Chapter 3 Business and the Constitution 2 functions of constitutions 1 Separation of powers 2 Prevent government from taking certain actions Formal constitutional changes only be accomplished through amendment process hard to employ so they are infrequent supreme court has become constitution s main amender through its many interpretations of constitutional provisions Judicial Review courts can declare actions of other government bodies unconstitutional many limitations b c judges are appointed and they don t want to creates feuds over constitutionality Limitations from Constitution s language judges adherence to stare decisis and tension between modern judicial review and democracy Federal law must meet 2 general tests in order to be constitutional Constitutional limitations on government regulatory power 1 Enumerated power must be based on an enumerated power of Congress Enumerated powers first limitation powers Congress can exercise decline on powers result of need for active federal regulation of economic and social life 2 Independent Checks must not collide with any independent checks Independent Checks limit state and federal power by placing independent checks in path of each main limitation congressional power State Regulatory Power Congress and state legislatures have concurrent powers both can make law within those areas unless congress preempts state regulation under supremacy clause Police power broad state power to regulate for public health safety morals and welfare Federal Regulatory Power 3 categories of action Congress may engage 1 Regulating the channels of interstate commerce 2 Regulating and protecting instrumentalities of interstate commerce 3 Regulating activities that substantially affect interstate commerce Burden on or Discrimination against Interstate Commerce Supreme Court hasn t adhered to one consistent test State laws may discriminate against interstate commerce when effect is to burden or hinder such commerce If they serve legitimate state interests and their local benefits burden they place on interstate commerce effects on interstate commerce can be constitutional Laws may unconstitutionally burden interstate commerce when they directly regulate that commerce i e when state price regulations require firms to post the prices at which they will sell within the state and to promise that they will not sell below those prices in other states Because they affect prices in other states regulations directly regulate interstate commerce and are usually unconstitutional Federal Preemption Federal Supremacy when state law conflicts with valid federal law federal law wins Generally occurs for one or more of the following reasons 1 conflict between state and federal measures impossible to follow both 2 Federal law specifically states it will preempt state regulation in certain areas 3 Federal regulation is pervasive 4 State regulation is obstacle to fulfilling purposes of federal law Independent Checks Even if regulation is within Congress s enumerated powers or a state s police power still unconstitutional if it collides with one of Constitution s independent checks First amendment gives everyone right to freedom of speech If there is a speech restriction must determine whether it is constitutional Takings Clause incorporated w in 14th Amendment applicable to all states recognizes government s power to take private property and limits that power by requiring that when property is subjected to a government taking Traditionally has come into play when government formally condemns land through its eminent domain powers 4 aspects of Takings Clause 1 Property protects other property interests besides land and interests in land Full scope is unclear has been held to cover personal property liens trade secrets and contract rights 2 Taking clause has a potentially broad scope 3 Public Use once a taking of property has occurred it is unconstitutional unless it is for public use 4 Just Compensation even if taking is for public use it is unconstitutional if property owner doesn t receive just compensation standards for determining just vary but basic test is the fair market value of the property Chapter 9 Intro to Contracts Law of Contracts separates promises from legally enforceable contracts Essence of a contract legally enforceable promise s Functions of a Contract ability to enter into agreements with legal backing create type of private law terms of the agreements we make that governs our relations Facilitate planning necessary in a modern industrialized society Contract common law now include broader imprecise standards i e good faith injustice reasonableness and Unconscionability Bilateral to accept offer and enter contract offeree must make promise promise in an exchange for a promise i e I will pay you 50 if you promise to mow my lawn General Rule requested by offer Acceptance can be implied or expressed Offerees who take action that objectively indicates agreement risk formation of the contract Unilateral promise in return for an act i e coffee house gives out frequent buyer cards that get stamped with each cup After the 10th stamp your 11th cup of coffee is free Courts may prevent offeror from revoking offer once offeree has begun performance achieved by holding either that a bilateral contract is created by the beginning of performance OR offeror s power to revoke is suspended for period of time reasonably necessary for offeree to complete act Valid contract enforceable in court meets Oftentimes rules under UCC end up creating contractual liability to accept offer and be entitled to the stated reward offerees must perform the requested act Auctions Auctioneers are seen as all requirements for a binding contract Unenforceable contract meets basic legal requirements may not be enforceable because of some other legal rule Voidable contract one or more parties have legal right to cancel their obligations under contract Fraud is a voidable contract Void contracts agreements that create no legal obligations no remedy can be given Minors can void contracts Express contract parties have directly stated terms of their contract orally or in writing at time contract was formed Not very usual express most are implied by facts at hand Implied contract surrounding facts and circumstances indicate that an agreement has been reached A contract is executed when all of parties have performed their contractual duties and it is executory until such duties have been performed
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