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y New York law, which only authorizes courts toaward punitive damages. As a result of thesediffering views, the Court had to interpret themeaning of the contract.Determining the Intent of the PartiesThe Court said that when interpreting a contract,it must determine the intent of the parties atthe time that they entered into the agreement. Theoriginal intent of the parties would be used to guidethe court’s decision. In this contract, the partiesagreed that arbitration would be conducted inaccordance with rules of the National Associationof Security Dealers (NASD), which states thatarbitrators may award “damages and other relief.”The NASD manual further provides that “Noagreement [between a member and a customer]shall include any condition which . . . limits theability of a party to file any claim in arbitration orlimits the ability of an arbitrators to make anyaward.” However, the contract also states that it isgoverned by New York law, which permits onlycourts to award punitive damages. These conflictingprovisions create an ambiguity in the contract.Ambiguous TermsUnder common law, ambiguousterms in a contract are interpretedagainst the party thatdrafted the contract. Ambiguousterms can be understood in differentways. This view of ambiguityprotects the party who did not preparethe contract. A party that hadno input in drafting a contract cannotbe blamed for that contract’sambiguities. As stated in theRestatement (Second) of Contracts§ 206, Comment A (1979):“Where one party chooses the terms of a contract,he is likely to provide more carefully for theprotection of his own interests than for those of theother party. He is also more likely than the otherparty to have reason to know of uncertainties ofmeaning. Indeed, he may leave meaning deliberatelyobscure, intending to decide at a later datewhat meaning to assert. In cases of doubt, therefore,so long as other factors are not decisive, thereis substantial reason for preferring the meaning ofthe other party.”Because Shearson Lehman Hutton preparedthe contract for the Mastrobuonos’ signatures,any ambiguity must be interpreted in favor of theMastrobuonos.Holding The contact between the parties isambiguous. Under well-established rules of commonlaw, ambiguities in a contract are construedagainst the party who wrote the contract. As a result,the arbitration panel’s award of punitive damageswas upheld.1. What type of contract is involved in this case?2. Why did Shearson Lehman Hutton force theMastrobuonos to participate in arbitration?3. Why didn’t Shearson Lehman Hutton agreewith the full decision of the arbitration panel,when they were the party who wanted thedispute to be resolved through arbitration?4. What does a court attempt to determine whenit interprets a contract?5. What common law rule does a court applywhen interpreting an ambiguous contract?6. What is the purpose of the rule addressed inquestion 5?Go to the Understanding Business and Personal Law Web site at ubpl.glencoe.comfor information about how to access online resources for the Landmark Cases.Chapter 12: Transfer of Contracts and Remedies for Breach 263
UNITUNIT OVERVIEWThroughout yourlife, you will take part intransactions involvingthe sale of goods. Lawsintended to promoteefficient economic relationshipsand protectyou as a consumer governthese contracts. Inthis unit, you will learnabout these laws bystudying the followingtopics:l Contracts for sellinggoodsl The law of warrantiesl Consumer protectionlawl Purchasing and sellingautomobilesl Personal property,intellectual property,and bailments
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interactive student edition
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Program ComponentsYour Understandin
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Studying Case LawApplying What You
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UNIT 1 Law Workshop: Using Legal To
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UNIT 3Understanding Consumer Law 26
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CHAPTER 21Employment Protection and
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CHAPTER 29Operating a Corporation 6
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Exploring the UnitUnderstanding Bus
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Exploring the SectionChapters of th
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Exploring Chapter AssessmentChapter
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Exploring the Law WorkshopsLaw Work
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FeaturesYour Understanding Business
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A Global Perspective: Laws Around t
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Law & AcademicsThe law is related t
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Legal BriefsThese short features di
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GORDON W. BROWN studied lawto becom
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UNITUNIT OVERVIEWLaws generally ref
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CHAPTEREthics and the LawUnderstand
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Defining Ethicsl How ethical decisi
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GhanaA law can be a decree, a prohi
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People want to be treated with resp
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decisions. Compassionate people try
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Sources of Lawl How to recognize th
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Language ArtsThe legal profession h
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Limits of Free SpeechThe First Amen
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Adopt a PetAre you consideringadopt
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CHAPTERASSESSMENTSection 1.1 Defini
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CHAPTERASSESSMENTConnect with Scien
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CHAPTERThe Court SystemUnderstandin
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A Dual Court Systeml How to determi
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Supreme CourtThe U.S. Supreme Court
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whether to transfer the case, the c
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Trial Proceduresl How to seek alter
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Another new form of ADR is known as
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AN ANSWERAn answer is the defendant
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predict whether a juror will be fai
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Execution of JudgmentAfter a trial
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SEARCH WARRANTThe scope of a search
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Forensic ScientistIf you’re a fan
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Figure 2.7CAWAORNVAge Limits For Ju
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CHAPTERASSESSMENTSection 2.1 Dual C
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CHAPTERASSESSMENTConnect with Langu
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CHAPTERCriminal LawUnderstanding Bu
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What Is a Crime?l How to tell the d
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Congress to regulate commerce among
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InsanityAmerican law recognizes tha
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Particular Crimesl How to define ma
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a captive. Kidnapping usually inclu
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Figure 3.4Violent Crime Rates by Ra
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68 Unit 1: Knowing About the LawLar
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DRAG RACING AND LIABILITYMany state
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COMPUTER CRIMEBoth the state and th
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CHAPTERASSESSMENTSection 3.1 What I
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CHAPTERASSESSMENTAcquiring and Eval
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CHAPTERThe Law of TortsUnderstandin
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Intentional Tortsl How to tell the
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attery involves the unlawful, unpri
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Smashed Grapesand SlipperyFloorsYou
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Defamation is writtenor spoken inju
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l How to definenegligencel How to e
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Student PrivacyThe searching ofscho
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no longer follow this doctrine, how
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CHAPTERASSESSMENTSection 4.1 Intent
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CHAPTERASSESSMENTWorking with Techn
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UNITLaw Workshop:Using Legal ToolsH
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UNITLandmark CaseCipollone v. Ligge
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UNITUNIT OVERVIEWYou regularly take
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CHAPTERHow Contracts AriseUnderstan
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Contractsl Explain the elementsof l
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theory was called the will theory o
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Characteristics of a ContractContra
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for the other’s promise to do som
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l How to recognize therequirements
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Letting your officemanager know tha
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Student LoansThere are many waysto
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RevocationRevocation is the taking
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CHAPTERASSESSMENTSection 5.1 Contra
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CHAPTERASSESSMENTInterpret and Comm
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CHAPTERGenuine AgreementUnderstandi
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l How to identify theelements of fr
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creates a duty to reveal the hidden
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Resulting LossYou may choose to ent
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Figure 6.3Unilateral Mistake1. Mist
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the agreement can be performed when
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UNDUE INFLUENCEGenuine agreementsca
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CHAPTERASSESSMENTSection 6.1 Fraud
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CHAPTERASSESSMENTInterpreting and C
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CHAPTERContractual CapacityUndersta
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Contractual Capacityl How to explai
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their contracts. The court has esta
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PROVING MAJORITYSome states require
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Returning the Merchandise If a mino
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Ratification of Minors’ Contracts
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Draft RegistrationCelebrating your
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CHAPTERASSESSMENTSection 7.1 Contra
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CHAPTERConsiderationUnderstanding B
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Considerationl How to explain thele
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GiftsA gift is somethingthat is giv
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Common law judgesrarely entertainar
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Disputed AmountsIf the parties to a
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Consideration in Your Everyday Life
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Court ReporterSally Harmon provides
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Figure 8.2The Elements of Promissor
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PREEXISTING DUTIESPreexisting dutie
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CHAPTERASSESSMENTSection 8.1 Consid
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CHAPTERLegalityUnderstanding Busine
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l How to explain whatmakes a contra
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Winner Takes AllBecause she lives i
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At one time, most states prohibited
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THE GREAT SEAL OF THE STATE OF OHIO
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l How to explain thelegal doctrine
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llAgreements inducing fraud or a br
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Agreements to Obstruct JusticeAny c
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CHAPTERASSESSMENTSection 9.1 Legali
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CHAPTERASSESSMENTParticipate as a M
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CHAPTERForm of the ContractUndersta
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The Statute ofFraudsl How to explai
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Unions were formed tohelp protect t
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Civil Process ServerIt’s a good t
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Page 247 and 248: The Best Evidence RuleThe courts us
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Page 251 and 252: CHAPTERASSESSMENTAcquiring and Eval
Page 253 and 254: CHAPTERHow ContractsCome to an EndU
Page 255 and 256: l How to identify whentime is impor
Page 257 and 258: Earth DayYour local museummay have
Page 259 and 260: would prevent such a drastic and un
Page 261 and 262: Mutual ReleaseJodi and Mark mutuall
Page 263 and 264: Money damages are themost common re
Page 265 and 266: long to seek payment. You may not
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Page 271 and 272: CHAPTERTransfer of Contracts andRem
Page 273 and 274: The Transfer ofContractual Rightsan
Page 275 and 276: her neighbor, Helen Kane, were in w
Page 277 and 278: Keeping YourWordRachel agreed to ba
Page 279 and 280: do her printing job. He could not t
Page 281 and 282: l How to explain theconcept of anti
Page 283 and 284: Figure 12.3TypeActual DamagesCompen
Page 285 and 286: Corporate LawyerRichard Negrin is a
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Page 293: UNITLandmark CaseMastrobuono v. She
Page 297 and 298: CHAPTERContracts for theSale of Goo
Page 299 and 300: The Sale and Leaseof Goodsl When to
Page 301 and 302: A multimillion-dollarmasterpiece pa
Page 303 and 304: making the offer may request a part
Page 305 and 306: Buying MoreThan He CanAfford?Angelo
Page 307 and 308: Ownership andRisk of Loss inSales o
Page 309 and 310: Similarly, it is sometimes necessar
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Page 315 and 316: E-Commerceand the Lawl Tips for saf
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Page 323 and 324: CHAPTERThe Importance ofWarrantiesU
Page 325 and 326: l How to describe thethree ways an
Page 327 and 328: warranties close to the product or
Page 329 and 330: FULL WARRANTYA full warranty is one
Page 331 and 332: Description of the GoodsAny descrip
Page 333 and 334: Susan it would be perfect for that
Page 335 and 336: President Kennedyspoke of four basi
Page 337 and 338: Charitable GiftsGiving to charities
Page 339 and 340: lAlternative C gives sellers’ war
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CHAPTERConsumer Protectionand Produ
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Consumer Protectionl How to explain
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COMPLAINT LETTERA complaint letterd
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unlawful and unethical for a realto
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Credit identity theftoccurs when so
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Blowing SmokeThere is no doubt that
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Figure 15.4Dear Customer:See Figure
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Health HazardFor many people,smokin
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WARNINGSWarning labels mustbe place
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CHAPTERASSESSMENTSection 15.1 Consu
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CHAPTEROwning a VehicleUnderstandin
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Acquiring a Vehiclel How to identif
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Parole OfficerAs a parole officer f
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Purchasing a defectiveautomobile ha
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on the other hand, often sell used
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Buying from a Private PartyYou migh
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in cases in which you are led to be
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When an odometer is repaired and ca
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VEHICLEINSURANCEThe insurance types
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Maintenance OnlineAutomakers are be
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CHAPTERASSESSMENTSection 16.1 Ownin
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CHAPTERPersonal Propertyand Bailmen
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Personal Propertyl How to identifyt
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CanadaAt the University of Montreal
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Figure 17.1Intellectual Property an
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Bailmentsl How to define abailmentl
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Return to Sender, or Not?When you r
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Many courts today apply the reasona
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RIGHT OF PRIVACYHotel keepers mustr
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Guests are permitted to keep in the
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Under Article 1,Section 8 of the U.
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CHAPTERASSESSMENTSection 17.1 Perso
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UNITLaw Workshop:Using Legal ToolsD
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UNITDenny v. Ford Motor Co.New York
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UNITUNIT OVERVIEWMost of us must pl
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CHAPTERCreation of an AgencyUnderst
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l How to explain thenature of an ag
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voluntarily agreed upon by both par
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In the early developmentof agency l
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llllllllDoes the hiring person supp
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Talent AgentTo get a job in televis
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l How to recognize thecreation of a
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Coagents If the principal hires two
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AGENCY BY ESTOPPELOften agency rela
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CHAPTERASSESSMENTSection 18.1 Agenc
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CHAPTERAgency Relationshipsand Thei
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Authority and Dutiesl How to define
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Consequently, the key to determinin
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Good FaithAn agency relationship is
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In seventeenth centuryEurope, most
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he or she has the option of holding
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l How to recognizewhen an agencyrel
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ACTUAL NOTICE OFTERMINATIONThe law
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CHAPTERASSESSMENTSection 19.1 Autho
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CHAPTEREmployment LawUnderstanding
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l How to defineemployment-at-willl
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employ more than 100 workers are bo
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Harrington’s case clearly fits wi
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PUBLIC POLICY TORTIf an employee is
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l How to recognizethose areas ofemp
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Using E-Mail at WorkA large company
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Figure 20.1Child Labor LawsThis cha
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CHAPTERASSESSMENTSection 20.1 Emplo
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CHAPTEREmployment Protectionand Equ
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l How to recognize therole that OSH
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Wages, Hours, and BenefitsThe gover
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Family and Medical Leave ActUnder t
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Recent studies suggestthat it is in
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had programs in place. Workers’ c
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children. This system, known as wel
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Figure 21.3LawCivil Rights Act (Tit
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Cesar ChavezUnions exist withinmany
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AMERICANS WITHDISABILITIES ACTThe f
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CHAPTERASSESSMENTSection 21.1 Laws
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UNITLaw Workshop:Using Legal ToolsW
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UNITLandmark CaseAutomobile Workers
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UNITUNIT OVERVIEWMost people usesom
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CHAPTERBorrowing Money andBuying on
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What Is Credit?l How to distinguish
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Example 2. When Jill bought the tru
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According to a recentstudy, the ave
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to erase the debt! He will pay $7,0
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CREDIT CARD BLOCKTo be sure you don
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EQUAL CREDITOPPORTUNITY ACTThe Equa
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Managing Your Debtsl How to recogni
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FAMILY FARMThe family farm is avani
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CHAPTERASSESSMENTSection 22.1 What
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CHAPTERASSESSMENTParticipating Effe
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CHAPTERNegotiable InstrumentsUnders
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l How to state thepurpose of negoti
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Social StudiesThe use of metal form
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An action to enforcethe obligation
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U.S. CompaniesOperating in Other Co
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Electronic ChecksA group of banks h
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CHAPTERASSESSMENTSection 23.1 Purpo
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CHAPTERWriting ChecksUnderstanding
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Checking Accountsl How to describe
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PERSONAL CHECKNever write a check i
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ecords accurate. Fill out the check
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MathematicsWhen you open a checking
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Canine Enforcement OfficerChristine
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Availability of FundsIn the past, b
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Figure 24.6MANAGE YOUR EFT CARD WIS
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CHAPTERASSESSMENTSection 24.1 Check
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CHAPTERASSESSMENTIn groups of two o
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CHAPTERTransferring NegotiableInstr
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TransferringInstrumentsl How to dis
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Example 1. Hanako Lin wrote a check
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Figure 25.1Check FaceChange ofFortu
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Figure 25.4INDORSE HEREDO NOT WRITE
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Safe DrivingAutomobile crashes aret
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E-SignaturesElectronic signatures n
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CHAPTERASSESSMENTSection 25.1 Trans
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CHAPTERASSESSMENTParticipating as a
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CHAPTERCollecting NegotiableInstrum
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l How to determine if aperson is a
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Paying Twice Is Not So NiceA mechan
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FRAUD IN THEINDUCEMENTWhen someone
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Kristina learned that the brakes ha
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Liabilities of Partiesl How to expl
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Figure 26.3DIRECT REDUCTIONMORTGAGE
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CHAPTERASSESSMENTSection 26.1 Holde
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UNITLaw Workshop:Using Legal ToolsC
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UNITBeach v. Ocwen Federal BankU.S.
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UNITUNIT OVERVIEWMost Americans are
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CHAPTERSole Proprietorshipand Partn
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Sole Proprietorshipl How to define
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Taxing the Sole ProprietorOne advan
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The Partnershipl How to define gene
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PARTNERSHIPFORMATIONA partnership c
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Independence DayAs a citizen of the
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Starting a soleproprietorship can b
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Because each partner is an agent of
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Social StudiesMost people areintere
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CHAPTERASSESSMENTSection 27.1 Sole
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CHAPTERForming and Financinga Corpo
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Corporationsl How to definecorporat
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Social StudiesImagine you have been
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STOCK CERTIFICATESCorporations issu
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CORPORATE NAMESA new corporation ca
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The InsideInformation onNonprofitsB
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LIMITED LIABILITY COMPANIESA new fo
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have incorporated. To deal with the
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CHAPTERASSESSMENTSection 28.1 Corpo
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CHAPTEROperating a CorporationUnder
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l How to definecorporate directorl
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Language ArtsAt one time, insidertr
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many large corporations rent halls
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October 24, 1929, called“Black Th
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Figure 29.3Duties of Corporate Mana
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Many antiliability statutes simply
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Shareholder SuitsA shareholder suit
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CHAPTERASSESSMENTSection 29.1 Manag
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CHAPTERCorporate Regulationand Expa
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l How to identify thesource of the
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Business BluesMany small corporatio
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y the U.S. Supreme Court held that
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THE ENVIRONMENTALPROTECTION AGENCYT
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l How to distinguishamong a merger,
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Taking StockOnline investing hasall
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State LegislatorOliver Robinson got
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in two ways. The corporation can de
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CHAPTERASSESSMENTSection 30.1 Gover
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UNITLaw Workshop:Using Legal ToolsD
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UNITVirginia Bankshares, Inc. v. Sa
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UNITUNIT OVERVIEWGetting married, p
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CHAPTERMarriageUnderstanding Busine
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l How to state when themarriage con
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Domestic ViolenceUnfortunately, dom
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Figure 31.1Premarital AgreementAgre
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Example 2. Gerard Ingels and Ramona
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Figure 31.3U.S. Marriage Laws Summa
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IndiaTo know India, you must unders
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Social StudiesArranged marriages ar
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CHAPTERASSESSMENTSection 31.1 Marri
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CHAPTERDivorce and ItsLegal Consequ
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Ending a Marriagel How to describe
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Figure 32.1Grounds for Divorce and
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Example 2. Elise Carruthers persist
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Fingerprint ExpertKevin Teddy is an
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Divorce Settlementl How to identify
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“Divorce.Com”The Internet is a
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CHAPTERASSESSMENTSection 32.1 Endin
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CHAPTERRenting a Place to LiveUnder
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The RentalAgreementl How to define
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Tenancy at WillA tenancy at will is
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necessary to keep the premises fit
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When renting, keep thevolume on you
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Failure to abide by the restriction
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RoomiesWhen two or more people sign
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CHAPTERASSESSMENTSection 33.1 The R
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CHAPTERBuying a HomeUnderstanding B
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l How to compare theadvantages andd
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Figure 34.2AFFORDING A MORTGAGEYour
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Criminal Court JudgeWhen Dianne Jon
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l How to identify somesuggestions t
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Example 2. Monica and James Dipirro
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Taking OwnershipOwnership of proper
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Eminent Domainand SidewalksJordan i
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Figure 34.7The Nature of Real Prope
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CHAPTERASSESSMENTSection 34.1 Evalu
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CHAPTERInsurance ProtectionUndersta
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l How to explain themeaning and pur
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INSURABLE INTERESTYou cannot take o
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Figure 35.2Life Expectancy Table, A
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When buying term life insurance, yo
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employees who have been laid off pa
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Property Insurancel How to identify
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The NetherlandsDo people who are in
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CHAPTERASSESSMENTSection 35.1 The I
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CHAPTERRetirement and WillsUndersta
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Retirement Incomel How to describe
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Death and TaxesMost people own life
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START EARLYTax-deferred investments
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In 1935, Lord Moynihanand R. Killic
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Figure 36.4LAST WILL AND TESTAMENTO
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Legal ColumnistWhen the topic is th
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Figure 36.5 Distribution of Intesta
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CHAPTERASSESSMENTSection 36.1 Retir
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UNITLaw Workshop:Using Legal Skills
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UNITJones v. Mayer Co.U.S. Supreme
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APPENDIXThe Constitution of theUnit
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APPENDIX ANo Person shall be a Sena
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APPENDIX ATo declare War, grant Let
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APPENDIX AIn Case of the Removal of
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APPENDIX ALegislatures of the State
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APPENDIX AAmendment IXThe enumerati
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APPENDIX AAmendment XVSection 1 ■
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APPENDIX ASection 2 ■ This articl
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APPENDIXThe Declaration ofIndepende
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APPENDIX BHe has made Judges depend
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Aabandoned When an emancipated mino
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ilateral mistake Occurs when both p
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cooling-off rule Provision that giv
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Equal Credit Opportunity Act Ensure
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holographic will Will written entir
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limited-payment life insurance Allo
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passenger People being legally tran
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ight-to-work laws State laws that p
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title The formal written right of o
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AAmerican Legal Aid, Inc.v. Legal A
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ailors, 368bait and switch advertis
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contracts, written, 205-221best evi
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education-industry cooperation, 447
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health maintenance organizations(HM
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limited lifetime of soleproprietors
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pension plans, 456. See also retire
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Securities and Exchange Commission(
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United Nations Commission onInterna
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