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Chapter 2: Business and the Constitution

by: Kaitlyn Mirabella

Chapter 2: Business and the Constitution LGST 3010

Marketplace > Tulane University > Business > LGST 3010 > Chapter 2 Business and the Constitution
Kaitlyn Mirabella
GPA 3.8
Legal Studies

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Hey all! Here are my notes for Chapter 2: Business and the Constitution!
Legal Studies
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This 5 page Class Notes was uploaded by Kaitlyn Mirabella on Saturday September 19, 2015. The Class Notes belongs to LGST 3010 at Tulane University taught by Waguespack in Summer 2015. Since its upload, it has received 23 views. For similar materials see Legal Studies in Business at Tulane University.


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Date Created: 09/19/15
Chapter 2 Business and the Constitution The US Constitution is the oldest national ruling document in currently continuous use in the world Officially rati ed in 1788 Structure and Nature of the Constitution Federal Powers The US uses a federal system in which a national government coexists with the government of each state 0 Constitution acts to limit the federal govemment s powers to regulate individuals and businesses 0 States are thought of as having more inherent powers to protect the general welfare of their citizenry with only general constitutional authorization Three general functions 1 Establishing a structure for the federal government including qualifications for certain government offices and rules for amending the Constitution 2 Granting specific powers for the different branches of government Providing procedural protections for US citizens from wrongful government actions Structure of the Constitution Composed of a preamble seven articles and 27 amendments First three articles establish a 3part system of government with three coequal branches 0 Legislative branch 0 Executive branch 0 Judicial branch Checks and balances system Each branch exercises its respective powers to ensure that one branch does not exceed its authority under the Constitution Preamble states the Constitution s broad objectives Articles set out structure powers and procedures Amendments Bill of Rights the first 10 amendments added in 1791 preserves the rights of the individual US citizens and in some cases USbased businesses from unlawful acts of government officials o Establishes and protects citizens rights regarding freedom of speech religion and assembly as well as protecting against random searches and seizures and other matters There have been 27 amendments to the Constitution U Overview of Federal Powers Enumerated powers powers granted to the three branches of government in the Constitution typically limited in scope Article l Congressional Powers 1 The power to regulate commerce Commerce clause 2 The power to tax citizens and businesses and the spending of government funds tax and spend provisions 3 The power to regulate bankruptcy patents and copyrights 4 A general implied power to make all laws necessary for carrying out its enumerated powers Necessary and Proper Clause Article II Executive Powers 1 Carry out laws made by Congress 2 Act as the commander in chief of the armed forces 3 Enter into treaties subject to Senate approval and carry out foreign policy 4 Appoint federal officers and judges also subject to Senate approval Executive orders have the force of law and are typically issued by the president as a method to carry out executive functions of government The president not only appoints federal officers but has the power in many cases to unilaterally dismiss those same federal off1cers Article III Judicial Powers The federal judiciary adjudicates cases and controversies that fall within its authority Constitution establishes boundaries of jurisdiction Judicial review the notion that federal courts have the right to invalidate state or federal laws that are inconsistent with the US Constitution in some way Separation of Powers Enumerated powers are part of an overall scheme that acts to resolve con icts among the three branches and acts to ensure that no one branch exceeds its constitutional authority Separation of powers created by checks and balances ensures no one branch becomes overly dominant over the other two Applying the Constitution Standards of Review The US Supreme Court has established three standards of review for applying constitutional law 1 Rational basis 2 Intermediatelevel scrutiny 3 Strict scrutiny Rational Basis 0 Government actions in this category are subject to the least amount of scrutiny 0 Need only show that its action advanced a legitimate government objective and the action was minimally related to the govemment s objective 0 Almost every economic and taxrelated law is reviewed using this undemanding threshold IntermediateLevel Scrutiny o Courts will uphold government actions as constitutional so long as the government can prove that its action advanced an important government objective and that the action is substantially related to the govemment s objective Strict Scrutiny 0 When the government action is related to a fundamental right or is based on a suspect classi cation apply a strict scrutiny when deciding whether to uphold the government action 0 Will uphold the law only if 1 The govemment s objective is compelling 2 The means chosen by the government to advance that objective is necessary to achieve that compelling end 3 No less restrictive alternatives exist The Supremacy Clause and Preemption Supremacy clause Valid federal laws are always supreme to any con icting state law 0 Invalidates any state law that is in direct con ict with federal law Preemption the power granted by the supremacy clause to override a state law 0 The federal law must be directly in con ict with the state law to the point where the two laws cannot coexist Commerce Powers Commerce clause Congress is given the power to regulate Commerce among the several states Application of Commerce Powers Interstate versus Intrastate Commercial Activity 0 Congress has the express constitutional authority to regulate 1 Channels of interstate commerce such as railways and highways 2 The instrumentalities of interstate commerce such as vehicles used in shipping 3 The articles moving in interstate commerce 0 Even for commercial activity that is purely intrastate Congress has the power to regulate the activity so long as it has a substantial economic e ect on interstate commerce The Commerce Clause and Civil Rights Legislation 0 A key use of the federal commerce power has been in the area of civil rights legislation 0 Exercised its commerce power to ban discrimination in places of public accommodation such as restaurants and hotels Noncommercial Activity 0 In cases where the activity is purely noncommercial the Court has used increased levels of scrutiny to be sure that the activity that Congress seeks to regulate has a suf cient connection to some legitimate economic interest 0 As a general rule the further that Congress strays from regulating commercial activity the more likely the Court will be to give the law intense constitutional scrutiny Constitutional Restrictions on State Regulation of Commerce US Supreme Court has ruled that the mere existence of congressional commerce powers restricts the states from discriminating against of unduly burdening interstate commerce States are free to regulate commerce so long as o It does not impose a discriminatory law such as a taw on outofstate businesses 0 The state law is a legitimate effort to regulate health safety and welfare Tax and Spend Power Congress has a farreaching power to taX the citizenry and to spend the federal govemment s money in any way that promotes the common defense and general welfare Necessary and Proper Clause Congress may also place conditions on the use of federal money in order to achieve some public policy objective Necessary and Proper Clause cited by Congress as authorization to set conditions on the spending 0 Ability to set conditions on the use of federal money has been a somewhat controversial method of congressional regulation because it falls outside the areas of traditional regulation Constitutional Protections The Bill of Rights and Business First Amendment 0 Limits on Free Speech 0 Commercial Speech 0 Advertising and Obscenity Regulation 0 Political Speech by Corporations 0 Political Spending and Corporations Other Amendments 0 Fourth Amendment protects individual citizens rights to be secure in their persons houses papers and effects Two basic types of searches While investigating a criminal offense it must demonstrate that it has sufficient information Probable cause that justi es the issuance of a search warrant by a court While investigating noncriminal administrative violations standard for issuance of a warrant is lower 0 Fifth Amendment Provides that no person shall be compelled in any criminal case to be a witness against himself Individual corporate officers and employees are entitled to Fifth Amendment protection when facing a criminal investigation by the police or more commonly in a business context an administrative agency investigation of a possible criminal offense ex IRS investigating tax fraud Due Process Protections Due Process Clause in the Fifth and Fourteenth Amendments provides protections to individuals and businesses from government overreaching through constitutional guarantees 0 Protect individuals from being deprived of life liberty or property without due process of law 0 Require the government to provide some type of hearing and procedure whenever the government has taken some action that deprives an individual or business of some liberty or property interest Fourteenth Amendment 0 Makes the BoR applicable to the states 0 Due Process Clause Imposes certain procedural requirements on federal and state governments when they impair life liberty or property Limits the substantive power of the states to regulate certain areas related to individual liberty 0 Equal Protection Clause Prohibits the government from denying citizens equal protection of the laws Guarantees that the government will treat people who are similarly situated equally Does not mean everyone must be treated exactly the same Privacy Although the existence of a constitutional right of privacy has generate intense and emotional debate the US Supreme Court has reaffirmed the central tenets of the privacy rights recognized in Griswold and Roe over several decades and it has become settled law Federal Statutes Congress has sought to ensure certain privacy protections by mandating that government agencies allow only appropriate public and media access to agency records and reports Workplace Privacy


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