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BUSINESS LAW TODAY Essentials 8 th Ed. Roger LeRoy Miller - Institute for University Studies, Arlington, Texas Gaylord A. Jentz - University of Texas at Austin, Emeritus. The Historical and Constitutional Foundations. Chapter 1. Learning Objectives. What is the common law tradition?

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BUSINESS LAW TODAYEssentials 8th Ed.Roger LeRoy Miller - Institute for University Studies, Arlington, TexasGaylord A. Jentz - University of Texas at Austin, Emeritus

The Historical and Constitutional Foundations

Chapter 1

learning objectives
Learning Objectives
  • What is the common law tradition?
  • What is a precedent? When might a court depart from precedent?
  • What is the difference between remedies at law and remedies in equity?
  • What constitutional clause gives the federal government the power to regulate commercial activities among the various states?
  • What is the Bill of Rights? What freedoms are guaranteed by the First Amendment?
sources of american law
Sources of American Law
  • Constitutional Law.
    • Found in text and cases arising from federal and state constitutions.
    • U.S. Constitution is the supreme law of the land.
  • Statutory Law.
    • Laws enacted by federal and state legislatures.
    • Local ordinances.
    • Uniform Laws (e.g.,Uniform Commercial Code).
sources of american law4
Sources of American Law
  • Administrative Law.
    • Rulemaking--Rules, orders and decisions of administrative agencies, federal, state and local.
    • Administrative agencies can be independent regulatory agency such as the Food and Drug Administration.
    • Adjudication--agencies make rules, then investigate and enforce the rules in administrative hearings.
the common law tradition
The Common Law Tradition
  • Early English Courts of Law.
    • King’s courts started after Norman conquest of 1066.
    • Established the common law—body of general legal principles applied throughout the English empire.
    • King’s courts used precedent to build the common law.
stare decisis
Stare Decisis
  • Stare Decisis
    • Practice of deciding new cases based on precedent.
    • A higher court’s decision based on certain facts and law, is a binding authority on lower courts.
    • Helps courts stay efficient.
equitable remedies courts
Equitable Remedies & Courts
  • Remedy: means to enforce a right or compensate for injury to that right.
  • Remedy at Law: in king’s courts, remedies were restricted to damages in either money or property.
  • Equitable Remedy: based on justice and fair dealing a chancery court does what is right: specific performance, injunction, rescission.
  • Plaintiffs (injured party initiating the lawsuit), Defendants (allegedly caused injury).
classifications of law
Classifications of Law
  • Substantive vs. Procedural Law
    • Substantive: laws that define and regulate rights and duties.
    • Procedural: laws that establish methods for enforcing and protecting rights.
  • Civil Law and Criminal Law
    • Civil: private rights and duties between persons and government.
    • Criminal: public wrongs against society.
classifications of law10
Classifications of Law
  • National and International Law
    • National: laws of a particular nation.
    • Civil vs. Common Law: Civil law countries based on Roman code (e.g., Latin America).
    • International: body of written and unwritten laws observed by nations when dealing with each other.
constitutional powers of government
Constitutional Powers of Government
  • A Federal Form of Government: the federal constitution was a political compromise between advocates of state sovereignty and central government.
  • Separation of Powers: Executive, Legislative and Judicial. Provides checks and balances.
    • Legislative: enacts laws
    • Executive: enforces laws
    • Judicial: declares laws/actions unconstitutional.
the commerce clause
The Commerce Clause
  • U.S. Constitution gives Congress the power to

“regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” (Art. 1 § 8)

  • Greatest impact on business than any other Constitutional provision.
the commerce clause14
The Commerce Clause
  • Gibbons v. Ogden (1824).
    • To Chief Justice Marshall, commerce meant all business dealings that substantially affected more than one state.
    • The national government had the exclusive power to regulate interstate commerce.
  • Today: commerce clause applies to e-commerce internet transactions.
expansion of national powers
Expansion of National Powers
  • Wickard v. Filburn (1942).
    • Purely local production, sale and consumption of wheat was subject to federal regulation.
  • CASE 2.1 Heart of Atlanta Motel v. U.S. (1964).
    • Motel that provided public accommo-dations to guests from other states was subject to federal civil rights legislation.
commerce power today
Commerce Power Today
  • Theoretically: the federal government has unlimited control over all business transactions since any enterprise (in the aggregate) can have a “substantial effect” on interstate commerce.
  • Practical Limits: Supreme Court has curbed federal regulatory powers in U.S. v. Lopez (1995) and U.S. v. Morrison (2000).
regulatory powers of the states
Regulatory Powers of the States
  • Tenth Amendment reserves all powers to the states that have not been expressly delegated to the national government.
  • State have inherent “police powers.”
    • Police powers include right to regulate health, safety, morals and general welfare.
    • Includes licensing, building codes, parking regulations and zoning restrictions.
  • “Dormant” Commerce Clause 
dormant commerce clause
Dormant Commerce Clause
  • U.S. Supreme Court has interpreted commerce clause to give national government exclusive power to regulate.
  • States only have a “dormant” (negative) power to regulate interstate commerce.
  • Dormant power comes into play when courts balance state’s interest vs. national interest, e.g., internet transactions.
  • CASE 2.2Granholm v. Heald (2005).
the supremacy clause
The Supremacy Clause
  • Supremacy Clause: Article VI of the Constitution provides that Constitution, laws and treaties of the United States are the “supreme law of the land.”
  • Concurrent: in few areas, both states and federal government share powers.
  • Preemption: when Congress chooses to act in a concurrent area, federal law preempts state law.
taxing and spending powers
Taxing and Spending Powers
  • Article I Section 8: Congress has the power to “lay and collect taxes, duties, imposts and excises.”
  • Today: if federal tax has a reasonable relationship to revenue production, it will be held constitutional.
  • Congress can spend tax revenues on any express or implied constitutional power.
business and the bill of rights
Business and the Bill of Rights
  • 1791: Ten written guarantees of protection of individual liberties from government interference.
  • Originally: Bill of Rights only applied to the federal government.
  • Today: the Bill of Rights has been “incorporated” and applied to the States as well.
  • Some protections apply to businesses.
first amendment freedom of speech
First Amendment: Freedom of Speech
  • Right to Free Speech is the basis for our democratic government.
  • Free speech also includes “symbolic” speech, including gestures, movements, articles of clothing.
    • Texas v. Johnson (U.S. 1989).
    • Hodgkins v. Peterson (7th Cir. 2004).
corporate speech
Corporate Speech
  • Commercial speech (advertising) is given substantial protection. Government restrictions must:
    • Seek to implement substantial government interest,
    • Directly advance that interest, and
    • Must go no further than necessary to accomplish.
  • Corporations also have protected political speech (although not to the degree of a natural person).
unprotected speech
Unprotected Speech
  • U.S. Supreme Court has held that certain speech is NOT protected:
    • Defamatory speech.
    • Threatening speech that violates criminal laws.
    • Fighting Words.
    • Obscene Speech is patently offensive, violates community standards and has no literary, artistic, political or scientific merit.
    • CASE 2.3 Lott v. Levitt (2007).
online obscene speech
Online (Obscene) Speech
  • Protected or Unprotected?
    • Some of Congress’ attempts to protect children from online pornography have been ruled unconstitutional restriction on free speech.
      • Communications Decency Act (1996).
      • COPA (1998-challenged, in court).
      • Children’s Internet Protection Act (2000) which requires filters for computers in public libraries and public schools). Challenged, in court.
    • What about “hate” speech on the web?
freedom of religion
Freedom of Religion
  • First Amendment guarantees that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…”
  • Establishment clause: no state-sponsored religion or preference for one religion over another.
  • Free Exercise: person can believe what he wants, but actions may be unconstitutional.
  • What about freedom of religion and illegal drug use?
due process
Due Process
  • Procedural: any government decision to take life, liberty or property must be fair. Requires: Notice and Fair Hearing.
  • Substantive: focuses on the content or the legislation (the right itself).
    • Fundamental Right: requires compelling state interest.
    • Non-Fundamental: rational relationship to state interest.
equal protection
Equal Protection
  • 14th Amendment: A state may not “deny to any person within its jurisdiction the equal protection of the laws.”
  • Government must treat similarly situated individuals (or businesses) in the same manner.
  • Courts apply different tests:
    • Minimum scrutiny-economic rights.
    • Intermediate scrutiny.
    • Strict Scrutiny – fundamental rights.
privacy rights
Privacy Rights
  • Fourth amendment protects against unreasonable search and seizures.
  • Griswold v. Connecticut (1965) found a right to personal privacy implied in constitution, expanded in Roe v. Wade (1973).
  • Website privacy policies. What about private information on the internet?
  • What about USA PATRIOT ACT (2001)?
  • HIPAA (1996) (healthcare privacy).
appendix to chapter 1
Appendix to Chapter 1
  • Finding Statutory Law.
    • United States Code (USC).
    • State Statutes.
  • Finding Administrative Law.
    • Code of Federal Regulations (CFR).
  • Finding Case Law (Case Citations).
  • Reading & Understanding Case Law
    • Legal cases are identified by a “legal citation” (or a “cite”) as the example below:

Nunez v. Carabba’s Italian Grill, Inc.,448 Mass. 170, 859 N.E.2d 801 (2007).

Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined.

  • Reading & Understanding Case Law
    • Legal cases are identified by a “legal citation” (or a “cite”) as the example below:

Nunez v. Carabba’s Italian Grill, Inc., 448 Mass. 170, 859 N.E.2d 801 (2007).

This is a 2007 State Supreme Court Case found in volume 448, page 170 of the Massachussets Reports, OR volume 859, page 801 of the NorthEastern Reporter 2nd.