978-0077733735 Chapter 32 Solution Manual

Type

Solution Manual

Book Title

Business Law with UCC Applications 14th Edition

ISBN 13

978-0077733735

April 10, 2019

Part 9 THe Legal environment

ANSWER KEY

Chapter 32 Professional Liability

Opening Case Questions

3. Communication is a key in this case because knowledge is a key. The element of “near-privity”

4. Again as above, knowledge is a key. The element of “near-privity” may be established if FSC

A Question of Ethics

Indeterminacy from Another Angle

1. Determining and explaining which of the three theories offered in this Self-Evident Rights

feature presents the most accurate view of the legal system is problematic and, therefore,

2. Of the three theorists, Ernest Weinrib promotes a view that is basically in line with the idea

that the judicial–economic system is a balancing act that aims at creating a flexible and

responsive system. In “Legal Formalism: On the Immanent Rationality of Law,” Weinrib

declares that the most accurate way to examine the law is to look at its “inner coherence.”

3. This question can be answered using any one of the theories outlined above. One could argue

(position #1) that, because the law is chaotic, the legislature (and the courts) must step in

periodically to re-establish order, even though permanent order is impossible. Or one could

5. Again it is possible to make an argument to prove that each of the three views is supported by

the evidence in this chapter, especially in relation to the need for laws like Sarbanes-Oxley and

Dodd-Frank. One position might be that the use of such laws demonstrates that the legal system

CLASSIC CASES

Unconstitutional or Unethical: State of Florida, et al. v. U.S. Department of Health

and Human Services—One More Time

If the Affordable Care Act had been declared unconstitutional, already established and currently

Questions for Review and Discussion

1. A certified public accountant is an accountant who has met certain age, experience, and testing

2. Generally accepted accounting principles are procedures that accountants must use in

3. An audit is an examination of the financial records of an organization to determine whether those

records represent an accurate and fair representation of the financial health of the organization. When

auditors are satisfied that the financial records accurately reflect the company’s financial status, they

will issue an unqualified opinion. When auditors issue a qualified opinion they are saying that the

books represent the company’s financial health as of a given date. However, the auditors may qualify

4. Privity is a relationship that emerges when two or more parties enter a contract. The parties to the

5. Architects owe a duty to exercise due care and skill in carrying out professional duties. The

standard does not demand that the architect design perfect or faultless structures. Architects can make

8. Under the locality rule, similar health care professionals are compared in relation to their level of

9. Ostensible authority has been used by plaintiffs to hold a hospital liable for the torts of its

independent contractor physicians. Ostensible authority is created when a hospital presents itself to the

Cases for Analysis

1. The judge protected Stewart’s e-mail to her daughter under the attorney-client privilege and the

work product privilege. The judge labeled Stewart’s daughter a “valued confidant and counselor” and

3. No. The SEC was incorrect. Arthur Young and Company was required to follow GAAS. Having

done so, it met its standard of care. In addition, while auditors are required to look for fraud and illegal

4. No. The accountants were incorrect. Third parties damaged by negligence or fraud of an

accountant can bring suit against that accountant. Whether the third party will succeed in that suit will

depend upon the facts and the law of the state. Protection from negligently prepared financial

5. No. The measure of damages in a suit against architects for failing to fulfill the terms of a contract

does not depend on a drop in the market value of the structure. The appropriate measure of damages,

6. Probably not. The court may use two standards that might hold the physician in this case liable.

The court might judge performance by determining how the same procedure is performed at another

hospital located in a similar locality. Under the similar locality rule, rural hospitals are compared to

other rural hospitals, urban hospitals to urban hospitals, and suburban hospitals to suburban hospitals.

However, courts today often use a national standard. Under the national standard, a nurse in

END CHAPTER THIRTY-TWO

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