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Business Law I Essentials Essentials Business Law I Essentials OpenStax Rice University 6100 Main Street MS-375 Houston, Texas 77005 To learn more about OpenStax, visit https://openstax.org. Individual print copies and bulk orders can be purchased through our website. ©2019 Rice University. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). 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Trademarks The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, OpenStax CNX logo, OpenStax Tutor name, Openstax Tutor logo, Connexions name, Connexions logo, Rice University name, and Rice University logo are not subject to the license and may not be reproduced without the prior and express written consent of Rice University. B&W PAPERBACK BOOK ISBN-13 978-1-975076-62-7 DIGITAL VERSION ISBN-13 978-1-947172-78-4 ORIGINAL PUBLICATION YEAR 2019 10 9 8 7 6 5 4 3 2 1 OPENSTAX OpenStax provides free, peer-reviewed, openly licensed textbooks for introductory college and Advanced Placement® courses and low-cost, personalized courseware that helps students learn. A nonprofit ed tech initiative based at Rice University, we’re committed to helping students access the tools they need to complete their courses and meet their educational goals. RICE UNIVERSITY OpenStax, OpenStax CNX, and OpenStax Tutor are initiatives of Rice University. As a leading research university with a distinctive commitment to undergraduate education, Rice University aspires to path-breaking research, unsurpassed teaching, and contributions to the betterment of our world. It seeks to fulfill this mission by cultivating a diverse community of learning and discovery that produces leaders across the spectrum of human endeavor. PHILANTHROPIC SUPPORT OpenStax is grateful for our generous philanthropic partners, who support our vision to improve educational opportunities for all learners. Laura and John Arnold Foundation The Maxfield Foundation Arthur and Carlyse Ciocca Charitable Foundation Burt and Deedee McMurtry Ann and John Doerr Michelson 20MM Foundation Bill & Melinda Gates Foundation National Science Foundation Girard Foundation The Open Society Foundations Google Inc. Jumee Yhu and David E. Park III The William and Flora Hewlett Foundation Brian D. 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The future of education. openstax.org TABLE OF CONTENTS Preface 1 1 American Law, Legal Reasoning, and the Legal System 3 1.1 Basic American Legal Principles 3 1.2 Sources and Types of Law 5 1.3 Important Business Laws and Regulations 7 2 Disputes and Dispute Settlement 15 2.1 Negotiation 15 2.2 Mediation 19 2.3 Arbitration 22 3 Business Ethics and Social Responsibility 31 3.1 Business Ethics 31 3.2 Social Responsibility 35 4 Business and the United States Constitution 43 4.1 Commerce Clause 43 4.2 Constitutional Protections 47 5 Criminal Liability 53 5.1 Common Business Crimes 53 5.2 Civil vs: Criminal Liability 57 6 The Tort System 63 6.1 Intentional Torts and Negligence 63 6.2 Product and Strict Liability 67 7 Contract Law 75 7.1 Consideration and Promissory Estoppel 75 7.2 Capacity and Legality 78 7.3 Breach of Contract and Remedies 80 8 Sales Contracts 85 8.1 The Nature and Origins of Sales Contracts 85 8.2 Warranties and Sales Contracts 91 9 Employment and Labor Law 97 9.1 Employment, Worker Protection, and Immigration Law 97 9.2 Labor Law 101 9.3 Equal Opportunity in Employment 105 10 Government Regulation 113 10.1 Administrative Law 113 10.2 Regulatory Agencies 117 11 Antitrust Law 123 11.1 History of Antitrust Law 123 11.2 Antitrust Laws 127 12 Unfair Trade Practices and the Federal Trade Commission 133 12.1 Unfair Trade Practices 133 12.2 The Federal Trade Commission 136 13 International Law 141 13.1 Introduction to International Law 141 13.2 Sources and Practice of International Law 145 14 Securities Regulation 151 14.1 Liability Under the Securities Act 151 14.2 The Framework of Securities Regulation 154 This OpenStax book is available for free at http://cnx.org/content/col30149/1.5 Index 167 This OpenStax book is available for free at http://cnx.org/content/col30149/1.5 Preface 1 Preface Welcome to Business Law I Essentials, an OpenStax resource. This textbook was written to increase student access to high-quality learning materials, maintaining the highest standards of academic rigor at little to no cost. About OpenStax OpenStax is a nonprofit based at Rice University, and it’s our mission to improve student access to education. Our first openly licensed college textbook was published in 2012, and our library has since scaled to over 30 books for college and AP® courses used by hundreds of thousands of students. OpenStax Tutor, our low-cost personalized learning tool, is being used in college courses throughout the country. Through our partnerships with philanthropic foundations and our alliance with other educational resource organizations, OpenStax is breaking down the most common barriers to learning and empowering students and instructors to succeed. About OpenStax resources Attribution and Customization Business Law I Essentials was developed by Barnes and Noble Education LoudCloud and is licensed under a Creative Commons Attribution NonCommercial ShareAlike 4.0 International license (CC-BY-NC-SA), which means that noncommercial entities can remix and build upon the content, as long as they provide attribution to OpenStax and its content contributors and redistribute it under the same license as the original. Because our books are openly licensed, you are free to use the book in its current format or augment it with additional content, cases, or other teaching materials. Feel free to remix the content by assigning your students certain chapters and sections in your syllabus, in the order that you prefer. You can even provide a direct link in your syllabus to the sections in the web view of your book. Art attribution In Business Law I Essentials, most art contains attribution to its title, creator, or rights holder, host platform, and license within the caption. Because the art is openly licensed, anyone may reuse the art as long as they provide the same attribution to its original source and share it under the same license as the original art. Errata All OpenStax textbooks undergo a review process. However, like any professional-grade textbook, errors sometimes occur. Since our books are web based, we can make updates periodically when deemed pedagogically necessary. If you have a correction to suggest, submit it through the link on your book page on openstax.org. Subject matter experts review all errata suggestions. OpenStax is committed to remaining transparent about all updates, so you will also find a list of past errata changes on your book page on openstax.org. Format You can access this textbook for free in web view or PDF through openstax.org, and for a low cost in print. 2 Preface About Business Law I Essentials Business Law I Essentials is a brief introductory textbook designed to meet the scope and sequence requirements of courses on Business Law or the Legal Environment of Business. The concepts are presented in a streamlined manner, and cover the key concepts necessary to establish a strong foundation in the subject. The textbook follows a traditional approach to the study of business law. Each chapter contains learning objectives, explanatory narrative and concepts, references for further reading, and end-of-chapter questions. Business Law I Essentials may need to be supplemented with additional content, cases, or related materials, and is offered as a foundational resource that focuses on the baseline concepts, issues, and approaches. OpenStax’s Creative Commons licensing, described above, offers a instructors and course designers a great deal of flexibility in its use. Community Hubs OpenStax partners with the Institute for the Study of Knowledge Management in Education (ISKME) to offer Community Hubs on OER Commons—a platform for instructors to share community-created resources that support OpenStax books, free of charge. Through our Community Hubs, instructors can upload their own materials or download resources to use in their own courses, including additional ancillaries, teaching material, multimedia, and relevant course content. We encourage instructors to join the hubs for the subjects most relevant to your teaching and research as an opportunity both to enrich your courses and to engage with other faculty.
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