Interstate Commerce Clause Report


Background Facts You Need To Know: TLG has a new client, Clean-n-Shine (Clean), a commercial cleaning company incorporated and located in Maryland, but doing business in all Mid-Atlantic states. Clean uses its line of cleaning products and also sells its products to other businesses via the internet.

Recently, the Delaware legislature enacted a law banning all sales and importation, until further notice, of Clean’s Shine-It floor cleaner in Delaware.  It was discovered that one of the ingredients in Shine-It is contaminated and causes a quick-growing mold to spread on surfaces to which it is applied. The mold can be toxic to humans and can cause damage to floors.

Clean wants to expand its products to sell Shine-It in Delaware.  If Clean can sell Shine-IT in Delaware, it will increase its income and profits.  Clean, therefore, wants to challenge the new law as unconstitutional, and it has consulted TLG for advice.   

Winnie and Ralph ask you to prepare a summary report of relevant constitutional law for a meeting with them and Clean’s owners.


Report You Need to Prepare: Prepare a report that addresses the following three questions:

1. Analyze and explain whether the Delaware restriction on the sale of Shine-It violates the Interstate Commerce Clause.

Fully explain your conclusions based on constitutional law.

6/15/2021 Introduction to Course – BMGT 380 6980 Business Law I (2215) PLEASE NOTE: The final project in this course is due Saturday of week 8. BMGT 380: Introduction to Business Law This course is designed to enhance your understanding of various legal principles and issues that affect business practices and decisions and their application in business environments. The focus of the course is to identify and examine legal risk and liabilities in operating a business and explore how to minimize and resolve problems associated with risk and liabilities The BMGT 380 course is comprised of five (5) legal themes, including an overview of the legal system, business organizational structures, torts, and product liability, contracts, and agency. _________________________________________________________________________ The BMGT 380 course focuses on the story of a company, The Largo Group (TLG), a business consulting and research company based in Maryland that advises and conducts research for potential owners considering start-up businesses and for owners operating new businesses. You and your classmates will be active participants throughout the course in the story acting as consultantemployees of TLG assigned to complete consulting-related and/or research assignments and projects for TLG clients. Your TLG assignments begin with an overview of the legal system which is an important background for business owners. Other TLG assignments will concentrate on four (4) categories of business law principles that present significant risks and liabilities for start-up businesses: (1) tort law, including negligence, premises liability, and product liability, (2) contract law, including the Uniform Commercial Code sales and lease contracts, and econtracts, (3) agency law, and (4) business organizational structures, sometimes called business forms. Starting a new business requires extensive preparation, market research, and examination of the legal environment of business. The success of start-up and new businesses requires identifying the nature and scope of legal risks and liabilities that affect business practices and decisions. Exploring ways to prevent, minimize and resolve risks and liabilities is also important in forming and operating a business. The primary focus for the 380 course and assignments for TLG clients will center on the question: How can a business owner identify and minimize legal risks and liabilities associated with operating a business? ____________________________________________________________ Background: The Largo Group (TLG) After graduating with a B.S. in Management, you have been working for TLG for three years as an assistant consultant for Winnie James and Ralph Anders, senior consultants who serve clients in a variety of industries. Your work involves interviewing and meeting with clients, conducting research, writing office memorandums, making recommendations for clients, meeting with Winnie and Ralph with attorney-consultants, and coordinating and/or leading discussions for TLG’s in-house professional development seminars for its consultants. 1/4 6/15/2021 Introduction to Course – BMGT 380 6980 Business Law I (2215) Background: Clean-N-Shine Connor, Ali, Madison and Sam are all successful business owners who are friends or professional acquaintances in the business community. Connor has been the project manager for ten years for a construction company owned by a general contractor. Ali has been the Director of Marketing for a Mid-Atlantic-based carpet cleaning company with franchises on the East Coast. Madison owns a mid-sized, successful residential remodeling business. Sam owns a residential cleaning service business. The four recently attended a Chamber of Commerce presentation about “green” businesses. This spurred their interest and they went to dinner following the Chamber event to discuss possible business opportunities. After several meetings, they decided to start a business together. The group decided that a commercial cleaning business would be a good fit for their professional experiences, skills, and interests. They agreed to pursue the possibility of launching a Maryland-based “green” commercial cleaning service business that they would like to name Clean-N-Shine (“Clean”). They are committed to operating the new business as an environmentally responsible company using only chemical-free cleaning products in the new business. The four met several times with a business consultant to complete an analysis of market trends and demands in the cleaning industry and confirm whether Clean would likely be a viable business. The market analysis showed an increased demand and need for environmentally responsible cleaning businesses in the region. Consequently, the group decided to move forward with their idea to establish and market Clean as a green business. The group plans to purchase cleaning supplies from Environmental Pro, Inc. (EPI), a mid-sized manufacturer incorporated in a nearby state, that produces chemical-free environmentally-friendly cleaning products. The four are familiar with the corporation as each has purchased EPI products for their respective current businesses. The four friends intend to resell certain EPI products directly to Clean clients. The Clean group plans to market and advertise their services and re-sell EPI products through print, television, radio media, and via internet sales. Clean will be headquartered in a local shopping center. Clean headquarters will include private business management offices, a reception area, and conference meeting and planning space to which potential and existing customers will be invited to discuss proposals for cleaning jobs, cleaning products, and to complete contracts for sales and services. The business space also will be open to the public to collect information and inquire about Clean services, examine cleaning supply displays, and view photos and exhibits from ongoing and past commercial jobs. The potential Cleaner owners recently attended a start up business seminar sponsored by the local chapter of the Small Business Administration. Following the seminar, the owners began to define the nature and scope of the work necessary to prepare a plan for the start-up business. They realize this process requires time, thoughtful analysis, and clear guidelines. They also recognize the need for professional business consultants, such as TLG, to guide their startup for Clean. Consequently, the four have hired TLG to advise and guide them through the start-up process for Clean. Clean Owner Profiles: Connor: He wants an initial 30%-40% interest in Clean but wants to limit his future capital commitment until he is certain the business is operating smoothly and profitably. He does, however, want the option to acquire others’ interests if they die or leave the business for any reason. He also wants to take out 2/4 6/15/2021 Introduction to Course – BMGT 380 6980 Business Law I (2215) money from the business, in the form of salary, benefits, expenses, and/ dividends, as appropriate, as soon as Clean has a healthy net profit margin. Connor is most concerned about liability, and although he trusts the other owners as “straight shooters” and successful business persons, he is uneasy about working with a group of investors with whom he has no previous business connections. He wants to limit his liability in the business to no more than his capital contribution, and prefers complete protection. If possible, he wants Key Man Insurance for the owners so all will have protection if one owner can no longer contribute to business for any reason. Connor wants a managerial position so he can make decisions for day-to-day operations. He believes he is the best person to run the business as he currently owns a maid service and understands how to run a successful cleaning service business. Ali: Ali wants a 25% interest and prefers to minimize additional investments to protect her cash assets needed for her other businesses. Her main goal is to realize a return on her investment as quickly as possible. Ali wants to minimize her personal liability and protect her interests in the event of bankruptcy or death of any of the other owners. Ail wants to participate in long-term business decisions, and in major decisions about spending and organizational commitments, but she does not want to be involved in day-to-day business activities. She favors hiring a general manager to run the business, preferably one with commercial cleaning experience. Madison: Madison initially wants to invest up to 40% and is willing to invest another 5% because she knows start-up businesses often need more capital. She favors a larger, rather than a smaller, stake in the business. She wants to take out as much money as possible from the business, as soon as financially possible. Madison wants to minimize personal liability, as well as liability for the business. She realizes the future of the business is uncertain and she wants maximum protection again all pitfalls. Madison is willing to be involved in day-to-day business operations and has the time to do so because her other business is running smoothly with competent managers. She wants to play a key role, along with the other owners, in establishing the structure, business environment, and culture for Clean. However, she believes that a skilled general manager with commercial cleaning experience would be optimal for the business. Sam: Sam is willing to commit to an investment of 51% interest in Clean, but is agreeable to a lesser interest. 3/4 6/15/2021 Introduction to Course – BMGT 380 6980 Business Law I (2215) Sam wants to minimize his personal liability and prefers to limit it to his capital investment but is willing to negotiate. With a maximum interest of 51%, Sam wants complete control over business operations; even with a lesser interest, he wants a strong managerial position. Sam wants all owners with a minority interest to be silent in day-to-day management of Clean. 4/4 6/13/2021 Winning Discussion Responses – BMGT 380 6980 Business Law I (2215) Following are requirements and examples of “winning”, proper assignment responses. Requirements: Substantive Critical Thinking Discussion Assignments Written discussion assignments must: be in paragraph format, correct and clear in grammar, syntax, spelling, punctuation; must respond directly to the question(s) asked and respond to all parts of the assignment; reflect substantive, thoughtful, in depth critical thinking; offer specific, clear, relevant examples as needed to clarify and justify positions; use APA citation style for attributions to print or electronic resources used in analyses. Discussion responses typically require that you take a clear position on an issue, then explain, justify and support your position logically, comprehensively and in depth. Examples of Written Discussion Assignment Analyses – re: law and ethics Hypothetical Scenario: You are the CEO of Luck, Inc., a mid-size US home goods manufacturing corporation that earned profits of $8 million in 2017, an increase of 20% over 2016 profits. $4 million of the increased profits will be invested in the company to cover increased operating costs for Luck in 2018. You must decide what to do with the remaining $4 million and make a recommendation to the Board of Directors. You have 2 choices, and must choose one option below; the $4 million dollars cannot be divided between both options. 1. use the increased profits to develop a new and comprehensive corporate social responsibility (CSR) program, or 2. invest the increased profits in new research and development for the company A. Which option would you recommend to the Board and why? Explain, justify your answer comprehensively. B. Discuss the legal implications, if any, of establishing a “green” CSR program. Explain, justify your answer comprehensively. Superior Example: Substantive, justified, comprehensive, in depth analysis using APA citation style: I believe that CSR programs can be profitable for contemporary businesses, and for Luck, Inc., thus I would recommend that Luck invest the $4 million in a CSR program. In the book, Corporate Social Responsibility Does Not Pay, the author makes a strong argument that CSR is not profitable for most companies. (Nelling, 2009). However, I believe that if Luck carefully researches, plans and implements a CSR program that is closely identified with its products, the CSR program will enhance its public image and brand recognition and therefore, increase profitability. Specifically, I recommend that Luck develop and implement a “green” program. Society and consumers are increasingly focused on solutions to environmental problems and participating in green programs. More specifically, in her article, “Going Green in Today’s Marketplace”, author Nora Black 1/3 6/13/2021 Winning Discussion Responses – BMGT 380 6980 Business Law I (2215) states, “ … green building is forecast to grow from a $7.4 billion market last year to $38 billion by 2019.” (Black, 2017, p.10). These figures are a great incentive for companies in the home goods market to invest dollars now to become a part of a new and growing market that seems to be of benefit not only to society but to the bottom line of any forwarding thinking business. A green CSR program for Luck could include a corporate program to sponsor and donate funds to reforesting programs that replace depleted resources, and donate in-store wood scraps to schools and senior centers. These components of the Luck CSR program are directly related to its product and thus, feasible and closely associated and recognizable with its public image and brand. The CSR program could also include company recycling, in-store energy conservation, reduction of hazardous waste materials by using responsible, safe disposal processes, and use of sustainable products as much as possible. Also, Luck could increase public awareness of its CSR programs by sponsoring green education programs in the community and local schools, and sponsoring semiannual community “clean-up and recycle” programs. Since many companies are going green and they use that information in their advertising and promotion it has become a deciding factor that many environmentally conscious customers take into account when choosing where to spend their money. According to Will Beck, in his article “Do Businesses Need to be Green?” there has been an upswing in customer demand for green and environmentally friendly products and services so that signs point to a profitable future for those companies willing to responsibly expend funds now via CSR programs to increase profits later. (Beck, 2012, p.7) Also, a green program likely would exceed Luck’s compliance with any existing state and federal environmental regulations, and possibly position Luck to easily comply with any future more extensive state and federal environmental regulations. For example, EPA regulations are increasing more rapidly than regulations for any other federal regulatory agency, with business regulations increasing at 10-12% annually at both the state and federal levels. (Barton, 2012, p. 33). Thus, Luck could be well-positioned to comply with future regulations without undue additional cost. Reference List: Beck…….etc. Black….., etc Poor Example: Analysis that lacks substance, justification and support, depth, and is not comprehensive – would not earn points: As our readings told us, CSR programs are not profitable for businesses, so it does not make sense to invest the $4 million in a CSR program. Most consumers are not very aware of a company’s CSR programs and it could require a big investment to advertise the CSR program to increase awareness and so a CSR program would not be cost effective. Luck should invest the $4 million in research and development for new products. This will increase business, and thus profitability. CSR programs are not illegal. Requirements: Substantive Interactive Discussion with Classmates Discussion responses to others should: provides additional information to add value to the discussion 2/3 6/13/2021 Winning Discussion Responses – BMGT 380 6980 Business Law I (2215) contain citations or an explanation of your source of knowledge from the text or your professional/personal experience expand on, or clarify, previous comments from others support your position with concepts, or an explanation of your source of knowledge from the text or your professional/personal experience explain specific reasons for agreeing/disagreeing with another’s posting in a persuasive, respective fashion promote further interactive discussion by asking provocative questions Examples of interactive discussion with classmates Hypothetical Scenario: Review the memorandum, “International vs. Domestic Hiring and Recruitment” that discusses Company A’s new international hiring and recruitment policy that replaces its domestic hiring and recruitment policy. Do you believe the new international hiring and recruitment policy is beneficial or detrimental to Company A? Why or why not? Superior Example: Substantive, comprehensive, justified Interactive response that promotes further discussion: Hi, Susie and Classmates: You clearly explained why you believe Company A’s international hiring and recruitment policy is detrimental to the company. However, I disagree with this position. Yes, A’s new hiring policy is more costly in the short term, but I believe it is positive for the company and, in the long term, financially efficient. The company I work for is not an international one, but 5 years ago it changed from a regional recruitment policy to a national one. This enabled the company to cast the net more widely to hire more qualified, experienced personnel which saved on training costs. Also, according to a 2016 internal study, employee retention in my company increased 25% under the new national hiring policy as my company was able to hire employees who were a better fit in skills, expertise, professional goals and work style. Hiring and training are costly for any company, so increasing employee retention is inevitably a cost savings for businesses. I believe similar beneficial changes in reduced training costs and savings resulting from employee retention could apply to A’s new international hiring policy. What do you think? Poor Example: Inadequate response that is not substantive, comprehensive or justified, and does not promote further discussion – would not earn points: Hi, Susie: I agree completely with your response and think A’s hiring policy is too expensive. A Board of Directors would not agree to this more expensive policy, and if they did, it would be unethical. 3/3 6/15/2021 BMGT 380 6980 Business Law I (2215) – BMGT 380 6980 Business Law I (2215) BMGT 380 6980 Business Law I (2215) How to Support Arguments & Positions Supporting positions and conclusions Introduction Many papers that you write in college will require you to take a position or make a conclusion. You must take a position on the subject you are discussing and support that position with supporting evidence. It’s important that you use the right kind of support, that you use it effectively, and that you have an appropriate amount of it. If your professor has told you that you need more analysis, suggested that yo…

Fully explain your conclusions based on constitutional law 

3. Discuss why it is important for businesses to understand the impact of the Interstate Commerce Clause and state police powers.

Explanation & Answer length: 4 pages

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