley. ■

2–6 Business Ethics and Social Media


Today, social media affect many areas of daily life, including the business world.
As a result, businesses now face unique ethical issues with respect to all social
media platforms. In particular, social media raise ethical questions in business h
­ iring
decisions.
To gain better insight into a job candidate, managers ask for professional refer-
ences from former employers, as well as character references from others who know
the candidate. Employers are likely to also conduct internet searches to discover more
about job candidates. Often, an online search can lead managers to several links
regarding a candidate. With relative ease, managers can often view the prospective
candidate’s postings, photos, videos, blogs, and tweets.
In addition, some employers may decide that a candidate with no social media
presence is behind the times and is not a good employee choice. Some would consider
this type of employer behavior to be unethical as well.

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Another random document with
no related content on Scribd:
E GA L I T É
DES
HOMMES ET DES FEMMES.

A LA REYNE.

M. D C . XX II .
A LA REYNE.

adame,

Ceux qui s’adviserent de donner un Soleil pour devise au Roy vostre


Pere, avec ce mot, Il n’a point d’Occident pour moy, firent plus qu’ils ne
pensoient: parce qu’en representans sa grandeur qui voit presque tousjours ce Prince
des Astres sur quelqu’une de ses terres, sans intervale de nuict; ils rendirent la
devise hereditaire en vostre Majesté, presageans vos vertus, & de plus, la beatitude
des François sous vostre Auguste presence. C’est dis-je chez vostre Majesté,
Madame, que la lumiere des vertus n’aura point d’Occident, ny consequemment
l’heur & la felicité de nos Peuples qu’elles esclaireront. Or comme vous estes en
l’Orient de vostre aage & de vos vertus ensemble, Madame, daignez prendre courage
d’arriver en mesme point au midy de luy & d’elles, je dis de celles qui ne peuvent
meurir que par temps & culture: car il en est quelques unes des plus
recommendables, entre autres la Religion, la charité vers les pauvres, la chasteté &
l’amour conjugale, dont vous avez touché le midy dés le matin. Mais certes il faut le
courage requis à cet effort aussi grand & puissant que vostre Royauté, pour grande &
puissante qu’elle soit: les Roys estant battus de ce malheur, que la peste infernale
des flatteurs qui se glissent dans les Palais, leur rend la vertu & la clair voyance sa
guide & sa nourrice, d’un accez infiniment plus difficile qu’aux inferieurs. Je ne scay
qu’un seur moyen à vous faire esperer, d’atteindre ces deux midys en mesme instant:
c’est qu’il plaise à V. M. se jetter vivement sur les bons livres de prudence & de
mœurs: car aussi tost qu’un Prince s’est relevé l’esprit par cet exercice, les flatteurs
se trouvans les moins fins ne s’osent plus jouër à luy. Et ne peuvent communement
les Puissans & les Roys recevoir instruction opportune que des mors: parce que les
vivans estans partis en deux bandes, les foux & meschans, c’est à dire ces flateurs
dont est question, ne sçavent ny veulent bien dire pres d’eux; les sages & gens de
bien peuvent & veulent, mais ils n’osent. C’est en la vertu certes, Madame, qu’il faut
que les personnes de vostre rang cherchent la vraye hautesse & la Couronne des
Couronnes: d’autant qu’ils ont puissance & non droit de violer les loix & l’equité, &
qu’ils trouvent autant de peril & plus de honte que les autres hommes à faire ce coup.
Aussi nous apprend un grand Roy luy mesme, que toute la gloire de la fille du Roy
est par dedans. Quelle est cependant ma rusticité, tous autres abordent leurs Princes
& Roys en adorant & loüant, j’ose aborder ma Reyne en preschant? Pardonnez
neantmoins à mon zele, Madame, qui meurt d’envie d’ouyr la France crier ce mot, avec
applaudissement, La lumiere n’a point d’Occident pour moy, par tout où passera
vostre Majesté nouveau Soleil des vertus: & d’envie encore de tirer d’elle, ainsi que
j’espere de ses dignes commencemens, une des plus fortes preuves du Traicté que
j’offre à ses pieds, pour maintenir l’egalité des hommes & des femmes. Et non
seulement veu la grandeur unique qui vous est acquise par naissance & par mariage,
vous servirez de miroir au sexe & de sujet d’emulation aux hommes encore, en
l’estenduë de l’Univers, si vous vous eslevez au prix & merite que je vous propose:
mais aussi tost, Madame, que vous aurez pris resolution de vouloir luyre de ce bel &
precieux esclat, on croira que tout le mesme sexe esclaire en la splendeur de vos
rayons. Je suis de vostre Majesté

MADAME,
Tres-humble & Tres-obeissante
servante & subjecte.

Gournay.
EGALITÉ DES HOMMES ET DES
FEMMES.

a pluspart de ceux qui prennent la cause, des femmes, contre cette


orgueilleuse preferance que les hommes s’attribuent, leur rendent le
change entier: r’envoyans la preferance vers elles. Moy qui fuys toutes
extremitez, je me contente de les esgaler aux hommes: la nature
s’opposant pour ce regard autant à la superiorité qu’à l’inferiorité. Que dis-
je, il ne suffit pas à quelques gens de leur preferer le sexe masculin, s’ils ne les
confinoient encores d’un arrest irrefragable & necessaire à la quenoüille, ouy mesme
à la quenouille seule. Mais ce qui les peut consoler contre ce mespris, c’est qu’il ne
se faict que par ceux d’entre les hommes ausquels elles voudroient moins
ressembler: personnes à donner vray semblance aux reproches qu’on pourroit vosmir
sur le sexe feminin, s’ils en estoient, & qui sentent en leur cœur ne se pouvoir
recommander que par le credit de l’autre. D’autant qu’ils ont ouy trompetter par les
ruës, que les femmes manquent de dignité, manquent aussi de suffisance, voire du
temperament & des organes pour arriver à cette-cy, leur eloquence triomphe à
prescher ces maximes: & tant plus opulemment, de ce que, dignité, suffisance,
organes & temperament sont beaux mots: n’ayans pas appris d’autre part, que la
premiere qualité d’un mal habill’homme, c’est de cautionner les choses soubs la foy
populaire & par ouyr dire. Voyez tels esprits comparer ces deux sexes: la plus haute
suffisance à leur advis où les femmes puissent arriver, c’est de ressembler le
commun des hommes: autant eslongnez d’imaginer, qu’une grande femme se peust
dire grand homme, le sexe changé, que de consentir qu’un homme se peust eslever
à l’estage d’un Dieu. Gens plus braves qu’Hercules vrayement, qui ne desfit que
douze monstres en douze combats; tandis que d’une seule parolle ils desfont la
moitié du Monde. Qui croira cependant, que ceux qui se veulent eslever & fortifier de
la foiblesse d’autruy, se puissent eslever ou fortifier de leur propre force? Et le bon
est, qu’ils pensent estre quittes de leur effronterie à vilipender ce sexe, usants d’une
effronterie pareille à se loüer & se dorer eux mesmes, je dis par fois en particulier
comme en general, voire à quelque tort que ce soit: comme si la verité de leur
vanterie recevoit mesure & qualité de son impudence. Et Dieu sçait si je congnois de
ces joyeux vanteurs, & dont les vanteries sont tantost passées en proverbe, entre les
plus eschauffez au mespris des femmes. Mais quoy, s’ils prennent droict d’estre
galans & suffisans hommes, de ce qu’ils se declarent tels comme par Edict; pourquoy
n’abestiront ils les femmes par le contrepied d’un autre Edict? Et si je juge bien, soit
de la dignité, soit de la capacité des dames, je ne pretends pas à cette heure de le
prouver par raisons, puisque les opiniastres les pouroient debattre, ny par exemples,
d’autant qu’ils sont trop communs; ains seulement par l’aucthorité de Dieu mesme,
des arcsboutans de son Eglise & de ces grands hommes qui ont servy de lumiere à
l’Univers. Rangeons ces glorieux tesmoins en teste, & reservons Dieu, puis les
Saincts Peres de son Eglise, au fonds, comme le tresor.
Platon à qui nul n’a debattu le tiltre de divin, & consequemment Socrates son
interprete & Protecole en ses Escripts; (s’il n’est là mesme celuy de Socrates, son
plus divin Precepteur) leur assignent mesmes droicts, facultez & functions, en leurs
Republiques & par tout ailleurs. Les maintiennent, en outre, avoir surpassé maintefois
tous les hommes de leur Patrie: comme en effect elles ont inventé partie des plus
beaux arts, ont excellé, voire enseigné cathedralement & souverainement sur tous les
hommes en toutes sortes de perfections & vertus, dans les plus fameuses villes
antiques entre autres Alexandrie, premiere de l’Empire apres Rome. Dont il Hypathia.
est arrivé que ces deux Philosophes, miracles de Nature, ont creu donner
plus de lustre à des discours de grand poix, s’ils les prononçoient en leurs livres par
la bouche de Diotime & d’Aspasie: Diotime que ce dernier ne craint point d’appeller
sa maistresse & Preceptrice, en quelques unes des plus hautes sciences, luy
Precepteur & maistre du genre humain. Ce que Theodoret releve si volontiers en
l’Oraison de la Foy, ce me semble; qu’il paroist bien que l’opinion favorable au sexe
luy estoit fort plausible. Apres tous ces tesmoignages de Socrates, sur le faict des
dames; on void assez que s’il lache quelque mot au Sympose de Xenophon contre
leur prudence, à comparaison de celle des hommes, il les regarde selon l’ignorance &
l’inexperience où elles sont nourries, ou bien au pis aller en general, laissant lieu
frequent & spatieux aux exceptions: à quoy les deviseurs dont est question ne
s’entendent point.
Que si les dames arrivent moins souvent que les hommes, aux degrez
d’excellence, c’est merveille que le deffaut de bonne instruction, voire l’affluence de la
mauvaise expresse & professoire ne face pis, les gardant d’y pouvoir arriver du tout.
Se trouve til plus de difference des hommes à elles que d’elles à elles mesmes, selon
l’institution qu’elles ont prinse, selon qu’elles sont eslevées en ville ou village, ou
selon les Nations? Et pourquoy leur institution ou nourriture aux affaires & Lettres à
l’egal des hommes, ne rempliroit elle ce vuide, qui paroist ordinairement entre les
testes des mesmes hommes & les leurs: puis que la nourriture est de telle importance
qu’un de ses membres seulement, c’est à dire le commerce du monde, abondant aux
Françoises & aux Angloises, & manquant aux Italiennes, celles cy sont de gros en
gros de si loing surpassées par celles là? Je dis de gros en gros, car en detail les
dames d’Italie triumphent par fois: & nous en avons tiré deux Reynes à la prudence
desquelles la France a trop d’obligation. Pourquoy vrayment la nourriture ne
frapperoit elle ce coup, de remplir la distance qui se void entre les entendemens des
hommes & des femmes; veu qu’en cet exemple icy le moins surmonte le plus, par
l’assistance d’une seule de ses parcelles, je dis ce commerce & conversation: l’air
des Italiennes estant plus subtil & propre à subtilizer les esprits, comme il paroist en
ceux de leurs hommes, confrontez communement contre ceux là des François & des
Anglois? Plutarque au Traicté des vertueux faicts des femmes maintient; que la vertu
de l’homme & de la femme est mesme chose. Seneque d’autre part publie aux
Consolations; qu’il faut croire que la Nature n’a point traicté les dames ingratement,
ou restrainct & racourcy leurs vertus & leurs esprits, plus que les vertus & les esprits
des hommes: mais qu’elle les a doüées de pareille vigueur & de pareille faculté à
toute chose honeste & loüable. Voyons ce qu’en juge apres ces deux, le tiers chef du
Triumvirat de la sagesse humaine & morale en ses Essais. Il luy semble, dit il, & si ne
sçait pourquoy, qu’il se trouve rarement des femmes dignes de commander aux
hommes. N’est ce pas les mettre en particulier à l’egale contrebalance des hommes,
& confesser, que s’il ne les y met en general il craint d’avoir tort: bien qu’il peust
excuser sa restrinction, sur la pauvre & disgraciée nourriture de ce sexe. N’oubliant
pas au reste d’alleguer & relever en autre lieu de son mesme livre, cette authorité que
Platon leur depart en sa Republique: & qu’Anthistenes nioit toute difference au talent
& en la vertu des deux sexes. Quant au Philosophe Aristote, puisque remuant Ciel &
terre, il n’a point contredit en gros, que je scache, l’opinion qui favorise les dames, il
l’a confirmée: s’en rapportant, sans doubte, aux sentences de son pere & grand pere
spirituels, Socrates & Platon, comme à chose constante & fixe soubs le credit de tels
personnages: par la bouche desquels il faut advoüer que le genre humain tout entier,
& la raison mesme, ont prononcé leur arrest. Est il besoing d’alleguer infinis autres
Erasme Epist: & anciens & modernes de nom illustre, ou parmy ces derniers,
Colloq. Politia: Epist. Erasme, Politien, Agripa, ny cet honneste & pertinent Precepteur
Agripa Precel: du des courtizans: outre tant de fameux Poëtes si contrepoinctez
sexe feminin tous ensemble aux mespriseurs du sexe feminin, & si partisans
Courtizan. de ses advantages aptitude & disposition à tout office & tout
exercice louable & digne? Les dames en verité se consolent,
que ces descrieurs de leur merite ne se peuvent prouver habiles gens, si tous ces
esprits le sont: & qu’un homme fin ne dira pas, encores qu’il le creust, que le merite &
passedroit du sexe feminin tire court, pres celuy du masculin; jusques à ce que par
arrest il ait faict declarer tous ceux là buffles, affin d’infirmer leur tesmoignage si
contraire à tel decry. Et buffles faudroit il encores declarer des Peuples entiers & des
plus sublins, entre autres ceux de Smyrne en Tacitus: qui pour obtenir jadis à Rome
presseance de noblesse sur leurs voisins, allegoient estre descendus, ou de Tantalus
fils de Jupiter ou de Theseus petit fils de Neptune ou d’une Amazone, laquelle par ce
moyen ils contrepesoient à ces Dieux. Pour le regard de la loy Salique, qui prive les
femmes de la couronne, elle n’a lieu qu’en France. Et fut inventée au temps de
Pharamond, pour la seulle consideration des guerres contre l’Empire duquel nos
Peres secoüoient le joug: le sexe feminin estant vray semblablement d’un corps
moins propre aux armes, par la necessité du port & nourriture des enfans. Il faut
rémarquer encores neantmoins, que les Pairs de France ayans esté créez en
Hotman pour premiere intention comme une espece de personniers des Roys,
ainsi que leur nom le declare: les dames Pairaisses de leur chef
l’etymologie des Pairs:
du Tillet & Math. ont seance, privilege & voix deliberative par tout où les Pairs en
Histoire du Roy pour ont & de mesme estendue. Comme aussi les Lacedemoniens ce
les Dames Pairresses. brave & genereux Peuple, consultoit de toutes affaires privées &
Plut. publiques avec ses femmes. Bien a servy cependant aux
François, de trouver l’invention des Regentes, pour un equivalent des Roys; car
sans cela combien y a il que leur Estat fust par terre? Nous sçaurions bien dire
aujourd’huy par espreuve, quelle necessité les minoritez des Roys ont de cette
recepte. Les Germains ces belliqueux Peuples, dit Tacitus, qui apres plus de deux
cens ans de guerre, furent plustost triumphéz que vaincus; portoient dot à leurs
femmes, non au rebours. Ils avoient au surplus des Nations, qui n’estoient jamais
regies que par ce sexe. Et quand Ænee presente à Didon le sceptre d’Ilione, les
scoliastes disent, que cela provient, de ce que les dames filles aisnées, telle qu’estoit
cette Princesse, regnoient anciennement aux maisons Royalles. Veult-on deux plus
beaux envers à la loy Salique, si deux envers elle peut souffrir? Si ne mesprisoient
pas les femmes nos anciens Gaulois, ny les Carthaginois aussi; lors qu’estans unis
en l’armée d’Hanibal pour passer les Alpes, ils establirent les dames Gauloises
arbitres de leurs differends. Et quand les hommes desroberoient à ce sexe en
plusieurs lieux, part aux meilleurs advantages; l’inegalité des forces corporelles plus
que des spirituelles, ou du merite, peut facilement estre cause du larrecin & de sa
souffrance: forces corporelles, qui sont vertus si basses, que la beste en tient plus
par dessus l’homme, que l’homme par dessus la femme. Et si ce mesme
Historiographe Latin nous apprend, qu’où la force regne, l’equité, la probité, la
modestie mesme, sont les attributs du vainqueur; s’estonnera-on, que la suffisance &
les merites en general, soient ceux de nos hommes, privativement aux femmes.
Au surplus l’animal humain n’est homme ny femme, à le bien prendre, les sexes
estants faicts non simplement, mais secundum quid, comme parle l’Eschole: c’est à
dire pour la seule propagation. L’unique forme & difference de cet animal, ne consiste
qu’en l’ame humaine. Et s’il est permis de rire en passant, le quolibet ne sera pas
hors de saison, nous apprenant; qu’il n’est rien plus semblable au chat sur une
fenestre, que la chatte. L’homme & la femme sont tellement uns, que si l’homme est
plus que la femme, la femme est plus que l’homme. L’homme fut creé masle &
femelle, dit l’Escriture, ne comptant ces deux que pour un. Dont Jesus-Christ est
appellé fils de l’homme, bien qu’il ne le soit que de la femme. Ainsi parle apres le
grand Sainct Basile: La vertu de l’homme & de la femme est mesme chose, Homil. I.
puis que Dieu leur a decerné mesme creation & mesme honneur: masculum
& fœminam fecit eos. Or en ceux de qui la Nature est une & mesme, il faut que les
actions aussi le soient, & que l’estime & loyer en suitte soient pareils, où les œuvres
sont pareilles. Voila donc la deposition de ce puissant pilier, & venerable tesmoing de
l’Eglise. Il n’est pas mauvais de se souvenir sur ce poinct, que certains ergotistes
anciens, ont passé jusques à cette niaise arrogance, de debattre au sexe feminin
l’image de Dieu à difference de l’homme: laquelle image ils devoient, selon ce calcul
attacher à la barbe. Il failloit de plus & par consequent, desnier aux femmes l’image
de l’homme, ne pouvant luy ressembler, sans qu’elles ressemblassent à celuy auquel
il ressemble. Dieu mesme leur a departy les dons de Prophetie Olda Debora.
indifferamment avec les hommes, les ayant establies aussi pour Juges,
instructrices & conductrices de son Peuple fidelle en paix & en guerre: & qui plus est,
rendu triumphantes avec luy des hautes victoires, qu’elles ont aussi maintefois
emportées & arborées en divers lieux du Monde: mais sur quelles gens, à vostre
advis? Cyrus & Theseus: à ces deux on adjouste Hercules, lequel elles ont sinon
vaincu, du moins bien battu. Aussi fut la cheute de Pentasilée, couronnement de la
gloire d’Achilles: oyez Seneque & Ronsard parlans de luy.

L’Amazone il vainquit dernier effroy des Grecs.


Pentasilée il rua sur la poudre.

Ont elles au surplus, (ce mot par occasion) moins excellé de foy, qui comprend toutes
les vertus principales, que de suffisance & de force magnanime & guerriere?
Paterculus nous apprend, qu’aux proscriptions Romaines, la fidelité des enfans fut
nulle, des affranchis legere, des femmes tresgrande. Que si Sainct Paul, suyvant ma
route des tesmoignages saincts, leur deffend le ministere & leur commande le silence
en l’Eglise: il est evident que ce n’est point par aucun mespris: ouy bien seulement,
de crainte qu’elles n’esmeuvent les tentations, par cette montre si claire & publique
qu’il faudroit faire en ministrant & preschant, de ce qu’elles ont de grace & de beauté
plus que les hommes. Je dis que l’exemption de mespris est evidente, puisque cet
Apostre parle de Thesbé comme de sa coadjutrice en l’œuvre de nostre Seigneur,
sans toucher le grand credit de Saincte Petronille vers sainct Pierre: & puis aussi que
la Magdeleine est nommée en l’Eglise egale aux Apostres, par Apostolis. Voire que
l’Eglise & eux-mesmes ont permis une exception de ceste reigle Entre autres au
de silence pour elle, qui prescha trente ans en la Baume de Calendrier des Grecs,
Marseille au rapport de toute la Provence. Et si quelqu’un publié par Genebrard.
impugne ce tesmoignage de predications, on luy demandera que
faisoient les Sibyles, sinon prescher l’Univers par divine inspiration, sur l’evenement
futur de Jesus-Christ? Toutes les anciennes Nations concedoient la Prestrise aux
femmes, indifferemment avec les hommes. Et les Chrestiens sont au moins forcez de
consentir, qu’elles soyent capables d’appliquer le Sacrement de Baptesme: mais
quelle faculté de distribuer les autres, leur peut estre justement deniée; si celle de
distribuer cestuy-là, leur est justement accordé? De dire que la necessité des petits
enfans mourans, ait forcé les Peres anciens d’establir cet usage en despit d’eux: il est
certain qu’ils n’auroient jamais creu que la necessité les peust dispenser de mal faire,
jusques aux termes de permettre violer & diffamer l’application d’un Sacrement. Et
partant concedans ceste faculté de distribution aux femmes, on void à clair qu’ils ne
les ont interdites de distribuer les autres Sacremens, que pour maintenir tousjours
plus entiere l’auctorité des hommes; soit pour estre de leur sexe, soit afin qu’à droit
ou à tort, la paix fust plus asseurée entre les deux sexes, par la foiblesse &
Epist. ravallement de l’un. Certes sainct Jerosme escrit sagement à nostre propos;
qu’en matiere du service de Dieu, l’esprit & la doctrine doivent estre
considerez, non le sexe. Sentence qu’on doit generaliser, pour permettre aux Dames
à plus forte raison, toute action & science honneste: & cela suyvant aussi les
intentions du mesme sainct, qui de sa part honnore & auctorise bien fort leur sexe.
Davantage sainct Jean l’Aigle & le plus chery des Evangelistes, ne mesprisoit pas les
femmes non plus que sainct Pierre, sainct Paul & ces deux Peres, j’entends saint
Basile & sainct Jerosme; puis qu’il leur addresse ses Epistres Electra.
particulierement: sans parler d’infinis autres Ss: ou Peres, qui font pareille
addresse de leurs Escrits. Quand au faict de Judith je n’en daignerois faire mention
s’il estoit particulier, cela s’appelle dependant du mouvement & volonté de son
auctrice: non plus que je ne parle des autres de ce qualibre; bien qu’ils soient
immenses en quantité, comme ils sont autant heroiques en qualité de toutes sortes,
que ceux qui couronnent les plus illustres hommes. Je n’enregistre point les faicts
privez, de crainte qu’ils semblent, non advantages & dons du sexe, ains boüillons
d’une vigueur privée & specialle. Mais celuy de Judith merite place en ce lieu, parce
qu’il est bien vray, que son dessein tombant au cœur d’une jeune dame, entre tant
d’hommes lasches & faillis de cœur, à tel besoing, en si haulte & si difficile entreprise,
& pour tel fruict, que le salut d’un Peuple & d’une Cité fidelle à Dieu: semble plustost
estre une inspiration & prerogative divine vers les femmes, qu’un traict purement
voluntaire. Comme aussi le semble estre celuy de la Pucelle d’Orleans, accompagné
de mesmes circonstances environ, mais de plus ample & large utilité, s’estendant
jusques au salut d’un grand Royaume & de son Prince.

Æneid. I.
allusion. Cette illustre Amazone instruicte aux soins de Mars,
Fauche les escadrons & brave les hazars:
Vestant le dur plastron sur sa ronde mammelle,
Dont le bouton pourpré de graces estincelle:
Pour couronner son chef de gloire & de lauriers,
Vierge elle ose affronter les plus fameux guerriers.

Adjoustons que la Magdelene est la seule ame, à qui le Redempteur ait jamais
prononcé ce mot, & promis cette auguste grace: En tous lieux où se preschera
l’Evangile il sera parlé de toy. Jesus-Christ d’autrepart, declara sa tres heureuse &
tres glorieuse resurrection aux dames les premieres, affin de les rendre, dit un
venerable Pere ancien, Apostresses aux propres Apostres: cela, comme lon sçait,
avec mission expresse: Va, dit il, à cette cy mesme, & recite aux Apostres & à Pierre
ce que tu as veu. Surquoy il faut notter, qu’il manifesta sa nouvelle naissance
esgalement aux femmes qu’aux hommes, en la personne d’Anne fille de Phannel, qui
le recongneut en mesme instant, que le bon vieillard Sainct Simeon. Laquelle
naissance, d’abondant, les Sybilles nommées, ont predite seules entre les Gentils,
excellent privilege du sexe feminin. Quel honneur faict aux femmes aussi, ce songe
survenu chez Pilate; s’addressant à l’une d’elles privativement à tous les hommes, &
en telle & si haulte occasion. Et si les hommes se vantent, que Jesus-Christ soit nay
de leur sexe, on respond, qu’il le failloit par necessaire bien sceance, ne se pouvant
pas sans scandale, mesler jeune & à toutes les heures du jour & de la nuict parmy les
presses, aux fins de convertir, secourir & sauver le genre humain, s’il eust esté du
sexe des femmes: notamment en face de la malignité des Juifs. Que si quelqu’un au
reste est si fade; d’imaginer masculin ou feminin en Dieu, bien que son nom semble
sonner le masculin, ny consequemment besoin d’acception d’un sexe plustost que de
l’autre, pour honnorer l’incarnation de son fils; cettuy cy monstre à plein jour, qu’il est
aussi mauvais Philosophe que Theologien. D’ailleurs, l’advantage qu’ont les hommes
par son incarnation en leur sexe; (s’ils en peuvent tirer un advantage, veu cette
necessité remarquée) est compensé par sa conception tres precieuse au corps d’une
femme, par l’entiere perfection de cette femme, unique à porter nom de parfaicte
entre toutes les creatures purement humaines, depuis la cheute de nos premiers
parens, & par son assumption unique en suject humain aussi.
Finalement si l’Escripture a declaré le mary, chef de la femme, la plus grande
sottise que l’homme peust faire, c’est de prendre cela pour passedroict de dignité.
Car veu les exemples, aucthoritez & raisons nottées en ce discours, par où l’egalité
des graces & faveurs de Dieu vers les deux especes ou sexes est prouvée, voire leur
unité mesme, & veu que Dieu prononce: Les deux ne seront qu’un: & prononce
encores: L’homme quittera pere & mere pour suivre sa femme; il paroist que cette
declaration n’est faicte que par le besoin expres de nourrir paix en mariage. Lequel
besoin requeroit, sans doubte, qu’une des parties cédast à l’autre, & la prestance des
forces du masle ne pouvoit pas souffrir que la soubmission vînt de sa part. Et quand
bien il seroit veritable, selon que quelques uns maintiennent, que cette soubmission
fut imposée à la femme pour chastiement du peché de la pomme: cela encores est
bien esloigné de conclure à la pretendue preferance de dignité en l’homme. Si lon
croioit que l’Escripture luy commendast de ceder à l’homme, comme indigne de le
contrecarrer, voyez l’absurdité qui suivroit: la femme se treuveroit digne d’estre faicte
à l’image du Createur, de jouyr de la tressaincte Eucaristie, des mysteres de la
Redemption, du Paradis & de la vision voire possession de Dieu, non pas des
advantages et privileges de l’homme: seroit ce pas declarer l’homme plus precieux &
relevé que telles choses, & partant commettre le plus grief des blasphemes?
FIN.
L’IMPRIMEUR A RANGÉ
ces vers icy pour emplir le reste
de la feuille.

AUTHEUR INCERTAIN.

Lumine Acron dextro captus, Leonilla sinistro,


Et potis est forma vincere uterque Deos.
Blande puer, lumen quod habes concede sorori:
Sic tu cæcus Amor, sic erit illa Venus.

VERSION.

Lys & sa jeune mere aussy beaux que les Dieux:


De deux costez divers ont perdu l’un des yeux.
Lys, donne ton bon œil à ta mere Argentine;
Tu seras Cupidon, elle sera Cyprine.

AUTREMENT.

Lyse & son petit Lys aussy beaux que les Dieux,
De deux costez divers ont perdu l’un des yeux.
Si Lys donne l’autre œil à sa mere admirée;
Il est l’aveugle Amour, & Lyse Cytherée.
EX HORATIO.
Dial.

Donec gratus eram tibi,


Nec quisquam potior brachia candidæ
Cervici iuvenis dabat,
Persarum vigüi Rege beatior.
Donec non alia magis
Arsisti, neque erat Lydia post Chloen,
Lydia multi nominis,
Romana vigui clarior Ilia.
Me nunc Thrassa Chloe regit,
Dulces docta modos & Cytharæ sciens:
Pro qua non metuam mori,
Si parcent animæ fata superstiti.
Me torret face mutua
Thurini Calais filius Orinthi:
Pro quo bis patiar mori,
Si parcent puero fata superstiti.
Quid si prisca redit Venus,
Diductosque iugo cogit aheneo?
Si flava excutitur Chloe
Reiectæque patet ianua Lydiæ?
Quanquam sidere pulchrior
Ille est, tu levior cortice & improbo
Iracundior Adria;
Tecum vivere amem, tecum obeam libens.
DIALOGUE D’HORACE
ET DE LYDIE.

Tandis que mon Amour t’enflammoit constamment,


Tandis qu’un jeune amy, bravant ma jalousie,
Ne pressoit ton beau col d’un mol embrassement,
J’ay flory plus heureux qu’un Monarque d’Asie.
Devant que ton esprit brisast sa loyauté,
Devant qu’il eust chery d’une aveugle folie
Cloé plus que Lydie, illustre de beauté,
J’ay surmonté l’esclat de la Romaine Ilie.
Cloé Greque sans pair me possede à son tour
Par son luth & sa voix qui scait charmer l’oreille:
Et mourrois volontiers, victime de l’Amour,
Pour conserver mourant cette jeune merveille.
Calaïs Thurien épris de mes appas,
Par un revers gentil de ses attraits me blesse:
Et souffrirois deux fois la rigueur du trespas,
Pour sauver du tombeau cette belle jeunesse.
Quoy si l’amour premier ressuscitant son feu
Ramenoit soubs ton joug mon ame revoltée?
Quoy si mon cœur solide éternisant son vœu,
Ma Lydie est reçeue & Cloé rejettée?
Encor qu’il soit plus beau qu’un astre au front des cieux,
Toy plus leger qu’un liege & plus mutin que l’onde;
Je veux rouler mes jours aux prisons de tes yeux,
Je veux que mon cercueuil tes obseques seconde.
INCERTAIN SUR L’HORLOGE
DE SABLE.

Exiguus vitro pulvis qui dividit horas,


Et levis angustum sæpe recurrit iter,
Olim Alcipus erat: qui Marthæ ut vidit ocellos
Arsit, & est subito factus ab igne cinis.
Irrequiete cinis, miseros testabere amantes,
More tuo, nulla posse quiete frui.

VERSION

Ce peu de poudre, helas qui fîle en ces deux verres,


Courant & recourant sur ses estroictes erres,
Affin de marquer l’heure & mesurer le jour,
Estoit jadis Alcipe esclave de l’Amour.
Bruslé des yeux de Marthe il coula tout en cendre:
Et faut, cendre inquiete, en ton aspect comprendre:
Qu’un miserable esprit blessé par un bel œil
N’a jamais de repos s’il te manque au cercueil.
Au lecteur

Cette version numérisée reproduit dans son intégralité la version


originale.
La ponctuation a pu faire l’objet de quelques corrections mineures.
L’orthographe a été conservée. Seuls quelques mots ont été modifiés.
La version originale pouvant être difficile à déchiffrer, nous avons fait
suivre celle-ci d’une version modernisée dans laquelle nous avons remplacé
ſ et ß par s, ã par an ou am, ẽ par en ou em, le ĩ par in, õ par on ou om, le ũ
par um, ainsi que les abréviations de vo9 et pl9 par vous et plus.
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