Business Law Exam Cheat Sheet
Key Concepts from Chapters 1, 2, and 4
Chapter 1 — Legal Foundations
Hierarchy of Law
U.S. Constitution > Federal statutes > State constitutions > State statutes > Local ordinances
> Administrative rules > Case law
• If laws conflict, the higher level wins.
Stare Decisis & Precedent
• Courts follow decisions from higher courts in the same jurisdiction.
• Ensures consistency.
• Use 'case on point' to support legal arguments.
Types of Law
• Substantive law = defines rights and duties (what the rules are).
• Procedural law = how to enforce rights and duties (how the process works).
Sources of Law
• Primary sources = actual laws (Constitution, statutes, regulations, case law).
• Secondary sources = commentaries that explain the law (not legally binding).
Chapter 2 — Business and the Constitution
Federalism
• Power is shared between federal and state governments.
• Supremacy Clause: federal law wins over conflicting state law.
Commerce Clause
• Congress can regulate anything that affects trade between states.
• Dormant Commerce Clause stops states from burdening interstate commerce.
Important Constitutional Clauses
• Privileges and Immunities: states can’t discriminate against out-of-staters in fundamental
rights.
• Full Faith and Credit: states must honor other states’ legal documents (contracts, court
judgments, marriages).
Due Process vs. Equal Protection
• Due Process (5th & 14th): fairness of government actions.
- Procedural: fair methods (notice, hearing)
- Substantive: fair laws/content
• Equal Protection (14th): laws must treat similar people the same.
, Levels of Scrutiny (Equal Protection)
• Strict scrutiny — race or fundamental rights. Law must be necessary for a compelling
interest.
• Intermediate scrutiny — gender or legitimacy. Law must be substantially related to an
important interest.
• Rational basis — economic/social. Law must be reasonably related to a legitimate interest.
Preemption
• When Congress takes over a subject, federal law overrides state law.
Chapter 4 — Courts & ADR
Jurisdiction
• Courts need subject-matter + personal jurisdiction.
• Federal courts can hear: federal question cases OR diversity of citizenship ($75,000+).
Venue and Standing
• Venue = best location for the trial (where defendant lives or event happened).
• Standing = must be personally affected to sue.
Litigation vs ADR
• Litigation = going to court. Time-consuming and expensive.
• ADR = faster and cheaper (negotiation, mediation, arbitration).
ADR Types
• Negotiation: parties talk it out.
• Mediation: neutral third party helps, but doesn’t decide.
• Arbitration: neutral third party decides the outcome. Often binding if agreed in contract.
Supreme Court Review
• Writ of certiorari = Supreme Court requests case record.
• Rule of Four = 4 justices must agree to hear a case.
Constitution — High-Value Topics to Know
🔹 Federalism
● Power is divided between federal and state governments.
● Supremacy Clause (Art. VI): If state and federal laws conflict, federal law wins.
🔹 Commerce Clause (Art. I, Sec. 8)
● Congress can regulate business between states (interstate commerce).
Key Concepts from Chapters 1, 2, and 4
Chapter 1 — Legal Foundations
Hierarchy of Law
U.S. Constitution > Federal statutes > State constitutions > State statutes > Local ordinances
> Administrative rules > Case law
• If laws conflict, the higher level wins.
Stare Decisis & Precedent
• Courts follow decisions from higher courts in the same jurisdiction.
• Ensures consistency.
• Use 'case on point' to support legal arguments.
Types of Law
• Substantive law = defines rights and duties (what the rules are).
• Procedural law = how to enforce rights and duties (how the process works).
Sources of Law
• Primary sources = actual laws (Constitution, statutes, regulations, case law).
• Secondary sources = commentaries that explain the law (not legally binding).
Chapter 2 — Business and the Constitution
Federalism
• Power is shared between federal and state governments.
• Supremacy Clause: federal law wins over conflicting state law.
Commerce Clause
• Congress can regulate anything that affects trade between states.
• Dormant Commerce Clause stops states from burdening interstate commerce.
Important Constitutional Clauses
• Privileges and Immunities: states can’t discriminate against out-of-staters in fundamental
rights.
• Full Faith and Credit: states must honor other states’ legal documents (contracts, court
judgments, marriages).
Due Process vs. Equal Protection
• Due Process (5th & 14th): fairness of government actions.
- Procedural: fair methods (notice, hearing)
- Substantive: fair laws/content
• Equal Protection (14th): laws must treat similar people the same.
, Levels of Scrutiny (Equal Protection)
• Strict scrutiny — race or fundamental rights. Law must be necessary for a compelling
interest.
• Intermediate scrutiny — gender or legitimacy. Law must be substantially related to an
important interest.
• Rational basis — economic/social. Law must be reasonably related to a legitimate interest.
Preemption
• When Congress takes over a subject, federal law overrides state law.
Chapter 4 — Courts & ADR
Jurisdiction
• Courts need subject-matter + personal jurisdiction.
• Federal courts can hear: federal question cases OR diversity of citizenship ($75,000+).
Venue and Standing
• Venue = best location for the trial (where defendant lives or event happened).
• Standing = must be personally affected to sue.
Litigation vs ADR
• Litigation = going to court. Time-consuming and expensive.
• ADR = faster and cheaper (negotiation, mediation, arbitration).
ADR Types
• Negotiation: parties talk it out.
• Mediation: neutral third party helps, but doesn’t decide.
• Arbitration: neutral third party decides the outcome. Often binding if agreed in contract.
Supreme Court Review
• Writ of certiorari = Supreme Court requests case record.
• Rule of Four = 4 justices must agree to hear a case.
Constitution — High-Value Topics to Know
🔹 Federalism
● Power is divided between federal and state governments.
● Supremacy Clause (Art. VI): If state and federal laws conflict, federal law wins.
🔹 Commerce Clause (Art. I, Sec. 8)
● Congress can regulate business between states (interstate commerce).
