Table Of Content16th Edition
John D. Ashcroft, J.D.
Member of the District of Columbia and Missouri Bars
Janet E. Ashcroft, J.D.
Member of the District of Columbia and Missouri Bars
Law for Business, 16th edition
John D. Ashcroft • Janet E. Ashcroft
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Brief Contents
Part 1: The Legal System and the 24 Liabilities of Parties and Holders
Legal Environment of Business 1 in Due Course 265
25 Defenses 279
1 Introduction to Law 2 Part 5 Summary Cases 287
2 Courts and Court Procedure 11
3 Business Torts and Crimes 21 Part 6: Agency and Employment 291
4 GovernmentRegulationofBusiness 37
26 Nature and Creation of an Agency 292
Part 2: Contracts 45 27 Operation and Termination
of an Agency 303
5 Nature and Classes of Contracts 46 28 Employer and Employee Relations 314
6 Offer and Acceptance 55 29 Employees’ Rights 325
7 Capacity to Contract 65 30 Labor Legislation 340
8 Consideration 74 Part 6 Summary Cases 350
9 Defective Agreements 83
10 Illegal Agreements 96 Part7:BusinessOrganization 353
11 Written Contracts 106
12 Third Parties and Contracts 115 31 Introduction to Business Organization 354
13 Termination of Contracts 125 32 Creation and Operation
Part 2 Summary Cases 137 of a Partnership 365
33 Dissolution of a Partnership 378
Part 3: Personal Property 141 34 Nature of a Corporation 387
35 Ownership of a Corporation 395
14 Nature of Personal Property 142 36 Management and Dissolution of a
15 Special Bailments 155 Corporation 405
Part 3 Summary Cases 169 Part 7 Summary Cases 417
Part 4: Sales 171 Part 8: Risk-Bearing Devices 421
16 Sales of Personal Property 172 37 Principles of Insurance 422
17 Formalities of a Sale 180 38 Types of Insurance 432
18 Transfer of Title and Risk in Sales 39 Security Devices 446
Contracts 187 40 Bankruptcy 457
19 Warranties, Product Liability, and Consumer Part 8 Summary Cases 466
Protection 200
Part 4 Summary Cases 221 Part 9: Real Property 469
41 Nature of Real Property 471
Part 5: Negotiable Instruments 223
42 Transfer of Real Property 480
20 Nature of Negotiable Instruments 224 43 Real Estate Mortgages 489
21 Essentials of Negotiability 234 44 Landlord and Tenant 500
22 Promissory Notes and Drafts 243 45 Wills, Inheritances, and Trusts 513
23 Negotiation and Discharge 256 Part 9 Summary Cases 528
iii
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Contents
Preface ix Chapter7: Capacity to Contract 65
Minors 66 • Mentally Incompetent Persons 69
PART 1: THE LEGAL SYSTEM AND THE • Intoxicated Persons 71 • Convicts 71
LEGAL ENVIRONMENT OF BUSINESS 1 • Questions 71 • Case Problems 72
Chapter8: Consideration 74
Chapter1: Introduction to Law 2
Nature of Consideration 74 • Adequacy of
Objectives of Law 3 • Roots of Our Legal System 3
Consideration 75 • Exceptions to Requirement
• The Common Law 3 • Equity 3 • Sources of
ofConsideration 79 • Questions 80 • Case
Law 4 • Civil versus Criminal Law 6 • Tort
Problems 81
Law 7 • Ethics 8 • Questions 10
Chapter9: Defective Agreements 83
Chapter2: Courts and Court Procedure 11
Mistakes 83 • Mistakes That Invalidate Contracts
FunctionoftheCourts 11 • JurisdictionofCourts 12
84 • Mistakes That Do Not Invalidate Contracts 86
• Classification of Courts 12 • Court Officers 17
• Fraud 88 • Duress 90 • Undue Influence 91
• Procedure in Courts of Record 18 • Procedure in
• Remedies for Breach of Contract Because of Fraud,
Small Claims Court 19 • Questions 20
Duress, or Undue Influence 92 • Questions 93
Chapter3: Business Torts and Crimes 21 • Case Problems 94
Torts 21 • Crimes 27 • Types of Business
Chapter10: Illegal Agreements 96
Crimes 27 • Questions 33 • Case Problems 34
Contracts Prohibited by Statute 97 • Contracts
Chapter4:GovernmentRegulationofBusiness 37 Contrary to Public Policy 102 • Questions 103
• Case Problems 104
Purpose of Regulation 38 • Administrative
Agencies 38 • Antitrust 40 • Environmental
Chapter11: Written Contracts 106
Protection 41 • Questions 44
Reasons for Written Contracts 106 • Statute of
Frauds 107 • Note Or Memorandum 110 •
PART 2: CONTRACTS 45 Other Written Contracts 111 • Parol Evidence
Rule112 • Questions 112 • Case Problems 113
Chapter5: Nature and Classes of Contracts 46
Chapter12: Third Parties and Contracts 115
Requirements for a Contract 47 • Contracts
Involving a Third Party 115 • Technicalities of
Contrasted with Agreements 47 • Classification
anAssignment 119 • Joint, Several, and Joint
ofContracts 48 • Questions 52
andSeveral Contracts 121 • Questions 123
• Case Problems 53
• Case Problems 123
Chapter6: Offer and Acceptance 55
Chapter13: Termination of Contracts 125
Requirements of a Valid Offer 56 • Invitations to
Methods by Which Contracts Are Terminated 125
Make Offers 57 • Duration of the Offer 59
• Remedies for Breach of Contract 131
• The Acceptance 60 • Counteroffers 61
• Malpractice 133 • Questions 134
• Inquiries Not Constituting Rejection 62
• Case Problems 134
• Manner of Acceptance 62 • Questions 63
• Case Problems 63 Part 2 Summary Cases 137
v
vi Contents
PART 3: PERSONAL PROPERTY 141 • Exclusion and Surrender of Warranties 207
• Product Liability 209 • Identity of Parties 211
Chapter14: Nature of Personal Property 142 • Nature and Cause of Harm 211 • Consumer
Personal Property 142 • Methods of Acquiring Protection 212 • Questions 218 • Case
Personal Property 144 • Bailments 147 Problems 218
• The Bailment Agreement 148 • Delivery Part 4 Summary Cases 221
andAcceptance 148 • Return of the Bailed
Property 149 • Types of Bailments 149 PART 5: NEGOTIABLE
• Conversion of Bailed Property by the Bailee 151
INSTRUMENTS 223
• Questions 152 • Case Problems 152
Chapter15: Special Bailments 155 Chapter20: Nature of Negotiable
Instruments 224
Carriers 155 • Liability of Common Carriers of
Goods 157 • Hotelkeepers 163 • Questions 166 History and Development 224 • Negotiation 225
• Case Problems 166 • Order Paper and Bearer Paper 225 •
Classification of Commercial Paper 226 • Parties to
Part 3 Summary Cases 169
Negotiable Instruments 227 • Negotiation and
Assignment 229 • Credit and Collection 230
PART 4: SALES 171 • Electronic Fund Transfers 230 • Questions 231
• Case Problems 232
Chapter16: Sales of Personal Property 172
Chapter21: Essentials of Negotiability 234
Property Subject to Sale 172 • Sales and Contracts
toSell 173 • Sales of Goods and Contracts for Requirements 234 • Issue and Delivery 239
Services 174 • Price 174 • Existing Goods 175 • Delivery of an Incomplete Instrument 239
• Future Goods 175 • Bill of Sale 176 • Illegal • Date and Place 240 • Questions 241
Sales 177 • International Sales Contracts 177 • Case Problems 241
• Questions 178 • Case Problems 178
Chapter22: Promissory Notes and Drafts 243
Chapter17: Formalities of a Sale 180 Notes 243 • Drafts 245 • Checks 248 •
Multiple Purchases and the Statute of Frauds 181 Questions 253 • Case Problems 254
• When Proof of Oral Contract Is Permitted 181
Chapter23: Negotiation and Discharge 256
• Nature of the Writing Required 183
• Questions 185 • Case Problems 185 Place of Indorsement 257 • Multiple Payees 258
• Kinds of Indorsements 259 • Liability of
Chapter18: Transfer of Title and Risk in Sales Indorser 261 • Obligation of Negotiator of Bearer
Contracts 187 Paper 261 • Discharge of the Obligation 262
• Questions 262 • Case Problems 263
Potential Problems in Sales Transactions 188
• Classification of Sales Transactions 188 •
Chapter24: Liabilities of Parties and Holders
Ownership, Insurable Interests, and Risk of Loss in
inDue Course 265
Particular Transactions 189 • Damage to Or
Destruction of Goods 192 • Sales on Approval Liability for the Face of the Paper 267 • Liability for
andwith Right to Return 193 • Special Rules Warranties 271 • Holders in Due Course 272
onTransfer of Title 194 • Questions 197 • Holder Through a Holder in Due Course 274
• Case Problems 198 • HoldersofConsumerPaper 274 • Questions 276
• Case Problems 276
Chapter19: Warranties, Product Liability, and
Chapter25: Defenses 279
Consumer Protection 200
Classification of Defenses 280 • Miscellaneous
Express Warranties 201 • Implied Warranties 202
Matters 284 • Questions 284 • Case
• Full Or Limited Warranties 202 • Warranties
Problems 285
ofAll Sellers 202 • Additional Warranties of
Merchant 204 • Warranties in Particular Sales 206 Part 5 Summary Cases 287
Contents vii
PART 6: AGENCY AND PART7:BUSINESSORGANIZATION 353
EMPLOYMENT 291
Chapter31: Introduction to Business
Chapter26: Nature and Creation Organization 354
of an Agency 292
Sole Proprietorship 354 • Partnership 357
Importance of Agency 293 • What Powers May be • Corporations 360 • Questions 363
Delegated to an Agent? 293 • Who May Appoint • Case Problems 363
anAgent? 293 • Who May Act as an Agent? 294
Chapter32: Creation and Operation
• Classification of Agents 294 • Additional Types
of a Partnership 365
of Agents 295 • Extent of Authority 295 •
Creation of an Agency 297 • Other Employment Partnership Agreements 365 • Partnership Firm
Relationships 299 • Questions 300 • Case Name 367 • Partner’s Interest in Partnership
Problems 300 Property 368 • Duties of Partners 368 • Rights
of Partners 370 • Liabilities of Partners 372
Chapter27: Operation and Termination
• Nature of Partnership Liabilities 373 • Authority
of an Agency 303
of a Partner 374 • Sharing of Profits and Losses 374
Agent’s Duties to Principal 303 • Principal’s Duties • Questions 374 • Case Problems 375
to Agent 305 • Agent’s Liabilities to Third
Chapter33: Dissolution of a Partnership 378
Parties307 • Principal’s Duties and Liabilities to
Third Parties 308 • Termination of an Agency by Dissolution by Acts of the Parties 379 • Dissolution
Acts of the Parties 308 • Termination by Operation by Court Decree 380 • Dissolution by Operation
of Law 309 • Notice of Termination 310 ofLaw 381 • Effects of Dissolution 382 • Notice
• Questions 311 • Case Problems 311 of Dissolution 383 • Distribution of Assets 383
• Questions 384 • Case Problems 384
Chapter28: Employer and Employee
Chapter34: Nature of a Corporation 387
Relations 314
Classification by Purpose 387 • Classification by
Creation of Employer and Employee Relationship 315
State of Incorporation 389 • Formation of a
• Duties and Liabilities of the Employer 316
Corporation 389 • Liability on Promoter’s Contracts
• Common-law Defenses of the Employer 317
and Expenses 389 • Issuance of Stock 390 •
• Statutory Modification of Common Law 317
Articles of Incorporation 391 • Powers of a
• Liabilities of the Employer to Third Parties 319
Corporation 391 • Ultra ViresContracts 392 •
• Employee’s Duties to the Employer 320 • Federal
Questions 393 • Case Problems 393
Social Security Act 321 • Questions 323 • Case
Problems 323
Chapter35: Ownership of a Corporation 395
Chapter29: Employees’ Rights 325 Ownership 396 • Stock Certificate 396
• Transfer of Stock 396 • Classes of Stock 397
Discrimination 326 • Testing 332
• Kinds of Stock 398 • Stock Options 400
• Protections 334 • Other Sources of Rights 336
• Dividends 400 • LawsRegulatingStockSales 401
• Questions 337 • Case Problems 337
• Questions 403 • Case Problems 403
Chapter30: Labor Legislation 340
Chapter36: Management and Dissolution
The Fair Labor Standards Act 341 • The National
of a Corporation 405
Labor Relations Act and the Labor Management
Relations Act 342 • The Labor-Management Stockholders’ Meetings 406 • Rights of
Reporting and Disclosure Act 345 • Questions 347 Stockholders 409 • Directors 410 • Officers 411
• Case Problems 347 • Liabilities of Directors and Officers 412
• Corporate Combinations 413 • Dissolution 414
Part 6 Summary Cases 350
• Questions 414 • Case Problems 414
Part 7 Summary Cases 417
viii Contents
PART 8: RISK-BEARING DEVICES 421 Chapter42: Transfer of Real Property 480
Deeds 480 • Provisions in a Deed 483
Chapter37: Principles of Insurance 422
• Delivery 485 • Recording 485 • Abstract of
Terms Used in Insurance 423 • Types of Insurance Title 486 • Title Insurance 486 • Questions 486
Companies 424 • Who May be Insured 424 • Case Problems 486
• Some Legal Aspects of the Insurance Contract 426
Chapter43: Real Estate Mortgages 489
• Questions 429 • Case Problems 430
The Mortgage Contract 490 • Recording 490
Chapter38: Types of Insurance 432
• Duties of the Mortgagor 492 • Rights of the
Life Insurance 432 • Property Insurance 436 Mortgagor 493 • Foreclosure 495 • Assignment
• Description of the Property 438 of the Mortgage 496 • Deed of Trust 496
• Coinsurance 438 • Repairs and • Mortgage Insurance 497 • Questions 497
Replacements 439 • Defense and Notice of • Case Problems 498
Lawsuits 439 • Automobile Insurance 440
Chapter44: Landlord and Tenant 500
• Questions 444 • Case Problems 444
The Lease 503 • Types of Tenancies 503
Chapter39: Security Devices 446
• Rights of the Tenant 505 • Duties of the
Guaranty and Suretyship 446 • Secured Credit Tenant 506 • Rights of the Landlord 507
Sales 451 • Effect of Default 453 • Duties of the Landlord 507 • Termination
• Questions 454 • Case Problems 455 oftheLease 508 • Improvements 510
• Discrimination 511 • Questions 511
Chapter40: Bankruptcy 457
• Case Problems511
Who Can File a Petition of Bankruptcy? 458
• KindsofDebtors 458 • RequiredCounseling 459 Chapter45: Wills, Inheritances, and Trusts 513
• Procedure in a Chapter 7 Case 459 Limitations on Disposition of Property 514 • Terms
• Nonliquidation Plans 459 • Eligibility Common to Wills 515 • Distinguishing
Restrictions for Chapter 7 460 • Exempt Characteristics of a Will 515 • Formalities 515
Property 461 • Included Property 461 • Debtor’s • Special Types of Wills 516 • The Wording of a
Duties During Bankruptcy 461 • Proof of Will 517 • Revocation 517 • Codicils 517
Claims 462 • Reclamations 462 • Types of • Abatement and Ademption 519 • Probate of
Claims 462 • Priority of Claims 463 • Discharge a Will 519 • When Administration Is
of Indebtedness 463 • Debts not Discharged 463 Unnecessary 520 • Title by Descent 520
• Questions 464 • Case Problems 464 • Per CapitaandPer StirpesDistribution 520 •
Part 8 Summary Cases 466 Administrators 522 • Trusts 522 • Questions
525 • Case Problems 525
PART 9: REAL PROPERTY 469 Part 9 Summary Cases 528
Table of Cases T1
Chapter41: Nature of Real Property 470
Glossary G1
Distinguishing Real Property 470 • Multiple
Ownership 472 • Estates in Property 474 Index I1
• Other Interests in Real Property 475 • Acquiring
Real Property 477 • Questions 478 • Case
Problems 478
Preface
WHY STUDY BUSINESS LAW?
Newspapers,magazines,television,radio—andevenourcomputers—relate
business information to us almost by the minute. Behind the scenes of
business activity—from startups of new businesses to corporate mergers,
marketing, advertising, technology, and employment—laws governing business
play a vital role. The study of business law is necessary to provide students with
an overview of the law of commercial transactions and other business legal issues.
Law for Business, Sixteenth Edition,focuses on these laws to prepare students to
conduct business in our dynamic world marketplace.
PURPOSE OF THE TEXT
Law for Business, Sixteenth Edition, is a practical approach to law that empha-
sizescurrentandrelevanttopicsstudentsneedtounderstandaboutbusinesstrans-
actionsandissues,suchascontracts,property,employer/employeerelations,and
insurance. The basic concepts of business law are covered without the excessive
theory that often makes law seem incomprehensible. Practical coverage of law
pertainingtobusiness,withoutthedetailedtreatmentofalawschooltext,isthe
hallmarkofthistext.Thesubstantialbreadthofthistext,completewithexamples
andcases,isaneffectiveintroductiontoavarietyoflegaltopics.
NEW AND SUCCESSFUL FEATURES
Integrated Learning Objectives
Each chapter begins with learning objectives that outline what the students will
accomplish after reading the chapter. Margin icons indicate where learning objec-
tives are first discussed in the text. Each objective is briefly restated as reinforce-
ment, so students need not refer to the beginning of each chapter. These learning
objective icons create a natural outline to help students easily comprehend the
information.
Actual U.S. Court Cases with Citations
This book contains no make-believe cases. Every case example, problem, and
summary is an actual U.S. court case, transferring theory into reality. These excit-
ing actual cases help students relate to the subject as they learn about real world
legal situations that can occur in business. Case citations are included in the text
for each case example, to further clarify these resources and inspire further
research and reading.
ix
