Miller BLTE12e PPT ch01

Business Law Today
The Essentials: Text & Summarized Cases, 12e

Roger LeRoy Miller
Miller, Business Law Today, The Essentials: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Legal and Constitutional
Foundations of Business
Chapter 1
Chapter Outline
• 1-1 Sources of American Law
• 1-2 The Common Law
• 1-3 Classifications of Law
• 1-4 The Constitutional Powers of Government
• 1-5 Business and the Bill of Rights
• 1-6 Due Process, Equal Protection, and
Privacy
Learning Objectives
1. What are four primary sources of law in the United
States?
2. What is a precedent? When might a court depart
from precedent?
3. What are some important differences between civil
law and criminal law?
4. What constitutional clause gives the federal
government the power to regulate commercial
activities among the various states?
5. What is the Bill of Rights? What freedoms does the
First Amendment guarantee?
6. Where in the Constitution can the due process
clause be found?
Miller, Business Law Today, The Essentials: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights
Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1-1 Sources of American Law
• Primary source of law: A document

that establishes the law on a particular
issue, such as a constitution, a statute,
an administrative rule, or a court
decision.
• Secondary source of law: A publication
that summarizes of interprets the law,
such as a legal encyclopedia, a legal
treatise, or an article in a law review.
1-1a Constitutional Law
• Found in text and cases arising from

federal and state constitutions.
• U.S. Constitution is the supreme law of
the land.
1-1b Statutory Law
• Statutory law: Laws enacted by federal

and state legislatures
• Uniform Laws
• The Uniform Commercial Code (UCC)
1-1c Administrative Law
• Agency Creation
• Rulemaking: Rules, orders and decisions of
administrative agencies
• Legislative Rules: Under the Administrative
Procedure Act involves the following:
1. Notice of the proposed rulemaking. Published in
Federal Register.
2. A comment period. Time for interested parties to
comment in writing.
3. The final rule. Published in Federal Register.
• Interpretive Rules: Nonbinding, explain how an
agency interprets and intends to apply statutes
1-1d Case Law and Common Law
Doctrines
• Case law: The rules of law announced in
court decisions. Case law interprets
statutes, regulations, constitutional
provisions, and other case law.
1-2 The Common Law
• 1-2a 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.
• Precedent: Court decision that furnishes an
example involving identical or similar facts
1-2b Stare Decisis (slide 1 of 2)
• Stare decisis: A common law doctrine under

which judges are obligated to follow the
precedents established in prior decisions.
1. Court should not overturn its own precedents
2. Decisions made by higher court are binding on
lower courts
1-2b Stare Decisis (slide 2 of 2)
• Controlling Precedents
• Binding authority: Any source of law that a court
must follow when deciding a case.
• Departures from Precedent
• Case Example 1.4 Brown v. Board of Education of
Topeka (1954): The U.S. Supreme Court
overturned precedent when it held that ‘separate
but equal’ facilities was unconstitutional.
• When There is No Precedent
1-2c Equitable Remedies and
Courts of Equity (slide 1 of 2)
• Remedy: Means to enforce a right or

compensate for injury to that right.
• Remedies at law: In king’s courts, remedies
were restricted to damages in either money or
property.
• Remedies in Equity
• Based on justice and fair dealing a chancery court
does what is right: specific performance, injunction,
rescission.
• Plaintiffs (injured party initiating the lawsuit)
• Defendants (allegedly caused injury)
1-2c Equitable Remedies and
Courts of Equity (slide 2 of 2)
• The Merging of Law and Equity

• A court will normally only grant an equitable
remedy only when the remedy at law (monetary
damages) is inadequate.
Exhibit 1–1 Procedural Differences between an
Action at Law and an Action in Equity
Exhibit 1–1 Procedural Differences between an Action at Law and an

Action in Equity
PROCEDURE ACTION AT LAW ACTION IN EQUITY
Initiation of lawsuit By filing a complaint By filing a petition

Decision By jury or judge By judge (no jury)
Result Judgment Decree
Remedy Monetary damages or property Injunction, specific
performance,
or rescission
1-3 Classifications of Law
• Substantive law: Law that defines, describes,

regulates, and creates legal rights and
obligations.
• Procedural law: Law that establishes the
methods of enforcing the rights established by
substantive law.
1-3a Civil Law and Criminal Law
• Civil law: The branch of law dealing with the

definition and enforcement of all private or
public rights, as opposed to criminal matters.
• Criminal law: The branch of law that defines
and punishes the wrongful actions committed
against the public.
1-3b National and International
Law
• National law: Law that pertains to a
particular nation (as opposed to international
law).
• International law: The law that governs
relations among nations.
1-4 The Constitutional Powers of
Government
• 1-4a A Federal Form of Government
• Federal Powers
• Regulatory Powers of the States
• Sovereignty: Power of a state to do what is
necessary to govern itself.
• Police powers: State regulatory powers
1-4b The Separation of Powers
• Checks and balances: Each branch of

government exercises a check on the actions
of the others.
1. The legislative branch (Congress) can enact a law, but the
executive branch (the president) has the constitutional
authority to veto that law.
2. The executive branch is responsible for foreign affairs, but
treaties with foreign governments require the advice and
consent of the Senate.
3. Congress determines the jurisdiction of the federal courts,
and the president appoints federal judges, with the advice
and consent of the Senate. The judicial branch has the
power to hold actions of the other two branches
unconstitutional.
1-4c The Commerce Clause
• Commerce clause: Provision in Article 1,

Section 8, that gives Congress the power to
regulate interstate commerce
• The Expansion of National Powers under the
Commerce Clause
• The “Dormant” Commerce Clause
• Case Example 1.8 Comptroller of the Treasury of
Maryland v. Wynne (2015): Found the failure to
provide a full credit for income taxes paid to other
states was unconstitutional.
Classic Case 1.1
Heart of Atlanta Motel v. United States

(1964)
Owner of the HoA motel
unconstitutionally refused to rent to
blacks. The Civil Rights Act of 1964 did
not violate the interstate commerce
clause.
1-4d The Supremacy Clause
• Supremacy clause: Article VI of the

Constitution provides that Constitution, laws
and treaties of the United States are the
“supreme law of the land.”
• Preemption: A doctrine under which certain
federal laws preempt, or take precedence over,
conflicting state or local laws.
• Congressional Intent
• Case Example 1.9 Riegel v. Medtronic, Inc. (2008)
1-5 Business and the Bill of
Rights
 Bill of Rights: The first ten amendments to the U.S. Constitution
1. First Amendment – freedom of religion
2. Second Amendment – right to keep and bear arms
3. Third Amendment – prohibits lodging of soldiers in any house
without owner’s consent during peacetime
4. Fourth Amendment – unreasonable search and seizure
5. Fifth Amendment – rights to indictment by grand jury
6. Sixth Amendment – right to speedy and public trial
7. Seventh Amendment – right to trial by jury in civil cases
8. Eighth Amendment – prohibits excessive bail/fines and
cruel/unusual punishment
9. Ninth Amendment – establishes people have rights in addition to
those specified in Constitution
10. Tenth Amendment – establishes powers reserved for states
1-5a Limits on Federal and State
Governmental Actions
• Originally, Bill of Rights only applied to the
federal government.
• Later, the Bill of Rights was “incorporated”
and applied to the States as well.
• Some protections also apply to businesses.
1-5b The First Amendment—
Freedom of Speech (slide 1 of 3)
• Right to Free Speech is the basis for our

democratic government.
• Free speech also includes symbolic speech,
including gestures, movements, articles of
clothing.
• Reasonable Restrictions
• Content-Neutral Laws
• Case Example 1.11 Commonwealth v. Ora (2008)
• Laws That Restrict the Content of Speech
• Case Example 1.12 Morse v. Frederick (2007)
1-5b The First Amendment—
Freedom of Speech (slide 2 of 3)
• Corporate Political Speech

• Commercial Speech
• Unprotected Speech
Spotlight on Beer Labels: Case 1.3
• Bad Frog Brewery, Inc. v. New York

State Liquor Authority (1998)
• Did the State unconstitutionally restrict
commercial speech when it prohibited a
certain gesture (illustration) on beer
labels?
1-5c The First Amendment—
Freedom of Religion (slide 1 of 3)
First Amendment may not “establish” a

religion or prohibit the “free exercise” of
religion.
The Establishment Clause
• Establishment clause: Prohibits
government from establishing a state-
sponsored religion, or passing laws that
favor one over the other.
1-5c The First Amendment—
Freedom of Religion (slide 3 of 3)
• The Free Exercise Clause

• Free exercise clause: The provision in the
First Amendment that prohibits the government
from interfering with people’s religious practices or
forms of worship.
• Case Example 1.16 Holt v. Hobbs (2015): United States
Supreme Court decision on the free exercise clause and
how restrictions must be necessary
1-6 Due Process, Equal
Protection, and Privacy
• 1-6a Due Process
• Procedural Due Process
• Any government decision to take life, liberty, or
property must be fair.
• Requires: Notice and Fair Hearing
• Substantive Due Process
• Focuses on the content or the legislation (the
right itself)
1-6b Equal Protection
• Government must treat similarly situated

individuals (or businesses) in the same
manner. Courts apply different tests:
• Strict Scrutiny – fundamental rights
• Intermediate Scrutiny
• Applied in cases involving discrimination based on
gender or legitimacy
• The “Rational Basis” Test - economic rights
• Case Example 1.22 Maxwell’s Pic-Pac, Inc. v.
Dehner (2014)
1-6c Privacy Rights (slide 1 of 2)
• Constitutional Protection of Privacy

Rights
• Olmstead v. United States (1928)
• Griswold v. Connecticut (1965) found a right
to personal privacy implied in constitution,
expanded in Roe v. Wade (1973).
1-6c Privacy Rights (slide 2 of 2)
Exhibit 1–2 Federal Legislation Relating to Privacy

TITLE OF ACT PROVISIONS CONCERNING PRIVACY
Freedom of Information Act (1966) Provides that individuals have a right to access information about them collected
in government files.
Family Educational Rights and Limits access to computer-stored records of education-related evaluations and
Privacy Act (1974) grades in private and public colleges and universities.
Privacy Act (1974) Protects the privacy of individuals about whom the federal government has
information. Regulates agencies’ use and disclosure of data, and gives individuals
access to and a means to correct inaccuracies.
Electronic Communications Privacy Prohibits the interception of information communicated by electronic means.
Act (1986)
Driver’s Privacy Protection Act (1994) Prevents states from disclosing or selling a driver’s personal information without
the driver’s consent.
Health Insurance Portability and Requires health-care providers and health-care plans to inform patients of their
Accountability Act (1996) privacy rights and of how their personal medical information may be used. States
that medical records may not be used for purposes unrelated to health care or
disclosed without permission.
Financial Services Modernization Act Prohibits the disclosure of nonpublic personal information about a consumer to an
(Gramm-Leach-Bliley Act) (1999) unaffiliated third party unless strict disclosure and opt-out requirements are met.
1-7b The USA Patriot Act
• Passed by Congress in the wake of the

terrorist attacks of September 11, 2001, and
then reauthorized twice (2006) and (2011)
Appendix to Chapter 1 (slide 1 of 3)
Finding and Analyzing the Law

Finding Statutory and Administrative
Law
• United States Code (U.S.C.)
• State Codes
• Administrative Rules
Finding Case Law

• State Court Decisions: most state trial court
decisions are not printed and published
• Regional Reporters
• Case Citations
• Federal Court Decisions
• Unpublished Opinions
• Old Cases
Reading and Understanding Case Law

Case Titles and Terminology
• Parties to Lawsuits
• Judges and Justices
• Decisions and Opinions
A Sample Court Case
Review of the Sample Court Case

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Business Law Today

The Essentials: Text & Summarized Cases, 12e

• Primary source of law: A document

• Found in text and cases arising from

• Statutory law: Laws enacted by federal

• 1-2a Early English Courts

• Stare decisis: A common law doctrine under

• Remedy: Means to enforce a right or

• The Merging of Law and Equity

Exhibit 1–1 Procedural Differences between an Action at Law and an

Initiation of lawsuit By filing a complaint By filing a petition

• Substantive law: Law that defines, describes,

• Civil law: The branch of law dealing with the

• Checks and balances: Each branch of

• Commerce clause: Provision in Article 1,

Heart of Atlanta Motel v. United States

• Supremacy clause: Article VI of the

• Right to Free Speech is the basis for our

• Corporate Political Speech

• Bad Frog Brewery, Inc. v. New York

First Amendment may not “establish” a

• The Free Exercise Clause

• Government must treat similarly situated

• Constitutional Protection of Privacy

Exhibit 1–2 Federal Legislation Relating to Privacy

• Passed by Congress in the wake of the

Finding and Analyzing the Law

Finding Case Law

Reading and Understanding Case Law

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