I guess I really don't want my sister in law establishing her place with my dog. I protect my dog by supervising the interaction between my dog and everyone else and intervening BEFORE it gets annoying. If a family member is annoying my dog, I intervene. If my dog is annoying a family member I intervene.
Put your pup on lead, and tell him No. He is just playing, and he plays by nipping and biting, but it isn't up to your sister to break him of this. You need to look out for a good puppy class, and work with him on all the puppy behaviors that you do not want your dog to continue on with, like puppy biting, jumping up, etc.
Bear Cub, Hepsi-Pepsi
Cujo2, Karma Chameleon
Ramona the Pest, Kojak -- who loves you baby?
Tiny Tinnie, Susie's Uzzi, Kaiah -- The Baby Monster.