ALD 2205 Legal Environment

of Business

Lecture 1 Introduction to Law

by
Prof. Nazrul Islam, PhD, MBA, LLB
Canadian University of Bangladesh

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OBJECTIVES
AFTER STUDYING THIS CHAPTER,
YOU SHOULD BE ABLE TO:

1. Define law
2. Characteristics of the definition
3. Legal systems of the world
LEARNING

4. Why should we know law?

5. Sources of English Law
6. Branches of Law
7. Sources of Business Law
8. Questions & Cases

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 Introduction to Law
 The word “law” is generally associated with the word
“rules.”
 McInnes, Kerr, and Van Duzer provide a simple
definition of law as “a rule that can be enforced by
the courts.”
 Similarly, Yates defines law as “the body of rules that
can be enforced by the courts or by other
government agencies.”
 DuPlessis and O’Byrne define law as “a set of rules
and principles intended to guide conduct in society,
primarily by protecting persons and their property;
facilitating personal and commercial interactions;
and providing mechanisms for dispute recognition.”
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 Introduction Law, Contd.,

Smyth, Soberman, Easson, and McGill describe

what law does, which is to “set standards of
behavior that are enforced by government, and
also by individuals and groups with the help of
government.”

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 Introduction to Law, Contd.,
So, law is that portion of established habit and
thought of mankind which has gained distinct
and formal recognition in the shape of uniform
rules backed by the authority and power of
Government.

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 Introduction to Law, Contd.,
Law denotes rules and principles to control
and regulate peoples behavior with a view
to securing justice, peaceful living and
social security.

Characteristics:
• set of rules and principles
• enforced by an authority
• to control peoples behavior

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 Introduction to Law, Contd.,
• Law means a ‘set of rules’
• Broadly, it may be defined as the rules
of conduct recognized and enforced by
the state to control and regulate the
conduct of people, to protect their
property and contractual rights with a
view to securing justice, peaceful living,
and social security.

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Introduction to Law, Contd.,
Since the value system of a society
keeps on changing, the law also keeps
changing according to the changing
requirements of the society.

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Presumption of Law

Every person is presumed to know the

law.

“Ignorantia juris non-excusat”

Ignorance of law is no excuse.

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Legal Systems of the World

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 Legal Systems of the World

Major legal systems:

1. CIVIL LAW
2. COMMON LAW
3. RELIGIOUS LAW

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 Legal systems of the world
CIVIL LAW (continental law)
- most widespread system, based on Roman Law (French,
German Scandinavian)
- Main source : enacted laws (codes/statutes) – passed by
legislature
- laws provide general principles and guidelines which are
applied in each case
COMMON LAW (Anglo-Saxon law)
- developed in England in the 11th century – UK, Ireland, USA
(except Louisiana), Canada (except Quebec), Australia, India,
Hong Kong
- Sources of common law:
a) ancient customs,
b) judicial precedents (previous court rulings)
c) enacted laws
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- does not provide general principles, but court rulings
 Legal systems of the world

RELIGIOUS LAW
- Main source: a religious system or document
- usually follows the the principles of either civil or
common
- Sharia in Islam; Halakha in Judaism
- Afghanistan, Saudi Arabia, Oman Libya …

LEGAL SYSTEMS – often combinations of two or more

systems Israel (common, civil, Jewish), Cyprus,
Louisiana (French civil + common - federal laws;
Scotland – civil + common)

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 Why should one know law

One should know the law to which he is

subject because ignorance of law is no
excuse.
For example, X caught traveling in a train
without ticket, he cannot plead or appeal
that he was not aware of the rule regarding
the purchase of ticket and therefore, he
may be excused.

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 Definition of Business Law
Business law is the branch of law which comprises
laws concerning trade, industry, and commerce.
It is a part of civil law which deals with the
rights and obligations of mercantile persons
arising out of mercantile transactions in respect
of mercantile property.
It is an ever growing branch of law with changing
circumstances of trade and commerce.

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 Definition of Business Law,
Contd.,

It broadly includes, the laws relating to

Contracts, Sale of Goods, Partnership,
Companies, Negotiable Instruments,
Insurance, Insolvency, Carriage of
Goods, and Arbitration.

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 Sources of English Law
1. Historical sources (e.g., common law – conduct
of common life, equity or justice, etc.)
2. Legal sources (e.g., judicial precedents,
legislation, custom, religion)
3. Subsidiary sources (e.g., law merchant, roman
law, etc.)
4. European Community sources (e.g., regulations
and decisions of EC, European State, etc.)

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 The United Kingdom
 The United Kingdom means Great Britain and
Northern Ireland; Great Britain means England,
Scotland and Wales
 The United Kingdom is a unitary state, but it does
not have a single body of law
 England, Scotland, Wales and Northern Ireland
have their own legal systems and courts

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 The Separation of Powers

 The great political philosopher Montesquieu coined

the phrase the ‘separation of powers’ in the 18th
century.
“Government should be set so that no man need be
afraid of another”
Three individual elements of the state:
1. The executive
2. The legislature and
3. The judiciary

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 Branches of Law

* International law
* Constitutional law
* Criminal law
* Civil law
* Mercantile or Business law, etc.

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 Sources of Business Law

1. English Mercantile Law

2. The Statute Law – various acts
passed in the parliament.
3. Judicial or Court decisions
4. Custom and Usages

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English Mercantile Law

Bangladeshi Mercantile Law is built on the

foundation of English Mercantile Law. In
case of ambiguity, our courts take recourse
to English Law.

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The Statute Law

 Statute is an Act of Parliament.

 Bulk of Bangladeshi Business Law is
Statute Law

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The Statute Laws

 The Indian Contact Act, 1872.

 The Negotiable Instruments Act, 1881.
 The Sale of Goods Act, 1930.
 The Indian Partnership Act, 1932.
 The Companies Act, 1956.
 The Arbitration and Conciliation Act, 1996.

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 Judicial or Court Decisions

Court Law is sometimes called case law.

Courts make laws in 3 ways:

1. Common law tradition
2. By interpreting statues (laws)
3. By judicial review

A judge cannot interpret a statute unless that

statute is involved in a dispute between 2
parties in a lawsuit before them.

The Supreme Court has final authority

regarding the constitutionality of all laws.
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 CUSTOMS & USAGES

 Custom or usage must be widely known,

 Certain and reasonable.
 Must not be opposed to any legislative
enactment.
 Where rule of law specially provides that the
law is subject to well recognized custom or
usage of trade, the latter may override the
statute law.

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Thank You

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