Academic level:CollegeNumber of pages: 2 (550 words)Spacing:double spaced
Number of sources:3
BUSINESS AND THE CONSTITUTIONDescription
BUSINESS AND THE CONSTITUTION
Read Chapter 5, write (500-750 words) summary of the Commerce Clause and its affect on business activity. Also include a discussion of the power of the states to regulate commerce and the so-called “balancing test” regarding such regulations.
Reference Jennings, M. (2015). Business: Its Ethical, Legal, and Global Environment. (10th Ed.) (CHAPTER 5)
Mason, OH: South-Western Cengage Learning ISBN: 9781285428260
The commerce clause and its effects on business activity
The “Commerce Clause” about the United States Constitution refers to article 1, section 8 clause 3. It gives the US Congress the power of regulating commerce with foreign nations, among those states and the tribe of India. The implication of the term “Commerce” in the US constitution include all forms of trade as well as social communication between citizen of different states although some people argue that the definition is unclear. “Interstate commerce” refers to the exchange of goods between nationals of different states. “Commerce with foreign nations” is trade between United States’ citizens and foreigners. Commerce with Indians is monetary exchange between the United States and American Indians.
The aim of the clause was to remove extreme rivalry between states with commercial advantage and those without due to their location away from a major harbor. One of the prominent effects of the commercial clause is its ability to eliminate economic battles among states with different economic advantages. The clause has also ensured that interstate commercial activity is free from local restrictions put in place by various states (Jones, 1991).
The Congress has always used commercial clause as a justification for its exercising power over the activities of states and their citizens. This action has often led to a continuous controversy about power balancing between the Congress and the federal government. The controversy is because historically, most people view the clause as being a barrier to the states’ ability to exercise its commerce regulatory authority. In addition, it has been pointed out that the commercial clause grants congestion authority.
Another important aspect of consideration with the commerce clause is the “dormant” commerce clause. This is a clause within the commerce clause, which restricts states from passing legislations tending to discriminate against state-to-state commerce. Of specific importance, in this area, is the prevention of state policies with protectionist nature that provide favor to the citizens of the state or its businesses at the expense of foreign nationals operating businesses within that state Jennings, 2014). As a summery, the commercial clause is a regulatory clause by character, which empowers the congress to regulate interstate commerce as well as foreign commerce.
The power to regulate and the balancing test
As mentioned earlier, under the commercial clause, the Congress regulates commerce to ensure that no subjecting of interstate commerce to restraints by any state. As such, the Congress may provide for the extent to which an interstate commerce becomes a subject regulation and hence state law. However, although constitutionally, the power of a state is limited, a state still enjoy some rights guaranteed by the tenth amendment such as the rights to regulate domestic commerce. However, the exercising of the right must be without burdening or interfering with interstate commerce. Failure to observe this limitation, the Congress intervenes to provide interstate commerce from unnecessary burden. Although a state cannot directly prohibit or regulate foreign or interstate commerce, the state may indirectly affect it though a reasonably exercising its police powers.
Although the Congress has powers to regulate both foreign and domestic commerce, its action or inaction paves the way for a state to act or not. Therefore, any economics issue passes under an examination to decide if the Congress has exclusive powers to control it. If the subject is of national character and importance, requiring the Congress action, then the Congress takes the regulation.
It is upon the courts to make a decision on the nature a law subject through balancing the between state interest and national interest. The decision depends on the nature of the issue. Where the subject is such that either the Congress or a state can regulate it, then the state controls except in case the Congress does so. In case the Congress has not acted but has shown its interest in regulating the whole field, the state has no power to act on the subject. In its decision as to whether a state has regulatory rights in a particular area, a court evaluates the aim of federal regulations and obligations imposed and the state legislation history among other necessary considerations. This way, the congress regulatory powers remain in balance with that of a state.
Jennings, M. M. (2014). Business: Its legal, ethical, and global environment. Nelson Education.
Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issue-contingent model. Academy of management review, 16(2), 366-395.
Frankfurter, F. (1964). The Commerce Clause Under Marshall, Taney and Waite (Vol. 16). Quadrangle Books.