the legal environment of business © 2006 prentice hall ch. 5-1 a critical thinking approach fourth...
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THETHE LEGALLEGAL ENVIRONMENTENVIRONMENT OFOF BUSINESSBUSINESS
© 2006 Prentice Hall© 2006 Prentice Hall Ch. 5-Ch. 5-11
A Critical Thinking ApproachA Critical Thinking ApproachA Critical Thinking ApproachA Critical Thinking ApproachFourth EditionFourth Edition
Nancy K. KubasekNancy K. Kubasek
Bartley A. BrennanBartley A. Brennan
M. Neil BrowneM. Neil Browne
Nancy K. KubasekNancy K. Kubasek
Bartley A. BrennanBartley A. Brennan
M. Neil BrowneM. Neil Browne
© 2006 Prentice Hall, Inc.© 2006 Prentice Hall, Inc.© 2006 Prentice Hall, Inc.© 2006 Prentice Hall, Inc.
CHAPTER 5CHAPTER 5
Constitutional PrinciplesConstitutional Principles
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Ch. 5-Ch. 5-22
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The ConstitutionThe ConstitutionProvides the legal framework for the nationProvides the legal framework for the nation
Sets out the basic structure of governmentSets out the basic structure of government
Establishes the balance of powers Establishes the balance of powers
Amendments establish individual rightsAmendments establish individual rights
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FederalismFederalismDefinitionDefinition: A division of political power : A division of political power between a central authority and constituent between a central authority and constituent unitsunits
Operation:Operation: All powers not specifically given to All powers not specifically given to the federal government are reserved to the the federal government are reserved to the statesstates
Federal regulation must be based in a Federal regulation must be based in a constitutional provisionconstitutional provision
* See slide * See slide 4-144-14
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Supremacy ClauseSupremacy Clause
Article V of the ConstitutionArticle V of the Constitution
Any state or local law that directly Any state or local law that directly conflicts with the federal Constitution, conflicts with the federal Constitution, laws, or treaties is void.laws, or treaties is void.
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Federal PreemptionFederal Preemption
Federal law “preempts” state or local law Federal law “preempts” state or local law where a local law indirectly conflicts with where a local law indirectly conflicts with congressional intent, as evidenced by congressional intent, as evidenced by federal legislation regulating the same federal legislation regulating the same area.area.
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Separation of PowersSeparation of Powers
Checks and Balances on PowerChecks and Balances on Power
Article I - Legislative BranchArticle I - Legislative Branch
Enacts the LawEnacts the Law
Article II - Executive BranchArticle II - Executive Branch
Enforces the LawEnforces the Law
Article III - Judicial Branch Article III - Judicial Branch
Interprets the LawInterprets the Law
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Case 5-1:Case 5-1: Clinton v. Jones Clinton v. Jones Separation of Powers Doctrine does not Separation of Powers Doctrine does not
provide complete presidential immunity provide complete presidential immunity from private suits; both for official and from private suits; both for official and unofficial actsunofficial acts
Precedent: Civil cases involving Truman, Precedent: Civil cases involving Truman, Kennedy, Nixon, FordKennedy, Nixon, Ford
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The Commerce ClauseThe Commerce Clause
Article I, Sec. 8
Congress has the power “To regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes…”.
Article I, Sec. 8
Congress has the power “To regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes…”.
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The Commerce ClauseThe Commerce ClauseIs the basis for federal regulation of Is the basis for federal regulation of businessbusiness
Is a limited grant of powerIs a limited grant of power
Is subject to interpretation by the CourtIs subject to interpretation by the Court
Currently, this power is interpreted broadly Currently, this power is interpreted broadly and includes intrastate as well as interstate and includes intrastate as well as interstate activityactivity
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Interstate CommerceInterstate Commerce is found in is found in::
Intrastate activities - Intrastate activities - NLRB v. Jones & LaughlinNLRB v. Jones & Laughlin (1937)(1937)
Growing and consuming wheat on a farm – Growing and consuming wheat on a farm – Wickard v. FilburnWickard v. Filburn (1942) (1942)
Loansharking – Loansharking – Perez v. U.S.Perez v. U.S. (1971) (1971)
A local restaurant – A local restaurant – IHOP v. PinnockIHOP v. Pinnock (1993) (1993)
Local coal mining – Local coal mining – U.S. v. LakeU.S. v. Lake (1995) (1995)
Supreme Court CasesSupreme Court Cases
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Supreme Court CasesSupreme Court Cases
Interstate Commerce Interstate Commerce NOTNOT found in found in::
Gun-Free School Zone Act - Gun-Free School Zone Act - U.S. v. LopezU.S. v. Lopez (1995) (1995)
Violence against Women Act – Violence against Women Act – Brzonkala v. Brzonkala v. MorrisonMorrison (2000) (2000)
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The Police PowerThe Police Power
When does the state’s police power conflict
with federal Commerce Clause power?
When does the state’s police power conflict
with federal Commerce Clause power?
DefinitionDefinition
The inherent regulatory The inherent regulatory power of the state to power of the state to pass laws to protect the pass laws to protect the public health, safety, public health, safety, welfare, and morals of welfare, and morals of the communitythe community
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The Two-Pronged Test The Two-Pronged Test The Rational Basis TestThe Rational Basis Test
The Balancing TestThe Balancing Test
Case 5-3:Case 5-3: Oregon Waste Systems v. Oregon Oregon Waste Systems v. Oregon
Discriminatory state pricing burdens interstate Discriminatory state pricing burdens interstate commerce…no state showing of rational basis, commerce…no state showing of rational basis, nor of an offsetting legitimate state interestnor of an offsetting legitimate state interest
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Taxing and Spending ClauseTaxing and Spending Clause
Article I, Section 8
Gives congress the “Power to lay and collect taxes…” and to “pay the Debts and provide for the common Defense and General Welfare…”.
Article I, Section 8
Gives congress the “Power to lay and collect taxes…” and to “pay the Debts and provide for the common Defense and General Welfare…”.
This power often used to accomplish This power often used to accomplish specific goals, (i.e., federal highway funds)specific goals, (i.e., federal highway funds)
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Protects citizens against the federal Protects citizens against the federal governmentgovernment
Comprised of the first Ten Comprised of the first Ten AmendmentsAmendments
Extended to the states via the Extended to the states via the Fourteenth AmendmentFourteenth Amendment
The Bill of RightsThe Bill of Rights
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The First AmendmentThe First Amendment
Freedom of SpeechFreedom of Speech
Freedom of the PressFreedom of the Press
Right to AssemblyRight to Assembly
Right to Petition for Redress Right to Petition for Redress
Separation of Church and StateSeparation of Church and State
Right to Free Exercise of ReligionRight to Free Exercise of Religion
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Restrictions on SpeechRestrictions on Speech
Speech that causes dangerSpeech that causes danger
Obscene speechObscene speech
Hate speechHate speech
Commercial speechCommercial speech
Corporate speechCorporate speech
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Case 5-4:Case 5-4: Central Hudson v. New York Central Hudson v. New York Commercial speech relates solely to Commercial speech relates solely to
economic interestseconomic interests Occurs in an area traditionally subject to Occurs in an area traditionally subject to
government regulationgovernment regulation Commercial speakers have knowledge of Commercial speakers have knowledge of
the market and their productthe market and their product Commercial speech is a hardy breed of Commercial speech is a hardy breed of
expressionexpression
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Corporate SpeechCorporate Speech
CommercialCommercial speech entitled to lesser speech entitled to lesser protection, yet is still protected if not protection, yet is still protected if not misleading or unlawfulmisleading or unlawful
State must assert a substantial interestState must assert a substantial interest
Regulation must be no more than Regulation must be no more than necessary to achieve legitimate interestnecessary to achieve legitimate interest
PoliticalPolitical speech treated the same as for speech treated the same as for individual citizensindividual citizens
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The Fourth AmendmentThe Fourth Amendment
The right of individuals to be secure in The right of individuals to be secure in their persons, their homes, and their their persons, their homes, and their personal propertypersonal property
No unreasonable searches and seizuresNo unreasonable searches and seizures
Requires probable cause and a warrant Requires probable cause and a warrant for searchesfor searches
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The Fourth AmendmentThe Fourth AmendmentException: Administrative SearchesException: Administrative Searches
Where industry is subject to pervasive Where industry is subject to pervasive regulationregulation
Where there is a reduced expectation of privacyWhere there is a reduced expectation of privacy
Where there is a substantial government Where there is a substantial government interestinterest
Where there is a constitutionally adequate Where there is a constitutionally adequate substitute for a warrantsubstitute for a warrant
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The Fifth AmendmentThe Fifth Amendment
Protects against self-incrimination and Protects against self-incrimination and double jeopardydouble jeopardy
Due ProcessDue Process
Procedural:Procedural: Notice and opportunity to be Notice and opportunity to be heard; to confront witnessesheard; to confront witnesses
Substantive:Substantive: Protection against arbitrary Protection against arbitrary laws unrelated to legitimate state laws unrelated to legitimate state purposespurposes
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The Fifth AmendmentThe Fifth Amendment
The Takings Clause:The Takings Clause:
Private property may not be Private property may not be taken by the state unless;taken by the state unless;
It is taken for public It is taken for public purposespurposes
The owner is paid just The owner is paid just compensationcompensation
The Takings Clause:The Takings Clause:
Private property may not be Private property may not be taken by the state unless;taken by the state unless;
It is taken for public It is taken for public purposespurposes
The owner is paid just The owner is paid just compensationcompensation
When does regulation When does regulation amount to a taking?amount to a taking?
See See Lucas v. S. Lucas v. S. Carolina Coastal Carolina Coastal
CommissionCommission
When does regulation When does regulation amount to a taking?amount to a taking?
See See Lucas v. S. Lucas v. S. Carolina Coastal Carolina Coastal
CommissionCommission
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The Fourteenth AmendmentThe Fourteenth Amendment
Applies the Bill of Rights and the Due Applies the Bill of Rights and the Due Process Clause to the statesProcess Clause to the states
Exceptions: Grand Jury and right to jury Exceptions: Grand Jury and right to jury trialstrials
Also important: Also important:
The Equal Protection ClauseThe Equal Protection Clause
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SummarySummaryThe Constitution is the framework of the The Constitution is the framework of the governmentgovernment
Federalism is the fundamental conceptFederalism is the fundamental concept
States regulate local mattersStates regulate local matters
Federal government has only limited powerFederal government has only limited power
Commerce Clause is the primary source of Commerce Clause is the primary source of federal power to regulate businessfederal power to regulate business