Business Law Midterm Exam

Chapter 1

In a dispute between Cosmic Games Corporation and Mythic Engineering Associates, Inc., the court applies the doctrine of stare decisis. What is this doctrine? What does this doctrine have to do with the American le¬gal system?

Past judicial decisions bind in current disputes that have similar cases or facts in a common law legal system. In the common law system, judges try to be consistent and base their decisions on principles of past cases. When deciding how to go about a case or charge someone in a case, it can help by referencing former cases and precedents. This is called the doctrine of stare decisis. It helps courts to make the law more stable, predictable and efficient. Judges must follow the precedents that have been established in their jurisdictions under this doctrine. America’s legal system is based off of this part of the common law. Judges applied principles from past cases to subsequent legal controversies, and formed the common law.

The Arkansas state legislature enacts a statute that prohibits the advertising of video games "because the games might be harmful to minors." Despite this new statute, the president of Games Marketing, Inc. (GMI), orders GMI marketers to place ads in any media. When a GMI ad appears on HDTV, a local television station, GMI and HDTV are charged with violating the statute. What is the defendants' best defense against a conviction?

The First Amendment states that we have the right to freedom of speech. Commercial Speech is protected by the First Amendment. This consists of primarily advertising and marketing communications made by business firms. The state can limit or restrict certain kinds of advertising because noncommercial speech has more protection under the First Amendment than commercial speech does. If an advertisement is misleading consumers, the state could restrict the company from that kind of advertising because it is protecting the consumers. Generally, a restriction on commercial...