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Constitutional Law for
Business and E-Commerce
CHAPTER 2
1/29/2019
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall
2-1
Learning Objectives
1.
2.
3.
4.
5.
Describe the concept of federalism and the doctrine of
separation of powers.
Define and apply the Supremacy Clause of the U.S.
Constitution.
Explain the federal government’s authority to regulate
interstate commerce and foreign commerce.
Explain how the freedoms of speech, assembly, religion,
and the press are protected by the First Amendment and
how commercial speech may be limited.
Explain the doctrines of equal protection and due
process.
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The U.S. Constitution Serves Two
Major Functions:
1. It creates the three branches of government
(executive, legislative, and judicial) and
allocates powers to these branches.
2. It protects individual rights by limiting the
government’s ability to restrict those rights.
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Federalism and Delegated Powers
❑ Federalism is the U.S. form of
government.

The federal government and the 50 state
governments share powers.
❑ Enumerated powers—certain powers
delegated to the federal government by
the states.
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Federalism: Any powers that are not
specifically delegated to the federal
government by the Constitution are reserved
to the states.
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Doctrine of Separation of Powers
(1 of 3)
❑ Article I of the Constitution establishes the
legislative branch of government.

The part of the government that consists of
Congress:


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The Senate
The House of Representatives
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Doctrine of Separation of Powers
(2 of 3)
❑ Article II of the Constitution establishes the
executive branch of government.

The part of the government that consists of:



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The President
The Vice President
The president is selected by the electoral
college, not elected by popular vote.
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Doctrine of Separation of Powers
(3 of 3)
❑ Article III of the Constitution establishes the
judicial branch of government.

The part of the government that consists of:


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The Supreme Court
Other federal courts that may be created by the
Congress
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2-8
Checks and Balances: Certain
checks and balances are built into
the constitution to ensure that no
one branch of the federal
government becomes too powerful.
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The Supremacy Clause
❑ Supremacy Clause—establishes that the
federal constitution, treaties, federal laws, and
federal regulations are the supreme law of the
law.

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State and local laws that conflict with valid
federal law are unconstitutional.
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Commerce Clause
❑ A clause of the U.S. Constitution that grants
Congress the power “to regulate commerce
with foreign nations, and among the several
states, and with Indian tribes.”
❑ Because this clause authorizes the federal
government to regulate commerce, it has a
greater impact on business than any other
provision in the Constitution.
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Federal Regulation of
Interstate Commerce
❑ The Commerce Clause also gives the
federal government the authority to
regulate interstate commerce.
❑ The federal government may regulate:


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Interstate commerce that crosses state
borders
Intrastate commerce that affects interstate
commerce
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State and Local Government
Regulation of Business (1 of 2)
❑ Police Power—the power of the states to
regulate private and business activity
within their borders.
❑ States may enact laws that protect or
promote the public health, safety, morals,
and general welfare as long as the law
does not unduly burden interstate
commerce.
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State and Local Government
Regulation of Business (2 of 2)
❑ State and local governments may regulate:
❑ Interstate commerce within their borders
❑ Intrastate commerce not exclusively regulated
by the federal government.
❑ Zoning ordinances, state environmental
laws, corporation and partnership laws,
and property laws are enacted under this
power.
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The Bill of Rights and Business
❑ The Bill of Rights provides certain
freedoms and protections to individuals
and business:


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Freedom of speech
Freedom of religion
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Freedom of Speech
❑ The right to
❑ The U.S. Supreme
engage in oral,
written, and
symbolic speech
protected by the
First Amendment.
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Court places speech
into three categories:
1. Fully protected
2. Limited protected
3. Unprotected
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Freedom of Religion
❑ The U.S. Constitution requires federal,
state, and local governments to be neutral
toward religion.


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The Establishment Clause—prohibits the
government from either establishing a state
religion or promoting one religion over another.
The Free Exercise Clause—prohibits the
government from interfering with the free
exercise of religion in the United States.
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The Equal Protection Clause
❑ The Supreme Court has adopted three
different standards for reviewing equal
protection cases:



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Strict Scrutiny Test—applied to classifications
based on race
Intermediate Scrutiny Test—applied to
classifications based on protected classes other
than race (e.g., sex or age)
Rational Basis Test—applied to classifications
not involving suspect or protected class
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Due Process Clause
❑ The Fifth and Fourteenth Amendments both
contain a Due Process Clause.
❑ These clauses provide that no person shall be
deprived of “life, liberty, or property” without due
process of the law.
❑ Fifth Amendment Clause—applies to federal
government action.
❑ Fourteenth Amendment Clause—applies to
state and local government action.
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The Privileges and Immunities
Clause
❑ Article IV of the Constitution and the
Fourteenth Amendment contain a
Privileges and Immunities Clause.
❑ This clause prohibits states from enacting
laws that unduly discriminate in favor of
their residents.
❑ This clause applies only to citizens.

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Corporations are not protected.
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