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vi CONTENTS
Kelo v. City of New London, Connecticut 122 Burden of Proof 165

Fourteenth Amendment: Equal Protection Right to a Jury 165
Clause 123 Felony/Misdemeanor 165
Criminal Procedure 165
Chapter Conclusion 126 Conduct Outlawed 165
Exam Review 126 State of Mind 166
Multiple-Choice Questions 128 Gathering Evidence: The Fourth
Essay Questions 129 Amendment 166
Discussion Questions 130 You Be the Judge: Ohio v. Smith 168
The Case Begins 170
Landmark Case: Miranda v. Arizona 171
Chapter 6 Torts 132 Right to a Lawyer 172
Intentional Torts 134 After Arrest 172
Defamation 134 Ewing v. California 174
False Imprisonment 136 Crimes that Harm Business 175
Jane Doe and Nancy Roe v. Lynn Mills 137 Larceny 175
Intentional Infliction of Emotional Distress 137 Fraud 176
Additional Intentional Torts 138 Skilling v. United States 177
Damages 138 Arson 179
Compensatory Damages 138 Embezzlement 179
Punitive Damages 140 Crimes Committed by Business 179
Landmark Case: State Farm v. Campbell 141 Commonwealth v. Angelo Todesca Corp. 180
Business Torts 142 Selected Crimes Committed by Business 180
Tortious Interference with Business Punishing a Corporation 183
Relations 142
Privacy and Publicity 144 Chapter Conclusion 184
Negligence 144 Exam Review 185
Duty of Due Care 145 Multiple-Choice Questions 187
Hernandez v. Arizona Board of Regents 146 Essay Questions 188
Breach of Duty 148 Discussion Questions 189
Causation 148
Damages 150
Defenses 151 Chapter 8 International Law 190
Contributory and Comparative Negligence 151 Trade Regulation: The Big Picture 191
Assumption of the Risk 152 Export Controls 191
Truong v. Nguyen 153 You Be the Judge: Totes-Isotoner Co. v.
Strict Liability 154 United States 192
Ultrahazardous Activity 154 Import Controls 192
Product Liability 154 Treaties 193
United States—Import Prohibition
Chapter Conclusion 156 of Certain Shrimp and Shrimp
Exam Review 156 Products 194
Multiple-Choice Questions 159 International Sales Agreements 197
Essay Questions 160 The Sales Contract 197
Discussion Questions 162 Centrifugal Casting Machine Co., Inc. v.
American Bank & Trust Co. 200
International Trade Issues 201
Chapter 7 Crime 163 Repatriation of Profits 201
The Differences between a Civil and Criminal Expropriation 202
Case 164 Foreign Corrupt Practices Act 203
Prosecution 164 United States v. King 204
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CONTENTS vii
Extraterritoriality 205 Chapter 10 Legality, Consent, and Writing 238

You Be the Judge: Carnero v. Boston Legality 239
Scientific Corporation 206 Noncompete Agreements 239
King v. Head Start Family Hair Salons, Inc. 240
Chapter Conclusion 207 Sales of a Business 241
Exam Review 207 Exculpatory Clauses 242
Multiple-Choice Questions 210 Unconscionable Contracts 243
Essay Questions 211 You Be the Judge: Ransburg v. Richards 243
Discussion Questions 212 Voidable Contracts: Capacity and Consent 244
Capacity 245
Reality of Consent 246
Mistake 248
UNIT 2 Duress 249
Contracts & the UCC 213 Written Contracts 250
Common Law Statute of Frauds: Contracts
Chapter 9 Introduction to Contracts 214 That Must Be in Writing 251
Contracts 215 The Common Law Statute of Frauds: What
Elements of a Contract 215 the Writing Must Contain 253
Other Important Issues 216 The UCC’s Statute of Frauds 254
Types of Contracts 216 Parol Evidence 254
Bilateral and Unilateral Contracts 216 Mayo v. North Carolina State University 255
Executory and Executed Contracts 216
MR. W FIREWORKS, Chapter Conclusion 256
INC. v. OZUNA 217 Exam Review 256
Valid, Unenforceable, Voidable, and Void Multiple-Choice Questions 259
Agreements 217 Essay Questions 260
Express and Implied Contracts 218 Discussion Questions 261
You Be the Judge: Demasse v. ITT corporation 219
Promissory Estoppel and Quasi-Contracts 220
Sources of Contract Law 221 Chapter 11 Performance, Discharge, and
Common Law 221 Remedies 263
Uniform Commercial Code 221 Performance and Discharge 264
The Agreement 222 Performance 264
Meeting of the Minds 222 Brunswick Hills Racquet Club Inc. v. Route
Offer 223 18 Shopping Center Associates 266
Landmark Case: Carlill v. Carbolic Smoke Breach 268
Ball Company 224 O’Brien v. Ohio State University 268
Termination of Offers 225 Impossibility 270
Nadel v. Tom Cat Bakery 226 Remedies 271
Acceptance 227 Expectation Interest 272
Consideration 229 Landmark Case: Hawkins v. McGee 272
Landmark Case: Hamer v. Sidway 230 You Be the Judge: Bi-Economy Market, Inc.
v. Harleysville Ins. Co. of New York 274
Chapter Conclusion 231 Reliance Interest 275
Exam Review 231 Restitution Interest 276
Multiple-Choice Questions 235 Other Remedies 276
Essay Questions 236 Milicic v. Basketball Marketing Company, Inc. 278
Discussion Questions 237 Special Issues 279
viii CONTENTS
Chapter Conclusion 280 Implied Warranties 323

Exam Review 280 Goodman v. Wenco Foods, Inc. 324
Multiple-Choice Questions 283 Secured Transactions 325
Essay Questions 284 Article 9: Terms and Scope 325
Discussion Questions 286 Article 9 Vocabulary 325
Attachment of a Security Interest 326
Agreement 327
Chapter 12 Practical Contracts 287 Control and Possession 327
The Lawyer 288 Value 327
Lawyers and Clients 289 Debtor Rights in the Collateral 327
Hiring a Lawyer 289 Perfection 328
The Contract 290 Nothing Less than Perfection 328
Who Drafts It? 290 Perfection by Filing 328
How to Read a Contract 290 Corona Fruits & Veggies, Inc. v. Frozsun
Mistakes 290 Foods, Inc. 329
Quake Construction v. American Airlines 291 Perfection by Possession or Control 331
Cipriano v. Patrons Mutual Insurance Perfection of Consumer Goods 331
Company of Connecticut 293 Protection of Buyers 332
You Be the Judge: Heritage Technologies v. You Be the Judge: Conseco Finance Servicing
Phibro-Tech 295 Corp. v. Lee 333
The Structure of a Contract 297 Priorities among Creditors 334
LeMond Cycling, Inc. v. PTI Holding, Inc. 300 Default and Termination 335
Default 335
Chapter Conclusion 306 Termination 335
Exam Review 306
Multiple-Choice Questions 308 Chapter Conclusion 335
Essay Questions 309 Exam Review 336
Discussion Questions 310 Multiple-Choice Questions 339
Essay Questions 341
Discussion Questions 342
Chapter 13 The UCC: Sales and Secured
Transactions 311
Development of the UCC 312 Chapter 14 Negotiable Instruments 343
Harold and Maude, Revisited 312 Commercial Paper 344
Scope of Article 2 313 Types of Negotiable Instruments 344
Mixed Contracts 313 The Fundamental “Rule” of Commercial Paper 345
Merchants 314 Negotiable 345
Contract Formation 314 You Be the Judge: Blasco v. Money Services
Formation Basics: Section 2-204 314 Center 348
Statute of Frauds 314 Negotiated 348
Delta Star, Inc. v.. Michael’s Carpet World 316 Holder in Due Course 349
Added Terms: Section 2-207 317 Buckeye Check Cashing, Inc. v. Camp 350
Modification 319 Defenses against a Holder in Due Course 351
Hessler v. Crystal Lake Chrysler-Plymouth, Consumer Exception 352
Inc. 320 Antuna v. Nescor, Inc. 352
Performance and Remedies 320 Liability for Negotiable Instruments 353
Buyer’s Remedies 320 Primary versus Secondary Liability 353
Seller’s Remedies 322 Signature Liability 353
Warranties 322 Maker 354
Express Warranties 322 Drawer 354
CONTENTS ix
Drawee 354 Chapter 13 Consumer Reorganizations 387

Indorser 355 You Be the Judge: Marrama v. Citizens Bank
Accommodation Party 356 of Massachusetts 388
Warranty Liability 356 Beginning a Chapter 13 Case 389
Basic Rules of Warranty Liability 356 Plan of Payment 389
Transfer Warranties 357 Discharge 389
You Be the Judge: Quimby v. Bank
of America 358 Chapter Conclusion 390
Comparison of Signature Liability and Exam Review 390
Transfer Warranties 359 Multiple-Choice Questions 391
Presentment Warranties 359 Essay Questions 392
Other Liability Rules 360 Discussion Questions 393
Conversion Liability 360
Impostor Rule 361
Fictitious Payee Rule 361
Employee Indorsement Rule 361 UNIT 3
Negligence 362 Agency & Employment 395
Chapter Conclusion 363 Chapter 16 Agency Law 396
Exam Review 363 Creating an Agency Relationship 397
Multiple-Choice Questions 367 Consent 397
Essay Questions 367 Control 398
Discussion Questions 369 Fiduciary Relationship 398
Elements Not Required for an Agency
Relationship 398
Chapter 15 Bankruptcy 370 Duties of Agents to Principals 399
Overview of the Bankruptcy Code 371 Duty of Loyalty 399
Rehabilitation 371 Otsuka v. Polo Ralph Lauren Corporation 399
Liquidation 372 Abkco Music, Inc. v. Harrisongs Music, Ltd. 400
Chapter Description 372 Other Duties of an Agent 402
Goals 372 Principal’s Remedies when the Agent
Chapter 7 Liquidation 372 Breaches a Duty 403
Filing a Petition 373 Duties of Principals to Agents 404
Trustee 374 Duty to Cooperate 405
Creditors 374 Terminating an Agency Relationship 405
Automatic Stay 375 Termination by Agent or Principal 405
Jackson v. Holiday Furniture 375 Principal or Agent Can No Longer Perform
Bankruptcy Estate 376 Required Duties 406
Payment of Claims 378 Change in Circumstances 407
Discharge 380 Effect of Termination 407
In Re Stern 381 Liability 408
In Re Grisham 383 Principal’s Liability for Contracts 408
Chapter 11 Reorganization 384 Authority 408
Debtor in Possession 385 Ratification 409
Creditors’ Committee 385 Subagents 410
Plan of Reorganization 385 Agent’s Liability for Contracts 410
Confirmation of the Plan 385 Fully Disclosed Principal 410
Discharge 386 Unidentified Principal 411
In Re Fox 386 Undisclosed Principal 411
Small-Business Bankruptcy 387 Unauthorized Agent 412
x CONTENTS
Principal’s Liability for Torts 413 Chapter 18 Employment Discrimination 453

Employee 413 Introduction 454
Scope of Employment 414 The United States Constitution 454
You Be the Judge: Zankel v. United States of Civil Rights Act of 1866 455
America 415 Title VII of the Civil Rights Act of 1964 455
Intentional Torts 416 Prohibited Activities 455
Doe v. Liberatore 416 You Be the Judge: Jespersen v. Harrah’s 456
Physical or Nonphysical Harm 417 Landmark Case: Griggs v. Duke Power Co. 457
Agent’s Liability for Torts 418 Teresa Harris v. Forklift Systems, Inc. 459
Religion 461
Chapter Conclusion 418 Sex 462
Exam Review 419 Family Responsibility Discrimination 462
Multiple-Choice Questions 421 Sexual Orientation 463
Essay Questions 423 Gender Identity 463
Discussion Questions 423 Defenses to Charges of Discrimination 463
Equal Pay Act of 1963 465
Pregnancy Discrimination Act 465
Chapter 17 Employment and Labor Law 425 Age Discrimination in Employment Act 466
Introduction 426 Disparate Treatment 466
Employment Security 427 Reid v. Google, Inc. 467
Family and Medical Leave Act 427 Disparate Impact 468
Peterson v. Exide Technologies 427 Hostile Work Environment 468
Health Insurance 428 Bona Fide Occupational Qualification 468
Common-Law Protections 428 Discrimination on the Basis of Disability 469
Kozloski v. American Tissue Services The Rehabilitation Act of 1973 469
Foundation 430 Americans with Disabilities Act 469
Whistleblowing 433 Allen v. SouthCrest Hospital 470
Privacy in the Workplace 435 Genetic Information Nondiscrimination Act 473
Lifestyle Laws 435 Enforcement 473
You Be the Judge: Rodrigues v. Scotts Constitutional Claims 474
Lawnservice 436 The Civil Rights Act of 1866 474
Workplace Safety 439 The Rehabilitation Act of 1973 474
Financial Protection 439 Other Statutory Claims 474
Fair Labor Standards Act: Minimum Wage,
Overtime, and Child Labor 440 Chapter Conclusion 476
Workers’ Compensation 440 Exam Review 476
Social Security 440 Multiple-Choice Questions 479
Pension Benefits 441 Essay Questions 480
Labor Law and Collective Bargaining 441 Discussion Questions 481
Key Pro-Union Statutes 441
Labor Unions Today 442
Organizing a Union 442 UNIT 4
Collective Bargaining 444
Concerted Action 445 Business Organizations 483
Landmark Case: NLRB v. Truitt
Manufacturing Co. 445 Chapter 19 Starting a Business: LLCs and
Other Options 484
Chapter Conclusion 447 Sole Proprietorships 485
Exam Review 447 Corporations 486
Multiple-Choice Questions 450 Corporations in General 486
Essay Questions 451 S Corporations 488
Discussion Questions 452 Close Corporations 489
CONTENTS xi
Limited Liability Companies 490 Chapter Conclusion 537

You Be the Judge: Ridgaway v. Silk 491 Exam Review 537
Wyoming.Com, LLC v. Lieberman 492 Multiple-Choice Questions 540
BLD Products, LTD. v. Technical Plastics of Essay Questions 541
Oregon, LLC 493 Discussion Questions 542
Tzolis v. Wolff 494
Socially Conscious Organizations 496
General Partnerships 497 Chapter 21 Securities Regulation 544
Marsh v. Gentry 498 Introduction 545
Limited Liability Partnerships 500 The Securities and Exchange Commission 545
Limited Partnerships and Limited Liability What Is a Security? 546
Limited Partnerships 500 Securities Act of 1933 546
Professional Corporations 502 General Exemption 547
Joint Ventures 502 Exempt Securities 547
Franchises 503 Exempt Transactions 547
National Franchisee Association v. Burger Public Offerings 552
King Corporation 504 Sales of Restricted Securities 553
You Be the Judge: EBC I, Inc. v. Goldman
Chapter Conclusion 505 Sachs & CO. 553
Exam Review 506 Liability under the 1933 Act 554
Multiple-Choice Questions 507 Securities Exchange Act of 1934 555
Essay Questions 508 General Provisions of the 1934 Act 556
Discussion Questions 509 Liability under the 1934 Act 557
Matrixx Initiatives, Inc. v. Siracusano 559
Stoneridge Investment Partners, LLC
Chapter 20 Corporations 511 v. Scientific-Atlanta, Inc. 561
Promoter’s Liability 512 Insider Trading 562
Incorporation Process 512 Securities and Exchange Commission v. Steffes 564
Where to Incorporate? 512 Sarbanes-Oxley 566
The Charter 513 Dodd-Frank 566
After Incorporation 516 Blue Sky Laws 566
Directors and Officers 516 Exemption from State Regulation 566
Bylaws 517 State Regulation 567
Issuing Debt 517 Facilitating State Regulation 567
Death of the Corporation 517
Piercing the Corporate Veil 518 Chapter Conclusion 568
Brooks v. Becker 518 Exam Review 568
Termination 519 Multiple-Choice Questions 571
The Role of Corporate Management 519 Essay Questions 572
The Business Judgment Rule 520 Discussion Questions 573
Duty of Loyalty 521
Anderson v. Bellino 522
Duty of Care 524
The Role of Shareholders 525 UNIT 5
Rights of Shareholders 526
Brehm v. Eisner (In re Walt Disney Co.
Government Regulation
Derivative Litig.) 534 and Property 575
You Be the Judge: eBay Domestic Holdings,
Inc. v. Newmark 535 Chapter 22 Antitrust 576
Enforcing Shareholder Rights 536 In the Beginning 577
Derivative Lawsuits 536 Antitrust Legislation 578
Direct Lawsuits 537 Chicago School 578
xii CONTENTS
Overview of Antitrust Laws 579 Chapter 24 Intellectual Property 627

Cooperative Strategies 580 Introduction 628
Horizontal Cooperative Strategies 580 Patents 628
Landmark Case: United States v. Trenton Types of Patents 628
Potteries Company 581 Requirements for a Patent 630
Fears v. Wilhelmina Model Agency, Inc. 583 Patent Application and Issuance 631
Vertical Cooperative Strategies 584 Copyrights 634
You Be the Judge: Feesers, Inc. v. Michael Lapine v. Seinfeld 635
Foods, Inc. 586 Copyright Term 636
Mergers and Joint Ventures 587 Infringement 636
Landmark Case: United States v. Waste First Sale Doctrine 636
Management, Inc. 587 Fair Use 636
Aggressive Strategies 588 Digital Music and Movies 638
Monopolization 588 Metro-Goldwyn-Mayer Studios, Inc.
Predatory Pricing 591 v. Grokster, Ltd. 639
Tying Arrangements 592 International Copyright Treaties 641
Controlling Distributors and Retailers 593 Trademarks 641
Resale Price Maintenance 594 Types of Marks 642
Leegin Creative Leather Products, Inc. Ownership and Registration 642
v. PSKS, Inc. 595 Valid Trademarks 642
Infringement 644
Chapter Conclusion 596 You Be the Judge: Network Automation, Inc.
Exam Review 596 v. Advanced Systems Concepts, Inc. 645
Multiple-Choice Questions 599 Federal Trademark Dilution Act of 1995 646
Essay Questions 600 Domain Names 646
Discussion Questions 600 International Trademark Treaties 647
Trade Secrets 648
Pollack v. Skinsmart Dermatology and
Chapter 23 Cyberlaw 602 Aesthetic Center P.C. 649
Privacy 604
Tracking Tools 604 Chapter Conclusion 650
Regulation of Online Privacy 605 Exam Review 650
You Be the Judge: Juzwiak v. John/Jane Doe 606 Multiple-Choice Questions 651
United States of America v. Angevine 607 Essay Questions 652
United States of America v. Warshak 608 Discussion Questions 654
You Be the Judge: Scott v. Beth Israel
Medical Center Inc. 611
Spam 612 Chapter 25 Property 655
Internet Service Providers and Web Hosts: Nature of Real Property 656
Communications Decency Act of 1996 614 Estates in Real Property 657
Carafano v. Metrosplash.com, Inc. 614 Freeman v. Barrs 657
Crime on the Internet 616 Concurrent Estates 658
Hacking 616 Jackson v. Estate of Green 659
Fraud 617 Nonpossessory Interests 660
Easements 661
Chapter Conclusion 620 Profit 661
Exam Review 620 License 661
Multiple-Choice Questions 623 Mortgage 661
Essay Questions 624 Land Use Regulation 662
Discussion Questions 625 Nuisance Law 662
CONTENTS xiii
Zoning 662 Federal Trade Commission v. Direct

Eminent Domain 663 Marketing Concepts, Inc. 687
Landlord-Tenant Law 663 Unfair Practices 688
Three Legal Areas Combined 664 Additional Sales Rules 689
Lease 664 Consumer Credit 691
Types of Tenancy 664 Truth in Lending Act—General Provisions 691
Tenancy for Years 664 Home Loans 692
Periodic Tenancy 664 Credit Cards 694
Tenancy at Will 665 Gray v. American Express Co. 697
Tenancy at Sufferance 665 Debit Cards 698
Landlord’s Duties 665 Credit Reports 699
Duty to Deliver Possession 665 Debt Collection 701
Quiet Enjoyment 665 Equal Credit Opportunity Act 702
Duty to Maintain Premises 666 You Be the Judge: Brown v. Card Service
Mishkin v. Young 667 Center 702
Tenant’s Duties 668 Treadway v. Gateway Chevrolet
Duty to Pay Rent 668 Oldsmobile Inc. 703
Duty to Use Premises for Proper Purpose 670 Consumer Leasing Act 704
Duty Not to Damage Premises 670 Magnuson-Moss Warranty Act 705
Duty Not to Disturb Other Tenants 670 Consumer Product Safety 705
Injuries 670
Tenant’s Liability 670 Chapter Conclusion 706
Landlord’s Liability 671 Exam Review 706
Personal Property 671 Multiple-Choice Questions 710
Gifts 671 Essay Questions 711
Intention to Transfer Ownership 672 Discussion Questions 712
Delivery 672
Inter Vivos Gifts and Gifts Causa Mortis 673
You Be the Judge: Albinger v. Harris 674
Acceptance 674 Chapter 27 Environmental Law 714
Bailment 675 Introduction 715
Control 676 Environmental Protection Agency 715
Rights of the Bailee 676 Air Pollution 716
Duties of the Bailee 677 Clean Air Act 716
You Be the Judge: Johnson v. Weedman 678 You Be the Judge: Central Arizona Water
Conservation District v. EPA 717
Chapter Conclusion 678 Greenhouse Gases and Global Warming 718
Exam Review 678 Soot Particles 720
Multiple-Choice Questions 681 Air Toxics 720
Essay Questions 682 Water Pollution 721
Discussion Questions 684 Clean Water Act 722
Entergy Corporation v. Riverkeeper, Inc. 722
Other Water Pollution Statutes 725
Chapter 26 Consumer Law 685 Waste Disposal 726
Introduction 686 Resource Conservation and Recovery Act 726
Federal Trade Commission 686 Superfund 728
Consumer Financial Protection Bureau 687 Chemicals 729
Sales 687 Federal Insecticide, Fungicide, and
Deceptive Acts or Practices 687 Rodenticide Act 729
xiv CONTENTS
Federal Food, Drug, and Cosmetic Act 730 Essay Questions 739
Food Quality Protection Act of 1996 730 Discussion Questions 739
Toxic Substances Control Act 730
Natural Resources 730 Appendix A
National Environmental Policy Act 730 The Constitution of the United States A1
You Be the Judge: Winter v. Natural
Appendix B
Resources Defense Council, Inc. 731
Uniform Commercial Code (Selected Provisions) B1
Endangered Species Act 732
Gibbs v. Babbitt 733 Glossary G1
Chapter Conclusion 735 Table of Cases T1
Exam Review 735
Multiple-Choice Questions 738 Index I1
PREFACE
Looking for more examples for class? Do you want the latest developments? Visit our blog at
Bizlawupdate.com. To be notified when we post updates, just “like” our Facebook page at
Beatty Business Law or follow us on Twitter @bizlawupdate.
NOTE FROM THE AUTHORS

New to This Edition
A New Chapter: Practical Contracts
In this textbook, as well as other business law texts, contracts chapters focus on the theory of
contract law. And that theory is important. But our students tell us that theory, by itself, is
not enough. They need to know how these abstract rules operate in practice. They want to
understand the structure and content of a standard agreement. They have questions such as:
• Do I need a written agreement?
• What do these legal terms really mean?
• Are any important provisions missing?
• What happens if a provision is unclear?
• Do I need to hire a lawyer? How can I use a lawyer most effectively?
We answer all these questions in Chapter 12, “Practical Contracts,” which is new to this
edition. As an illustration throughout the chapter, we use a real-life contract between a
movie studio and an actor.
A New Chapter: Employment Discrimination

We have heard from faculty and students alike that employment law plays an increasingly
important role in the life of a businessperson. At the same time, fewer and fewer workers belong
to labor unions. Therefore, we have rewritten the labor law and employment law chapters from
the previous edition. Instead of one chapter on labor law and one on employment law, we now
have a new Chapter 17, “Employment and Labor Law,” which covers both common law
employment issues and labor law. In addition, Chapter 18, “Employment Discrimination,”
focuses solely on employment discrimination and includes, among other things, an expanded
discussion of disparate impact cases, which have become increasingly common and important.
Landmark Cases
As a general rule, we want our cases to be as current as possible, reporting on the world as it is
now. However, sometimes students can benefit from reading vintage cases that are still good law
and provide a deep understanding of how and why the law has developed as it has. Thus, for
example, we have added a discussion about the famous Supreme Court case Miranda v. Arizona.
Reading this case provides students with a much better understanding of why the Supreme
Court created Miranda rights, and this context helps students follow the recent Supreme Court
rulings on Miranda. Other landmark cases include Hawkins v. McGee (the case of the hairy hand),
Griggs v. Duke Power Co., and International Shoe Co. v. State of Washington.
xv
xvi PREFACE
Reorganized and Revised Material

To reflect requests from faculty, the product liability material is now covered in Chapter 6,
“Torts and Product Liability,” because most people like to teach these two subjects
together. The topics of sales and secured transactions are now in the same chapter,
Chapter 13, “Secured Transactions and Sales,” while bankruptcy has its own stand-alone
chapter devoted to it, Chapter 15.
The new CPA exam no longer includes questions about banks and their customers, and
much of that material (such as how long it takes checks to clear) is not very relevant to our
students. Therefore, in Chapter 14, “Negotiable Instruments,” we have replaced the bank-
ing material with information on liability for negotiable instruments.
The New Patent Law

This statute represents the most major change in patent law in our lifetime.
The JOBS Act

The Jumpstart Our Business Startups (JOBS) Act rewrote significant portions of the
securities laws. These changes are included in this edition.
End of Chapter Material

To facilitate class discussion and student learning, we have overhauled the study questions
at the end of the chapters. They are now divided into three parts:
1. Multiple-choice questions. Because many instructors use this format in their tests,
it seemed appropriate to provide practice questions. The answers to these multiple-
choice questions are available to students online at www.cengagebrain.com.
2. Essay questions. Students can use these as study questions, and professors can also
assign them as written homework problems.
3. Discussion questions. Instructors can use these questions to enhance class discussion.
If assigned in advance, students will have a chance to think about the answers
before class. This format follows one that students are used to from business cases,
which often pose discussion questions in advance.
Other New Material

We have, of course, added substantial new material, with a particular focus on the Internet
and social media. Chapter 17, “Employment and Labor Law,” includes a section on social
media. Chapter 20, “Corporations,” uses Facebook as an example of how to organize a
corporation. There are also new cases involving eBay and craigslist. In addition, Chapter 19,
“Starting a Business: LLCs and Other Options,” includes a new section about socially
conscious organizations.
Staying Current: Our Blog, Facebook, and Twitter

To find out about new developments in business law, visit our blog at Bizlawupdate.com.
If you “like” our Facebook page at Beatty Business Law or follow us on Twitter
@bizlawupdate, you will receive a notification automatically whenever we post to the blog.
The Beatty/Samuelson Difference

When we began work on the first edition of this textbook, our publisher warned us that our
undertaking was risky because there were already so many Legal Environment texts.
Despite these warnings, we were convinced that there was a market for a Legal Environment
PREFACE xvii
book that was different from all the others. Our goal was to capture the passion and
excitement—the sheer enjoyment—of the law. Business law is notoriously complex, and as
authors we are obsessed with accuracy. Yet this intriguing subject also abounds with human
conflict and hard-earned wisdom, forces that can make a law book sparkle.
Now, as this fifth edition goes to press, we look back over the intervening years and
are touched by the many unsolicited comments from students, such as these posted on
Amazon:
• “Glad I purchased this. It really helps put the law into perspective and allows me as a
leader to make intelligent decisions. Thanks.”
• “I enjoyed learning business law and was happy my college wanted this book.
THUMBS UP!”
We think of the students who have emailed us to say, “In terms of clarity, comprehen-
siveness, and vividness of style, I think it’s probably the best textbook I’ve ever used in any
subject,” and “I had no idea business law could be so interesting.” Or the faculty who have
told us, “Until I read your book, I never really understood UCC 2-207” and “With your
book, we have great class discussions.” Comments such as these never cease to thrill us and
to make us grateful that we persisted in writing a Legal Environment text like no other—a
book that is precise and authoritative, yet a pleasure to read.
Comprehensive. Staying comprehensive means staying current. This fifth edition
contains over 50 new cases. Almost all were reported within the last two or three years.
We never include a new court opinion merely because it is recent, but the law evolves
continually, and our willingness to toss out old cases and add important new ones ensures
that this book—and its readers—remain on the frontier of legal developments.
Look, for example, at the important field of corporate governance. All texts cover par
value, and so do we. Yet a future executive is far likelier to face conflicts over Sarbanes-
Oxley (SOX), executive compensation, and shareholder proposals. We present a clear path
through this thicket of new issues. In Chapter 20, for example, read the section about the
election and removal of directors. Typically, students (even those who are high-level
executives) have a basic misconception about the process of removing a director from office.
They think that it is easy. Once they understand the complexity of this process, their whole
view of corporate governance—and compensation—changes. We want tomorrow’s business
leaders to anticipate the challenges that await them and then use their knowledge to avert
problems.
Strong Narrative. The law is full of great stories, and we use them. Your students
and ours should come to class excited. Look at Chapter 3, “Dispute Resolution.” No
tedious list of next steps in litigation, this chapter teaches the subject by tracking a
double-indemnity lawsuit. An executive is dead. Did he drown accidentally, obligating
the insurance company to pay? Or did the businessman commit suicide, voiding the
policy? The student follows the action from the discovery of the body, through each step
of the lawsuit, to the final appeal.
Students read stories and remember them. Strong narratives provide a rich context for
the remarkable quantity of legal material presented. When students care about the material
they are reading, they persevere. We have been delighted to find that they also arrive in
class eager to question, discuss, and learn more about issues.
Precise. The great joy of using English accurately is the power it gives us to attack
and dissect difficult issues, rendering them comprehensible to any lay reader. This text
takes on the most complex legal topics of the day, yet it is appropriate for all college and
graduate-level students. Accessible prose goes hand in hand with legal precision. We take
great pride in walking our readers through the most serpentine mazes this tough subject
can offer.
xviii PREFACE
As we explore this extraordinary discipline, we lure readers along with quirky anecdotes
and colorful diagrams. (Notice that the color display on page 525 clarifies the complex rules
of the duty of care in the business judgment rule.) However, before the trip is over, we insist
that students:
• Gauge policy and political considerations,
• Grapple with legal and social history,
• Spot the nexus between disparate doctrines, and
• Confront tough moral choices.
Authoritative. We insist, as you do, on a lawbook that is indisputably accurate. A

professor must teach with assurance, confident that every paragraph is the result of
exhaustive research and meticulous presentation. Dozens of tough-minded people spent
thousands of hours reviewing this book, and we are delighted with the stamp of approval
we have received from trial and appellate judges, working attorneys, scholars, and
teachers.
We reject the cloudy definitions and fuzzy explanations that can invade judicial
opinions and legal scholarship. To highlight the most important rules, we use bold print,
and then follow with vivacious examples written in clear, forceful English. (See, for
example, the discussion of factual cause on page 149.) We cheerfully venture into con-
tentious areas, relying on very recent appellate decisions. Can a creditor pierce the veil of an
LLC? What are the rights of an LLC member in the absence of an operating agreement?
(See pages 491–494.) Where there is doubt about the current (or future) status of a doctrine,
we say so. In areas of particularly heated debate, we footnote our work: we want you to have
absolute trust in this book.
A Book for Students. We have written this book as if we were speaking directly to
our students. We provide black letter law, but we also explain concepts in terms that hook
students. Over the years, we have learned how much more successfully we can teach when
our students are intrigued. No matter what kind of a show we put on in class, they are only
learning when they want to learn.
Every chapter begins with a story, either fictional or real, to illustrate the issues in the
chapter and provide context. Chapter 23, “Cyberlaw,” begins with the true story of a college
student who discovers nude pictures of himself online. These photos had been taken in the
locker room without his knowledge. What privacy rights do any of us have? Does the
Internet jeopardize them? Students want to know—right away.
Many of our students were not yet born when Bill Clinton was elected president. They
come to college with varying levels of preparation; many now arrive from other countries.
We have found that to teach business law most effectively, we must provide its context.
Chapter 21, “Securities Regulation,” begins with a brief but graphic description of the 1929
stock market crash and the Great Depression (page 544). Only with this background do
students grasp the importance and impact of our securities laws.
At the same time, we enjoy offering “nuts-and-bolts” information that grabs students.
For example, in Chapter 26, “Consumer Law,” we offer advice about how students can
obtain a free credit report (page 700).
Students respond enthusiastically to this approach. One professor asked a student to
compare our book with the one that the class was then using. This was the student’s
reaction: “I really enjoy reading the [Beatty & Samuelson] textbook and I have decided
that I will give you this memo ASAP, but I am keeping the book until Wednesday so that I
may continue reading. Thanks! :-)”
PREFACE xix
Along with other professors, we have used this text in courses for undergraduates,
MBAs, and Executive MBAs, with the students ranging in age from 18 to 55. The book
works, as some unsolicited comments indicate:
• An undergraduate wrote, “This is the best textbook I have had in college, on any
subject.”
• A business law professor stated that the “clarity of presentation is superlative. I have
never seen the complexity of contract law made this readable.”
• An MBA student commented, “I think the textbook is great. The book is relevant,
easy to understand, and interesting.”
• A state supreme court justice wrote that the book is “a valuable blend of rich
scholarship and easy readability. Students and professors should rejoice with this
publication.”
• A Fortune 500 vice president, enrolled in an Executive MBA program, commented,
“I really liked the chapters. They were crisp, organized and current. The information
was easy to understand and enjoyable.”
• An undergraduate wrote, “The textbook is awesome. A lot of the time I read more
than what is assigned—I just don’t want to stop.”
Humor Throughout the text, we use humor—judiciously—to lighten and enlighten. Not
surprisingly, students have applauded—but is wit appropriate? How dare we employ levity
in this venerable discipline? We offer humor because we take the law seriously. We revere
the law for its ancient traditions; its dazzling intricacy; its relentless, though imperfect,
attempt to give order and decency to our world. Because we are confident of our respect
for the law, we are not afraid to employ some levity. Leaden prose masquerading as legal
scholarship does no honor to the field.
Humor also helps retention. Research shows that the funnier or more bizarre the
example, the longer students will remember it. Students are more likely to remember a
contract problem described in a fanciful setting, and from that setting recall the underlying
principle. By contrast, one widget is hard to distinguish from another.
Features
We chose the features for our book with great care. Each one supports an essential
pedagogical goal. Here are some of those goals and the matching feature.
Exam Strategy
GOAL: To help students learn more effectively and to prepare for exams. In preparing this
fifth edition, we asked ourselves: What do students want? The short answer is—a good
grade in the course. How many times a semester does a student ask you, “What can I do to
study for the exam?” We are happy to help them study and earn a good grade because that
means they should also be learning.
About six times per chapter, we stop the action and give students a two-minute quiz. In
the body of the text, again in the end-of-chapter review, and also in the Instructor’s Manual,
we present a typical exam question. Here lies the innovation: We guide the student in
analyzing the issue. We teach the reader—over and over—how to approach a question: to
start with the overarching principle, examine the fine point raised in the question, apply the
analysis that courts use, and deduce the right answer. This skill is second nature to lawyers,
but not to students. Without practice, too many students panic, jumping at a convenient
answer and leaving aside the tools that they have spent the course acquiring. Let’s change
that. Students who have tried the Exam Strategy feature love it.
xx PREFACE
You Be the Judge

GOAL: Get students to think independently. When reading case opinions, students tend
to accept the court’s “answer.” Judges, of course, try to reach decisions that appear
indisputable, when in reality they may be controversial—or wrong. From time to time we
want students to think through the problem and reach their own answer. Virtually every
chapter contains a You Be the Judge feature, providing the facts of the case and conflicting
appellate arguments. The court’s decision, however, appears only in the Instructor’s Manual.
Because students do not know the result, discussions are more complex and lively.
Ethics
GOAL: Make ethics real. We ask ethical questions about cases, legal issues, and commercial
practices. Is it fair for one party to void a contract by arguing, months after the fact, that
there was no consideration? What is a manager’s ethical obligation when asked to provide a
reference for a former employee? What is wrong with bribery? What is the ethical obligation
of developed nations to dispose of toxic waste from computers? We believe that asking the
questions and encouraging discussion reminds students that ethics is an essential element of
justice and of a satisfying life.
Cases
GOAL: Let the judges speak. Each case begins with a summary of the facts and a statement
of the issue. Next comes a tightly edited version of the decision, in the court’s own
language, so that students “hear” the law developing in the diverse voices of our many
judges. We cite cases using a modified bluebook form. In the principal cases in each
chapter, we provide the state or federal citation, the regional citation, and the LEXIS or
Westlaw citation. We also give students a brief description of the court. Because many of our
cases are so recent, some will have only a regional reporter and a LEXIS or Westlaw citation.
Exam Review
GOAL: Help students to remember and practice! At the end of every chapter, we provide a
list of review points and several additional Exam Strategy exercises in a Question/Strategy/
Result format. We also challenge the students with 15 or more problems—Multiple-Choice,
Essay Questions, and Discussion Questions. The questions include the following:
• You Be the Judge Writing Problem. The students are given appellate arguments on both
sides of the question and must prepare a written opinion.
• Ethics. This question highlights the ethical issues of a dispute and calls upon the
student to formulate a specific, reasoned response.
• CPA Questions. Where relevant, practice tests include questions from previous CPA
exams administered by the American Institute of Certified Public Accountants.
Answers to all the Multiple-Choice questions are available to students online through
www.cengagebrain.com.
Author Transition
Jeffrey Beatty fought an unremitting 10-year battle against a particularly aggressive form of
leukemia which, despite his great courage and determination, he ultimately lost. Jeffrey, a
gentleman to the core, was an immensely kind, funny and thoughtful human being, some-
one who sang and danced, and who earned the respect and affection of colleagues and
students alike. In writing these books, he wanted students to see and understand the impact
PREFACE xxi
of law in their everyday lives, as well as its role in supporting human dignity, and what’s
more, he wanted students to laugh.
Because of the length of Jeffrey’s illness, we had ample time to develop a transition
plan. Through a combination of new and old methods (social media and personal connec-
tions), we were able to identify a wonderfully talented group of applicants—graduates of
top law schools who had earned myriad teaching and writing prizes. We read two rounds of
blind submissions and met with finalists. In the end, we are thrilled to report that Dean
Bredeson has joined the Beatty/Samuelson team. A member of the faculty of the
McCombs School of Business at the University of Texas, Dean is a devoted teacher
who has received the school’s highest teaching award for the last five years. He is also
the author of the textbook, Applied Business Ethics (Cengage, 2011). Dean has a number of
qualities that are essential to a textbook writer—keen insight into explaining complex
material in an engaging manner, meticulous attention to detail, an ability to meet dead-
lines, and a wry sense of humor.
TEACHING MATERIALS
For more information about any of these ancillaries, contact your Cengage Learning/South-
Western Legal Studies Sales Representative for more details, or visit the Beatty & Samuelson
Legal Environment, 5th edition web page, accessed through www.cengagebrain.com.
Instructor’s Resource CD. The Instructor’s Resource CD (IRCD) contains the
ExamView testing software files, the test bank in Microsoft Word files, the Instructor’s
Manual in Word files, and Microsoft PowerPoint Lecture Review Slides.
Instructor’s Manual. Available both online at and on the IRCD, this manual
includes special features to enhance class discussion and student progress:
• Exam Strategy problems. If your students would like more Exam Strategy problems,
there is an additional section of these problems in the Instructor’s Manual.
• Dialogues. These are a series of questions and answers on pivotal cases and topics.The
questions provide enough material to teach a full session. In a pinch, you could walk
into class with nothing but the manual and use the Dialogues to conduct an exciting
class.
• Action Learning ideas. Interviews, quick research projects, drafting exercises, classroom
activities, commercial analyses, and other suggested assignments get students out of
their chairs and into the diverse settings of business law.
• Skits. Various chapters have lively skits that students can perform in class, with no
rehearsal, to put legal doctrine in a real-life context.
• Succinct introductions. Each chapter has a theme and a quote of the day.
• Current focus. This feature offers updates of text material.
• Additional cases and examples. For those topics that need more attention or coverage,
use the additional cases and examples provided in the Instructor’s Manual.
• Solutions. Answers to You Be the Judge cases from the text and to the Exam Review
questions found at the end of each chapter.
Test Bank. The test bank offers hundreds of essay, short-answer, and multiple-choice
problems and may be obtained online or on the IRCD.
xxii PREFACE
ExamView Testing Software–Computerized Testing Software. This testing

software contains all of the questions in the test bank. This program is an easy-to-use test
creation software compatible with Microsoft Windows. Instructors can add or edit questions,
instructions, and answers; and select questions by previewing them on the screen, selecting
them randomly, or selecting them by number. Instructors can also create and administer
quizzes online. The ExamView testing software is available only on the IRCD.
PowerPoint Lecture Review Slides. PowerPoint slides are available for instructors
to use with their lectures. Download these slides online or from the IRCD.
CengageNOW. This robust, online course management system gives you more control
in less time and delivers better student outcomes—NOW. CengageNOW for Legal Envir-
onment 5e has been expanded to include six homework types that align with the six levels of
Bloom’s taxonomy: Knowledge: Chapter Review, Comprehension: Business Law Scenarios,
Application: Legal Reasoning, Analysis: IRAC, Synthesis: Exam Strategy, and Evaluation:
Business Wisdom. With all these elements used together, CengageNOW will ensure that
students develop the higher-level thinking skills they need to reach an advanced under-
standing of the material.
Aplia. Engage, prepare, and educate your students with this ideal online learning solu-
tion. Aplia’s™ business law solution ensures that students stay on top of their coursework
with regularly scheduled homework assignments and automatic grading with detailed,
immediate feedback on every question. Interactive teaching tools and content further
increase engagement and understanding. Aplia™ assignments match the language, style,
and structure of Legal Environment 5e, allowing your students to apply what they learn in the
text directly to their homework.
Business Law CourseMate. Cengage Learning’s Business Law CourseMate brings
course concepts to life with interactive learning, study, and exam preparation tools—
including an e-book—that supports the printed textbook. Designed to address a variety of
learning styles, students will have access to flashcards, Learning Objectives, and the Key
Terms for quick reviews. A set of auto-gradable, interactive quizzes will allow students to
instantly gauge their comprehension of the material. For instructors, all quiz scores and
student activity are mapped within Engagement Tracker, a set of intuitive student perfor-
mance analytical tools that help identify at-risk students. An interactive blog helps connect
book concepts to real-world situations happening now.
Business Law Digital Video Library. This dynamic online video library features
over 90 video clips that spark class discussion and clarify core legal principles. The library is
organized into four series:
• Legal Conflicts in Business includes specific modern business and e-commerce
scenarios.
• Ask the Instructor contains straightforward explanations of concepts for student review.
• Drama of the Law features classic business scenarios that spark classroom
participation.
• LawFlix contains clips related to the law from many popular films, including Field of
Dreams, Midnight Run, and Jaws.
• Real World Legal takes students out of the classroom and into real-life situations,
encouraging them to consider the legal aspects of decision making in the business
world.
• Business Ethics in Action challenges students to examine ethical dilemmas in the world
of business.
PREFACE xxiii
Access to the Business Law Digital Video Library is available as an optional package with
each new student text at no additional charge. Students with used books can purchase
access to the video clips online. For more information about the Business Law Digital Video
Library, visit www.cengagebrain.com.
A Handbook of Basic Law Terms, Blacks Law Dictionary Series. This paper-
back dictionary, prepared by the editor of the popular Black’s Law Dictionary, can be packaged
for a small additional cost with any new South-Western Legal Studies in Business text.
Student Guide to the SOX. This brief overview for business students explains SOX,
what is required of whom, and how it might affect students in their business lives. Available
as an optional package with the text.
Interaction with the Authors. This is our standard: Every professor who adopts this
book must have a superior experience. We are available to help in any way we can. Adopters
of this text often call us or e-mail us to ask questions, obtain a syllabus, offer suggestions,
share pedagogical concerns, or inquire about ancillaries. One of the pleasures of working on
this project has been this link to so many colleagues around the country. We value those
connections, are eager to respond, and would be happy to hear from you.
Susan S. Samuelson
Phone: (617) 353-2033
Email: ssamuels@bu.edu
Dean A. Bredeson
Phone: (512) 471-5248
Email: bredeson@mail.utexas.edu
ACKNOWLEDGMENTS
We appreciate the thoughtful insights of the reviewers for this fifth edition:
Martha Broderick Carol Nielsen
University of Maine Bemidji State University
Burke Christensen Margaret A. Parker
Eastern Kentucky University Owens Community College
Michael Costello Cheryl Staley
University of Missouri, St. Louis Lake Land College
Suzanne M. Gradisher Paulette L. Stenzel
University of Akron Michigan State University
Wendy Hind Kenneth Ray Taurman, Jr.
Doane College Indiana University Southeast
Ronald B. Kowalczyk Deborah Walsh
Elgin Community College Middlesex Community College
Colleen Arnott Less
Johnson & Wales University
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“What!” roared the big lout, whom he had slightly touched upon the
arm. “Who the devil are you? Keep your hands off of me, you fool!”
The person on whom Adam looked was Gallows, whose face,
florid almost to being purple, was so savagely contorted as to
comprise an insult in itself.
“My cross-eyed friend,” retorted Adam, whose temper had risen
without delay, “have done looking at yourself, if you would see no
fool. If you will tell me which hand I put on you, I’ll cut it off, else I
may live to see it rot!”
The company had turned about at once. Pinchbecker was there,
with his satellite, Psalms Higgler, the little white-eyed scamp that
Adam had once dropped from the near-by window. The foppish
young Englishman, who owned the horse outside, was likewise in
the party. They all saw the burly Gallows turn to them hopelessly,
befuddled by Adam’s answer.
“You be a fool!” he roared again, his eyes bulging out of their
sockets in his wrath, “and I be the fool-killer!”
The company guffawed at this, the monster’s solitary sally of wit.
“You are a liar by the fact that you live,” said Rust. “Bah, you
disgust me with the thought of having the duties, which you have so
patently and outrageously neglected, thrust upon me. Begone.
There’s no fire to roast a barbecue, if I should be minded to spit you!”
The creature looked again at his fellows, who had obviously egged
him on.
“He insults you right prettily, good Gallows,” said the dandy, who
was himself a rascal banished from his own country. “But he dare not
fight you, we can see it plainly.”
“With you thrown in, I dare say there might be a moment’s sport in
a most unsavory blood-letting,” said Rust, whose hand went to his
sword-hilt calmly. “I should want some fresh air if I stuck either one of
you carrion-fed buzzards.”
Gallows knew by this that it was time to draw his blade. “You be a
fool and I be the fool-killer,” he roared as before, this being his best
hold on language to suit the occasion. Only now he came for Adam
like a butcher.
“Outside—go outside, gentlemen!” cried the landlord excitedly.
“Go outside!” said the voice of some one who was not visible. It
was Randolph, concealed in the adjoining room and watching the
proceedings through a narrow crack, where he had opened the door.
“Go on out, and I’ll fight you!” bellowed Gallows.
“After you,” said Rust, whose blade was out and being swiftly
passed under his exacting eye. “Go out first. You will need one more
breath than I.”
The brute obeyed, as if he had to do so and knew it, receiving
Adam’s order like the clod he was.
The other creatures made such a scrambling to see the show, and
otherwise evinced such an abnormal interest in the coming fight, that
Adam had no trouble in divining that the whole affair had been
prearranged, and that if he did not get killed, he would be arrested,
should he slay his opponent. He concluded he was something of a
match for the whole outfit.
“Have at you, mountain of foul meat,” he said, as he tossed down
his hat. “What a mess you will make, done in slices!”
The young dandy laughed, despite himself, from his place by the
door.
Gallows needed no further exasperations. He came marching up
to Rust and made a hack at him, mighty enough and vicious enough
to break down the stoutest guard and cleave through a man’s whole
body as well.
Rust had expected no less than such a stroke. He spared his steel
the task of parrying the Gallows’ slash. Nimbly leaping aside, he
made a motion that had something debonair in its execution, and cut
a ghastly big flap, like a steak, from the monster’s cheek.
The fellow let out an awful bellow and ran at his opponent, striking
at him like a mad Hercules.
“Spare yourself, fool-killer,” said Adam. He dared to bow, as he
dodged a mighty onslaught, in which Gallows used his sword like a
hatchet, and then he flicked the giant’s ear away, bodily, taking
something also of his jowl, for good measure.
The great hulk stamped about there like an ox, the blood
hastening down from his face and being flung in spatters about him.
Adam next cut him deeply in the muscle of his great left arm.
“I warm to my work,” he said, as he darted actively away and back.
“Gentlemen, is your choice for a wing or a leg of the ill-smelling
bird?”
The dandy, fresh from England, guffawed and cried “Bravo!” He
had been born a gentleman, in spite of himself.
The fight was a travesty on equality. The monster was absolutely
helpless. He was simply a vast machine for butchery, but he must
needs first catch his victim before he could perform his offices. He
was a terrible sight, with his great sword raised on high, or ripping
downward through the air, as he ran, half blinded by his own gore, to
catch the rover, who played with him, slicing him handily, determined
not to kill the beast and so to incur a penalty for murder.
The creatures inside the tavern, appalled by the exhibition they
had brought about, saw that their monster was soon to be a
staggering tower of blood and wounds.
“Don’t let him get away! Kill him! Kill him!” said the voice of
Randolph, from behind the others.
Adam heard him. He saw Pinchbecker shrink back at once.
Psalms Higgler, however, glad of an excuse and ready to take
advantage of a man already sufficiently beset, came scrambling out.
The foppish gentleman was too much of a sport to take a hand
against such a single swordsman as he found in Rust.
Aware that he was to have no chance, and convinced abruptly that
these wretches had plotted to kill him, Adam deftly avoided Gallows,
as the dreadful brute came again upon him, and slashing the fellow’s
leg behind the knee, ham-strung him instantly.
Roaring like a wounded bull, the creature dropped down on his
side, and then got upon his hands and knees and commenced to
crawl, wiping out his eyes with his reddened hands.
Unable to restrain his rage, and fearing his intended victim would
yet avoid him, Higgler being already at bay and disarmed, Randolph
came abruptly out from the tavern himself, pistol in hand, to perform
the task which otherwise was doomed to failure.
“Call the guard!” he cried. “Call the guard!”
Adam had been waiting for some such treachery. He cut at the
pistol the second it rose, knocking it endways and slicing Randolph’s
arm, superficially, from near the wrist to the elbow. He waited then
for nothing more.
Across the road, before any one guessed his intention, he was up
on the back of the horse, before the yelled protest of the English
gentleman came to his ears.
“Gentlemen all,” he called to the group, “good evening.”
Clapping his heels to the ribs of the restive animal, he rode madly
away, just as Isaiah Pinchbecker, with half a dozen constables came
running frantically upon the scene.
CHAPTER XXXI.
A REFUGEE.
Irresponsibly joyous, thus to be in a saddle, on a spirited horse,

Rust was soon dashing across the common and turning about like a
centaur, for ease and grace, glanced back to see who might be
joining in the race. His naked sword was still in his hand. It was red
from point to hilt. He wiped it on the horse, thereby causing the
animal to plunge and to run in a frenzy of nervousness.
Adam chortled. The affair from beginning to end, from his present
standpoint, appealed to his sense of humor. The consequences of
his adventure would be presented to his mind soon enough. He
merely knew now that he had won out of a tight corner, as a
gentleman should, that a glorious animal was bounding beneath him
and, that sweet night air came rushing upon him as if it opened its
arms to receive him.
Aware that he would soon be pursued, and mentally
acknowledging that the horse was not his own, he rode to a farm-
house about a mile or so out from the town, and there dismounted.
Reluctantly he said farewell to the charger, bidding the farmer have
the animal returned to Boston in the morning, with his thanks and
compliments. For the service he presented the wondering man with
a piece of silver, the last he had of the small amount left him after
paying the fares of the beef-eaters up to Massachusetts.
Coolly inviting himself to have a bite of the farmer’s scanty supper,
he bade the man good night, about five minutes before the mounted
constables came riding hotly to the place. He even heard them,
when they left the farm and began to scour the woods to jump him
up. At this he smiled with rare good humor, confident of the powers
of superior wood-craft to baffle anybody or anything in all
Massachusetts, save alone an Indian.
Understanding all the delighted chucklings of the forest as he did,
he felt at once secure among the trees, as one of the family.
Moreover he loved to be wandering in the woods at night. He
continued to walk, on and on, beginning to wonder at last what he
really intended to do. Then, at the thought of Garde, who might be
expecting to see him, and whom he very much desired again to see,
he waxed somewhat impatient with this enforced flight from the town
where she was.
The more he thought upon it, then, the more impossible it seemed
for him to return. Against Randolph, enthroned in power, and against
all his wretched disciples, he could not expect to breathe a word
which would avail to get him justice. It would be sheer madness to
make the attempt. The creatures would charge him with all the
crimes on the calendar, and, swearing all to one statement, would
convict him of anything they chose. The whole affair had been
planned to beat him, or worse, and to a galling extent it had quite
succeeded. He was balked, completely and absolutely, in
whatsoever direction his meditations turned. To try to see Garde
would be fairly suicidal. Not to see her, especially after his promises,
would be, to a man so much in love as he, a living death.
And again, the beef-eaters. What was to become of his faithful
retinue? They would arrive there, only to find that he had again
deserted them, leaving them wholly at the mercy of Randolph and
his jackals. These demons would not be slow at recognizing who
and what Pike and Halberd were, from episodes of the past. The two
would go straight into the lion’s mouth, at the Crow and Arrow.
He thought at first of going to Plymouth. He could write to Garde
from there, he reflected, and also to Halberd and Pike. But he soon
concluded that this would be to walk merely into the other end of the
enemy’s trap, for no good or comforting purpose. New York
presented itself as a jurisdiction where Randolph’s arm would have
no power to do him harm. But New York was a long way off. If he
went there, not only would he miss seeing Garde, but he could not
warn his retinue in time to keep them out of Randolph’s clutches.
The business was maddening. He began to think, as a
consequence of dwelling on the hopelessness of his own situation,
that Randolph would be aiming next at Garde herself, in wreaking his
dastardly vengeance for his past defeats. This was intolerable. He
halted, there in the dark woods, swaying between the good sense of
hiding and the nonsense of going straight back to the town, to carry
Garde away from the harpies, bodily.
A picture of old David Donner, stricken, helpless, a child, arose in
his mind, to confront him and to mock his Quixotic scheme. He could
not carry both Garde and her grandfather away to New York, nor
even to the woods. He was penniless. This was not the only
obstacle, even supposing Donner would consent so to flee, which
was not at all likely.
It was also certain that Garde would not permit him to carry her off
and leave the old man behind. But at least, he finally thought, he
could go back to the town and be near, to protect her, if occasion
should require a sword and a ready wit. Could he but manage to do
this—to go there secretly and remain there unknown—he could
gather his beef-eaters about him and together they could and would
combat an army!
But how to go back and be undetected, that was the question. In
the first place he despised the idea of doing anything that did not
smack of absolute boldness and fearlessness. Yet Boston was a
seething whirlpool of Randolph’s power, at this time. Simply to be
caught like a rat and killed like a pest would add nothing of glory to
his name, nor could it materially add to Garde’s happiness and
safety.
Driven into a corner of his brain, as it were, by all these moves and
counter-moves on the chess-board of the situation, he presently
conceived a plan which made him hug himself in sheer delight.
He would simply disguise himself as an Indian and go to town to
make a treaty with Randolph, the Big-man-afraid-to-be-chief.
This so tickled his fancy that, had an Indian settlement been near
at hand, he would have been inside his buckskins and war-paint and
back to Boston ahead of the constables themselves. In such a guise,
he told himself, he could manage to see his sweetheart, he could get
his beef-eaters clear of danger, baffle his foes, and arrange to carry
both Garde and her grandfather away to safety.
But the first consideration was, where should he find an Indian?
He was aware that the Red men had been pushed backward and
westward miles from the towns of the whites. It was years since he
had roamed through the forests and mountains——years since he
had known where his old-time, red brothers built their lodges. There
could be but one means of finding a camp, namely: to walk onward,
to penetrate fairly to the edge of the wilderness beyond.
Nothing daunted by the thought of distance, he struck out for the
west. Like the Indians themselves, he could smell the points of the
sunrise and sunset, unerringly. With boyish joy in his thoughts, and
in the dreams he fashioned of the hair-breadth events that would
happen when he arrived in the town in his toggery, he plodded along
all night, happy once more and contented.
CHAPTER XXXII.
A FOSTER PARENT.
Adam covered many a mile before the morning. Mindless of his

hunger, spurred by the thought that he must soon be back in Boston,
he felt that the further he went the more he must hasten. Thus he
marched straight on till noon.
He rested briefly at this time, filled his craving stomach with water,
and again made a start. In fifteen minutes he came upon a clearing,
at the edge of a little valley where up-jutting rocks were as plentiful
as houses in a city. Pausing for a moment, to ascertain the nature of
the place, and to prepare himself against possible surprise, he
presently approached a small log hut, of more than usually rude
construction.
There appeared to be no signs whatsoever of life about the place.
No smoke ascended from the chimney; there was no animal in sight,
not even so much as a dog.
Adam glanced hurriedly about the acre or so of land, beholding
evidences of recent work. A tree had been felled, not far away, within
the week. In a neat little patch of tilled soil, green corn stood two feet
high and growing promisingly.
Going to the cabin-door he knocked first and gave it a push
afterward, for it was not latched, although it was nearly closed. There
being no response from the inside, he entered. The light entered with
him. It revealed a strange and dreadful scene.
On the floor lay a man, dressed, half raised on his elbow, looking
up at the visitor with staring eyes, while he moved his lips without
making a sound. A few feet away sat a little brown baby-boy, clothed
only in a tiny shirt. He looked up at big Adam wistfully. Strewn about
were a few utensils for cooking, a bag which had once contained
flour, the dust of which was in patches everywhere, and an empty
water-bucket and dipper, with all the bedding and blankets from a
rude wooden bunk, built against the wall.
In amazement Adam stood looking at the man. In the haggard
face, with its unkempt beard and glassy eyes he fancied he saw
something familiar. Memory knocked to enter his brain. Then, with a
suddenness that gave him a shock, he recognized a man he had
known in England—an elder brother of Henry Wainsworth, supposed
to have died years before—drowned while attempting to escape from
an unjust sentence of imprisonment for treason.
“Wainsworth!” he said, “good faith! what is the meaning of this?”
The man sank back on the floor, a ghost of a smile passing across
his face. He moved his lips again, but Adam heard not a word.
Bending quickly down, he became aware that the man was
begging for water. He caught up the bucket and hastened forth,
presently finding the spring, to which a little path had been worn in
the grass.
Back at once, he placed the dipper to the dried-out lips and saw
this fellow-being drink with an evidence of joy such as can only come
to the dying. Wainsworth shivered a little, as the dipper left his teeth,
and jerked his hand toward the silent child, sitting so near, on the
floor. Adam comprehended. He gave more of the water to the small,
brown baby. It patted the dipper with its tiny hands and looked up at
him dumbly.
“What in the world has happened here?” said Rust.
Making a mighty effort, the man on the floor partially raised his
head and arms. He looked at Adam with a hungering light in his
eyes. “I’m—done—for,” he said, thickly and feebly.
Adam hustled together the blankets on the floor and made a
pillow, which he placed for Wainsworth to lie on. “Shall I put you into
the bed?” he asked.
The man shook his head. “I’m crushed,” he said, winking from his
eyes the already gathering film that tells of the coming end. “Tree—
fell—killed the—wife. I—crawled—here.”
Adam looked at him helplessly. He knew the man was dying. He
felt what agonies the man must have suffered. “Man!” he said, “can’t
I get you something to eat?”
Wainsworth waved his hand toward the wreckage strewed on the
floor. “Nothing—here,” he said. Then he made a great effort, the
obvious rally of his strength. “Save the—boy,” he implored. “Give him
a—chance.... Don’t—tell—about me. I married—his mother—
Narragansett—God bless—her.... Give—him—a—chance....
Thanks.”
As he mentioned the child’s mother, his eyes gave up two tears—
crystals, which might have represented his soul, for it had quietly
escaped from his broken body.
Adam, kneeling above him, looked for a moment at his still face,
on which the shadow of a smile rested. Then he looked at the little,
brown youngster, half Narragansett Indian, gazing up in his
countenance with a timid, questioning look, winking his big black
eyes slowly, and quite as deliberately moving his tiny toes.
It was not a situation to be thought out nor coped with easily. To
have found any human being in this terrible plight would have been
enough, but to have found Henry Wainsworth’s brother thus, and to
have him tell such a brief, shocking story, and make of his visitor all
the things which Adam would have to become at once, was enough
to make him stand there wondering and wondering upon it all.
“You poor little rascal,” he said to the child, at last.
He selected a shovel and a pick, from some tools which he noted,
in a corner, and laying aside his sword, he went to work, on the
preface to his duties, out by the patch of corn where he found the
pretty, young Indian mother, clasped and held down to earth in an all
too ardent embrace, by an arm of the fallen tree.
When he had padded up the mound over the two closed human
volumes, he was faint with hunger. He carried the tools again to the
house, and stood as before, looking at the baby-boy, who still sat
where he had left him, on the floor.
“Well, I suppose you are hungry, you little brown man,” he said. “I
must see what there is to be had.”
There was little opportunity for extended explorations. The one
room had contained the all of Wainsworth and his Narragansett
partner. Rust soon found himself wondering what the two had lived
upon. What flour and meal there had been, the man, despite his two
crushed legs, had pulled down, from a box-like cupboard, on the
wall, together with a bit of dried meat. Of the latter only a dry
fragment remained, still tied to a string, while of the meal and flour,
only the empty bags gave evidence that they once had existed.
There was no way possible for Adam to know that in the forest, not
far away, the lone woodsman had set his traps, for squirrels and
rabbits, nor that fifteen minutes’ walk from the door a trout stream
had furnished its quota to the daily fare. He only knew that there was
nothing edible to be found here now. There was salt, a bit of grease,
on a clean white chip of pine, and a half gourd, filled with broken-up
leaves, which had doubtless been steeped for some manner of tea
or drink.
“Partner,” he said, to the child, “someone has been enforcing
sumptuary laws upon us. I hesitate in deciding whether we shall take
our water salted or fresh.”
With his hand on the hilt of his sword he regarded the youngster
earnestly. Nothing prettier than the little naked fellow could have
been imagined, howbeit he was not so plump as a child of his age
should be, for the lack of nourishment had already told upon him
markedly. Adam felt convinced, from various indications, that the tree
which had done its deadly work had fallen about a week before, and
that Wainsworth had not been able to do anything more than to crawl
to the cabin, to die, neither for himself or the child.
For a time the rover wondered what he must do. His own plans
had nearly disappeared from his mind. He reflected that a child so
brown as this, so obviously half a little Narragansett, would be ill
received by the whites. The Indians would be far more likely to
cherish the small man, according to his worth. He therefore believed
the best thing he could do would be to push onward, in the hope of
finding an Indian settlement soon. There were several reasons, still
remaining unaltered, why it would be wiser not to take the child to
Boston.
“Well, our faces are dirty, partner,” he said, at the end of a long
cogitation, in which the baby had never ceased to look up in his
countenance and wink his big eyes, wistfully. “Let’s go out and have
a bath.”
He took the tiny chap up in his arms and carried him forth to the
spring. Here, in the warm sunlight, he got down on his knees in the
grass, bathed his protégé, over and over again, for the pleasure it
seemed to give the child and the joy it was to himself, to feel the little
wet, naked fellow in his hands.
The sun performed the offices of a towel. Without putting his tiny
shirt back upon him, Adam rolled the small bronze bit of humanity
about his back, patting his velvety arms and thighs and laughing like
the grown-up boy he was, till the little chap gurgled and crowed in
tremendous delight. But it having been only the freshness of the
water, air and sunlight which had somewhat invigorated the baby, he
presently appeared to grow a little dull and weary. Adam became
aware that it was time to be moving. He washed out the child’s wee
shirt and hung it through his belt to dry as they went. Then taking a
light blanket from the cabin, for the child’s use at night, he left the
cabin behind and proceeded onward as before.
He walked till late in the afternoon without discovering so much as
a sign of the Indian settlement he was seeking. By this time his own
pangs of hunger had become excruciating. It was still too early in the
summer for berries or nuts to be ripe, and the half green things
which he found where the sun shone the warmest were in no
manner fit to be offered to the child, as food.
Arriving at another small valley, as the sun was dipping into the
western tree-tops, the rover sat down for a rest, and to plan
something better than this random wandering toward the sunset. He
had chuckled encouragement to the child from time to time, laughing
in the little fellow’s face, but hardly had he caught at the subtle signs
on the small face, at which a mother-parent would have stared wild-
eyed in agony.
Now, however, as he sat the tiny man on the grass before him, he
saw in the baby’s eyes such a look as pierced him to the quick. For a
moment the infinite wistfulness, the dumb questioning, the
uncomplaining silence of it, made him think, or hope, the child was
only sad. He got down on all fours at once.
“Partner,” said he, jovially, “you are disappointed in me. I make
poor shift as a mother. Do you want to be cuddled, or would you
rather be tickled?”
He laid the little chap gently on his back and tried to repeat the
frolic of the earlier hours. He rolled the small bronze body in the
grass, as before, and petted him fondly. But the baby merely winked
his eyes. He seemed about to cry, but he made no sound. Adam’s
fingers ceased their play, for the joy departed from them swiftly.
“Maybe you’re tired and sleepy,” he crooned. “Shall I put on your
shirt and sing you a little Indian lullaby? Yes? That’s what he wants,
little tired scamp.”
He adjusted the abbreviated shirt, awkwardly, but tenderly, after
which he held his partner in his arms and hummed and sang the
words of a Wampanoag song, which he had heard in his boyhood,
times without number. The song started with addresses to some of
the elements, thus:
“Little Brook, it is night,
Be quiet, and let my baby sleep.
“Little wind, it is night,

Go away, and let my baby sleep.
“Little storm, it is night,

Be still, and let my baby sleep.
“Little wolf, it is night,

Howl not, and let my baby sleep.”
and after many verses monotonously soothing, came an

incantation:
“Great Spirit, I place my babe

Upon the soft fur of thy breast,
Knowing Thou wilt protect,
As I cannot protect;
And therefore, oh Great Spirit,
Guard my child in slumber.”
Adam sang this song like a pleading. But his little partner could not
sleep, or feared to sleep. Then the rover looked at the tiny face and
realized that the child would soon be dying of starvation. At this he
started to his feet, abruptly.
He had undergone the pains of hunger often, himself; he was not
impatient now with the pangs in his stomach, nor the weakness in
his muscles. But he could not bear the thought of the child so
perishing, here in the wilderness.
He saw poor Wainsworth again, and heard him beg that the child
be given a chance. He thought of the man’s shattered life, his
escape from persecution, his isolation, in which he had preferred the
society of his Indian wife and child to association with his kind. Then
he blamed himself for coming further into this deserted region, when
he knew that by going back, at least he could find something for the
child to eat—something that would save its life!
But he could not forget that he himself was a refugee. Wrongly or
rightly, Randolph was still on his track. Nothing in his own case had
been altered, but the case was no longer one concerning himself
alone. He took the child on his arm, where he had carried him
already many miles, and faced about.
“Partner, let them take me,” he said. “I wish them joy of it.”
He started back for Boston, for in the child’s present extremity, the
nearest place where he could be sure of finding food was the only
one worthy a thought.
CHAPTER XXXIII.
REPUDIATED SILVER.
Sometime, along toward the middle of the night, Adam tripped, on

a root which lay in his path, and in catching himself so that his small
partner should not be injured, he sprained his foot. He proceeded
onward without sparing the member, however, for he had begun to
feel a fever of impatience.
His foot swelled. It finally pained him excessively, so that he
limped. He wore away the night, but when the morning came, he
was obliged to snatch an hour of sleep, so great was the sense of
exhaustion come upon him.
His face had become pale. With his hair unkempt, his eyes
expressive of the fever in his veins and his mouth somewhat drawn,
he was not a little haggard, as he resumed his lame, onward march.
The child in his arms was no burden to his enduring strength, but as
a load on his heart the little chap was heavy indeed. Sleeping, the
miniature man appeared to be sinking in a final rest, so wan had his
tiny face become. Waking, he gazed at Adam with such a dumb
inquiry ever present in his great, wistful eyes, that Rust began to
wish he would complain—would cry, would make some little sound to
break his baby silence.
They were obliged to rest frequently, throughout the day. Try as he
might, Adam could not cover the ground rapidly. Whenever he
resumed walking, after sitting for a moment on a log, or a rock, he

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Irresponsibly joyous, thus to be in a saddle, on a spirited horse,

Adam covered many a mile before the morning. Mindless of his

“Little wind, it is night,

“Little storm, it is night,

“Little wolf, it is night,

and after many verses monotonously soothing, came an

“Great Spirit, I place my babe

Sometime, along toward the middle of the night, Adam tripped, on

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