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ANSWERS TO LEARNING OBJECTIVES/ FOR REVIEW QUESTIONS AT THE BEGINNING AND THE END OF THE CHAPTER 1A. What are four primary sources of law? Primary sources of law are sources that establish the law. In the United States, these include the U.S. Constitution and the state constitutions, statues passed by Congress and the state legislatures, regulations created by administrative agencies, and court decisions, or case law. 2A. What is the common law tradition? Because of our colonial heritage, much of American law is based on the English legal system. After the Norman conquest of England, the king‟s courts sought to establish a uniform set of rules for the entire country. What evolved in these courts was the common law—a body of general legal principles that applied throughout the entire English realm. Courts developed the common law rules from the principles underlying judges‟ decisions in actual legal controversies. 3A. What is a precedent? When might a court depart from precedent? Judges attempt to be consistent, and when possible, they base their decisions on the principles suggested by earlier cases. They seek to decide similar cases in a similar way and consider new cases with care, because they know that their conflicting Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a



decisions make new law. Each interpretation becomes part of the law on the subject and serves as a legal precedent—a decision that furnishes an example or authority for deciding subsequent cases involving similar legal principles or facts. A court will depart from the rule of a precedent when it decides that the rule should no longer be followed. If a court decides that a precedent is simply incorrect or 1 © 2016 publicly accessible website, in whole or in part.

that technological or social changes have rendered the precedent inapplicable, the court might rule contrary to the precedent. 4A. What is the difference between remedies at law and remedies in equity? An award of compensation in either money or property, including land, is a remedy at law. Remedies in equity include a decree for specific performance (an order to perform what was promised), an injunction (an order directing a party to do or refrain from doing a particular act), and rescission (cancellation) of a contract (and a return of the parties to the positions that they held before the contract‟s formation). As a rule, courts will grant an equitable remedy only when the remedy at law (money damages) is inadequate. Remedies in equity on the whole are more flexible than remedies at law. 5A. What are some important differences between civil law and criminal law? Civil law spells out the rights and duties that exist between persons and between persons and their governments, and the relief available when a person‟s rights are violated. In a civil case, a private party may sue another private party (the government can also sue a party for a civil law violation) to make that other party comply with a duty or pay for damage caused by a failure to comply with a duty. Criminal law has to do with wrongs committed against society for which society demands redress. Local, state, or federal statutes proscribe criminal acts. Public officials, such as district attorneys, not victims or other private parties, prosecute criminal defendants on behalf of the state. In a civil case, the object is to obtain remedies (such as damages) to compensate an injured party. In a criminal case, the object is to punish a wrongdoer to deter others from similar actions. Penalties for violations of criminal statutes include fines and imprisonment, and in some cases, death.

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ANSWERS TO CRITICAL THINKING QUESTIONS AT THE ENDS OF THE FEATURES ONLINE DEVELOPMENTS—CRITICAL THINKING Does this argument justify the different treatment for unpublished opinions in the state and federal courts? Explain. Yes, because categorizing some decisions, unpublished or otherwise, as not establishing precedent is arguably unconstitutional. No, because such decisions are often less significant or may set “bad” precedents and have not traditionally been regarded as establishing precedent.

BEYOND OUR BORDERS— CRITICAL THINKING Does the civil law system offer any advantages over the common law system, or vice versa? Explain. The positive and negative aspects of the characteristics of each legal system make up its advantages and disadvantages. For example, on the one hand, a civil law system relies on a code of laws without regard to precedent. When a statute is clear, this can make the application of law more standard. When a statute is ambiguously phrased, it can be subject to different interpretations, however, which can lead to unpredictable applications. On the other hand, in a common law system, reliance on precedent is required, which can render the application of an unclear statute more predictable, at least in a give jurisdiction. But a statute that is not clearly phrased may not be uniformly interpreted and applied across jurisdictions.

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE AT THE END OF THE CHAPTER 1A. Parties In this situation, the automobile manufacturers are the plaintiffs, and the state of California is the defendant. 2A. Remedy The plaintiffs are seeking an injunction, which is an equitable remedy, to prevent the state of California from enforcing its statute restricting carbon dioxide emissions. 3A. Source of law This case involves a law passed by the California legislature and a federal statute, thus the primary source of law is statutory law.



4A. Finding the law Federal statutes are found in the United States Code, and California statutes are published in the California Code. You would look in both of these sources to find the relevant state and federal statutes.

ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE AT THE END OF THE CHAPTER Under the doctrine of stare decisis, courts are obligated to follow the precedents established in their jurisdictions unless there is a compelling reason not to. Should U.S. courts continue to adhere to this common law principle, given that our government now regulates so many areas by statute? Both England and the U.S. legal systems were constructed on the common law system. The doctrine of stare decisis has always been a major part of this system—courts should follow precedents when they are clearly established, excepted under compelling reasons. Even though more common law is being turned into statutory law, the doctrine of stare decisis is still valid. After all, even statutes have to be interpreted by courts. What better basis for judges to render their decisions than by basing them on precedents related to the subject at hand? In contrast, some students may argue that the doctrine of stare decisis is passé. There is certainly less common law governing, say, environmental law than there was 100 years ago. Given that federal and state governments increasingly are regulating more aspects of commercial transactions between merchants and consumers, perhaps the courts should simply stick to statutory language when disputes arise.

ANSWERS TO ISSUE SPOTTERS AT THE END OF THE CHAPTER 1A. The First Amendment provides protection for the free exercise of religion. A state legislature enacts a law that outlaws all religions that do not derive from the Judeo-Christian tradition. Is this law valid within that state? Why or why not? No. The U.S. Constitution is the supreme law of the land, and applies to all jurisdictions. A law in violation of the Constitution (in this question, the First Amendment to the Constitution) will be declared unconstitutional. © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2A. Under what circumstance might a judge rely on case law to determine the intent and purpose of a statute? Case law includes courts’ interpretations of statutes, as well as constitutional provisions and administrative rules. Statutes often codify common law rules. For these reasons, a judge might rely on the common law as a guide to the intent and purpose of a statute.

ANSWERS TO BUSINESS SCENARIOS AND CASE PROBLEMS AT THE END OF THE CHAPTER 1–1A. Binding v. persuasive authority A decision of a court is binding on all inferior courts. Because no state‟s court is inferior to any other state‟s court, no state‟s court is obligated to follow the decision of another state‟s court on an issue. The decision may be persuasive, however, depending on the nature of the case and the particular judge hearing it. A decision of the United States Supreme Court on an issue is binding, like the decision of any court, on all inferior courts. The United States Supreme Court is the nation‟s highest court, however, and thus, its decisions are binding on all courts, including state courts. 1–2A. Remedies 1. In a suit by Arthur Rabe against Xavier Sanchez, Rabe is the plaintiff and Sanchez is the defendant. 2. Specific performance is the remedy that includes an order to a party to perform a contract as promised. 3. Rescission is a remedy that includes an order to cancel a contract. 4. In both cases, these remedies are remedies in equity. 5. If Sanchez appeals the decision, Sanchez would be the appellant (or petitioner) and Rabe would be the appellee (or respondent). 1–3A. Philosophy of law Crimes against humanity constituted, at the time of the Nuremberg trials, a new international crime, consisting of “murder, extermination, enslavement, deportation, and other inhumane acts committed against any civilian population, before or during the war, or persecutions on political, racial or religious ground.” In response to the defendants‟ assertion that they had only been following orders, the Nuremberg judges explained in part that these were familiar crimes within domestic jurisdictions and that thus the accused must have known, when they committed their acts, that they would be considered criminal. In terms of a philosophy of law, it might be said that these



criminals violated “natural law.” The oldest and one of the most significant schools of jurisprudence is the natural law school. Those who adhere to the natural law school of thought believe that government and the legal system should reflect universal moral and ethical principles that are inherent in human nature. Because natural law is universal, it takes on a higher order than positive, or conventional, law. The natural law tradition presupposes that the legitimacy of conventional, or positive, law derives from natural law. Whenever it conflicts with natural law, conventional law loses its legitimacy. For example, a precept of natural law may be that murder is wrong, which is a value reflected by specific laws prohibiting murder. If a specific, written law requires murder, it conflicts with the natural law precept, in which case individuals should disobey the written law and obey the natural law. 1–4A. SPOTLIGHT ON AOL—Common law The doctrine of stare decisis is the process of deciding case with reference to former decisions, or precedents. Under this doctrine, judges are obligated to follow the precedents established within their jurisdiction. In this problem, the enforceability of a forum selection clause is at issue. There are two precedents mentioned in the facts that the court can apply The United States Supreme Court has held that a forum selection clause is unenforceable “if enforcement would contravene a strong public policy of the forum in which suit is brought.” And California has declared in other cases that the AOL clause contravenes a strong public policy. If the court applies the doctrine of stare decisis, it will dismiss the suit. In the actual case on which this problem is based, the court determined that the clause is not enforceable under those precedents. 1–5A. Sources of law The U.S. Constitution is the supreme law of the land. A law in violation of the Constitution, no matter what its source, will be declared unconstitutional and will not be enforced. In this problem, the court determined that a Massachusetts state statute was in conflict with the U.S. Constitution. The Constitution takes priority, so the statute will not be enforced. In the actual case on which this problem is based, the trial court held that the statute violated the Constitution, and the U.S. Court of Appeals for the First Circuit affirmed this holding. Under the statute‟s definitions of large and small wineries, most of the small wineries were in state, and all of the large wineries were out-of-state. The court found that the purpose of the statute was to “ensure that Massachusetts‟ wineries obtained an advantage over their out-of-state counterparts.”

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1–6A. Business CASE PROBLEM WITH SAMPLE ANSWER—Law around the world The key differences between common law and civil law systems relate to how judges decie cases. In the common law system, courts decide new cases with reference to former decisions, or precedents. Judges attempt to be consistent and to decide similar cases in a similar way, basing their decisions on the principles suggested by earlier cases. Each interpretation becomes part of the law on the subject and serves as a legal precedent, forming a doctrine called stare decisis. Common law systems exist in Australia, Canada, India, Ireland, and New Zealand, as well as the United States. Most of the other European nations base their legal systems on Roman civil law. Civil law is codified law—an ordered grouping of legal principles enacted into law by a legislature or governing body. In a civil law system, the primary source of law is a statutory code, and case precedents are not judicially binding as they are in a common law system. Nonetheless, judges in such systems commonly refer to previous decisions as sources of legal guidance. The difference is that in a civil law system, judges are not bound by precedentand the doctrine of stare decisis does not apply. 1–7A. Reading citations The court‟s opinion in this case—People v. Tuttle, 304 Mich.App. 72, 850 N.W.2d 484 (2014)—can be found in volume 304 of the Michigan Appeals Reports on page 72, and in volume 850 of West‟s Northwestern Reporter, Second Series, on page 484. The Court of Appeals of Michigan issued the opinion in 2014. 1–8A. A QUESTION OF ETHICS—Stare decisis 1. Your answer to this question and the reasons for that answer will likely follow one of the three schools of jurisprudential thought discussed in Chapter 1. In other words, your reasoning would indicate how you personally view the nature of law. If your sentiments are similar to those of the positivist school, you would have little difficulty. Your answer would be that the criminal law of the nation should be applied. In contrast, if you hold that there is a higher, “natural” law to which all human beings are subject, you might have concluded that, given their circumstances, the men should not be subject to any nation‟s particular laws but to that higher law. If you reached this conclusion, then you would have to further decide whether that higher law would sanction the killing of another human being for the sake of survival in these circumstances or absolutely prohibit the taking of another‟s life under any circumstances. This is a question that would ultimately be based on your personal ethical, religious, or philosophical leanings. Approaching the question from a legal realist‟s perspective, you would probably attempt to balance your personal, subjective view of the men‟s actions against the views held by the others—how do most people feel about the issue? How would they respond to whatever your decision might be? As a judge, do you have an obligation to be responsive to society‟s ethical standards?



If so, to what extent should this obligation be a determining factor in your decision, and how do you balance this obligation against your duty to uphold the law. 2. The legal realists believed that, just as each judge is influenced by the beliefs and attitudes unique to his or her personality, so, too, is each case attended by a unique set of circumstances. According to the legal realist school of thought, judges should tailor their decisions to take account of the specific circumstances of each case, rather than rely on an abstract rule that may not relate to those circumstances. Legal realists also believe that judges should consider extra-legal sources, such as economic and sociological data, in making decisions, to the extent that those sources illuminate the circumstances and issues involved in specific cases. A counterargument can be derived from the positivist school: the law is the law, and there is no need to look beyond it to apply it. In fact, a legal positivist might argue that looking at extra-legal sources would be acting contrary to the law.


CHAPTER 2 BUSINESS ETHICS 2-1A. Consumer welfare The court hearing the case was not convinced by the father‟s arguments. Rather, the court held that certain risks, such as falling off a jungle gym, are so obvious that manufacturers need not warn of them. In its decision, the court applied the age-old commonsense principle: “If you fall, you might get hurt.” Today‟s manufacturers are plagued by product liability suits, many of which strain the limits of one‟s legal imagination. There is, after all, something called common sense, and most courts agree that consumers should expect to incur certain risks when they use particular products. For example, if a consumer is cut by a sharp knife, the manufacturer should not be held responsible for that injury because the risk was obvious and inherent in the nature of the product. Similarly (one would think), manufacturers of playground equipment should not have to bear responsibility for injuries sustained by children who fall off such equipment, providing the equipment itself is not faulty. But many consumers view the matter otherwise, and in recent years, a number of cases—including the Cozzi case—have come before the courts in © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

which plaintiffs allege that manufacturers of playground equipment should be held liable for injuries sustained by children while playing on the equipment. 2-2A. Duty to consumers The state trial court held that although Terry‟s use of the lighter was an unintended use, Bic should have known that harm caused by a child‟s use of its product was a foreseeable risk. Because Bic failed to design its product in such a way as to avoid this risk, it did not exercise reasonable care and was therefore liable for Terry‟s injuries. The court stated that because lighters such as those manufactured by Bic “are commonly used and kept about the home, it is reasonably foreseeable that children will B-1

B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2 have access to them and will try to use them.” In response to Bic‟s argument under the Restatement (Second) of Torts, the court held that New York law is broader than that set forth in the Restatement. In New York, manufacturers have a duty to design a product so that it avoids an unreasonable risk of harm to anyone who is likely to be exposed to danger when the product is being used either as intended or in unintended but foreseeable ways. In response to Bic‟s claim that the risks associated with its lighter were “open and obvious,” which in some situations is a defense to a claim of negligence, the court held that in New York that doctrine “is simply another factor that is considered in determining the reasonable care exercised by the parties.” 2-3A. Employment relationships The court ruled in favor of Faverty. McDonald‟s argued that under the Restatement (Second) of Torts, Sections 315, that “[t]here is no duty so to control the conduct of a third person as to prevent him from causing physical harm to another unless (a) a special relation exists between the actor and the third person which imposes a duty upon the actor to control the third person‟s conduct, or (b) a special relation exists between the actor and the other which gives to the other a right to protection.” In this case, the “third person” was Theurer. The court explained, however, that “unless a defendant invokes a special status or relationship, or is subject to a particular statutory standard of conduct, it is subject to the general duty to avoid conduct that unreasonably creates a foreseeable risk of harm to a plaintiff.” This is the same duty that we all have. The jury decided that McDonald‟s “knew or should have known that Theurer was so exhausted or fatigued that it should have foreseen that working him three shifts in one 24-hour period would create a foreseeable risk of harm to motorists such as plaintiff.”



In other words, by not preventing Theurer from driving home from work, McDonald‟s “unreasonably create[d] a foreseeable risk of harm to [the] plaintiff.” 2-4A. Ethical conduct The court enjoined the defendants, for a period of three years, “from disclosing, using or selling any of [Elm City‟s] confidential customer information, trade secrets, procedures, technical data or know-how relating to the products, processes, methods, research and development plans, equipment or business operations of [Elm City].” The court also awarded Elm City $461,239 in compensatory damages, $300,000 in punitive damages, and $100,000 in attorney‟s fees. The defendants‟ appeal went to the Connecticut Supreme Court, which upheld the injunction and the damages. The court emphasized that “Federico used confidential business information that he was duty bound, by both statute and the ethics of his profession, to keep confidential. He cannot do so and then hide behind professed ignorance that the information he used improperly is part of Elm City‟s trade secret.” The court concluded that “Federico should have known that he was using information that was a trade secret and that he was duty bound to keep confidential.” The court added that Federico was “on a course for Elm City‟s APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2


demise rather than to enter into fair competition.” For example, the choice of location for Lomar was closer to the suppliers than Elm City‟s location and would “chok[e] off” Elm City‟s supplies. Federico would be “choking off further the distribution of Elm City‟s life lines by getting the three major customers of Elm City‟s product.” The court also noted the animosity between Federico and the Weinsteins when Federico resigned. 2-5A.

Consumer welfare

On the defendants‟ motions, the court issued two summary judgment orders, effectively dismissing the case. The court reasoned in part that riding unrestrained in the bed of a pickup truck is “an open and obvious danger as a matter of law, and the manufacturer of a pickup truck is not under a duty to warn potential passengers and users of [this] obvious danger.” The plaintiffs appealed to the Hawaii Supreme Court, which affirmed the judgment of the lower court. The state supreme court held that “the dangers of riding unrestrained in an open cargo bed of a pickup truck are obvious and generally known to the ordinary user and that therefore Isuzu had no duty to warn potential passengers of those dangers.” The court explained that “it should be readily apparent and patently obvious to a passenger who chooses to ride in the bed of a

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pickup truck that he or she is completely unrestrained and unprotected from being ejected from the bed in an accident.” 2-6A.

Ethical conduct

The court entered a judgment in part ordering Zandford to disgorge $343,000 in “illgotten gains.” On Zandford‟s appeal, the U.S. Court of Appeals for the Fourth Circuit reversed this judgment. The SEC appealed to the United States Supreme Court, which reversed this decision and remanded the case, holding that Zandford‟s conduct was sufficiently “in connection with the purchase or sale of any security” to violate securities law. The Court explained that “[t]his is not a case in which, after a lawful transaction had been consummated, a broker decided to steal the proceeds and did so. Nor is it a case in which a thief simply invested the proceeds of a routine conversion in the stock market. Rather, respondent‟s fraud coincided with the sales themselves. . . . [E]ach sale was made to further respondent‟s fraudulent scheme; each was deceptive because it was neither authorized by, nor disclosed to, the Woods. With regard to the sales of shares in the Woods‟ mutual fund, respondent initiated these transactions by writing a check to himself from that account, knowing that redeeming the check would require the sale of securities.” As to others, respondent‟s fraud represents [a great] threat to investor confidence . . . . Not only does such a fraud prevent investors from trusting that their brokers are executing transactions for their benefit, but it undermines the value of a discretionary account like that held by the Woods. The benefit of a discretionary account is that it enables individuals, like the Woods, who lack the time, capacity, or know-how to supervise investment decisions, to delegate authority to a broker who will make decisions in their best interests without prior approval. If such individuals cannot B-4


rely on a broker to exercise that discretion for their benefit, then the account loses its added value.” 2-7A.

Ethical conduct

You can infer from the problem that the damage award included not only actual damages to compensate Eden for Amana‟s failure to fulfill its contractual obligations but also punitive damages. The real question here is thus whether such a high amount of punitive damages was appropriate, or warranted, in this case. One would assume that behavior such as Amana‟s should be punished somehow. Amana had clearly ignored its ethical and legal obligations to Eden. Moreover, Amana is a major appliance dealer with global operations, and $12.1 million would not likely cause the company to go bankrupt. The award is sufficiently high, though, to severely punish Amana and let Amana know that its conduct toward Eden was outrageous. Indeed, the trial court referred to Amana‟s actions as “a reprehensible case of business fraud.”



On appeal, the U.S. Court of Appeals for the Eighth Circuit emphasized that due to “the egregious nature of Amana‟s conduct,” the damages award appropriately furthered “the state‟s twin goals of punishment and deterrence.” This case illustrates that business ethics is important to the long-run viability of a corporation. Too much unethical conduct by a firm‟s representatives and consequent financial penalties would likely result in the end of the firm‟s capacity to do business. 2-8A.

Ethical conduct

The court concluded that the federal laws in question protect only electronic communications in the course of transmission, and granted a summary judgment in favor of Nationwide. Here, of course, the e-mail had already been sent and was in storage in Nationwide‟s computers. “[R]etrieval of a message from post-transmission storage is not covered” by the federal laws in question. Those laws provide protection “only for messages while they are in the course of transmission. The facts of this case are that Nationwide retrieved Fraser‟s e-mail from storage after the e-mail had already been sent and received by the recipient. Nationwide acquired Fraser‟s e-mail from posttransmission storage. Therefore, Nationwide‟s conduct is not prohibited under” federal law. As for the ethics of Nationwide‟s retrieval of Fraser‟s e-mail from Nationwide‟s file server, the court acknowledged that it “may in fact be ethically „questionable‟ as [an internal board that reviewed Nationwide‟s cancellation of Fraser‟s contract] indicated in its report. But it is not legally actionable under” federal law. Why might it be unethical? It could be interpreted as “unfair” or as an invasion of privacy, somewhat like searching through someone‟s trash. It could be seen as a violation of a duty to “employees,” even though Fraser was technically an independent contractor. Fraser appealed the decision to the U.S. Court of Appeals for the Third Circuit, which affirmed the lower court‟s judgment on these points and remanded for consideration of other questions. On remand, the court again ruled in Nationwide‟s favor. APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2



Ethical conduct

The bankruptcy court held that Schilling was not entitled to any fees because he was not a “disinterested” party: “The moment that [Schilling] approached three of Big Rivers‟ largest * * * creditors and broached the subject of his compensation * * * he was no longer a disinterested party.” The court also found that Schilling‟s failure to disclose the fee negotiations was a violation of the law, and ordered him to remit to Big Rivers the amount that he had already been paid. Schilling appealed to the U.S. Court of Appeals for the Sixth Circuit, which affirmed the bankruptcy court‟s order. The © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

appellate court held that to be “disinterested” means a person in Schilling‟s position “may not have a material adverse interest to any party to the bankruptcy for any * * * reason. * * * An agreement with a single creditor that links * * * compensation to the creditor‟s recovery qualifies as such an interest because it creates the risk that [a person in Schilling‟s position] will favor one creditor at the expense of other creditors. * * * Opportunities abound, moreover, for [persons] paid in this manner to benefit selected creditor[s]” at the expense of others. “That Schilling reached the agreement * * * in secret only makes matters worse.” 2-10A. A QUESTION OF ETHICS 1. The court granted the manufacturer summary judgment, and Welch appealed. The state appellate court affirmed the lower court‟s decision. The appellate court pointed out in its discussion, “Under the open and obvious danger rule, a manufacturer of a product is liable only for defects which are hidden and not normally observable. . . . [T]he relative obviousness of a defect is . . . relevant in determining whether or not a product is defective and unreasonably dangerous. . . . In this case, the risks posed by a disposable butane lighter are open and obvious to an ordinary user of the lighter.” With this in mind, the court concluded that “Scripto was not negligent in failing to design the lighter with child-resistant features and Scripto had no duty to warn Welch of the lighter‟s inherent dangers.” The court noted that “although the manufacturer of a lighter does not have a duty to provide a warning to keep the lighter away from children, in this case, Scripto provided such a warning on the package in which the lighter was sold.” 2. In discussing the openness and obviousness of the dangers of a disposable lighter, the appellate court based its conclusions on “[t]he physical characteristics of the lighter, including the fact that it would ignite when one pushed down on the thumb lever and that it could be operated by a small child.” This, as the court saw it, “could be directly observed. Accordingly, the danger of allowing a lighter to fall into the hands of a small child is open and obvious.”

Download solution manual for the legal environment today summarized case 8th edition by miller  
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