Solution Manual For Business Law Today: The Essentials, 12th Edition

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1Chapter 1Law and Legal ReasoningINTRODUCTIONThe first chapters in Unit 1 provide the background for the entire course. Chapter 1 sets the stage.At thispoint, it is important to establish goals and objectives.For your students tobenefit from this course, they mustunderstand that (1) the law is a set of general rules, (2) that, in applying these general rules, a judge cannot always fita case to suit a rule, so must fit (or find) a rule to suit the case,(3) that, in fitting (or finding) a rule, a judge must alsosupply reasons for the decision.Law consists of enforceable rules governing relationships among individuals and betweenindividuals andtheir society.The tension in the law between the need for stability and theneed for change is one of the conceptsintroduced in this chapter.How common law courts originated, and the rationale for the doctrine ofstare decisisarealso covered in this chapter.Another major concept in the chapter involves the distinctions amongtoday’s sources of law and distinctionsin its different classifications. The sources include the federal constitution and federal laws, state constitutions andstatutes (including the UCC), local ordinances, administrative agencyregulations, and case law.The classificationsinclude substantive and procedural, national and international, public and private, civil andcriminal, and law andequity.These sources and categories give students a framework on which to hang the mass of principles known asthe law.CHAPTEROUTLINEI.Business Activities and the Legal EnvironmentA.MANYDIFFERENTLAWSMAYAFFECT ASINGLEBUSINESSTRANSACTIONVarious areas of the law can affect a business decision (such as whether to enter into a contract).Abusinessperson should know enough about the law to know when to ask for advice.B.LINKINGBUSINESSLAW TO THESIXFUNCTIONALFIELDS OFBUSINESSThe text introduces a feature that appearsin selected chapters, which explainshow legal concepts canbe useful to managers and other businesspersons in any functional field of business—•Corporate management•Production and transportation

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2UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS•Marketing•Research and development•Accounting and finance•Human resourcemanagementII.Sources of American LawA.CONSTITUTIONALLAWThe federal constitution is a general document that distributes power among the branches of thegovernment.It is the supreme law of the land.Any law thatconflicts with it is invalid.The states alsohave constitutions, but the federal constitution prevails if their provisions conflict.B.STATUTORYLAWLaws enacted by legislative bodies at any level of government, such as the statutes passed byCongressor by state legislatures, make up the body of law generally referred to as statutorylaw. When alegislature passes a statute, that statute ultimately is included in the federal codeof laws or the relevantstate code of laws.Much of the work of courts is interpreting what lawmakers meant when a law wasenacted and applying that law to a set of facts (a case).1.Local OrdinancesLocal legislative bodies enact ordinances—regulations passed by municipal or county governingunits to deal withmatters not covered by federal or state law.2.Applicability of StatutesA federal statute applies to all states. A state statute applies only within the state’s borders.3.Uniform LawsPanels of experts and scholars create uniform laws that anystate’s legislature can adopt.4.The Uniform Commercial CodeThe Uniform Commercial Code (UCC) provides a uniform flexible set of rules that govern mostcommercial transactions. The UCC has been adopted by all the states (only in part in Louisiana),the District of Columbia, and the Virgin Islands.ADDITIONALBACKGROUND—National Conference of Commissioners on Uniform State Laws,Co-Sponsor of the Uniform Commercial CodeAs explained in the text, the Uniform Commercial Code (UCC) is anambitious codification of commercialcommon law principles. The UCC has been the most widely adopted, and thus the most successful, of themany uniform and model acts that have been drafted.The National Conference of Commissioners onUniform State Lawsis responsible for many of these acts.The National Conference of Commissioners onUniform State Laws is an organization of state commissioners appointed by the governor of each state, theDistrict of Columbia, and Puerto Rico. Their goal is to promote uniformity in state lawwhere uniformity isdesirable.The purpose is to alleviate problems that arise in an increasingly interdependent society in which asingle transaction may cross many states.Financial support comes from state grants.The members meet

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CHAPTER 1:LAW AND LEGAL REASONING3annually to consider drafts of proposed legislation.The American Law Institute works with the NationalConference of Commissioners on Uniform State Laws on some of the uniform state laws.C.ADMINISTRATIVELAWAdministrative law consists of the rules, orders, and decisions of administrative agencies. The creation offederaladministrativeagencies,agencies’powers,andtheadministrativeprocess(rulemaking,investigation, and adjudication) are discussed in the text.1.Federal AgenciesExecutive agencies within the cabinet departments of the executive branch are subject to the powerof the president to appoint and remove their officers. The officers of independent agencies servefixed terms and cannot be removed without just cause.2.State and Local AgenciesThese agencies are often parallel federal agencies in areas of expertise and subjects of regulation.Federal rules that conflict with state rules take precedence.3.Agency CreationCongresscreates an agency through enabling legislation to perform certain functions with respecttospecificsubjects.Thefunctionsmayincludelegislativepowers(rulemaking),executivecapabilities (investigation and enforcement), and judicial authority (adjudication).4.RulemakingAn agency’s creation and changing of its rules is subject to the requirements of the AdministrativeProcedure Act of 1946.a.Legislative RulesLegislative rules implement federal laws and are legally binding. Creating a legislative ruletypically involves—•Public notice through the publication of a proposed rule in theFederal Register.•Receipt and review of public comments.•Drafting and publication of the final rule in theFederal Register.b.Interpretive RulesInterpretive rules declare policy—how an agency will interpret and apply its regulations. Theseinformal guidelines are not legally binding.5.Enforcementand InvestigationAn agency can request an individual’s or a business’s records. An agency canconduct an on-siteinspection, which may require a search warrant. The purpose is to uncover regulatory violationsagainst which an agency may issue a formal complaint.6.AdjudicationOn a formal complaint, an agency’s administrative law judge mayconduct a trial-like hearing andrender a decision, which may compel a fine or prohibit certain behavior. This may be appealed tothe board or commission that governs the agency and ultimately to a federal court.

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4UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESSD.CASELAW ANDCOMMONLAWDOCTRINESAnother basic source of American law consists of the rules of law announced in court decisions.Theserules include judicial interpretations of constitutional provisions, of statutes enacted by legislatures, andof regulations created by administrative agencies.ADDITIONALBACKGROUND—Restatement (Second) of ContractsTheAmericanLawInstitute(ALI),agroupofAmericanlegalscholars,isresponsiblefortheRestatements.These scholars also work with the National Conference of Commissioners on Uniform StateLaws on some of the uniform state laws.Members include laweducators, judges, and attorneys.Their goal isto promote uniformity in state law to encouragethe fair administration of justice.The ALI publishes summaries of common law rules on selected topics.Intended to clarify the rules, thesummaries are published as theRestatements.EachRestatementis further divided into chapters andsections.Accompanyingthe sections are explanatory comments, examples illustrating the principles, relevantcase citations, and other materials.The following isRestatement (Second) of Contracts,Section 1 (that is,Section 1 of the second edition of theRestatement of Contracts) with excerpts from the Introductory Note toChapter 1 and Comments accompanying the section.Chapter 1MEANING OF TERMS****Introductory Note: A persistent source of difficulty in the law of contracts is the fact that words oftenhavedifferent meanings tothe speaker and to the hearer.Most words are commonly used in more than one sense,and the words used in thisRestatementare no exception.It is arguable that the difficulty is increased ratherthan diminished by an attempt to give a word a single definitionand to use it only as defined.But whereusage varies widely, definition makes it possible to avoid circumlocution in the statement of rules and to holdambiguity to a minimum.In theRestatement,an effort has been made to use only words withconnotations familiar to the legalprofession, and not to use two or more words to express the same legal concept.Where a word frequentlyused has a variety of distinct meanings, one meaning has been selected and indicated by definition.But it isobviously impossible to capture in a definition an entire complex institution such as “contract” or “promise.”The operative facts necessary or sufficient to create legal relations and the legalrelations created by thosefacts will appear with greater fullness in the succeeding chapters.§ 1. Contract DefinedA contract is a promise or a set of promises for the breach of which the law gives a remedy, or theperformance of which the law in some way recognizes as a duty.Comment:****c.Set of promises.A contract may consist of a single promise byone person to another, or of mutualpromises by two persons to one another; or there may be,indeed, any number of persons or any number of

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CHAPTER 1:LAW AND LEGAL REASONING5promises.One person may make several promises to one person or to several persons, or several personsmay join in making promises to one or more persons.To constitute a “set,” promises need not be madesimultaneously; it is enough that several promises are regarded by the parties as constituting a singlecontract, or are so related in subject matter and performance thatthey may be considered and enforcedtogether by a court.III.TheCommon LawAmerican law is based on the English common law legal system. Knowledge of this tradition is necessary tostudents’ understanding of the nature of our legal system.A.EARLYENGLISHCOURTSThe English system unified its local courtsafter 1066. This unified system, based on the decisionsjudges make in individual cases, is the common law system. The common law systeminvolves theconsistent application of principles applied in earlier cases with similar facts.B.STAREDECISISThe use of precedent forms the basis for the doctrine ofstare decisis.1.The Importance of Precedents in Judicial Decision MakingA court’s application of a specific principle to a certain set of facts is binding on that court and lowercourts, whichmust then apply it in future cases. A controlling precedent is binding authority. Otherbinding authorities include constitutions, statutes, and rules.2.Stare Decisisand Legal StabilityThis doctrine permits a predictable, quick, and fair resolution of cases, which makes the applicationof law more stable.ENHANCINGYOURLECTURE—IS AN1875CASEPRECEDENTSTILLBINDING?In a suit against the U.S. government for breachof contract, Boris Korczak sought compensation forservices that he had allegedly performed for the Central Intelligence Agency (CIA) from 1973 to 1980.Korczak claimed that the government had failed to pay him an annuity and other compensation required by asecretoralagreement he had made with the CIA.The federal trial court dismissed Korczak’s claim, andKorczak appealed the decision to the U.S. Court of Appeals for the Federal Circuit.At issue on appeal was whether aU.S.Supreme Court case decided in 1875,Totten v. United States,aremained the controlling precedent in this area.InTotten, the plaintiff alleged that he had formed a secretcontract with President Lincoln to collectinformation on the Confederate Army during the Civil War. When theplaintiff sued the government for compensation for his services, theCourt held that the agreement wasunenforceable.AccordingtotheCourt,toenforce suchagreementscouldresultinthedisclosureofinformation that “might compromise or embarrass our government” or cause other “serious detriment” to thepublic.In Korczak’s case, the federal appellate court held that theTottencase precedent was still “good law,”

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6UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESSand therefore Korczak, like the plaintiff inTotten,could not recover compensation for his services.Said thecourt, “Totten, despite its age, is the last pronouncement on this issue by the Supreme Court. ...We areduty bound to follow the law given us by the Supreme Court unless and until it is changed.”bTHEBOTTOMLINESupremeCourtprecedents,nomatterhowold,remaincontrollinguntiltheyareoverruledbyasubsequent decision of the Supreme Court, by a constitutional amendment, or by congressional legislation.a. 92 U.S. 105 (1875).b.Korczak v. United States, 124 F.3d 227 (Fed.Cir. 1997).3.Departures from PrecedentA judge may decide that a precedent is incorrect, however, if there may have beenchanges intechnology, for example, business practices, or society’s attitudes.4.When There Is No PrecedentWhen determining which rules and policies to apply in a given case, and in applying them, a judgemay examine: prior case law, the principles and policies behind the decisions, and their historicalsetting; statutes and the policies behind a legislature’s passing a specific statute; society’s valuesand custom; and data and principles from other disciplines.5.Stare Decisisand Legal ReasoningThrough the use of legal reasoning, judges harmonize their decisions with those that have beenmade before, as the doctrine ofstare decisisrequires.The IRAC method of legal reasoning is anacronym forIssue,Rule, Application, andConclusion.C.EQUITABLEREMEDIES ANDCOURTS OFEQUITYA court of law is limited to awarding payments of money or property as compensation.1.Remedies in EquityEquity is a branch of unwritten law founded in justice and fair dealing and seeking to supply a fairerandmore adequate remedy than a remedy at law. A court of equity can order specific performance,an injunction, or rescission of a contract.2.The Merging of Law and EquityToday, in most states, a plaintiff may request both legal and equitable remedies in the same action,and the trial court judge may grant either form—or both forms—of relief.3.Equitable MaximsThese guide the application of equitable remedies.D.SCHOOLS OFLEGALTHOUGHT1.The Natural Law SchoolAdherents of thenatural lawschool believe that government and the legal system should reflectuniversal moral and ethical principles that are inherent in the nature of human life.

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CHAPTER 1:LAW AND LEGAL REASONING72.Legal PositivismFollowers of the positivist school believe that there can be no higher law than a nation’s positive law(the law created by a particular society at a particular point in time).3.The Historical SchoolThose of the historical school emphasize legal principles that were applied in the past.4.Legal RealismLegal realists believe thatjudges are influenced by their unique individual beliefs and attitudes, thatthe application of precedent should be temperedby each case’s specific circumstances, and thatextra-legal sources should be considered in making decisions.IV.Classifications of Law•Substantive law defines, describes, regulates, and creates rights and duties. Procedural law includesrules for enforcing those rights.•Other classifications include splitting law into federal and state divisions orprivate and public categories.•Cyberlaw is an informal term that describes the body of case and statutory law dealing specifically withissues raised by Internet transactions.A.CIVILLAW ANDCRIMINALLAWCivil lawregulates relationships between persons and betweenpersons and their governments, and therelief available when their rights are violated. Criminal law regulates relationships between individualsand society, and prescribes punishment for proscribed acts.B.NATIONAL ANDINTERNATIONALLAW1.National LawNational law is the law of a particular nation.Laws vary from country to country, but generally eachnation has either a common law or civil law system. A common law system, like ours, is based oncase law. A civil law system is based on codified law (statutes).2.International LawInternational law includes written and unwritten laws that independent nations observe. Sourcesinclude treaties and international organizations. International law represents attempts to balance eachnation’s need to be the final authority over its own affairs and to benefit economically from relationswith other nations.TEACHINGSUGGESTIONS1.Emphasize that the law is notsimple—there are no simple solutions tocomplex problems.Legalprinciples are presented in this course as “black letter law”—that is, in the form of basic principles generallyaccepted by the courts or expressed in statutes.In fact, the law is not so concrete and static.One of thepurposes of this course is to acquaint students with legal problems and issues that occur in society in generaland in business in particular.The limits of time and space do not allow all of the principles to be presented

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8UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESSagainst the background of their development and the reasoning in their application.By the end of the course,students should be able to recognize legal problems (“spotthe issues”) when they arise.In the real world, thismay be enough to seek professional legal assistance.In this course, students should also be able torecognize the competing interests involved in an issue and reason through opposing points of view to adecision.2.Point out that the law assumes everyone knows it, or, as it’s often phrased, “Ignorance of the law is noexcuse.”Of course, the volume and expanding proliferation ofstatutes, rules, and court decisions is beyondthe ability of anyone to know it all.But pointing outthe law’s presumption might encourage students to study.Also, knowing the law allows business people to make better business decisions.3.As Oliver Wendell Holmes noted, “The life of the law has not been logic”—that is, the law does notrespond to an internal logic. It responds to social change.Emphasize that laws (and legal systems) aremanmade, that they can, and do, change over time as society changes.To what specific social forcesdoes law respond?Are the changes always improvements?4.One method of introducing the subject matter of each class is to give students a hypothetical at thebeginning of the class.The hypothetical should illustrate the competing interests involved in some part of thelaw in the assigned reading.Students should be asked to make a decision about the case and to explain thereasons behind their decision.Once the law has been discussed, the same hypothetical can be consideredfrom an ethical perspective.5.You might want to remind your students that the facts in a case should be accepted as given.Forexample, under some circumstances, an oral contract may be enforceable.If there is a statement in a caseabout the existence of oral contract, it should be accepted that there was an oral contract.Arguing with thestatement (“How could you prove that there was an oral contract?” for instance) willonly undercut theirlearning,Once they have learned the principle for which a case is presented, then they can ask, “What if thefacts were different?”Cyberlaw LinkAsk your students, at this early stage in their study of business law, what they feel are the chief legalissues in developing a Web site or doing business online.What are the legal risks involved in transactingbusiness over the Internet?As their knowledge of the law increases over the next few weeks, this questioncan be reconsidered.DISCUSSIONQUESTIONS1.If justice is defined as the fair, impartial consideration of opposing interests, are law and justice thesame thing?No.There can be law without justice—as happenedin Nazi-occupied Europe, for example.Therecannot be justice without law.2.What is jurisprudence?Jurisprudence refers to the study of law and the ethical values used in definingwhatthe law should be.Which of the schools of jurisprudence matches the U.S. system?None of theapproaches mentioned in these sections is an exact model of the American legal system. They represent frameworksthat can be used in evaluating the moral and ethical considerations that are an integral part of the law.

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CHAPTER 1:LAW AND LEGAL REASONING93.Define and discuss the sources of American law:What is the supreme law of the land?The federalconstitution.What are statutes?Laws enacted by Congress or a state legislative body.What are ordinances?Laws enacted by local legislative bodies.What are administrative rules?Laws issued by administrative agenciesunder the authority given to them in statutes.4.What is the Uniform Commercial Code?The Uniform Commercial Code (UCC) was created through thejoint efforts of the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American LawInstitute. The UCC was first issued in 1952. The UCC facilitates commerce among the states by providing a uniform,yet flexible, set of rules governing commercial transactions (sales of goods, commercial paper, bank deposits andcollections, letters of credit, bulk transfers, warehouse receipts, bills of lading, investment securities, and securedtransactions). The UCC assures businesspersons, for example, thattheir contracts, if validly entered into, normallywill be enforced. Uniform laws are often adopted in whole or in substantial part by the states.The UCC has beenadopted in its entirety by nearly all states (except Louisiana, which has not adopted Article 2).5.What is the common law?Students may most usefully understand common law to be case law—that is, thebody of law derived from judicial decisions. The body of common law originated in England. The term common law issometimes used to refer to the entire common law system to distinguish it from the civil law system.6.Under what circumstance might a judge rely on case law to determine the intent and purpose of astatute?Case law includes courts’ interpretations of statutes, as well as constitutional provisions and administrativerules. Statutes oftencodify common law rules. For these reasons, a judge might rely on the common law as a guideto the intent and purpose of a statute.7.Discuss the differences between remedies at law and in equity.Remedies at law were once limited topayments of money or property (including land) as damages.Remedies in equity were available only when therewasno adequate remedy at law.Today, in most states, either or both maybe granted in the same action.Remedies inequity are still discretionary, guided by equitable principles and maxims. Remedies at law still include payments ofmoney or property as damages.The major practical difference between actions at law and actions in equity is theright to demand a jury trial in an action at law.8.Identify and describe remedies available in equity.Specific performance is available only whena disputeinvolves a contract.Thecourt may order a party to perform what was promised. An injunction orders a person to do orrefrain from doing a particular act. Rescission undoes an agreement, and the parties are returned to the positionsthey were in before the agreement.9.Discuss the differences within the classification of law as civil law and criminal law.Civil law concernsrights and duties of individuals between themselves; criminal lawconcerns offenses against society as a whole.(Civillaw is a term that is also used to refer to a legal system based on a code rather than on case law.)ACTIVITY ANDRESEARCHASSIGNMENTS1.Have students research the laws of othercommon law jurisdictions (England, India, Canada), other legalsystems (civil law systems, contemporary China, Moslem nations), and ancient civilizations (the Hebrews, theBabylonians, the Romans), and compare the laws to those of theUnited States.In looking at other legal systems,have students consider how international law might develop, given the differences in legal systems, laws, traditions,and customs.

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10UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS2.Assign specific cases and statutes for students to find, either in a library or online, or assign a list of citations,including uniform resource locators (URLs), for students to decipher.3.Ask students to read newspapers and magazines, listen to radio newsand podcasts, watch television news,andfind online sourcesfor developments in the law—new laws passed byCongress or signed by the president, lawsinterpreted by the courts, proposals for changes in the law. The omnipresent effect of law on society should be easyto see.EXPLANATIONS OFSELECTEDFOOTNOTES IN THETEXTFootnote7:InBrown v. Board of Education of Topeka,the United States Supreme Courtunanimouslyheld that the separate but equal concept had no place in education. The case involved four consolidated casesfocusing on the permissibility of local governments conducting school systemsthat segregated students by race. Ineach case blacks sought admission to public schools on a non-segregated basis, and in each case the lower courtbased its decision on the separate but equal doctrine.The Court interpreted the principles of the U.S.Constitution’sFourteenth Amendment as they should apply to modern society and lookedat the effects of segregation.The justicesfound that segregation of children in public schools solely on the basis of race deprives the children of the minoritygroup of equal educational opportunities.To separate black children “from others of similar age and qualificationssolely because of their race generates a feeling of inferiority as to their status in the community that may affect theirhearts and minds in a way unlikely ever to be undone.”Footnote8:InPlessy v. Ferguson,the United States Supreme Court adopted the doctrine of separatebut equal.A Louisiana state statute required that all railway companies provide separate but equal accommodationsfor black and white passengers, imposing criminal sanctionsfor violations. Plessy, who alleged his ancestry wasseven-eighths Caucasian and one-eighth African, attempted to use the coach for whites.The Court said that the U.S.Constitution’s Thirteenth and Fourteenth Amendments (the Civil War Amendments) “could not have been intended toabolish distinctions based on color, or to enforce social ... equality, or a commingling of the two races upon termsunsatisfactory to either.”According to the Court, laws requiring racial separation did not necessarily imply theinferiority of either race.In a lone dissent, Justice Harlan expressed the opinion that the Civil War Amendments hadremoved “the race line from our governmental systems,” and the Constitution was thus “color-blind.”

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11website, in whole or in part.Appendix to Chapter 1Finding and Analyzing the LawINTRODUCTIONLaws pertaining to business consist of both statutory law and case law. The statutes, agency regulations, andcase law referred to in this text establish the rightsand duties of businesspersons.The cases in this book providestudents with concise, real-life illustrations of the interpretation and application of the law by the courts.Theimportance of knowing how to find statutory and case law is the reason for this appendix.APPENDIXOUTLINEI.Finding Statutory and Administrative LawPublications collecting statutes and administrative regulations are discussed in the text.II.Finding Case LawA brief introduction to case reporting systems and legal citations is also included.III.Reading and Understanding Case LawTo assist students in reading and analyzing court opinions, the formats of cases in the text are digested,terms are defined, and a sample case is annotated.ADDITIONALBACKGROUND—TheFederal ReporterFederal court decisions are published unofficially in a variety of publications. These reportsare organizedby court level and issuedchronologically. Opinions from the United States Court of Appeals, for example, arereported intheFederal Reporter. Thomson Reuterspublishes these decisions with headnotes condensing

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12UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESSimportant legalpoints in the cases. The headnotes are assigned key numbers that cross-reference the pointsto similar points in cases reported in other publications.The following are excerpts fromFerguson v.Commissioner of Internal Revenue,as published with headnotes intheFederal Reporter.Betty Ann FERGUSON, Petitioner-Appellant,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.No. 90-4430Summary Calendar.United States Court of Appeals,Fifth Circuit.Jan. 22, 1991.Taxpayer filed petition.The United States Tax Court, Korner, J., dismissed for lack of prosecution, andappeal was taken.The Court of Appeals held that court abused itsdiscretion in refusing testimony oftaxpayer, who refused, on religious grounds, to swear or affirm.Reversed and remanded.1. Constitutional Law 92K84(2)Protection of free exercise clause extends to all sincere religious beliefs;courts may not evaluate reli-gious truth.U.S.C.A. Const. Amend. 1.Ferguson v. C.I.R.921 F.2d 588, 67 A.F.T.R.2d 91-459, 91-1 USTCP 50,0522. Witnesses 410K227Court abused its discretion in refusing testimony of witness who refused, on religious grounds, to swearor affirm, and who instead offered to testify accurately and completely and to be subject to penalties forperjury.U.S.C.A. Const. Amend. 1; Fed.Rules Evid.Rule 603, 28 U.S.C.A.Ferguson v. C.I.R.921 F.2d 588,67 A.F.T.R.2d 91-459, 91-1 USTC P 50,052Betty Ann Ferguson, Metairie, La., pro se.Peter K. Scott, Acting Chief Counsel, I.R.S., Gary R. Allen, David I. Pincus, William S. Rose, Jr., Asst.Attys. Gen., Dept. of Justice, Tax Div., Washington, D.C., for respondent-appellee.Appeal from a Decision of the United States Tax Court.Before JOLLY, HIGGINBOTHAM, and JONES, Circuit Judges.PER CURIAM:Betty Ann Ferguson appeals the Tax Court’s dismissal of her petition for lack of prosecution after sherefused toswear or affirm at a hearing.We find the Tax Court’s failure to accommodate her objectionsinconsistent with both Fed.R.Evid. 603 and the First Amendment and reverse.

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APPENDIX A: FINDING AND ANALYZING THE LAW13I.This First Amendment case ironically arose out of a hearing inTax Court. Although the government’s briefis replete with references to income, exemptions, and taxable years, the only real issue is Betty AnnFerguson’srefusalto“swear” or“affirm”before testifyingatthehearing.Herobjection tooathsandaffirmations is rooted in two Biblical passages, Matthew 5:33-37 and James 5:12. * * *Ms. Ferguson, proceeding pro se, requested that Judge Korner consider the following statement set forthby the Supreme Court of Louisiana inStaton v. Fought,486 So.2d 745 (La.1986), as an alternative to an oathor affirmation:I, [Betty Ann Ferguson], do hereby declare that the facts I am about to give are, to the best of myknowledge and belief, accurate, correct, and complete.Judge Korner abruptly denied her request, commenting that “[a]sking you to affirm that you will give truetestimony does not violate any religious conviction that I have ever heard anybody had” and that he did notthink affirming “violates any recognizable religious scruple.”Because Ms. Ferguson could only introduce therelevantevidencethroughherowntestimony,JudgeKornerthendismissedherpetitionforlackofprosecution. She now appeals to this court.II.[1]Theright to free exercise of religion, guaranteed by the First Amendment to the Constitution, is one ofour most protected constitutional rights.The Supreme Court has stated that “only those interests of thehighest order and those not otherwise served can overbalance legitimate claims to the free exercise ofreligion.”Wisconsin v. Yoder,406 U.S. 205, 215, 92 S.Ct. 1526, 1533, 32 L.Ed.2d 15 (1972).Accord Hobbiev. Unemployment Appeals Comm’n of Florida,480 U.S. 136, 141, 107 S.Ct. 1046, 1049, 94 L.Ed.2d 190(1987);andSherbert v. Verner, 374 U.S. 398, 403, 83 S.Ct. 1790, 1793, 10 L.Ed.2d 965 (1963).Theprotection of the free exercise clause extends to all sincere religiousbeliefs;courts may not evaluatereligious truth.United States v. Lee, 455 U.S. 252, 257, 102 S.Ct. 1051, 1055, 71 L.Ed.2d 127 (1982);andUnited States v. Ballard,322 U.S. 78, 86-87, 64 S.Ct. 882, 886-887, 88 L.Ed. 1148 (1944).Fed.R.Evid. 603,applicable in Tax Court under the Internal Revenue Code, 26 U.S.C. § 7453, requires only that a witness“declare that [she] will testify truthfully, by oath or affirmation administered in a form calculated to awaken thewitness’ conscience and impress the witness’ mind with the duty to do so.”As evidenced in the advisorycommittee notes accompanying Rule 603, Congress clearly intended to minimize any intrusion on the freeexercise of religion:The rule is designed to afford the flexibility required in dealing with religious adults, atheists, conscientiousobjectors, mental defectives, and children.Affirmation is simply a solemnundertaking to tell the truth;nospecial verbal formula is required.Accord Wright and Gold,Federal Practice and Procedure§ 6044 (West1990).The courts that have considered oath and affirmation issues have similarly attempted to accommodatefree exercise objections.InMoore v. United States,348 U.S. 966, 75 S.Ct. 530, 99 L.Ed. 753 (1955) (percuriam), for example, the Supreme Court held that a trial judge erred in refusing the testimony of witnesseswho would not use the word “solemnly” in their affirmations for religious reasons.* * * *[2]The government offers only two justifications for Judge Korner’s refusal to consider theStatonstatement.First, the government contends that the Tax Court was not bound by a Louisiana decision.Thisargument misses the point entirely;Ms. Ferguson offeredStatonas an alternative to an oath or affirmationand not as a precedent.

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14UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESSThe government also claims that theStatonstatement is insufficient because it does not acknowledgethat the government may prosecutefalse statements for perjury.The federal perjury statute, 18 U.S.C. §1621, makes the taking of “an oath” an element of the crime of perjury.AccordSmith v. United States, 363F.2d 143 (5th Cir.1966).However, Ms. Ferguson has expressed her willingness to add a sentence to theStaton statement acknowledging that she is subject topenalties for perjury.The government has cited anumber of cases invalidating perjury convictions where no oath was given, but none of the cases suggest thatMs. Ferguson’s proposal would not suffice as “an oath” for purposes of § 1621.SeeGordon, 778 F.2d at1401 n. 3 (statement by defendant that he understands he must accurately state the facts combined withacknowledgment that he is testifying under penalty of perjury would satisfy Fed.R.Civ.P. 43(d)).The parties’ briefs to this court suggest that the disagreement between Ms. Ferguson and Judge Kornermight have been nothing more than an unfortunate misunderstanding.The relevant portion of their dialoguewas as follows:MS. FERGUSON: I have religious objections to taking an oath.THE COURT: All right. You may affirm. Then in lieu of taking an oath, you may affirm.MS. FERGUSON: Sir, may I present this to you? I do not—THE COURT: Just a minute. The Clerk will ask you.THE CLERK: You are going to have to stand up and raise your right hand.MS. FERGUSON:I do not affirm either.I have with me a certified copy of a case from the LouisianaSupreme Court.THE COURT:I don’t care about a case from the Louisiana Supreme Court, Ms. Ferguson.You willeither swear or you will affirm under penalties of perjury that the testimony you are about to give is true andcorrect, to the best of your knowledge.MS. FERGUSON:In that case, Your Honor, please let the record show that I was willing to go underwhat has been acceptable by the State of Louisiana Supreme Court, the State versus—THE COURT:We are not in the state of Louisiana, Ms. Ferguson.You are in a Federal court and youwill do as I have instructed, or you will not testify.MS. FERGUSON: Then let the record show that because of my religious objections, I will not be allowedto testify.Ms. Ferguson contends that Judge Korner insisted that she use either the word “swear” or the word“affirm”;thegovernmentsuggestsinsteadthatJudgeKorneronlyrequiredanaffirmationwhichthegovernment defines as “an alternative that encompasses all remaining forms of truth assertion that wouldsatisfy[Rule603].”EvenMs.Ferguson’sproposedalternativewouldbean“affirmation”underthegovernment’s definition.If Judge Korner had attempted to accommodate Ms. Ferguson by inquiring into her objections andconsidering her proposed alternative, the entire matter might have been resolved without an appeal to thiscourt.Instead, however, Judge Korner erred not only in evaluating Ms. Ferguson’s religious belief, andconcluding that it did not violate any “recognizable religious scruple,” but also in conditioning her right totestify and present evidence on what she perceived as a violation of that belief.His erroris all the moreapparent in light of the fact that Ms. Ferguson was proceeding pro se at the hearing.We therefore REVERSE the decision of the Tax Court and REMAND this case for further proceedings notinconsistent with this opinion.

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APPENDIX A: FINDING AND ANALYZING THE LAW15ADDITIONALBACKGROUND—State Codes:Pennsylvania Consolidated StatutesState codes may have any of several names—Codes, General Statutes, Revisions, and so on—de-pending on the preference of the states.Also arranged by subject, some codes indicate subjects bynumbers.Others assign names.The following is the text of one of the state statutes whose citations areexplained in the textbook—Section 1101 of Title 13 of thePennsylvania Consolidated Statutes(13 Pa. C.S.§ 1101).PURDON’S PENNSYLVANIA CONSOLIDATED STATUTES ANNOTATEDTITLE 13. COMMERCIAL CODEDIVISION 1. GENERAL PROVISIONSCHAPTER 11. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECTMATTER OF TITLE§ 1101. Short title of titleThis title shall be known and may be cited as the “Uniform Commercial Code.”1984 Main Volume Credit(s)1979, Nov. 1, P.L. 255, No. 86, § 1, effective Jan. 1, 1980.California Commercial CodeThe text of another of the state statutes whose citations are explained in the textbook follows—Section1101 of theCalifornia Commercial Code(Cal. Com. Code § 1101).WEST’S ANNOTATED CALIFORNIA CODESCOMMERCIAL CODEDIVISION 1. GENERAL PROVISIONSCHAPTER 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER OF THE CODE§ 1101. Short TitleThis code shall be known and may be cited as Uniform Commercial Code.1964 Main Volume Credit(s)(Stats.1963, c. 819, § 1101.)

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