Business Law Textbook

Topics: Law, Common law, Partnership Pages: 29 (7986 words) Published: April 28, 2014

How Do We Define Law?

1. Law is needed to protect persons and property; it prohibits conduct that society believes to be harmful to others. The law punishes a wrongdoer who is found guilty of such conduct, and usually also give the vistim a right to obtain compensation from the wrongdoer. It prescribes simple but vital rules that allow us to get on with our everyday lives.

2. Law gives government the powers to act for the benefit of society in general (taxes = policing, fire fighting, education, and health care).

Rule of law: Established legal principles that treat all persons equally and that government itself obeys.

3. Law provides a framework that gives us broader freedom of choice; in particular, it enable us to make legally binding agreements enforceable in the courts. (bargain, plan, sign contract = certainty).

The Significance of Law for the Business Environment

Deciding on foreign investment  Legal certainty: To have a good environment for business, a country must provide an adequate legal infrastructure that clearly defines rights and properly enforces them. International business: Foreign trade and foreign investment = legal relationships.

Why is Law Generally Accepted and Obeyed?

In our daily lives, it is essential that we feel we can rely on our normal ways of getting things done and that arrangements with others should be reasonably predictable and orderly. The legal system appears to be generally just so that the majority is willing to assume that any particular law will produce fair results. If the law is unjust, not its application, it can be amended.

People generally agree that there are times when an individual is justified in breaking the law, although they would add that, generally speaking, the law should be obeyed.


Stream 1: Based on religious belief, establishing a set of moral and ethical values, prescribing rules of conduct based on these values. Natural law: Based on the fundamental principles of law derived from religious principles, even though detailed rules and their particular applications may vary as society changes. Stream 2: Rests on the assumption that people are rational and by applying their inherent abilities of reason and logic to their perception of the world, they will arrive at basic principles of justice. Fundamental, immutable moral principles are expressed in general legal principles, and may be formulated in detailed rules for a particular society. Natural Law can, on the one hand, be a vehicle for reform and revolution or, on the other, give strong support to a highly conservative view of society, upholding the status quo.


Normative Law: Law made by government establishing standards of behaviour and regulating human conduct.
Law  Creates a code of behaviour complete with sanctions for failure to live by that code. (is)
Morals  Failure to observe them might create annoyance or indignation in others and a bad conscience in the wrongdoer. (ought)

Positive Law: Ascertainable rules that are binding—the law that “is”. (The law must come from a person or group of persons holding power over the general population.)

John Austin  The King in Parliament, the law = “command of a sovereign” (passed in both houses and give royal assent), applicable to monarchy.

Legal positivists: Those who insist upon a clear distinction between law and morals.

Federal country: Where powers are divided between the national government and a number of provinces or states. (problem = Lawful authority is allocated by the Constitution, and a document can hardly be personified as sovereign.)

Basic law: A constitution that is habitually obeyed by the citizens of a country and that they regard as legitimate and binding. (Revolution resolved when a government emerges in apparent effective control and is recognized by a number of major nations)

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