Chapter 1: The Legal and Constitutional Environment o f Business

1. ` Chapter 1: The Legal and Constitutional Environmentof Business

2. Learning Objectives • What is the common law tradition? • What is the difference between remedies at law and remedies at equity? • What constitutional clause gives the federal government the power to regulate commercial activities among the various states? 

3. Learning Objectives • What is the Bill of Rights? What freedoms does the First Amendment guarantee? • Where in the U.S. Constitution can the due process clause be found?

4. Introduction • At a minimum law consists of: • Enforceable rules governing relationships, • Among and between individuals and • Their society. 

5. Introduction • Different views of law have one thing in common: • Duties, rights, and privileges that are consistent with the values and traditions of that culture.

6. Business Activities andThe Legal Environment • Knowledge of “black letter” law is not enough. • Many different laws affect a single business transaction. • Ethics and business decision making: what constitutes right or wrong behavior?

7. Business Activities and The Legal Environment • Many Different Activities Can Affect a Single Business Transaction.

8. 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.

9. Sources of American Law • Statutory Law. • Laws enacted by federal and state legislatures. • Local ordinances. • Uniform Laws. • Uniform Commercial Code (UCC).

10. Sources of American Law • Administrative Law. • Rulemaking--Rules, orders and decisions of administrative agencies, federal, state and local. • Adjudication--agencies make rules, then investigate and enforce the rules in administrative hearings.

11. Sources of American Law • Case Law and Common Law Doctrines. • Much of the common law is still used today. • Common law governs all areas not specifically covered by statutory or constitutional law. • Restatements of the Law: modern compilations of common law principles found, e.g., in contracts, torts, property and agency.

12. The Common Law Tradition • Early English Courts. • 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.

13. The Common Law Tradition • Stare Decisis. • Importance of Precedents: 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. • Stare Decisis and Legal Stability. • Departures from Precedent. • When there is No Precedent.

14. The Common Law Tradition • Equitable Remedies and Courts of Equity. • 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. 

15. The Common Law Tradition • Equitable Remedies and Courts of Equity. • Remedies in Equity: based on justice and fair dealing a chancery court does what is right. • Merging of Law and Equity. Today, legal and equitable remedies are found in the same court.

16. 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.

17. 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. • Cyberlaw: internet transactions.

18. The Constitutional As It Affects Business • 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.

19. The Constitutional As It Affects Business • The Commerce Clause. • The Commerce Clause and the Expansion of National Powers. • The national government had the exclusive power to regulate interstate commerce. Gibbons v. Ogden (1824).

20. The Constitutional As It Affects Business • The Commerce Clause. • Commerce Today: Commerce Clause applies to e-commerce internet transactions.

21. The Constitutional As It Affects Business • The Commerce Clause. • Regulatory Powers of the States: often referred to as “police” powers. State laws enacted pursuant to a police power are given a strong presumption of constitutionality.

22. The Constitutional As It Affects Business • The Commerce Clause. • The “Dormant” Commerce Clause. • State police powers or regulations that substantially interfere with interstate commerce will be struck down. • CASE 1.1 Family Winemakers of California v. Jenkins (2010). Did the State of Massachusetts discriminate against out-of-state wineries?

23. The Constitutional As It Affects Business • 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. • Recently, the Bill of Rights was “incorporated” and applied to the States as well. • Some protections apply to businesses.

24. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Speech. • Symbolic Speech: Free speech also includes “symbolic” speech, including gestures, movements, articles of clothing. • Reasonable Restrictions. • Corporate Political Speech. Corporations and unions now have broader rights to support candidates. See Citizens United v. FEC (2010). 

25. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of 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. 

26. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Speech. • Commercial Speech. • CASE 1.2 Bad Frog Brewery, Inc. v. New York State Liquor Authority (2003). Did the State unconstitutionally restrict commercial speech when it prohibited a certain gesture (illustration) on beer labels?

27. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Speech. • Unprotected Speech. U.S. Supreme Court has held that certain speech is NOT protected: • Defamatory speech. • Threatening speech that violates criminal laws. 

28. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Speech. • Unprotected Speech. U.S. Supreme Court has held that certain speech is NOT protected: • Fighting Words. • Obscene Speech is patently offensive, violates community standards and has no literary, artistic, political or scientific merit.

29. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Speech. • Online Obscenity. Some of Congress’ attempts to protect children from online pornography have been ruled unconstitutional restrictions on free speech. • Communications Decency Act (1996). • COPA (1998-challenged, in court). • Children’s Internet Protection Act-CIPA-(2000) requires filters for computers in public libraries and public schools. Court held it is constitutional.

30. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Religion. • First amendment guarantees that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…” 

31. The Constitutional As It Affects Business • Business and the Bill of Rights. • First Amendment—Freedom of Religion. • Establishment Clause: no state-sponsored religion or preference for one religion over another. • CASE 1.3 Trunk v. City of San Diego (2011). What was the Supreme Court’s rationale for ordering the cross removed?  • Free Exercise clause: person can believe what he wants, but actions may be unconstitutional.

32. The Constitutional As It Affects Business • Business and the Bill of Rights. • Fifth and Fourteenth Amendments. • Due Process: both guarantee that “no person shall be deprived of life, liberty, or property without due process of law.” • Procedural: any government decision to take life, liberty or property must be fair. Requires: Notice and Fair Hearing. 

33. The Constitutional As It Affects Business • Business and the Bill of Rights. • Fifth and Fourteenth Amendments. • Due Process. • Substantive: focuses on the content or the legislation (the right itself). • Fundamental Right: requires compelling state interest. • Non-Fundamental: rational relationship to state interest.

34. Appendix • Finding Statutory and Administrative Law. • United States Code (USC). • State Statutes. • Code of Federal Regulations (CFR).

35. Appendix • Finding Case Law (Case Citations). • Supreme Court Cases at Findlaw.com. • Federal Court Cases at Findlaw.com. • State Court Cases at Findlaw.com.

36. Appendix: Finding and Analyzing the Law Legal cases are identified by a “legal citation” (or a “cite”) as the sample below: Fehr v. Algard,___ N.J. Super ___, A.3d (2011). Title: First Party is Plaintiff, second party is Defendant. The parties are either italicized or underlined. 36

37. Appendix: Finding and Analyzing the Law Legal cases are identified by a “legal citation” (or a “cite”) as the sample below: Fehr v. Algard,___ N.J. Super ___, A.3d (2011). The case is from the Superior Court of New Jersey and is not numbered as of the date of this printing. 37

38. Appendix: Finding and Analyzing the Law Legal cases are identified by a “legal citation” (or a “cite”) as the sample below: Fehr v. Algard,___ N.J. Super ___, A.3d (2011). The case was decided in 2011. 38