Introduction to Business Law

• Lecture 1 introduces business law and its importance
• The lecture will cover:
  • Why Business Law is needed
  • Definition of Law
  • Definition of Business Law
  • Legal systems
  • Legal provision

Why would you need Business Law?

• Business law helps in recognizing legal risks when concluding a contract
• It aids in determining the jurisdiction for dispute resolution
• It is important for recognizing potential antitrust or competition violations
• Business law helps in determining which law is applicable to a business transaction
• The main goal of the course is to identify potential problems before they arise

What is law?

• There is no single definition of law
• Cambridge Dictionary defines law as a rule made by a government to order society's behavior
• Merriam-Webster defines law as a binding custom or practice enforced by a controlling authority
• Thomson-Reuters defines law as a regime ordering human activities through politically organized society and backed by force

Competence

• Law can be adopted by an institution only with explicit competence
• Creating law competence must not be assumed
• Actions of institutions or public bodies do not become law if they are merely adopted by a part of the State apparatus
• Actions of authorities are regarded as law only when they meet certain conditions:
  • Issued based on an explicit mandate
  • Do not violate higher law
  • Follow the correct procedure
  • Do not abuse power

Competence of Institution

• Legislatures are not the only institutions that have the competence to adopt law
• Other institutions with competence include:
  • Local and regional authorities
  • Executive bodies
  • Government agencies
  • Regulatory bodies
  • Competition authorities
  • Professional organizations
• In common law systems, courts can create law through precedents

Enforceability

• Enforceability is not law enforcement
• Law enforcement involves government authorities or social institutions enforcing the law through investigation, deterrence, rehabilitation, or punishment
• Law enforceability includes all measures ensuring observance of or obedience to laws and rules

What makes law effective?

• State coercion involves measures compelling specific actions or behaviors
• Enforceability alone does not create law
• Rules must be clear and unambiguous
• All parties must have access to judicial recourse and remedies
• Rules must be made public and accessible to its addressees
• Whether lacking an enforcement mechanism renders law non-law is debated

What is Business Law?

• Business law has no single, universally accepted definition
• It is an umbrella category with specific branches of law
• Business law is the body of rules governing commercial dealings between persons, whether by convention, agreement, or national or international legislation

Business Law

• A natural person is a living human with rights and responsibilities under the law
• A legal person is a group of people acting as a single individual under the law
• Legal personality is the ability to have rights and responsibilities under the law
• A legal person is independent of its members and acts through its organs
• Legal capacity is the power under law for a natural or juridical person to enter contracts and sue/be sued

Business Law - Components

• Private law, or civil law, addresses disputes between individuals or entities
• It regulates commercial entities through laws related to company, partnership, agency, and bankruptcy
• It covers all contracts between business partners
• Public law governs the relationship between individuals and the state or government
• It includes antitrust law, competition law, customs regulation, subsidies, and prohibited market practices

What is a Legal System?

• A legal system is a framework of rules, procedures, and institutions used by a community to interpret and enforce laws
• The system is binding on all legal disputes within its jurisdiction
• A legal system consists of laws or legal norms issued by a sovereign authority or bound by shared underlying rules
• It includes institutions and processes for interpreting and enforcing laws
• The term "legal system" often used interchangeably with "legal order"

The Importance of Recognizing a Legal System

• Understanding what laws will govern a case (judicial precedent, statutes, customs) is crucial
• Knowing the role of judges and legal counsels is important
• Having access to judicial protection, access to court, or other forms of dispute resolution is necessary
• Rules of procedure, including rules on evidence, must be understood
• Mechanisms of enforcement should be clear

Most Common National Legal Systems

• Civil law (continental law)
• Common law
• Sharia (Islamic Law)
• Customary law

Most Common Legal Systems - International

• Public International Law
• European Union Law
• Customary law

Continental (Civil) Law System

• A codified system of law
• The system generally has a written constitution based on specific codes enshrining basic rights and duties
• Administrative law is usually less codified
• Administrative court judges behave more like common law judges
• Courts are specific to the underlying codes, leading to separate constitutional, administrative, and civil court systems
• Consistency of legislation and administrative acts interpreted for specific codes
• Less freedom of contract, provisions are implied by law, and parties cannot contract out of certain provisions

Common Law System

• It does not have a written constitution or codified laws
• Common law is based on court decisions rather than codes or statutes
• Judicial decisions are binding, and courts create laws through precedents
• The decisions of the highest court can only be overturned by that court or legislation
• Extensive freedom of contract exists
• Few provisions are implied into the contract by law, although consumer protection provisions may be implied
• Everything that is not expressly forbidden by law is allowed

Public International Law

• Also known as the Law of Nations
• Public international law is a set of norms regulating interaction between subjects of international law in international relations
• It creates a common framework for subjects of international law to operate and contribute to stable international relations
• Public international law applies to subjects of international law, such as States and international organizations
• Traditional doctrine did not regard individuals as subjects of international law
• A contemporary approach dictates that individuals are subjects of international law
• Sources of international law: treaties, customary international law, and general principles of law

Public and Private International Law

• Private international law, or 'conflict of laws', consists of rules governing relations between private entities
• It defines which domestic laws or courts are responsible for adjudicating international issues
• If a Chinese company signed a contract with a Polish company, private international law would regulate the applicable law if the contract was violated

Law of the European Union

• EU law is superior to national law
• EU law has its sources including primary law, general principles of EU law, and secondary law
• Primary Law includes treaties establishing the EU: TEU, TFEU, and the Treaty on the European Atomic Energy Community (Euratom)
• These treaties set out the distribution of competences (powers) between the EU and the EU Member States, describing the powers of the EU institutions.
• General principles of law include unwritten sources developed by the case-law of the Court of Justice of the European Union (CJEU) and constitutional traditions common to the Member States.

Law of the European Union 2/2

• Secondary law -comprises legal acts, which can be divided into two categories: regulations, directives, decisions, opinions and recommendations; And the so-called atypical acts, such as the rules of procedure of the institutions and interinstitutional agreements
• Other sources of EU law - CJEU case-law; international law – often a source of inspiration for the CJEU when developing its case-law. The CJEU cites written and customary law.
• EU law is in principle directly applicable and enforceable in all member States. All isntitutions including authorities and courts within nmember states are under legal obligation to apply eu law in the same manner as they would be applying national law

Legal provision

• A legal provision is the basic unit of the legal text, generally a grammatical sentence with an individual name
• A legal provision is an utterance, in the shape of a sentence, printed in a Journal of Laws
• A single provision can be interpreted as a single grammatical sentence, between two full stops, or whether a single provision is constituted by the lowest level unit in the text of a given statute, i.e. whether that be a section or a paragraph, which sometimes consists of a few grammatical sentences.
• Provisions express legal norms, indicating what a person should do based on the legislator's will
• This indicates obligations to perform behavior in certain circumstances

Legal Norm

• A legal norm is the general and abstract norm of conduct, laid down or recognized by a competent state agent, which orders or prohibits specific actions under specific circumstances
• A legal norm sets a standard of behavior
• As a norm, it can remain in existence even though it is broken
• Norms are distinguished from causal laws, which need reinterpretation if an exception is found
• Linguistic signals help determine the norm, indicated by ought, must, shall, `have to', right, wrong', good', bad', and so on, characteristically belong to the statement of norms, whereas words like 'is', 'are',, were', 'will be' 'possible', 'impossible' suggest descriptive rules
• The relationship between a legal norm and a legal provision is the same as the relationship between content and form