The law, Corporate Finance, and Management - The Law...

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Unformatted text preview: The Law, Corporate Finance, and Management v. 1.0 This is the book The Law, Corporate Finance, and Management (v. 1.0). This book is licensed under a Creative Commons by-nc-sa 3.0 ( 3.0/) license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. This book was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz ( ) in an effort to preserve the availability of this book. Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages. More information is available on this project's attribution page ( ). For more information on the source of this book, or why it is available for free, please see the project's home page ( ). You can browse or download additional books there. ii Table of Contents About the Authors................................................................................................................. 1 Acknowledgments................................................................................................................. 5 Preface..................................................................................................................................... 6 Chapter 1: Introduction to Law and Legal Systems ....................................................... 8 What Is Law?................................................................................................................................................... 9 Schools of Legal Thought ............................................................................................................................ 11 Basic Concepts and Categories of US Positive Law ................................................................................... 17 Sources of Law and Their Priority.............................................................................................................. 23 Legal and Political Systems of the World .................................................................................................. 32 A Sample Case............................................................................................................................................... 34 Summary and Exercises .............................................................................................................................. 40 Chapter 2: Corporate Social Responsibility and Business Ethics ............................. 44 What Is Ethics? ............................................................................................................................................. 46 Major Ethical Perspectives.......................................................................................................................... 52 An Ethical Decision Model........................................................................................................................... 63 Corporations and Corporate Governance.................................................................................................. 66 Summary and Exercises .............................................................................................................................. 78 Chapter 3: Courts and the Legal Process ....................................................................... 83 The Relationship between State and Federal Court Systems in the United States ...............................85 The Problem of Jurisdiction ........................................................................................................................ 92 Motions and Discovery .............................................................................................................................. 111 The Pretrial and Trial Phase ..................................................................................................................... 114 Judgment, Appeal, and Execution ............................................................................................................ 120 When Can Someone Bring a Lawsuit?...................................................................................................... 124 Relations with Lawyers.............................................................................................................................. 127 Alternative Means of Resolving Disputes ................................................................................................ 130 Cases ............................................................................................................................................................ 133 iii Chapter 4: Constitutional Law and US Commerce ..................................................... 141 Basic Aspects of the US Constitution ....................................................................................................... 142 The Commerce Clause ............................................................................................................................... 147 Dormant Commerce Clause....................................................................................................................... 154 Preemption: The Supremacy Clause ........................................................................................................ 159 Business and the Bill of Rights.................................................................................................................. 163 Cases ............................................................................................................................................................ 173 Summary and Exercises ............................................................................................................................ 195 Chapter 5: Administrative Law ...................................................................................... 200 Administrative Agencies: Their Structure and Powers ......................................................................... 201 Controlling Administrative Agencies....................................................................................................... 209 The Administrative Procedure Act .......................................................................................................... 212 Administrative Burdens on Business Operations ................................................................................... 215 The Scope of Judicial Review .................................................................................................................... 219 Cases ............................................................................................................................................................ 224 Summary and Exercises ............................................................................................................................ 231 Chapter 6: Criminal Law .................................................................................................. 236 The Nature of Criminal Law ...................................................................................................................... 237 Types of Crimes .......................................................................................................................................... 240 The Nature of a Criminal Act .................................................................................................................... 250 Responsibility ............................................................................................................................................. 254 Procedure.................................................................................................................................................... 257 Constitutional Rights of the Accused....................................................................................................... 260 Cases ............................................................................................................................................................ 264 Summary and Exercises ............................................................................................................................ 271 Chapter 7: Introduction to Tort Law............................................................................. 276 Purpose of Tort Laws ................................................................................................................................. 277 Intentional Torts ........................................................................................................................................ 283 Negligence .................................................................................................................................................. 292 Strict Liability............................................................................................................................................. 300 Cases ............................................................................................................................................................ 304 Summary and Exercises ............................................................................................................................ 316 Chapter 8: Contracts......................................................................................................... 320 General Perspectives on Contracts .......................................................................................................... 321 Contract Formation ................................................................................................................................... 332 Remedies ..................................................................................................................................................... 340 Cases ............................................................................................................................................................ 346 Summary and Exercises ............................................................................................................................ 354 iv Chapter 9: Relationships between Principal and Agent ........................................... 359 Introduction to Agency and the Types of Agents ................................................................................... 360 Duties between Agent and Principal........................................................................................................ 371 Cases ............................................................................................................................................................ 384 Summary and Exercises ............................................................................................................................ 399 Chapter 10: Liability of Principal and Agent; Termination of Agency .................. 404 Principal’s Contract Liability .................................................................................................................... 405 Principal’s Tort and Criminal Liability .................................................................................................... 411 Agent’s Personal Liability for Torts and Contracts; Termination of Agency....................................... 419 Cases ............................................................................................................................................................ 425 Summary and Exercises ............................................................................................................................ 437 Chapter 11: Partnerships: General Characteristics and Formation....................... 442 Introduction to Partnerships and Entity Theory ................................................................................... 443 Partnership Formation.............................................................................................................................. 449 Cases ............................................................................................................................................................ 458 Summary and Exercises ............................................................................................................................ 471 Chapter 12: Partnership Operation and Termination .............................................. 476 Operation: Relations among Partners...................................................................................................... 477 Operation: The Partnership and Third Parties ....................................................................................... 488 Dissolution and Winding Up ..................................................................................................................... 494 Cases ............................................................................................................................................................ 506 Summary and Exercises ............................................................................................................................ 522 Chapter 13: Hybrid Business Forms .............................................................................. 529 Limited Partnerships ................................................................................................................................. 531 Limited Liability Companies ..................................................................................................................... 539 Other Forms................................................................................................................................................ 546 Cases ............................................................................................................................................................ 551 Summary and Exercises ............................................................................................................................ 560 Chapter 14: Corporation: General Characteristics and Formation ........................ 566 Historical Background ............................................................................................................................... 567 Partnerships versus Corporations............................................................................................................ 571 The Corporate Veil: The Corporation as a Legal Entity ......................................................................... 574 Classifications of Corporations ................................................................................................................. 579 Corporate Organization............................................................................................................................. 582 Effect of Organization................................................................................................................................ 589 Cases ............................................................................................................................................................ 591 Summary and Exercises ............................................................................................................................ 603 v Chapter 15: Legal Aspects of Corporate Finance........................................................ 610 General Sources of Corporate Funds........................................................................................................ 611 Bonds ........................................................................................................................................................... 614 Types of Stock............................................................................................................................................. 617 Initial Public Offerings and Consideration for Stock ............................................................................. 623 Dividends .................................................................................................................................................... 627 The Winds of Change ................................................................................................................................. 632 Cases ............................................................................................................................................................ 635 Summary and Exercises ............................................................................................................................ 642 Chapter 16: Corporate Powers and Management ...................................................... 647 Powers of a Corporation............................................................................................................................ 648 Rights of Shareholders .............................................................................................................................. 653 Duties and Powers of Directors and Officers........................................................................................... 660 Liability of Directors and Officers ............................................................................................................ 664 Cases ............................................................................................................................................................ 676 Summary and Exercises ............................................................................................................................ 685 Chapter 17: Securities Regulation ................................................................................. 691 The Nature of Securities Regulation ........................................................................................................ 692 Liability under Securities Law .................................................................................................................. 701 Cases ............................................................................................................................................................ 708 Summary and Exercises ............................................................................................................................ 716 Chapter 18: Corporate Expansion, State and Federal Regulation of Foreign Corporations, and Corporate Dissolution.................................................................... 720 Corporate Expansion ................................................................................................................................. 721 Foreign Corporations................................................................................................................................. 728 Dissolution .................................................................................................................................................. 732 Cases ............................................................................................................................................................ 735 Summary and Exercises ............................................................................................................................ 741 Chapter 19: Nature and F...
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