Table of Contents

1.0 Introduction.............................................................................................................2

2.0 Sources of law........................................................................................................2

2.1 Case law.............................................................................................................2

2.2 Legislation...........................................................................................................4

2.2.1 Delegated Legislation...................................................................................5

2.3 Customary law....................................................................................................5

2.3.1 Kandyan law.................................................................................................6

2.3.2 Muslim law....................................................................................................6

2.3.3 Thesawalamai law........................................................................................6

3.0 Application of statutory and common law in the justice courts...............................7

Page | 1
1.0 Introduction
Law is a set of guidelines that imposes punishments under certain conditions (Le
Baron, 1971). Law, as defined by Willis (1926), is a set of instructions for conduct
that a subordinate is required to follow. Law is a code of conduct that is established
by the highest authority in a State, dictating what is right and prohibiting what is
wrong (Bigelow, 1905).

The purpose of this report is to create a guide on law and business that provides a
basic knowledge of how law affects business. Firstly, this report will explain the
different sources of law and explain the government in law making and how statutory
and common law is applied in the justice courts. Secondly, the effectiveness of the
legal system in terms of recent reforms and developments will be evaluated. Thirdly,
using examples, this report will illustrate how company, employment and contract
law has a potential impact on business followed by the analysis of the potential
impact on business through differentiation between legislation, regulations and
standards, Finally, a coherent and critical evaluation of the legal system and law,
with evidence drawn from a range of different relevant examples to support
judgements will be provided.

2.0 Sources of law

The numerous methods in which law might be created are frequently referred to as
sources of law. Currently, case law (judicial precedent), legislation (Acts of
Parliament), and customary law serve as the primary sources of law (Riches and
Allen, 2009).

2.1 Case law

Case law, also known as common law, are those that originate from rulings by
judges. This law is categorised as civil law and criminal law (Wang, 2013). Common
law is the law which is developed over a number of years and it is also the judge
made law which is enacted by the legislations or statues. This could also be known
as the law which is the law derived from the judicial decisions of similar tribunals and
courts. The legal system of Sri Lanka follows the English common law. This legal

Page | 2
system adheres to principles such as judicial precedent, which states that previous
decisions of judges are followed in future cases where the facts of the cases are
comparable, and ratio decidendi, which means the reason for the decision
(Sandvick, 2023).

Some example cases for case laws are shown below.

State Farm Mut. Automobile Ins. Co. v. Campbell

In 1981, Curtis Campbell (Campbell) was driving with his wife in Cache County,
Utah. He decided to pass six vans traveling ahead of them on a two-lane highway.
Todd Ospital was driving a small car approaching from the opposite direction. To
avoid a head-on collision with Campbell, who by then was driving on the wrong side
of the highway and toward oncoming traffic, Ospital swerved onto the shoulder, lost
control of his automobile, and collided with a vehicle driven by Robert G. Slusher.
Ospital was killed, and Slusher was rendered permanently disabled. The Campbells
escaped unscathed.

In the ensuing wrongful death and tort action, Campbell insisted he was not at fault
but in 1989, the Utah Supreme Court denied Campbell's appeal in the wrongful-
death and tort actions. Campbell’s insurance company, State Farm Mutual
Automobile insurance Company then paid the entire judgment, including the
amounts in excess of the policy limits.

Bivens v. Six Unknown Fed. Narcotics

This case has its origin in an arrest and search carried out on the morning of
November 26, 1965. Petitioner's complaint alleged that on that day respondents,
agents of the Federal Bureau of Narcotics acting under claim of federal authority,
entered his apartment and arrested him for alleged narcotics violations. The agents
manacled petitioner in front of his wife and children and threatened to arrest the
entire family. They searched the apartment from stem to stern. Thereafter, petitioner
was taken to the federal courthouse in Brooklyn, where he was interrogated, booked,
and subjected to a visual strip search. In addition to the allegations above, his
complaint asserted that the arrest and search were effected without a warrant, and

Page | 3
that unreasonable force was employed in making the arrest; fairly read, it alleges as
well that the arrest was made without probable cause.

Responders argue that petitioner may obtain money damages to redress invasion of
these rights only by an action in tort, under state law, in the state courts.

A.G vs. Siripala

The report alleged that Dharmakaran was detected at the Katunayake International
Airport, with 1,197 grammes of a substance suspected to be heroin in his
possession. The respondent has aided and abetted Dharmakaran in committing the
offences set out above and had thus committed a punishable offence.

The order of the learned Magistrate direct that the accused- respondent be
committed to fiscal’s custody forthwith.

2.2 Legislation
Legislation is the body of law that the Parliament enacts through statutes or Acts of
Parliament (Riches and Allen, 2009).

Employment Rights Act 1996, Education Act 1996 (c. 56), Corporate Tax Act 2009,
Waste Act 2003 c. 37, and Trade Marks Act 1994 are some examples of United
Kingdom’s legislation acts (The World Law Guide, 1996). Computer Crime Act No.
24 of 2007, Women and Children Act 2005, Companies Act 2007, Debits Tax Act
2002, and Information and Communication Technology Act 2003 are some examples
for Sri Lanka’s legislation acts (The World Law Guide, 1996).

The Employment Rights Act of 1996 outlines an employee's rights in cases including
redundancy, maternity leave, and unjust dismissal. It is applicable throughout the
entirety of the United Kingdom, including Scotland and Northern Ireland. It was
introduced by the conservative government to strengthen already-existing law and to
increase workers' individual rights (Net Lawman, 2022).

The goal of the Education Act of 1996 is to guarantee that every child in the United
Kingdom has access to a quality education. According to the act, parents and

Page | 4
guardians are responsible for ensuring that children who are of compulsory school
age receive a full-time education. From the start of the school year after their fifth
birthday until the final Friday in June of the year they turn sixteen, each child is
required to attend school. A child's education must be appropriate for their age,
aptitude, and ability, allowing for improvement through time (Twinkl, no date).

Computer-related crimes and hacking offences are mainly covered by Sri Lanka's
Computer Crimes Act No. 24 of 2007. A number of amendments to the Penal Code
and other statutory laws address content-related offences. This legislation is the
result of various contributions from groups including the Ministry of Justice, the
CINTEC Law Committee, and a Sub-Committee of the Law Commission. It
was implemented at a time when developments were being made in Sri Lanka's ICT
sector as a result of numerous development projects like the e-Sri Lanka Project
(Fernando, 2007).

Companies Act 2007 is an act made to amend and consolidate the law relating to
companies. It can be cited as the Companies Act, No 07 of 2007. The Companies
Act No. 07 of 2007 is regarded as a masterful piece of law. It combines the laws of
Canada and New Zealand on the subject and departs significantly from English law,
which has served as the foundation for the majority of Sri Lanka's commercial law
statutes for more than a century. The proper acknowledgment that has been
provided to the shareholders is one of the main characteristics of the new corporate
laws. The term 'shareholder' has been properly defined by the Act, and it has also
added a sizable number of rights and obligations that shareholders were not
previously able to take advantage of (archive.cmb.ac.lk., no date).

2.2.1 Delegated Legislation

Laws deal with complicated, ever-changing matters. An Act may provide a broad,
general framework for their enforcement rather than providing extremely detailed
guidelines. An Act may assign a minister, executive officeholder, or government
department the duty of providing specifics and that is known as delegated legislation
(Tooth, 2022).

Delegated legislation is of two types. They are regulations (statutory instrument) and
byelaws. Delegated legislation most frequently takes the form of regulations. They

Page | 5
are made by ministers or other people or organisations that have been given the
authority to do so, typically under a parliamentary act (Hansard Society, no date). An
example for regulations in Sri Lanka would be Food (Melamine in Milk and Milk
products) Regulations 2010. Made by the Minister of Healthcare and Nutrition under
Section 32 of the Food Act No. 26 of 1980, this regulation states that no person shall
import, manufacture, transport, distribute sell, offer or keep for sale any milk or milk
products in Sri Lanka, containing melamine in levels exceeding 1.0 mg/kg (Part Per
Million). Byelaws are implemented by local authorities through the magistrates' court
according to an enabling power found in a public general act or a local act that
mandates what must be done or not done in a particular area. Breaking a byelaw is
punishable by fine upon successful conviction. They are considered last-resort
measures by local councils when earlier attempts to resolve the local issue have
failed. When there are other legal options available that could be used to solve the
issue, a byelaw cannot be created, and byelaws that are no longer required must be
removed (GOV.UK, 2016).

2.3 Customary law

Customary law is a set of unwritten regulations that are developed by cultural or
societal standards. When a society views certain behaviours or practises to be so
widespread that they are required by law, whether officially recorded or not, those
beliefs serve as the foundation for customary law (Johnson, 2023). Customary law
may be administered by national judicial institutions, but it is commonly applied
through traditional, often informal, justice systems in many nations. These traditional
systems, which are based on family and community institutions, settle conflicts on a
local or regional scale. Some are authorised by the government, while others are not
(Judiciaries Worldwide, no date). Some of the customary laws present in Sri Lanka
are the Kandyan law, Muslim law, and Thesawalamai law.

2.3.1 Kandyan law

The territorial laws that apply to everyone residing in the Kingdom, irrespective of
their ancestry or cultural group, are known as Kandyan law in Sri Lanka and they
trace back to the days of the Sinhalese Kingdom in Kandy. When it concerns matters

Page | 6
such as marriage, inheritance, and adoption, Kandyan law is no longer confined to a
specific region and can only be used by Sinhalese people who can prove their
ancestry to ancestors who lived there during the reign of the Sinhalese monarchy
(Dissanayake, 2019). The Kandyan law, which had been the dominant legal
framework in the Kandyan provinces, was kept in place after the British conquered
the Kandyan kingdom in 1815 (Weeramantry, 1999).

2.3.2 Muslim law

All adherents of Islam are subject to Muslim law, which is founded on religion. To
govern the Muslims in the East Indies, the Dutch created a code of Mohammedan
law known as "Byzanderwatten," which they then applied to the Muslims of Sri
Lanka. As a result, it applies to all Muslims living on the island, including Moors,
Malays, and Indian immigrants, known as Coast Moormen (Weeramantry, 1999).

2.3.3 Thesawalamai law

The rules regulating Tamils living in the Jaffna district are known as Thesawalamai,
which loosely translates to ‘customs prevailing in the country’ (Dissanayake, 2019). It
was established by the Dutch on the basis of a collection of customs produced by
Dissawe Claasz Isaacs in 1707, and it applies to a class of people who fall under the
classification of ‘Malabar inhabitants of the Province of Jaffna’ (Weeramantry, 1999).

Page | 7
3.0 Application of statutory and common law in the justice courts
Statutory and common law are both vital in the administration of justice in courts.
Common law refers to laws created based on recent court rulings, whereas statutory
law refers to legislation issued by various government authorities (Rahaman, 2023).

Similar to how justice courts operate, common laws are employed to make additional
judgements. The decision of a higher court is used as reference in cases of a similar
nature. There are no statutes under the current common law, thus the other judges
interpret the law as it is and establish new limits and distinctions for various judicial
processes. Future decisions by subordinate courts must consider the rulings of
higher courts. The defined structure on which to base rulings facilitates making the
judicial procedure reasonably quick. However, in cases of common law, the rules are
reluctant to overturn earlier judgements because of a poor decision made by a
higher court. Obiter dictum, often known as the means and the actual binding
decision being rationally deciding, or the reason for the decision, deals with the
foundation of precedent (Nesteruk, 1996).

Statutory laws are created so that citizens can formalise a law for their benefit and
find solutions to their many problems. They cover all areas of law that are solely
governed by statutes. There are various situations in which common laws do not
apply. Therefore, statutory laws are employed for such unique instances. The literal,
golden, and mischievous rules are three standards that courts use to interpret the
law. The literal rule states that words should be understood in their simple, common,
and literal sense. Even if the outcome is absurd, the courts must follow the clear
guidelines if necessary. The golden rule states that a statute should be structured to
prevent evident absurdity or internal contradiction. The mischief rule states that the
court will apply the meaning that is most likely to achieve the goal or reform that the
act is meant to achieve if the terms employed are not clear and the statute's aim is
disclosed in its prelude. This is done in order to account for the problem or weakness
that the law is specifically meant to address (Rahaman, 2023).

Page | 8
4.0 Role of government in law making
The primary responsibility of the legislative branch is to enact laws, and the
judiciary's overall function in determining public policy is to interpret those laws. The
parliament is accountable for approving those laws and policies and giving them
legal force. They use a number of techniques to gather data in order to determine
the effects of bills and whether they provide a plausible explanation for the issues
(Kouzmanov, no date).

4.1 Law making process of the United Kingdom

The United Kingdom's (UK) parliament is separated into three sections. They are the
House of Commons, the House of Lords, and the Monarchy. The House of
Commons is the more influential of the parliament's two houses, and it serves as the
primary platform for the discussion and passage of laws by elected members of
parliament (MPs). The House of Lords, the second house of parliament, reviews new
laws once more to ensure that they are just and practical. These individuals are not
chosen by the general population. The King or Queen of the UK make up the
monarchy. The King or Queen has the last word in whether a bill is passed into law
(BBC, 2019).

Creating a law begins with a 'bill', which is an idea an individual believes will create a
good law. Usually, the government is the source of the notion, and it is known as
a government-sponsored bill. A regular MP may also submit and idea which is
known as a private member's bill (BBC, 2019).

When a bill is introduced in the House of Commons, the first reading, also known as
the bill's passage, takes place whenever there is a parliamentary session and
without debate. Opposition parties and MPs have the opportunity to discuss and
voice their concerns on the bill during the second reading. Before moving on to the
third stage, the bill is amended as needed by committee members from the House of
Commons and MPs. The House of Lords receives it next for its first reading (UK
Parliament, 2019).

The bill's title and contents are read aloud at the first reading in the House of Lords
by the Lords responsible for the bill. Specific elements and amendments to the bill

Page | 9
are proposed and considered in the second reading. The members of the House of
Lords committee will then make the necessary changes to the bill. After the third
reading, the bill is sent to the House of Commons for its first reading (UK Parliament,
2019).

A Bill cannot become an Act of Parliament until it has received Royal Assent after
passing all required parliamentary steps in both Houses. The Monarch's consent to
turn the Bill into an Act is known as Royal Assent. The legislation contained in the
Bill may take effect immediately, after a specified time period, or only following a
commencement order by a government minister following Royal Assent (UK
Parliament, 2019).

Page | 10