Bahir Dar University

School of Civil and Water Resources

Engineering
Construction Technology and Management
Program
Contract and Business Law(s)

2022 Program
Temesgen Sisay (LLB, LLM, Assistant Professor).
E-mail: temesgen.sisay@yahoo.com
 Chapter I
Understanding Law and Legal Personality

• What Is Law?
• How do you understand it?
• What does person mean?
 Chapter I
Understanding Law and Legal Personality

• What Is Law? Possible definitions

Law is a set of rules that plays an important part in
the creation and maintenance of social order.
John Austin’s definition: Law is a command issued
from a Sovereign power to an inferior and enforced
by coercion.
Sir John Salmond’s definition: Law is the body of
principles recognised and applied by the State in
the administration of justice.
• What Is Law?
– Starting from Plato and Aristotle down to the 21st Century
different scholars have tried to give their own definition of
the term ‘law’.
– But so far no universally acceptable and an all convincing
definition has been found.
– None of the definitions so far forwarded were satisfactory
or complete.
– To better understand this problem let us see some of the
definitions and theories propounded by different scholars
 School of Thoughts

• The most important school of taught are:-

– The Natural Law School (theory)
– The Positivists ( Imperatives) School of taught
– Realists School of taught (Legal Realism)
– The Marxian Theory of law
 The Natural Law School (theory)

• It is the oldest of all school of taught.

• The founders of this school of taught are Plato and
Aristotle.
• According to this school of taught, there are two sets of
laws that govern the relation of the human society.
• These are Natural law which is eternal and unchangeable
and the man made law which differs in space and time.
• The natural law
– Given by supra natural power- God – in the form of justice and
morality
– It is to serve as a standard to test the validity of man made laws
– It is eternal and unchangeable
– Its content is justice and morality
 Limitations of Natural Law

• It presupposes that law is a set of rules which is just and

morally correct, which is not always the case
– Look for example the extermination of millions of Jews by Nazi
Germany and Rohingiya Muslims in Mainamar
– Take also the 1975 proclamation in Ethiopia which nationalized with
out compensation major means’s of production and distribution
owned privately
– The Law of Apartheid in South Africa
• We do not have commonly acceptable standard to say
something just or unjust, right or wrong ( at least it differ
from place to place)
 The Positivists (Imperatives) School of taught

• Founded by Thomas Hobbes and which got predominance in

the 19th and 20th century
• Sharply separates law from morality and justice.
• It sharply contrasts with the natural law school theory of law
which is based on the belief that all written laws must follow
universal principles of morality, religion and justice.
• It says that, “law is a command of a political sovereign backed
by sanction”
– Command
– Political sovereign
– sanction
 Limitations of Positivist theory
• First, it equates all laws with commands which is not always
valid
• Some sections of the law may be in the form of command but
not all.
• Commands that are not law
– Eg. – do not smoke!
– - keep silent!
• Laws that are not in the nature of command.
– Eg
– Every one has the right to marry and found a family
– Everyone has the right to own and administer property.
• Commands that are laws
– Eg – Do not kill
– -don’t steal
– -don’t commit adultery
• Second, it associates all laws with a sovereign political
authority, which doesn’t always hold true
• We have customary laws that developed out of nothing but
from repeated practice only.
• Customary laws do not emanate from the parliament or other
organ rather from habitually repeated practice in a certain
fashion over a long period of time.
• International law is also a case in point.
• Third, it views the sovereign as unlimited and unaccountable
to anyone where as today every government organ is legally
limited and accountable to the public.
• Fourth, it divorces law from the ethical foundation of
equity, justice, morality and fairness
• This separation has resulted in the degeneration of
the human value and disintegration and collapse of
social systems.
– The extermination of Jews by Nazi Germany,
– Discriminatory treatment of Black Americans in America
and
– Blacks in South Africa under the Apartheid regime were all
carried out by issuing law inspired by positivist thinking
 Legal Realism
• It is the theory that understood law not as formal rules and
principles set by the parliament but something that are
pronounced by courts of law which are based on social
interests.
• It is not the legislatures that constitute the law of a country,
it is what the judge says in his decision to a particular case
• It is the judge who gives life to the dead statements of the
law maker
• The theory was first made popular by the famous American
Supreme court chief Justice Oliver Wendle Holmes when he
published his book entitled the common law in the 19th
century.
• Rousco Pound who described law as “social engineering” and
the utilitarian Bentham are also staunch advocates of this
theory of law
 Limitations of Legal Realism

• This theory views the courts as the real law makers.

• But this severely violates the well established and
operating constitutional principle of separation of
power and functions
 Marxist Theory of Law

• It views law as an instrument of the economically dominant

group in a class society to perpetuate its dominance.
• Like the positivists and Realists agree that law is man made
• Law comes in to existence with class society following the
emergence of the institution of private property.
• It is with the coming of the system of private property that
class societies come in to existence
• Law emerged at a certain point in history (with the
emergence private property) and it will disappear in the
future when classless society emerge at communism stage of
the evolution of society
• For Marxists law is an instrument of operation of the state in
its endeavor to protect the interest of the dominant group in
the society.
 Limitations of Marxist theory

• Even the communism system can not survive with

out the law.
• Human existence without private property is near to
impossibility and if the existence of law is related
with the existence of private property then law is to
be there forever
 Why all failed to give a acceptable definition?

• The first reason for the failure is that in defining it they give
emphasis only to one or some of its aspects and do not
address all aspects of law
– Natural law theory-in terms of its content (justice and morality),
– Positivists - in terms of form (as a command)
– Realists - in terms of its practical application
– Marxists- in terms of its significance
• The other reason is, the dynamic nature of law it self
• It is better to understand law from its characteristics point of
view.
 Features of Law

• Law is general statement on a possible human

behavior
• Law Is a Normative Statement ( it is provided in
different contexts of norms like, permissive,
prohibitive, directing, rewarding
• Law Regulates The Social Behavior Of Man.
• Law Is Intimately Related With The State
 Legal Systems of the World

• Every independent country has its own legal system.

• The system varies according to each country’s social
traditions and historical development.
• But most systems can be classed as either:
– (1) Civil-law (Continental) legal system,
– (2) Common-law (Anglo-Saxon) legal system
– (3) Hybrid system
– (4) Religious Law
 The Common Law Legal System.

• Developed in England in the 12th century

• Made by judges
• Main source of law are precedents (previous
decisions made by superior courts on similar facts)
• However, the law making role of legislatures in these
countries has increased greatly during the 20th
century
 Civil Law Legal Systems

• Based on Roman law

• Main source of law is legislation
• Laws provide general principles and guidelines to be
applied to each particular case
• Characterised by codification (written collections of
laws which apply to all)
 Hybrid??
• A combination of both legal systems
• Developed recently
 Religious law
• Religious law refers to ethical and moral codes
taught by religious traditions.
• Legal system using a religious system or
documents as a legal source
• Usually follows the principles of either civil or
common law
• Examples: Islamic sharia, hindu law
 The Ethiopian Legal System?

• Civil?
• Common?
 The Concept of Personality

• What does person mean?

• What are the requirements to acquire personality according
to the Ethiopian law)?
 The Concept of Personality

• In the language of the law the term "person" is not used in it’s
literally or usual meaning.
• The law of persons is that part of private law which
1. determines which entities are legal subjects,
2. when legal personality begins and ends,
3. what legal status involves (different classes of legal
subjects)
4. and what effect various factors have on a person’s legal
status (legal status of each class)
• So, the criteria in law to determine weather a certain entity is
a person or not is the ability to hold rights and duties
irrespective of the fact that it is human being or not
 Categorizing Legal Subject/Type of persons/
• Legal subject can be divided into two categories:
1. Natural persons (persona naturalia)
2. Juristic (Artificial) persons ( juristic persona).
– The state and it administrative units
– Religious groupings
– Business organizations like the Ethiopian Air Lines,
Commercial Bank
– Civic organizations established for philanthropic purpose
– Professional Associations like the Ethiopian Lawyers
Association
– Committees
– Trusts
– Endowments
 Similarities and differences between physical persons
and Artificial Persons

• What are similarities and differences?

Similarities-They are subjects of rights and duties as
defined by law
Differences- the way how we exercises the right
 Attributes of personality

• By attribute of personality we are referring to the

characteristics, qualities or distinguishing features
that entities with legal personality are endowed with
– The ability to sue or be sued in its own name
– The ability to own and administer property
– The ability to enter in to contracts
– The obligation to pay taxes
– Having name
 The importance of artificial personality

• The system of artificial personality is created by law

for the following purposes:
• For the purpose of continuity in transaction.
• For the purpose of convenience in control
• The benefit of limited liability
 Commencement of Personality

• The way how artificial personality commences

depends on the type of the artificial person itself.
• There is no uniform rule concerning the acquisition
of artificial personality
– State, in order to be considered as a person, it must fulfill
all the requirements under international law
– civic associations, register within the Ministry Of Justice Or
Regional Justice Bureaus.
– Business organizations, register with the Trade and
Industry Ministry
 Commencement of Human Personality
• Birth
– As a matter of principle personality begins with birth.
– Article 1 of the civil code, "The human person is the subject of rights from its birth
to its death."
• Conception
– There are cases where it seems that birth is not by itself a satisfactory criterion to
confer personality.
– The most obvious is the case where the father of a conceived child dies
• For the conceived child to acquire personality it must fulfill the
following conditions:-
– it must have an interest that justify the granting of personality at
conception
– it must be born alive, and
– it must be viable. The child will be considered viable
• If it survived for full 48 hours, or
• Even if it died before the 48th hour if the death is due to an external factor.
Chapter II- Law of Contract and Extra-
contractual liability