Introduction to business law

Unit 1

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 1: What is Law ?
• The law is a set of legal rules that governs the way
members of a society act towards one another.

• Law is “ that portion of the 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 the Government”.
• – Woodrow Wilson

• Laws are required in society to regulate the behaviour of

the individual, to correspond with what is acceptable to the
majority of individuals,

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 NEED FOR LAW

• Without law, life and business would become a matter of

survival, not only of the fittest but also of the most
ruthless.

• Laws are required in society to regulate the behaviour of

the individual, to correspond with what is acceptable to the
majority of individuals,

• Law is the potential tool of social change. In fact law and

society are complementary. No society can exist without
law. It is essential for up keeping of peace in the society.
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 BRANCHES OF LAW
• CONSTITUTIONAL LAW
• ADMINISTRATIVE LAW
• CRIMINAL LAW
• CIVIL LAW,
• COMMERCIAL LAW

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 CONSTITUTIONAL LAW
 Is the law which regulates the structure of the
principal organs of the government and their
relationships to one another and determines
their principal functions.

 The rules consist both of legal rules and of

usages, commonly called conventions, which
without being enacted are accepted as binding
by all concerned with the government

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 ADMINISTRATIVE LAW
• It is the law that governs the executive branch
of the government.
• It is as old as the executive.

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 CRIMINAL LAWS
• Are the laws which wrong doers are punished.

• At the same time, civil laws are those laws

with which the private rights of an individual
are enforced

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 MERCANTILE LAWS
It deals with the rights and obligations of
Commercial persons emerging from
commercial transactions in respect of
commercial property.

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 SCOPE OF BUSINESS LAW
The scope of the business law has enormously widened
due to the increasing complexities of the modern
business world.

It usually covers topics of

contracts, bailment, Agency, sale of
goods, partnerships, companies, negotiable
instruments, insurance, pollution control etc.

These and other topics are covered by legislations

enacted by Central and State Governments.
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 SOURCES OF BUSINESS LAW
1. Statutory law
2. Case law
3. Natural law
4. English mercantile law
5. Customs and usage

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 Legal Positivism
• Law is the supreme will of the State that
applies only to the citizens of that nation at
that time.

• Law, and therefore rights and ethics, are not

universal. The morality of a law, or whether
the law is “bad or good,” is irrelevant.

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 Legal Realism
Jurisprudence that holds law is not simply a
result of the written law, but a product of the
views of judicial decision makers, as well as
social,economic, and contextual influences.

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 Stare Decisis
Stare decisis is a Latin phrase meaning “to
stand on decided cases.”
– Makes the law stable and predictable.
– Increases judicial efficiency by relieving courts of
having to reinvent legal principles for each case
brought before them.

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 Stare Decisis and Precedent
• Stare decisis is “judge made law” based on
precedent.

• Precedents are judicial decisions that give rise to

legal principles that can be applied in future cases
based upon similar facts.

• Precedents and other forms of positive law, such as

statutes, constitutions, and regulations, are referred
to as binding authority and must be followed.

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 Cases of “First Impression”
In cases of “first impression” where there is no
precedent, the court may refer to
– positive law,
– public policy, and
– widely held social values in order to craft the best
new precedent.

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 Legal Reasoning
• Method used by judges to reach a decision.
• Many courts and attorneys frame decisions
and briefs using the IRAC format:
Issue, Rule, Application (Analysis), and
Conclusion.

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 Civil vs. Criminal
• Civil law defines the rights between
individuals or individuals and governments.

• Criminal law defines an individual’s obligations

to society as a whole.

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 Substantive vs. Procedural

• Substantive law defines or creates the rights

and obligations of persons and
governments.

• Procedural law provides the steps one must

follow in order to avail oneself of one’s legal
rights or enforce another’s legal obligations.

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 Reading &
Understanding Case Law
Legal cases are identified by a “legal citation” (or
a “cite”) as the example below:

Federal Express Corp. v. Federal

Espresso, Inc., 201 F.3d 168 (2nd Cir. 2000).
Title: First Party is Plaintiff, second party is
Defendant. The parties are either italicized or
underlined.

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 Reading &
Understanding Case Law [2]
Legal cases are identified by a “legal citation” (or
a “cite”) as the example below:

Federal Express Corp. v. Federal

Espresso, Inc., 201 F.3d 168 (2nd Cir. 2000).
Case is found in volume 201 of the 3rd
Federal Supplement, page 168.

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 Reading &
Understanding Case Law [3]
Legal cases are identified by a “legal citation” (or
a “cite”) as the example below:

Federal Express Corp. v. Federal

Espresso, Inc., 201 F.3d 168 (2nd Cir. 2000).

Case was decided by the United States

Second Circuit Court of Appeals in 2000.

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 Business persons
and the Law

• Laws regulate all areas of business.

• Factors business owners must consider:
– Is contract enforceable?
– Contract for goods vs. services?
– What happens if someone breaches the
contract?
– Dispute Resolution?

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 Civil Criminal
Person Plaintiff Government
commencing the
action:

Outcomes: Damages Imprisonment

Specific performance Fines
Injunction Good behaviour
bonds
Community service
order

Standard of proof: On the balance of Beyond a reasonable

probabilities doubt

Burden of proof: Plaintiff Prosecutor

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