SOLUTIONS MANUAL
Business Law: The Ethical, Global, and Digital Environment 18/E Jamie Darin Prenkert
CHAPTER 01
THE NATURE OF LAW
I. OBJECTIVES:
As its title suggests, this chapter seeks to acquaint students with the general nature of law. The
chapter does this by: (1) describing the different types of law; (2) examining legal philosophy or
jurisprudence; (3) sketching some of law's functions; and (4) discussing legal reasoning. The
chapter’s content maximizes instructor discretion by keeping these four subjects as distinct from
each other as possible. As a result, you may feel you do not need to teach or assign certain parts
of the chapter. The material on the types of law, however, is basic material that any instructor
probably would want to present or assign.
II. ANSWERS TO INTRODUCTORY PROBLEM:
A. See the major types of law discussed in Chapter 1 (especially constitutions, statutes, common
law, administrative regulations and decisions, and treaties).
B. See the schools of jurisprudence discussed in Chapter 1.
C. See the "Legal Reasoning" section of Chapter 1 for discussion of the role courts play in
making and interpreting law. That section also discusses two important methods of legal
reasoning: case law reasoning and statutory interpretation.
D. The question about the relationship between legal standards of behavior and notions of ethical
conduct is largely rhetorical at this point. It will be explored more fully at later points.
III. SUGGESTIONS FOR LECTURE PREPARATION:
A. Types of Law
1. The material in this section can be viewed as one response to the question: "What is
law?" The section answers this question by listing and describing the kinds of rules that
commonly are regarded as law in the United States. What unites most of them is their
issuance by a legitimate political authority. Remind students that he first question in the
chapter’s opening vignette concerns types of law.
2. We do not use the term "sources of law" to identify this material because in ordinary
language the things described are law rather than sources of law. A statute, for instance,
is colloquially referred to as a law, and the legislature is ordinarily regarded as its source.
3. Provide students an overview (including examples) of each of the types of law outlined in
the text. Keep in mind the following:
a. The text's description of the functions served by constitutions and of separation of
powers and federalism is traditional and somewhat limited. You might want to add
that, as Chapter 3 suggests, the political and legal reality often differs from the
accepted homilies in these areas.
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b. Note the role played by courts—most notably the Supreme Court—in interpreting the
U.S. Constitution. Comment on Presidents’ attempts to shape the judiciary through
appointments (subject to Senate confirmation) to the federal district courts, courts of
appeal, and the Supreme Court. Mention confirmation fights that have occurred
through the years (e.g., regarding Bork and Thomas; perhaps Alito, Sotomayor, and
Kagan in more recent years, though the fights in those instances were less intense).
More recent examples here include the Republican-controlled Senate’s refusal to
consider President Obama’s nomination of Merrick Garland in 2016 and the resort to
the so-called “nuclear option” to stymie any attempt to filibuster President Trump’s
nomination of Neil Gorsuch in 2017. And, of course, the confirmation processes
were fraught for both Brent Kavanaugh and Amy Coney Barrett, though for quite
different reasons. Provide examples of Supreme Court justices who proved to be
consistent with the probable expectations of the Presidents who appointed them and
of justices who most likely were disappointments to the appointing President.
Burger, Rehnquist, Scalia, Thomas, Ginsburg, Alito, Sotomayor, Gorsuch would be
examples of the former. Warren, Brennan, Blackmun, Stevens, and Souter would be
examples of the latter.
c. The material on uniform acts is included here because students will so often
encounter uniform acts throughout the text. Of course, you should emphasize that
uniform acts are not law until enacted in whole or in part by a legislature, and that
state-by-state variations from the original text are common.
d. Emphasize that common law applies only when there is no other applicable type of
law and that statutes have a controlling effect with regard to the common law.
Therefore, Congress or a state legislature may enact a statute that abolishes or
modifies a common law rule. Advance Dental Care, Inc. v. SunTrust Bank, which
appears somewhat later in the chapter, illustrates this point. (See the later discussion
of this case.) A portion of the Cyberlaw in Action box does as well. In addition, see
Problem #1. Note, also, that a legislature may choose to enact a statute that codifies
what formerly was only a common law rule.
e. Price v. High Pointe Oil Company, Inc.: High Pointe Oil Company erroneously
filled Beckie Price’s basement with 400 gallons of oil, which destroyed her house
and all of her personal belongings. The oil came in through an “oil fill pipe” that
used to lead to an oil furnace in Price’s basement. A year prior, however, Price had
replaced the oil furnace with a propane model and had cancelled her contract with
High Pointe to keep oil in the furnace. High Pointe somehow included her address on
a “keep full” list, leading to the contamination. Although Price’s land was
remediated, her house rebuilt, and her belongings cleaned or replaced, she sued High
Pointe for negligence seeking noneconomic damages. After a jury awarded her
$100,000 and the appellate court affirmed, the Michigan Supreme Court had to
decide whether to adopt a new common law rule to allow the recovery of
noneconomic damages for the negligent destruction of real property. It declined to
do so.
Points for Discussion: Have a student summarize the basic facts and the
procedural history of the case. Because this is the first excerpted judicial opinion in
the text, it is also worthwhile to talk about why it is important to read the cases in the
text, how they help us understand and illustrate the legal rules discussed in the text
better. Point them to the Appendix at the end of the chapter for guidance on how to
read and brief a case. Moreover, as any case would, this case involves legal terms
and concepts with which students will likely be unfamiliar (e.g., plaintiff and
defendant, personal and real property, motions, tort and negligence). This can provide
instructors the opportunity to encourage students to make liberal use of a legal
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dictionary, either a hard copy or one of the several online law dictionaries, when
reading the text and case excerpts. Yet, the authors chose Price v. High Pointe as the
first case to present in the text in part because the likely unfamiliar concepts in it are
relatively simple to explain within the factual and legal context of the case and
because they are ones that students will see repeatedly throughout the text and,
presumably, in your course. We recommend that you take some time, therefore, in
discussing this case to help students build some confidence and familiarity with
reading, briefing, and understanding the cases in the text. It may also be worthwhile
to reassure them that they might not always fully understand the cases, which is why
you will discuss the in class and why they should ask questions. The more carefully
they read the cases, the better they will follow class discussion and the more pointed
and helpful questions they can ask.
Ask the students why the court begins its discussion with the following
statement: “[a]bsent any relevant statute, the answer to that question [whether
noneconomic damages are recoverable for the negligent destruction of real property]
is a matter of common law.” (This may be a good way to highlight the doctrine in
point d. above.) Ask the students to describe the longstanding common law rule at
issue. (Negligent destruction of property is remedied by awarding damages equal to
the fair market value of destroyed property or the repair cost of damaged property.)
Note that simply because the law has been static and consistent for a long time does
not mean that it cannot be altered. Thus, the Michigan Supreme Court must
determine whether it would be appropriate to modify the common law rule. Ask the
students to summarize the arguments for why the Court refused to do so in this case.
(The policy arguments upon which the court relies are summarized in the sample case
brief at the end of the chapter.)
It might also be worth noting here what is sometimes thought of (and sometimes
critiqued) as a fundamental conservatism in the law, not in the political sense but in
the sense that favors tradition, settled expectations, and incrementalism over
revolution. Instructors who wish to delve into the short jurisprudence discussion in
this chapter might explore what reason each of the various schools of jurisprudence
might give for that fundamental conservatism.
For instructors who cover the common law and case law reasoning in the same
session, be sure to note that the first half of the Price case is a prototypical example
of case law reasoning. The approach of the Price court to that process can be
compared and contrasted to the approach of the Coomer court later in the chapter.
f. The text's statement that, as a general mater, common law exists only at the state
level implicitly recognizes the Supreme Court's decision in Erie R.R. v. Tompkins,
304 U.S. 64 (1938), which supposedly eliminated the "federal common law" that the
federal courts had previously used in some diversity cases. Erie's progeny--and the
related question whether there still is a federal common law despite Erie--are well
beyond the scope of this text.
g. Some discussion of the Restatements is included in Chapter 1 for the same reason
that the chapter discusses uniform acts. References to the Restatements appear
frequently in the torts, contracts, and agency chapters of this text. Emphasize that
Restatement rules are not law unless adopted by a court as a rule of decision. Also,
you might want to add that the Restatements have been subjected to conflicting
criticisms. Sometimes, they are criticized for "leading" the courts in the fashion
suggested in the text. And sometimes they are criticized as misguided attempts to
rigidly state rules that are always changing with circumstances.
h. Note that equity isn’t really a separate body of law any longer but that equitable
remedies (injunctions, etc.) remain very important instruments that courts frequently
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employ.
i. In the text, the term delegation is used to refer only to transfers of power made by a
legislature. Under this usage, for example, a constitution's grant of power to a
legislature is not an example of delegation.
j. In discussing administrative regulations and decisions, note the political debates that
often arise regarding whether we have too much, too little, or about the right amount
of, regulation of business by administrative agencies. Mention that the level of
regulatory activity on the part of agencies tends to vary with the prevailing political
winds.
k. Note the priority rules that apply only when the different types of law conflict.
Further note, as illustrated by the following Advance Dental Care case, that courts
will avoid interpreting the law to create such conflicts when possible. Problem # 2 at
the end of the chapter provides an additional opportunity for students to test their
application of the priority rules.
l. Advance Dental Care, Inc. v. SunTrust Bank: The Federal District Court for the
District of Maryland determined that the Maryland U.C.C. section 3-420, which
defines and provides a remedy for conversion, displaces the Maryland common-law
negligence claim when a payee sues a bank for negligently accepting unauthorized
and fraudulently endorsed checks. Michelle Rampersad had deposited in her personal
account at SunTrust Bank more than $400,000 worth of insurance reimbursement
checks that she had fraudulently endorsed to herself instead of intended payee,
Advance Dental Care. Advance Dental Care sued SunTrust under the U.C.C. and for
common law negligence. One U.C.C. claim was dismissed, but the court had to
decide whether the remaining claim, dealing with conversion, displaced the common
law claim.
Points for Discussion: Students may need a bit of coaching on the language in
this case, including who is the payee (Advance Dental) and drawer (the insurance
company), as well as what it means to endorse a check (i.e., to sign over the right to
receive payment to someone else). There’s no need to get deeply into the law of
negotiable instruments for the purposes of this case, but the text elaborates on that
topic in Chapter 31.
Note for students that a primary concern is whether displacement of the common
law remedy would leave a plaintiff with an adequate statutory remedy. It would in
this case, as opposed to cases where the drawer of the check is harmed when a bank
negligently honors a fraudulently endorsed check.
Ask students what is the relevance of U.C.C. section 1-103(b)’s “particular
provisions” language. (Because the U.C.C. does not expressly displace the common
law in total, the court must look to whether the particular conversion provision
displaces the particular negligence claim. Sometimes statutes expressly indicate the
legislature’s intention to displace certain common law rules.) Ask students to
indicate what it is about the conversion provision that causes the court to find that it
displaces the common-law negligence claim. (Significant overlap between the two
claims makes them largely duplicative and inconsistent defenses under each. So the
common law claim adds nothing in terms of what conduct is regulated, but the two
claims would result in differing standards for excusing the defendant of its liability
based on the plaintiff’s own negligence.) Explain that typically the courts would let a
somewhat related claim under common law sit alongside a statutory claim that does
not expressly displace it, so long as they are distinct and not contradictory. But, here,
the claims were not distinct and were contradictory. In that case, the priority rules
require that the statute displace the common law.
m. Briefly discuss the classifications of law identified in the text and give examples.
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