Constitutional Clauses and Business Law

Overview

Description

Three main clauses of the Constitution of the United States have an important effect on businesses. The commerce clause grants Congress the power to regulate interstate and foreign trade and commerce. The full faith and credit clause requires that each state recognize and respect the laws and court decisions of every other state. The supremacy clause makes federalism (which defines our system of a national and many state governments) work. It does so by establishing that where there is a conflict between a law of the national government and a law of a state government, the law of the national (federal) government prevails.

At A Glance

  • The U.S. Constitution contains a preamble and seven articles that outline the powers of the three branches of government, specify the relations between states, explain the process of amending the Constitution, establish the supremacy of the Constitution over all other laws, and state the process for ratification
  • The interstate commerce clause grants the federal government the power to regulate commerce. Congress has broad powers to regulate all commercial activity that involves more than one state.
  • The interstate commerce clause means that the federal government can regulate business if it crosses state lines. Therefore, businesses must be mindful not only of state laws, but of federal laws as well.
  • The full faith and credit clause states that businesses are entitled to the protection of their legal rights from state to state. If a business has legal rights in one jurisdiction, a system in which the legal authority of a court of law holds power, then it has legal rights in other jurisdictions as well.
  • The supremacy clause states that businesses must obey federal and state laws. When the federal and state laws conflict, the federal law is enforced and the state law then becomes void.