BAcc Students: Basic Legal Knowledge

• These study notes support preparation for contact time, discussion-based classes and tutorials and assessments.
• They should be read alongside the framework document available on EMSLearn.
• Contact time will address "problem areas", requiring preparation for contact sessions

Proposed study method

• Gain a general understanding of the chapter theme through an initial reading.
• Attend lectures in conjunction with the PowerPoint slides.
• Divide the chapter into sections, identifying key requirements, and connect them to other chapters and themes.
• Supplement notes with information and examples from classroom interactions.
• Test your acquired theoretical knowledge using self-tests.
• Consolidate understanding through EMSLearn quizzes.
• Assess insight through application questions, using contact sessions and tutorials to develop application skills.

Learning outcomes

After completing this unit:

• Understand the importance of basic legal knowledge for BAcc students.
• Understand the law's impact on daily life and commerce.
• Understand the fundamental principles of law, its dynamic nature, and context.
• Know the definition of law, its sources within South Africa, the judicial system, and different legal branches.
• Understand the concepts of "rights" and "obligations" within a constitutional democracy.
• Develop a working knowledge of legal terminology.
• Recognize the significance of ethical conduct and the legal implications of professional negligence.
• Develop skills in problem identification, applying knowledge in practical scenarios, and communicating logically in writing.

Study guide

Students should:

• Acknowledge the need for BAcc students to possess basic legal knowledge.
• Know the impact of the law on the world of commerce.
• Define the purpose and function of legal rules.
• Compare and contrast rules with other rules of conduct, with examples.
• Understand the differentiating characteristics of these norms and rules.
• Understand the role of law in a constitutional democracy and its impact on fairness and justice in legal rules.
• Identify and explain sources of the law.
• Explain the function of the Constitution.
• Explain fundamental human rights and provide examples.
• Explain the limits of fundamental human rights.
• Form opinions on the South African constitution's efficacy based on concepts of reasonableness and justice.
• Understand fundamental content of the Bill of Rights, including the extent of its effect on society, business and commerce.
• Explain national and subordinate legislation.
• Use examples to define an ultra vires act.
• Explain why the South African legal system is considered mixed.
• Know how court decisions create law through interpretation.
• Identify the various court types, functions, and jurisdictions.
• Explain the precedent system.
• Understand what appealing a judgment means.
• State requirements for custom becoming a legal rule.
• Define a right, including legal subject and object concepts.
• Distinguish between natural and juristic persons with examples.
• Show an understanding of the different rights in law referring to related cases.
• Explain the difference between the terms movables and immovables and also how they related to different kinds of rights with examples.
• Distinguish between juristic and non-juristic acts.
• Define "delict", "undue/unjustified enrichment", and "vicarious liability".
• Have a functional understanding of professional negligence.
• Know the difference between absolute and relative rights.
• Have a general understanding of law classification in terms of Public, Private, and Mercantile Law.

Why study mercantile law?

• Chartered Accountants (CA's) must think strategically in business.
• Strategic thinking involves weighing risks against potential returns.
• Business operates within the framework of the law, necessitating CAs to possess working knowledge of the legal system to assess legal risk effectively.
• Legislations such as the Companies Act and the Income Tax Act undergo regular revision, requiring constant legal development.
• Chartered Accountants must act honestly, ethically and with resonable skill and care, acting within the laws and its spirit.
• Focus goes beyond acquiring theoretical knowledge to understanding the law's dynamic nature and the contextual implications.
• The module aims to cultivate problem identification, comprehension, application, and logical argumentation skills for effective communication in practical scenarios.

What is the law?

• Potential for conflict always exists when individuals or groups ineract in community or in the world of commerce due to conflicting needs and desires
• Variety of rules and norms regulate human behaviour.

Four main types of conduct rules:

• Rules of religion
• Rules of individual morality
• Rules of collective morality
• Rules of law
• All rules aim toward order and peace, so there can be overlap and contradiction between these rules.
• Enforcement of rules of law is actioned by state institutions like the police, the courts or the sheriff.
• Other rules are enforced by individual conscience or by social disapproval

The role of the law

• The rules of law are important in the context of business and commerce, though morality should not be dismissed.
• Matters of religion and individual perceptions of law indirectly affect business.
• Infringements of basic human rights can lead to trade sanctions and public boycotts, and the key to business is ethical production.
• Rules of law are to provide guidance for societal conduct for the sake of commerce.
• The main goal of law is to create ordered society and to regulate everyday and commercial life.
• The law may set limits, offer freedoms, and provide a way to peacefully resolve disputes.

Commercial context

• The module focuses on commercial(mercantile) law as it affects business.
• Agreements such as a Coke from a shop are commercial contracts with legal ramifications.
• Business ownership is determined by factors such as partnership, single concern, or company options.
• Entities must follow laws like the Companies Act in the location that the company is registered.
• Entities must also comply with the certain legal compliances and processes like black economic empowerment (BEE).
• A supplier must provide goods, according to standards or requirements or risk breach of contract.
• Insurance must be taken out in case of theft or damages.
• Employee rights, compensation and obligation must be set out in employment contracts.
• Consumer protection laws protect customers against unlawful conduct of sellers and service providers.
• Failure to meet financial goals can result in an an insolvency declarations.
• It is necessary to seek legal advice to help with potential economic, financial and political risks that can affect business costs and strategy.
• Proper planning can be a way of bringing on legal advice to determine legal risks.
• Advice on compliance is a key part of ensuring non-compliance of regulations, fines, and commercial reputation.
• The legal and regulatory issues can affect reputation.
• Legal practices require upmost importance when businesses operate across border, following the appropriate local rules and trade agreements.
• Where you seek legal assiatnce, a choice-of-law clause determines the applicable law.

The rule of law

• The debate on whether law is always just is much debated.
• According to natural law, human conduct should conform to certain values regardless of regulations.
• Positivists suggest any law created by the state should be followed regardless of its justness.
• Countries with a Bill of Rights promote laws for equality, freedom and human dignity.
• Public Policy today relies on the principles of freedom, equality and human dignity also in matters of private law.
• Business in South Africa must operate within the Constitution and Bill of Rights, making all discriminatory conduct illegal.

Sources of the law

• There may be sources from which the law originates.

The sources are:

• Legislation
• Court decisions
• The common law
• Custom

Legislation

• The Constitution is the most important, regulating the legislative, executive, and legal functions of the state by defining powers.
• The Constitution reigns supreme since 1993, therefore the decisions made by courts are always tested with reference to human rights in the Constitution.
• The Constitution provides a Bill Of Rights that safeguards fundamental rights, subject to some limitations.
• Freedom, equality and human dignity are protected by constitutional principles.
• Parliament is granted the power to legislate while still abiding by the Constitution.
• Representatives in Parliament are elected democratically, that should reflect societal will in legislation.
• Parliament can address certain issue by filling gaps in the law in response to constitutional conflicts, evolving societal needs, for example (Act 25 of 2002).
• SA legislation can be found on the Government website www.gov.za.
• Statutes are split into sections.
• Every province in acts a constitution for its specific provinve which deals with local and regional issues.
• Provincial legislature deals with provinces "own affairs" including provincial sports, agriculture, culture and local government.
• Legal rules can be formatted by other bodies.
• Delegated legislation is formed by local bodies and ministers.
• Delegated legislation such regulations must follow the limited authority provided by the authorising act of the government.
• If the delegated legislation does not the rules are ultra vires and can be deemed invlaid by the courts.

Court decisions

• Courts act as an important source of law apart from common and satutory law.
• Constitutional Court in Johannesburg and the Supreme Court of Appeal in Bloemfontein are different courts to resolve civil or constitutional issues to determine appropriate applications of the decisions or the spirit of the Constitution.
• The High Court of South Africa is a number of divisions with divisions for local regions and provinces.
• Divisions of the High Court have jurisdiction over both civil and criminal matters from their geographical areas while only High Courts hear constitutional matters and related issues.
• Magristrates courts have jurisdiction over matters based on a maximum monetary value and some criminal matters.
• Specialised court hears specific concerns.
• High court can hear serious criminal matters.
• Tribunals are not judges or magistrates, but are specialists in particular field.
• Small claims courts can hear action civil matters to a monetary value.
• Judges do not create law but apply it.
• When interpreting legislation, judges may give a new interpretation or adapt a new law principle.
• A judge first uses the statute, its context, to interpet a definition.
• One Act of Parliament contains definitions for particular words.
• Interpretation of law must consirder human dignity, equality and freedom.
• Section 39(2) provides that the objectives of The Bill Of Rights can develop the common law.
• Precedent system entails that laws are determined by previous court decisions, for legal consistency.
• It also protects litigants right to appeal to a ligher court in the jurisdictional herarchy.
• The Constitutional Court is always the court of final appeal.
• Note that court cases are referred to in a specific manner, e.g. Brisley v Drotsky 2002 (4) SA 1 (SCA). The first party referred to is the plaintiff - versus (against) – the other party.
• Court cases are available at www.safflii.org.

Common law

• Common law refers to the background and traditions of our legal system.
• South African law is not codified to be in only all-inclusive statutes, or codes.
• Contract low relies heavily on English common law.
• Roman Dutch Law, the Corpus luris Civilis, dates back to the 6th century.
• This law remains source of reference to find clarity in unclear legal principles.
• With the Dutch VOC, Roman Dutch Law came to the Cape around the 17th Century.

Custom

• Sources of law are customs passed between society through generations.
• Van Breda v Jacobs 1921 AD 330 is the source of information about customs as sources of laws.
• Law customs include consistent use, fairness, clarity and social acknowledgement.
• The 231(40 of the Constrution states custom law is subordinate to the Constitution
• An unfair or unjust custom is not a legal rule.
• Trade usage is generally known in a trade or industry in commercial context.
• Customary law (vernacular) is referred to by Section 211(3) of the Constitution.
• The South African court must apply this law unless it counters the spirit of the Constitution.

Right (and obligation)

• Law consists of legal rules.
• A legal rule may confer a right upon a person.
• A right can be considered related to something a legal subject is entitled to.
• If something is a formally protected interest, it is a legal right.
• There are 4 kinds of rights. All relate to identifiable legal objects.
• The Constitution's BOR confers rights to every person.
• Rights and obligations depend on the principles of freedom, equality and dignity.
• Personal Rights are a performance someone is required to provide.
• These can only be acquired by people with contractual capacity.
• If there is lack of status or certain requirements, this may prevent someone entering into contract.
• The Bill Of Rights confers the right on everyone.

Classification of the law

• Many forms of classification in SA Law exist.
• Statutory and Common law can be used to label regulations and mandatory arrangements.
• Public and private law are commonly adopted in the classification structure.
• Public law regulates the relationship between state authority and its subjects.
• Private law governs the relationships between private individuals.
• Mercantile Law operates as a branch of private law for commerce, though all laws work concurrently.