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Business Law and the Legal Environment for a New Century
Alternate Edition
Quote of the Day
Give me the liberty to know, to
utter, and to argue freely according
to conscience, above all liberties.
John Milton, English poet, 1644
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Business Law and the Legal Environment for a New Century
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The Constitution of the United States is a
remarkable document in many ways.
Drafted in
1787, yet is
still relevant
today
Flexible enough
to deal with the
issues of a
changing world
Short, and
easy to read;
its brevity
gives it
endurance
Versatile
enough to
resolve a
wide variety
of conflicts
Leaves room for
interpretation and
“fleshing out”
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Business Law and the Legal Environment for a New Century
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Overview and History of
Constitutional Law

When America gained its freedom from England in
1783, the states governed themselves under the
Articles of Confederation.

The Articles of Confederation gave the federal
government no power to raise money or regulate
commerce.

Taxation policies were inconsistent and caused
dissent among states.

The Articles of Confederation were not working!
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Business Law and the Legal Environment for a New Century
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Overview and History (cont’d)

The states sent 55 delegates to meet to amend the
Articles of Confederation.

Instead, these men became the Framers of our
Constitution upon deciding that an entirely new
document was needed.

Debates raged over how much power to give the
federal government, the states and the people.

The result -- a series of compromises about power -is the Constitution of the United States.
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Business Law and the Legal Environment for a New Century
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Compromises in the
Constitution
 Separation of Powers
• Federal government is divided into three branches - Executive, Legislative, and Judicial
• Each branch is independent and equal.
• Each is a balance to the power of the others.
The
courts can rule
Congress
passa-- the

Federalism
government’s
power
is
The
Thenational
President
Presidentcan
can Congress
Congress has
can
to
limited
to only the
listed in
Article
I, §8.
law
unconstitutional,
statutes,
but...
appoint
vetoissues
a bill,
federal
but...
approve
override
the
a veto,
but...
but...
judges, but...
President’s nominee...
 Individual Rights -- the original Constitution did
not mention rights of citizens, so the first 10
amendments (Bill of Rights) spelled those out.
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Business Law and the Legal Environment for a New Century
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Congressional Powers
 Article 1 establishes Congress with two houses.
• Each state has 2 Senators; number of
Representatives is relative to each state’s population.
• Term limits for federal congressional offices are not
allowed by the Constitution.
 Article 1 gives Congress powers.
• Congress can create and enact legislation.
• Congress regulates commerce with other nations and
between different states. Each state regulates
commerce within its own borders.
• Substantial Effect Rule -- Congress may regulate any
activity which has a substantial economic effect on
interstate commerce.
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Business Law and the Legal Environment for a New Century
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State Legislative Power
 Commerce
• States may regulate commerce in its own borders.
• A state statute that discriminates against interstate
commerce is invariably unconstitutional.
 Supremacy Clause -- states that the
Constitution, federal statutes and federal treaties
are the supreme law of the land.
• If there is conflict between statutes, the federal
controls the issue and the state statute is void.
• Even with no direct conflict, federal law will prevail if
the issue is one that Congress controls exclusively.
• So, state law prevails only when there is no opposing
federal law and no exclusive federal control.
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Business Law and the Legal Environment for a New Century
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Executive Power
 Article II defines the powers and responsibilities
of the President -- in general he is to enforce the
nation’s laws.
• Appointment -- The president nominates federal
judges (including Supreme Court Justices) and
heads of most administrative agencies.
• Legislation -- The president and his advisors can
propose bills to Congress and the president can
veto bills from Congress.
• Foreign Policy -- The president coordinates
international efforts, negotiates treaties and is the
Commander in Chief of the military, but he may not
declare war.
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Business Law and the Legal Environment for a New Century
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Judicial Power
 Article III creates the Supreme Court and permits
Congress to create lower federal courts.
 Federal courts have two key functions:
adjudication and judicial review.
• Adjudication -- Federal courts hear civil and
criminal cases within their jurisdiction.
• Judicial Review -- Federal courts can declare a
statute or governmental action unconstitutional.
– Opponents claim that the Constitution does not grant
this power to the courts; and this takes power away
from citizens.
– Supporters claim that the Constitution gives the
judicial system the power to interpret laws and
ensures a consistent application of the Constitution.
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Business Law and the Legal Environment for a New Century
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Protected Rights: Free Speech
 The First Amendment states, “Congress shall
make no law… abridging the freedom of speech.”
• Speech includes non-verbal communication, such as
signs, symbols and acts (like flag-burning).
• Political speech -- about a politician or political
process is protected, and can be found illegal only if it
is intended and likely to promote lawless conduct.
• Legal speech may be limited in time, place & manner.
• Obscenity is not protected by the Constitution.
• Commercial speech -- designed to propose a
commercial transaction -- is regulated more strictly
than other speech and may be outlawed if false or
misleading.
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Business Law and the Legal Environment for a New Century
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Process and the
Fifth Amendment -- DueTakings
Clause
 “No person shall be… deprived of life, liberty, or
property without due process of law; nor shall
private property be taken for public use, without
just compensation.”
• Procedural Due Process -- the government must
go through procedures to ensure that the result is
fair. The process due is in proportion to what the
government is trying to take from the person.
• The Takings Clause -- when the government
takes private property for public use, it must pay a
fair price.
• Substantive Due Process -- some rights (voting,
speech, travel, privacy) are so fundamental that
the government may not take them at all.
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Business Law and the Legal Environment for a New Century
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14th Amendment --
Equal
Protection
 “No state shall… deny to any person within its
jurisdiction the equal protection of the laws.”
 The government must treat people equally, yet
they frequently make distinctions among classes
of people for different treatment. Is this legal?
• Usually acceptable -- based on economic and
social relations (such as higher income paying a
higher percentage income tax) are usually upheld.
• Sometimes acceptable -- based on gender are
sometimes upheld, if there is a good reason.
• Never acceptable -- based on race, ethnicity and
fundamental rights are almost never upheld.
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Business Law and the Legal Environment for a New Century
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Giving Up Your Constitutional
Rights… Would You??

Common Interest Developments

Private Organizations Acting as a Town
• Some neighborhoods have restrictive covenants
which may supercede constitutional protection.
• They may restrict owning of pets, color of paint, size
of mailbox, lawn decorations, even having children!
• These restrictions are enforceable, even if stricter
than the constitution, because the owners voluntarily
accept them.
• If an organization looks and acts like a town, it must
be treated so, and constitutional protections apply.
• This is called the state action doctrine.
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Business Law and the Legal Environment for a New Century
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“The United States Constitution,
the greatest legal document ever
written, is a series of
compromises about the power of
government. The compromises
affect every citizen and company
in the nation, every day.”
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Business Law and the Legal Environment for a New Century
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