Contemporary Business and Online Commerce Law - Chapter 2

Contemporary Business and Online Commerce Law

Chapter 2

Constitutional Law for Business and Online Commerce

The Constitution consists of seven articles and 26 amendments. It establishes the three branches of the federal government, enumerates their powers, and provides important guarantees of individual freedom. The Constitution was ratified by the states in 1788.

the U.S. Constitution serves two major functions:

1. creates the three branches of the federal government
   and allocates powers to these three branches
   
   
   
   1. executive
   
   
   2. legislative.
   
   
   3. Judicial branches
   
   
   
   


2. protects individual rights by limiting the government's ability to restrict those rights.

our countries form of government is referred to as federalism. That means that the federal government and the 50 state governments share powers.

Doctrine of Separation of Powers.

1. Article I of the Constitution established, the legislative branch of government. This branch is bicameral; that is, it consists of the Senate and the House of Representatives. Collectively, they are referred to as Congress. Each state has two senators. The number of representatives to the House of Representatives is determined according to the population of each state.


2. Article II of the Constitution establishes the executive branch of government by providing for the election of the president and vice president. The president is not elected by popular vote, but instead is selected by the electoral College, whose representatives are appointed by state delegations.


3. Article III establishes the judicial branch of the government by establishing the Supreme Court in providing for the creation of other federal courts by Congress.

Checks and Balances.

1. the judicial branch has a 42 examined the acts of the other two branches of government determine whether this extraconstitutional.


2. The executive branch can enter into treaties with foreign governments only with the advice and consent of the Senate.


3. The legislative branch is authorized to create federal courts and determine their jurisdiction and to enact statutes that change judicially made law

Supremacy Clause.

the supremacy clause establishes that the federal Constitution, treaties, federal walls, and federal regulations are the supreme law of lien. State and local laws that conflict with valid federal law are unconstitutional. The concept of federal wall taking precedence over state or local law is commonly called the preemption doctrine.

Commerce Clause.

the commerce clause of the U.S. Constitution grants Congress the power to regulate commerce with foreign nations, and among the several states, and with Indian tribes.

Federal Regulation of Interstate Commerce.

the commerce clause also gives the federal government the authority to regulate interstate commerce. Originally, the courts interpreted this clause to mean that the federal government can only regulate commerce that moved in interstate commerce. The modern rule, however, allows the federal government to regulate activities that affect interstate commerce.

under the effects of interstate commerce test, the regulated activity does not itself have to be in interstate commerce. Thus, any local activity that has an effect on interstate commerce is subject to federal regulation.

State and Local Government Regulation of Business -- State "police power"

the state did not delegate all power to regulate business in federal government. They retain the power to regulate intrastate and much interstate business activity that occurs within their borders. This is commonly referred to as state's police power.

police power permits states to enact laws to protect and promote the:

• public-health


• safety


• morals


• and general welfare

this includes the authority to enact laws to regulate the conduct of business:

• zoning ordinances


• state environmental laws


• Corp. and partnership laws


• property laws.

state and local laws cannot unduly burden interstate commerce. If they do, they are unconstitutional because they violate the Commerce Clause.

Bill of Rights

The Bill of Rights guarantees certain fundamental rights to natural persons and protects those rights from intrusive government action. Most of these rights have also been found applicable to so-called artificial persons (example corporations).

17 other amendments have been added to the Constitution.

amendments to the Constitution that are most applicable to business are:

Freedom of Speech

when the most honored freedoms guaranteed by the Bill of Rights is the freedom of speech of the First Amendment. The First Amendment's freedom of speech clause protects speech only, not conduct. The US Supreme Court places speech into three categories:

1. fully protected


2. Ltd. protected


3. unprotected speech

Freedom of Religion.

the U.S. Constitution requires federal, state, and local governments to be neutral toward religion. The First Amendment actually contains two separate religion clauses. They are:

1. The Establishment Clause -- prohibits the government from either establishing a state religion or promoting one religion over another.


2. The Free Exercise Clause -- prohibits the government from interfering with the free exercise of religion in the United States.

The Equal Protection Clause

The equal protection clause provides that a state cannot deny any person within its jurisdiction the equal protection of the laws. Although this clause expressly applies to state and local government action, the Supreme Court has held that it also applies to the federal government action. Artificial persons, such as corporations are also protected. This clause is designed to prohibit invidious discrimination.

The Supreme Court has adopted three different standards for reviewing equal protection cases. They are:

1. Strict scrutiny test. -- any government activity or regulation that classifies persons based on a suspect class is reviewed for lawfulness using a strict scrutiny test.


2. Intermediate scrutiny test -- the lawfulness of government classifications based on protected classes other than race (such as sex or age) are examined using an intermediate scrutiny test


3. Rational basis test -- the lawfulness of all government classifications that do not involve suspect or protected classes is examined using a rational basis test

Due Process Clause

These clauses provide that no person shall be deprived of "life, liberty, or property." Without due process of law. The government is not prohibited from taking a person's life, liberty, or property. However, the government must follow due process to do so.

There are two categories of due process:

1. Substantive Due Process -- requires that government statutes, ordinances, regulations, and other laws be clear on their face and not overly broad in scope. The test of whether substantive due process is met is whether a reasonable person can understand the wall enough to be able to comply with it. Laws that do not meet this test are declared void for vagueness.


2. Procedural Due Process -- requires that the government give a person proper notice and hearing of legal action before that person is deprived of his or her life, liberty, or property.

Privileges and Immunities Clause

this clause prohibits states from enacting laws that unduly discriminate in favor of the residents over residents of other states.