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Bussines law

1. Dire Dawa University College of law Business law BY Abdisa Beriso

2. Course objectives The course is designed to well acquaint you with the basic knowledge of laws pertaining to business No business activity failing outside the realm of law So u need to have a good knowledge of law to; develop skills of problem solving E nhance your personal competence to engage in business and its environment

3. Course introduction First time Essential to familiarize you with the very concept of law Various definition of law I dentifying a widely accepted definition of law seems to be essential I n simple terms it can be said that “ law” is the body of rules to which every persons are expected to conform .” It may be defined as “rules of conduct that are imposed by a government authority and backed by sanction.”

4. Business law Business law is the area of law that governs relations of “persons” in business It deals with legal aspects of business behavior The whole course deals with the right and duties of persons You should have to know the concept of persons because: Not all persons are holders of right and duties Incapacity Insanity Minority Interdictions Absence Followed by K The foundation of every business activity is contract General k provision lay a foundation for other areas of business law

5. Chapter One INTRODUCTION TO THE LAW Definition Frequently mentioned concept However, Difficult to define Black’s Law Dictionary law as “ rules of action which are issued by an authority and that have binding force accompanied by sanction or other legal consequence .” Classification of laws There is no exact number of classification of laws Different criteria they used to classify laws National Vs international Private Vs public Procedural Vs substantive

6. Classification con… International and Domestic/ National Laws International Law Related with international institutions and organizations and their relations with States and individuals Is a branch of law that regulates the relations between/among States The relation between/among citizens of different states Applicable when dispute arises between different countries Applicable in matters involving two or more persons from different countries

7. Classification con… Example: Issues involving the United Nations (UN ) and its branches like the Security Council or regional organizations like the African Union (AU) are under the scope of international law On the other hand, international law could be applicable in the dispute arising from business transactions of a Chinese investor and an American contractor   international law again classified in to public international law and private international law Public international law; R egulates the relations and transactions between states A s well as the disputes involving two or more sovereign countries It governs Bilateral treaties and multi lateral treaties Deals with the organization and functions of international organizations State, international organizations and individuals

8. Classification con… Example: The border dispute and war between Ethiopia and Eretria was settled through the Algiers Treaty. That was a matter of public international law that involves two sovereign states, i.e. Ethiopia and Eretria S imilarly , the USA’s counter-terrorism war against Iraq and Afghanistan is regulated under public international law

9. Classification con… B. Private international law/ Conflict of laws Private international law (conflict of laws) is a type of international law that governs the relations between individuals from different nations I t is applicable on matters involving two or more individuals who are citizens of different countries National Law Domestic law or law of the land It is that law whose applicability is limited to a single nation (country ) E.g. property law of Ethiopia and the criminal codes of China are considered as domestic (national) laws that are applicable in Ethiopia and China, respectively International law – applies in two or more country National law – to particular nation or country Local law – particular locality with in a nation

10. Classification con… Public and Private Laws A. Public Law Applicable to the state in its relations with its subjects Governs the relation between a government and citizens of a single nation Constitutional law , Criminal Law and Administrative Law Constitutional law: it is a branch of public law that defines the organization of the state , its fundamental rules, and form of the government , as well as the structure of the state and separation and limitations of powers .

11. Classification con… Administrative Law : it is another typical example of public law that regulates the operation of the executive power Moreover , it deals with the formation, as well as the powers and responsibilities of administrative agencies Criminal (Penal)law: It defines criminal acts (omissions), or offences, as well as criminal responsibilities It also determines the respective punishments for each and every crime B. Private law Regulate the acts of individuals , which are done in their private capacity, in a given state/ different states The disputes arising between two or more individuals in relation to their personal matters like property or marriage are resolved by private laws

12. Classification con… Civil Law: which comprises of law of contract, law of succession, law of sales, property law Procedural Law : which governs the process of litigation Commercial Law : that deals with traders and commercial business organizations, as well as acts of commerce including the law of insurance, negotiable instruments as well as law of traders and business organizations

13. Meaning and Features of Business Law Business law is a branch of private domestic law that governs business transactions between two or more citizens of a nation It is a broad area of law covering different types of laws and many different topics It encompasses laws that are essential for forming , running and managing a business Subject matters of business law Law of contract - deals with formation , performance and nonperformance and remedies of contractual agreements Law of Sales - describes the meaning and nature of contract of sales as well as the rights and obligations’ of the buyer and the seller Law of Agency - deals with the types and natures of agency as well as the formation and extinction of obligations of agent and principal

14. Meaning and features con… Law of Insurance- comprises of the type , nature and formations of insurance contracts as well as the rights and obligations of the insurer and that of the insured Labor Law/ Employment Law - governs the meaning and formation of employment contracts together with the obligations and rights of the employee and employer Law of Negotiable Instruments - deals with types and features of various commercial documents such as Bill of exchanges and Cheques

15. Making of Laws Branches of government Legislative Executive Judiciary Legislative Law making power HPR in Ethiopia Of course other branches also have law making power on certain areas depending on the nature of the law The law making process differs depending up on the type of the law or B ecause of the nature/structure of the government organ that makes the law

16. Law making process of HPR Initiation council of ministers or members of the parliament request for the law to be made on specific area HOF may also request in certain cases Deliberation Deliberation by the parliament on the importance of making such law Standing Committee The matter will be send to the legal affairs standing committee Ratification If there is no a need for correction, the House of People Representatives shall ratify it and send it to the President (head of the state).

17. Law making process of HPR con… Signature By the president/head of state Numbered After it is signed by the president, the speaker of the House of Peoples Representatives will number it and send it for publication Publication When it is published under the Negarit Gazette it becomes an official law of the land

18. Hierarchy of Laws The issue of which law should be applicable is answered by the principle of hierarchy of laws The principle of hierarchy of laws dictates that the law in the hierarchy shall be applicable whoever there are conflicting provisions of different laws Hierarchy of laws has direct relation with the organ that made the respective laws The law which is made by the legislative branch is in a higher hierarchy than the law made by the executive wing of the government

19. Hierarchy con… Supremacy of the constitution The Constitution is the supreme law of the land whereby any law or practices that are contrary to the constitution are null and void T he constitution is the highest in hierarchy whereby all other laws are subordinate laws that are expected to be compatible with it Proclamation Follows the constitution – by HPR Regulation By council of ministers Directive By each ministry Hence proclamations are by HPR while regulations and directives are by executive

20. Basic Features of Law These are features and natures common to all laws Sovereign/parliament or Court God/Divine law Among these features and natures, the ones considered as essential include G enerality , normativity and sanction Generality Law is a general rule of human conduct It does not specify the names of specific persons or specific behaviors Hence , its generality is both in terms of the individuals governed and in terms of the social behavior controlled

21. Basic Features of Law con…. E.g. Art 3 of UDHR says “ Everyone has the right to life, liberty and the security of a person.” This law is made to be applicable to every person on this world therefore , it is universal Article 14 of FDRE constitution says “ Every person has the inviolable and inalienable right to life, the security of person and liberty.” This constitutional provision is made to be applicable to every person in Ethiopia and the extent of its generality is national This is less general than the first illustration.

22. Basic Features of Law con…. Subject generality Generality of the subject of the law may serve two purposes I t promotes uniformity and equality before the law because any person falling under the group governed by the law will be equally treated under the same law It gives relative permanence to the law Since it does not specify the names of the persons governed, the same law governs any person that falls in the group There is no need to change the law when individuals leave the group The permanence of law is indicated as relative for there is no law made by person, which can be expected to be applicable eternally

23. Basic Features of Law con…. Conduct generality Generality of the law also refers to the human conduct , which is controlled The human conduct in any law is given as a general statement on possible social behavior It does not refer to any named specific act like killing by shooting and killing by spearing Just a law can govern millions of similar acts and that saves the legislator from making millions of laws for similar acts, which may make the law unnecessarily bulky

24. Basic Features of Law con…. Normativity Law does not simply describe or explain the human conduct it is made to control It is created with the intention to create some norms in the society Law creates norms by allowing, ordering or prohibiting the social behavior This shows the normative feature of the law Based on this feature, law can be classified as permissive, directive or prohibitive

25. Basic Features of Law con…. A) Permissive Law Permissive laws allow or permit their subjects to do the act they provide They give right or option to their subjects whether to act or not to act Most of the time such laws use phrases like : H as / have the right to I s/are permitted/allowed to, S hall have the right shall be entitled to, may

26. Basic Features of Law con…. E.g. Article 14 of the 1960 Civil Code of Ethiopia “ Every person is free to think and to express his idea .” The human conduct to think and to express ideas is permitted by this law, therefore , it is a permissive law B ) Directive law O rders , directs or commands the subject to do the act provided in the law, It is not optional Therefore , the subject has legal duty to do it whether s/he likes it or not, otherwise, there is an evil consequence that s/he incurs Directive law usually uses phrases like : must , shall, has/have the obligation , is/are obliged to , is/are ordered to , shall have the obligation/duty

27. Basic Features of Law con…. e.g. Article 13(1) of the 2003 Labor Proclamation No. 377/2003 “Every worker shall have the obligations to perform in person the work specified in the contract of employment.” “Shall have the … obligations to” in this law shows that the worker is directed by the law as it is provided in the law Therefore , it is directive law In general, directive laws are mandatory provisions of laws They oblige the subject to act , as they require him/her to act

28. Basic Features of Law con…. C) Prohibitive law Prohibitive law discourages the subject from doing the act required not to be done If the subject does the act against the prohibition, an evil follows as the consequence of the violation All criminal code provisions are prohibitive laws Prohibitive laws usually use phrases like : must not ; shall not; should not ; no one shall/should ; no person shall/should ; may not ; is/are not permitted/allowed; is/are prohibited; is/are punishable ; and is a crime

29. Basic Features of Law con …. E.g. Article 650(2) of the 2004 Criminal Code of Ethiopia “Any unmarried person who marries another he knows to be tied by the bond of an existing marriage is punishable with simple imprisonment.” “Is punishable” in this law, indicates that the law discourages such act. Therefore, it is prohibitive law

30. Basic Features of Law con…. Sanction Each and every member of a society is required to follow the law Where there is violation of the law, sanction would follow S anction , is a penalty or coercive measure that results from failure to comply with a law The main purpose of sanction is to prompt a party (a wrong doer) to respond Sanction will make the wrong doer to think that s/he made a fault and s/he should correct it Sanction may be criminal, civil or administrative

31. Functions of Law Why we need law? No agreement among scholars as to the functions of law Jurists have expressed different views about the purpose and function of law However, almost all theorists agree that law is an instrument of securing justice Salmond “law is a body of principles recognized and applied by the State in the administration of justice.”

32. Functions of Law con… Bentham “The purpose of law is maximization of the happiness of the greatest number of the members of the community.” Holland “The function of law is to ensure the well-being of the society.” Roscoe Pound attributed four major functions of law, namely: ( 1) maintenance of law and order in society; ( 2) to maintain status quo in society; ( 3) to ensure maximum freedom of individuals; and ( 4) to satisfy the basic needs of the people He treats law as a species of social engineering

33. Functions of Law con… NB. The object of law is to ensure justice The justice may be either distributive or corrective Distributive justice seeks to ensure fair distribution of social benefits and burden among the members of the community Corrective justice, seeks to remedy the wrong Thus, if a person wrongfully takes possession of another’s property , the court shall direct the former to restore it to the latter This is corrective justice

34. Functions of Law con… However, justice alone is not the only goal of law Today the following are taken as important functions of law A ) Social control There are informal and formal social controls Law is one of the forms of formal social control Lawrence M. Freedman explains the following two ways in which law plays important role in social control: The law clearly specifies rules and norms that are essential for the society and punishes deviant behaviour T he legal system carries out many rules of social control Police arrest burglars, prosecutors prosecute them, courts sentence them, prison guards watch them, and parole boards release them

35. Functions of Law con… B) Dispute settlement Court/ADR mechanisms C) Social change