Legal Environment of Business Study Notes

VCU AP Legal Environment of Business (BUSN 323) January 22, 2026

Professor Dan Erhard

Housekeeping

  • Communications
    • Include TA Dan Baum on emails: Baumd@vcu.edu
  • Quizzes and Assessments
    • Reminder: Quiz on syllabus due January 29
    • Extra-credit opportunity: 2 points added to syllabus quiz for 5 students who added class after Week 1
  • Introduction Exercise
    • Each student to share their name and something personal for better acquaintance.

Goals Today

  • Discuss the U.S. Constitution as a legal framework

U.S. Constitution: History and Structure

  • Written in 1787
  • Ratified in 1788
  • Composed of:
    • Preamble
    • 7 Articles
    • 27 Amendments
    • Bill of Rights: The first 10 Amendments ratified in 1791
    • The most recent amendment ratified in 1992 concerning congressional pay.
    • Note: Proposed in 1789.

U.S. Constitution: Preamble

  • Text:
    • "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and for our Posterity, do ordain and establish this Constitution for the United States of America."

Article I – Congress

  • Contains 10 Sections:
    • Section 1: "All legislative Powers herein granted shall be vested in a Congress…"
    • Section 2: "The House of Representatives shall be composed of Members chosen every second year by the People of the several States…"
    • Section 3: "The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof, for six years…" (Amended 125 years later.)

Article I, Section 8: Limits Congressional Power

  • Text:
    • "Congress shall have Power To lay and collect Taxes… to pay the Debts and provide for the common Defence and general Welfare of the United States…"
    • "To regulate Commerce with foreign Nations, and among the several States…"
    • "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

Article II – The President

  • Contains 4 Sections:
    • Section 1, Clause 1: "The executive Power shall be vested in a President of the United States…"
    • Section 2, Clause 1: "The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States."
    • Clause 2: "He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties…"

Article III – The Judiciary

  • Contains 3 Sections:
    • Section 1: "The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain…"

Article IV – States

  • Contains 4 Sections:
    • Section 1: "Full Faith and Credit shall be given in each State to the public Acts, Records and judicial Proceedings of other States."
    • Section 2: "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States."
    • Section 3: "New States may be admitted by the Congress…"
    • Section 4: "The United States shall guarantee to every State in this Union a Republican Form of Government… and shall protect each of them against Invasion; on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence."
    • Defining Republican Form of Government: The right of the people to choose their own officers for governmental administration and pass their own laws through representative bodies.

Historical Note: The Senate's Election

  • Article I, Section 3: Originally, Senators were chosen by the Legislature of each State, instead of being elected directly by the public.
  • Amendment XVII: Senators for each state to be "elected by the people thereof." Passed in 1912, ratified in 1913.
  • Discussion Points: Implications of the change in method of electing Senators?

Remaining Articles

  • Article V: Amendments
  • Article VI: Constitution's supremacy
    • Constitution and all constitutional laws/treaties are "the supreme Law of the Land…" (Supremacy Clause).
  • Article VII: Ratification
  • Amendments: 27 in the Constitution's history, critical but not the focus of current discussions.

Discussion Questions

  • Observations about Structure: What do you notice about the Constitution's structure?
  • Significance of Structure: Why does the structure matter?
  • Discontent with the Constitution: What if you disagree with what the Constitution states?

Structure (Order and Size)

  • Observation: The Constitution begins with "We The People" indicating government exists to serve citizens.
  • Structure Indication: Article I's establishment of Congress highlights its role as the 'First Branch' of government.

Structure (Relationships)

  • Federalism: The partnership between states and federal government, where certain powers are delegated to the latter while others are reserved for the states.
  • 10th Amendment: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Structure (Amendments Contemplated)

  • Article V: Process for proposing amendments, either by Congress or by state legislatures.
  • Bill of Rights: Ratified only three years post-Constitution, adds further declaratory and restrictive clauses to prevent misconstruction or abuse of power.

Conflicts of Law

  • Federal vs. State Law:
    • What occurs if state law conflicts with the Constitution?
    • What if it conflicts with federal law?
  • Article VI, Clause 2: The Supremacy Clause ensuring Constitution and federal laws are the supreme law.
    • Doctrine of Preemption:
    • Express Preemption: Clear preemption by federal law.
    • Implied Preemption: When Congress occupies the legislative field comprehensively leaving no room for state regulation.
    • Direct Conflict: State laws that frustrate federal objectives are invalid.

Inter-branch Power Disputes

  • Presidential Legislative Powers: Can the President exercise legislative powers?
  • Historical Context: Proliferation of executive orders in the last 20 years.
  • Limits of Congress: Are there limits on Congress to constrain the President's executive authority?

Separation of Powers

  • The Constitution manages interactions among the three branches:
    • Article I: Legislative powers vested in a Congress.
    • Article II: Executive powers vested in a President.
    • Article III: Judicial powers vested in a Supreme Court and inferior courts established by Congress.

Judicial Review (Marbury v. Madison 1803)

  • Text: "It is emphatically the province and duty of the judicial department to say what the law is…"
  • Interpretation of Conflict: Courts must reconcile conflicts between law and the Constitution; laws contrary to the Constitution are void.

Application of Separation of Powers in Current Events

  • Case example: Presidential removal power regarding Federal Reserve Governor Lisa Cook.
  • Context: Seila Law v. Consumer Financial Protection Bureau (2020) concerning independence of agencies and presidential powers.

Anticipated Actions by Founding Fathers

  • Article I, Section 5 grants each House the authority to set rules and punish disorderly behavior.
  • Article II, Section 4 specifics grounds for removal (Impeachment, Treason, Bribery, etc.).

Recent Case Study: George Santos

  • Expulsion from Congress:
    • Vote: 311-114 to expel Santos due to multiple financial misdeeds.
    • Accusations: Misusing campaign funds; funding sources contentious.
    • Santos questioned Congress's rights, advocating for public decision at the ballot box.

Discussion Questions regarding Santos’ case

  • Did the House violate Constitutional provisions during the expulsion?
  • What could be the implications of expelling without conviction?
  • Personal position: What would you have done and why?

Judicial Engagement: Griswold v. Connecticut (1965)

  • Facts: Connecticut law prohibiting dissemination of birth control information; resulting legal implications for Planned Parenthood officials.
  • Issue: Is there a fundamental right to privacy violating the 19th-century law?

Rationale in Griswold

  • The law was deemed to violate an inherent right of privacy, arguing previous rulings indicate rights create privacy zones.
  • Cited rights: First, Third, Fourth, Fifth Amendment protections.

Dissenting Opinion in Griswold

  • Disputes the decision's foundations, asserting personal opinions on contraceptive morality.
  • Emphasizes the judiciary must not supplant state rights unless fundamental violations occur.

Kassel v. Consolidated Freightways (1981)

  • Context: Iowa statute prohibiting large trucks; questioned if state law burdens interstate commerce without federal law existence.
  • Outcome: Court ruled Iowa law infringed too heavily on interstate commerce.
  • Significance: States cannot impose regulations that dramatically hinders commerce, even without federal oversight.

National Federation of Independent Businesses v. Department of Labor, OSHA (2022)

  • Situation: OSHA mandated vaccination or masking/testing for large employers during COVID-19 pandemic.
  • Authority Challenge: OSHA's constitutionality of this mandated power; do they have the authority to regulate broadly without explicit Congressional backing?

Court Decision in NFIB v. OSHA

  • The Court ruled OSHA lacked sufficient authority, supporting the “Major Questions Doctrine”.
  • Emphasizes that administrative agencies' powers must be distinctly authorized by Congress for significant issues.

Introduction in Day-to-Day Relevance

  • Explores how dynamic the world finance, technology, and politics are compared to the slow adaptations of government frameworks like the Constitution.
    • Current Environment: Calls to action for Congressional adjustments often go unmet, leading to executive actions.

SCOTUS and Tariff Discussions

  • Current debates about presidential authority to enact tariffs under existing executive powers.
  • Legal Basis: IEEPA claimed as framework for emergency tariffs - questions about executive overreach arise.

Tariff Definition and Importance

  • Definition: A tariff is a tax levied on imported goods, influencing market prices.
  • Reported Revenue: U.S. received over $236 billion through November 2025 from tariffs.

Impact of Tariffs

  • Examination of how tariffs disrupt supply chains, affect pricing, monetary policy, and market competition, particularly in the auto industry.

Legal Examination of Separation Powers in Tariffs

  • EEPA’s Legislative Power: Questions surrounding the President's limitation in imposing tariffs without distinct Congressional permission.
  • Judicial questioning surrounding executive authority interpretation of statutory language.

Major Questions Doctrine Importance

  • Leading to better clarity on administrative power limits regarding significant political matters within the agency's scope.

Hypothetical Case Study: FDA and Tobacco Regulation

  • Example scenario posed to examine the President's role against potential industry consequences from health-related regulations proposed by federal agencies.
  • Discussion of intra-agency authority limits and executive action balancing with legislative intent.

Summary Points on Separation of Powers

  • Highlights the inevitable tensions among governmental branches shaping policy and constitutional enforcement.
  • Concludes with outlined implications on various topical issues such as tobacco regulation, administrative actions, and executive decision-making.

Administrative Agencies Overview

  • Analyzed in the context of powers vested in the Executive Branch without explicit references within the Constitution.
  • Discussed agency limitations and legislative scopes governing their formation and operation.

Types and Structure of Administrative Agencies

  • Executive agencies with single leadership vs. independent bodies consisting of multiple members; discussed roles and effects of each type.

Constraints on Agency Actions

  • Legislative oversight and executive interventions are necessary checks to agency authority.

Judicial Review of Agency Conduct

  • Discussed parameters and circumstances under which the actions and inactions of agencies may be challenged in court.

Case Studies of Agency Powers

  • Detailed voting, inspection, and regulatory actions unique to administrative agencies, particularly highlighting pivotal cases that expose constitutional boundaries and interpretations.

Appendix

  • Note: These materials will not be on the exam.