1. McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 Business and the Constitution

2. 2-2 Chapter Overview The structure of the U.S. Constitution and individual state constitutions, and their respective roles in the American legal system. The specific powers granted to the government in the Constitution. The protections afforded by the Constitution in the Bill of Rights and the 14 th Amendment.

3. 2-3 Overview of Articles I, II Article I Establishes the legislative branch (A Congress composed of the House of Representatives and the Senate); sets qualifications for members; grants congressional powers (lawmaking). Article II Establishes the executive branch (president); sets qualifications for the presidency; grants executive powers (enforcement of laws).

4. 2-4 Overview of Articles III, IV, V Article III Establishes the judicial branch with a federal system of courts, including a Supreme Court; grants certain judicial powers. Article IV Establishes the relationship between the states and the federal government; describes how to admit new states to the Union. Article V Describes the process for amending the Constitution.

5. 2-5 Overview of Articles VI, VII Article VI Establishes the Constitution and federal law as the supreme law of the United States over any conflicting state law; authorizes the national debt (Congress may borrow money); public officials must take an oath to support the Constitution. Article VII Lists the requirements for ratification of the Constitution.

6. 2-6 Judicial Review One of the central concepts in federal Constitutional law is the notion that federal courts have the right to invalidate state or federal laws that are inconsistent with the U.S. Constitution. The U.S. Supreme Court is the ultimate judge

7. 2-7 Supremacy Clause and Preemption U.S. Constitution provides that valid federal laws (those made pursuant to Congress’s constitutional authority and that are constitutionally sound) are always supreme to any conflicting state law

8. 2-8 Application of Commerce Powers Congress has the express constitutional authority to regulate:  (1) channels of interstate commerce such as railways and highways,  (2) the instrumentalities of interstate commerce such as vehicles used in shipping,  (3) the articles moving in interstate commerce

9. 2-9 Necessary and Proper Clause Congress may also place conditions on the use of federal money in order to achieve some public policy objective. Congress generally cites the Necessary and Proper Clause as authorization to set conditions on the spending.

10. 2-10 First Amendment “Congress shall make no law”: That allows government encroachment in the areas of religion, press, speech, assembly, and petition of grievances.

11. 2-11 Fourth Amendment The U.S. Supreme Court has systematically applied a reasonableness test to define the limits of when the government may search without a warrant based on probable cause that criminal activity is possible.

12. 2-12 Fifth Amendment This amendment does not apply to corporate entities when the government is seeking certain business records, individual corporate officers and employees are entitled to Fifth Amendment protection when facing a criminal investigation.

13. 2-13 Fourteenth Amendment Perhaps the most important role of the Fourteenth Amendment is that it makes the Bill of Rights applicable to the states.

14. 2-14 learning outcome checklist 2 - 1 Explain the federal system in the context of the U.S. Constitution. 2 - 2 Describe the purpose and structure of the Constitution. 2 - 3 List the major provisions of the first three articles of the Constitution and explain the underlying assumptions of coequal branches of government. 2 - 4 Identify the powers of Congress that impact individuals and businesses.

15. 2-15 learning outcome checklist 2 - 5 Recognize the role of judicial review in interpreting the Constitution. 2 - 6 Understand the various applications and limits of congressional power under the Commerce Clause. 2 - 7 Apply Constitutional restrictions on state regulation of commerce in the business environment. 2 - 8 Explain how the tax and spend powers impact business.

16. 2-16 learning outcome checklist 2 - 9 List the major protections in the Constitution’s Bill of Rights and explain how they apply in the business environment. 2-10 Understand limits imposed on government overreaching by virtue of the Due Process Clause and Equal Protection Clause. 2 - 11 Explain the right of privacy that has been recognized by the U.S. Supreme Court and Congress.