Business Law PDF - Mid Term - Haramaya University

BUSINESS LAW Haramaya University College of Law (HU CoL) Instructor Information  Name: Ana Hassen Aliyyi  Email: [email protected]  Office: HU College of Law Building, Room …  Office Hours: Monday – Friday at wo...

BUSINESS LAW Haramaya University College of Law (HU CoL) Instructor Information  Name: Ana Hassen Aliyyi  Email: [email protected]  Office: HU College of Law Building, Room …  Office Hours: Monday – Friday at working hours or by appointment. Course Information Class Meeting Times: Monday at 8:30 am – 10:30 am & Wednesday at 8:30 am – 10:30 am Class Location: FB College, Room … Course Description  In this course, students will gain a comprehensive understanding of the legal principles and regulations that govern various aspects of business activities. The course covers a wide range of subjects, including an introduction to law, Law of persons, contracts, Law of Sales, Agency law, law of business organizations, employment law, commercial transactions, and other relevant legal frameworks.  The primary goal of studying business law is to provide students with the knowledge and skills necessary to navigate the complex legal landscape of the business world so that students will be equipped to make well-informed decisions, recognize and mitigate potential risks, and effectively handle legal matters.  By examining the legal aspects of business activities, students will be empowered to navigate the intricate legalities that businesses encounter daily. They will develop the ability to analyze and interpret laws and regulations, understand legal responsibilities and obligations, and apply legal principles to real-world business scenarios.  Ultimately, this course aims to furnish students with the necessary tools to navigate the legal complexities of the business realm confidently. Course and Learning Objectives  To bestow students with a foundational understanding of the law, including its definition, features, functions, and relationship to morality, classifications, and the importance of business law in commercial activities. By: Ana Hassen Aliyyi (2017) For Business Law Class 1  BUSINESS LAW Haramaya University College of Law (HU CoL)  To equip students with an understanding of the definitions, distinctions, commencement, end, acquisition, exercise, extinguishment, and attributes of legal personality, including the differentiation between natural persons and artificial persons (juridical persons).  To provide students with a comprehension of traders, business, and its elements, the concept of business organization, the types of business organizations recognized under Ethiopian law, and the classifications and distinguishing features of partnerships and companies.  To provide students with an understanding of the concept of obligations, including their sources, and to define and explain contracts, their elements, distinctive features, defects, effects, performance or non-performance, legal remedies for non-performance, and grounds for the extinction of contracts and their effects.  To boast the students' understanding of identifying and understanding the specific laws governing the insurance industry in Ethiopia, examine the criteria for forming an insurance contract, and explore the essential components that constitute an insurance policy.  To equip the students with the ability to differentiate commercial documents, transferable securities, and documents of title to goods, and explain the defences available to negotiable instruments.  To provide a comprehensive understanding to Explain various aspects of banking activities, including deposits, lending, contracts, and other financial services provided by banks. Learning Assessment Table Course Learning Objective Covered Corresponding Assignment Title Marks % Chapter 1-2 Mid Term Exam 25 Chapter 3-4 Individual Assignment 10 Chapter 5-6 Group Assignment and Presentations 15 All Chapters Participation and discussion 5 Chapter 7-10 Final Term Exam 45 By: Ana Hassen Aliyyi (2017) For Business Law Class 2  BUSINESS LAW Haramaya University College of Law (HU CoL) Business Law Business Law course covers a wide range of subjects including:  Introduction to Law  Contract Law  Law of Sales  Agency Law  Law of Business Organizations  Labor and Employment Law  Commercial Transactions  Other legal frameworks that apply to different types of business entities. The primary goal of studying business law:  To provide students with the knowledge and skills necessary to navigate the complex legal landscape of the business world  To equip students so that they could make well-informed decisions, recognize and mitigate potential risks, and effectively handle legal matters that may arise in a business context.  To develop the student’s ability to analyze and interpret laws and regulations, understand legal responsibilities and obligations, and apply legal principles to real-world business scenarios. Chapter One Introduction to Law Be reminded that, Business law students need to get some preliminary understanding of the law before proceeding to business law. This chapter will provide you with an understanding of the law as a general and business law in particular. 1.1. Definition of Law While there is no universally agreed-upon definition of the term "law," there are several common understandings and interpretations across legal systems and scholars. The concept of law can vary depending on cultural, historical, and jurisprudential perspectives. For “Cultural Relativists”, law is a set of norms, rules, and practices that are established and enforced within a particular cultural or societal context. So, the law represents the collective agreement and consensus of a community regarding acceptable behavior, rights obligations, and consequences. Law is shaped by cultural values, traditions, and historical experiences that are unique to a specific culture, and it reflects the social and moral order of that society. By: Ana Hassen Aliyyi (2017) For Business Law Class 3  BUSINESS LAW Haramaya University College of Law (HU CoL) From the “Pragmatic” point of view, American jurist, Benjamin Nation Cordazo defines law as “a principle or rule of conduct so established as to justify a production with reasonable certainty that it will be enforced by the courts if its authority is challenged.” According to Holmes “the prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law”. It is observable from these definitions that courts play a great role in applying as well as creating the law. From the “Sociological” perspective, Max Weber suggests that an order will be called law if it is externally guaranteed by the probability that coercion (physical or psychological), to bring about conformity or avenge violation will be applied by a staff of people holding themselves especially ready for that purpose. Max Weber argues that law has three features that distinguish it from other normative orders such as custom or convention: a. There must be pressure that comes from external in the form of actions or threats of action by others regardless of whether the person wants to obey the law or not; b. These external actions or threats of action always involve coercion or force; c. Individuals whose official role is to enforce the law must enforce the coercive action. Paton described law in terms of legal order tacitly or formally accepted by society and enforced. A body of binding rules sufficient compliance is ensured by some mechanism accepted by the community is called law. Black's Law Dictionary defines the term law as “a body of rules of action or conduct prescribed by controlling authority and having binding legal force. That which must be obeyed and followed by citizens subject to sanctions or legal consequence is a law.” Black's Law Dictionary, 6th ed., s.v. “law.” Generally, law can be understood as a system of rules and regulations created and enforced by a governing authority, such as a government or a legal institution. These rules are designed to regulate behavior and relationships within a society, providing a framework for maintaining order, resolving disputes, and promoting justice. The law typically consists of a set of norms that prescribe rights, duties, obligations, and prohibitions. The law establishes the standards of conduct that individuals and organizations must adhere to, and it often includes mechanisms for enforcement and penalties for non-compliance. By: Ana Hassen Aliyyi (2017) For Business Law Class 4  BUSINESS LAW Haramaya University College of Law (HU CoL) 1.2. Features of the Law What we mean by features of law is those characteristics of law which differentiate law from other rules of conduct such as customs, moral rules and standards, societal values and habits. Law is different from socially non-binding soft rules by the following basic features. These are Generality, Normativity, and sanction. A. Generality The generality nature of Law connotes two meanings. The first meaning indicates that law is stated in general terms or languages in which details are left for enforcement organs. The second meaning of generality implies that law is enacted to govern or bind all members who belong to the group without distinction. When it is said that the law is general one has to note that law does not invariably apply to the people of the world. It only applies to those who fall within its jurisdiction. For instance, the law which applies to Traders may not apply to Non-Traders; it applies to traders equally, though everyone who belongs to the group is presumed to be equal and treated equally. The law has no regard for individual status, economic or social position and any other ground of discrimination. The law is equally binding on all persons who belong to the group in case of violation. Thus, the extent of its generality depends on, to whom the law is made to be applicable. Illustration 1. “Everyone has the right to life, liberty and the security of a person.” [Art 3, UNDHR; 1948]. - This law is made to apply to every person in this world. Therefore, it is universal. Illustration 2. “Whoever intentionally spreads or transmits a communicable human disease is punishable with rigorous imprisonment not exceeding ten years.” [Article 514 (1) of the 2004 FDRE Criminal Code]. -This law is made to apply only to a person who commits the crime. B. Normativity Law does not simply describe or explain the human conduct. Law is made to control them. It is created to create some norms in the society. The law creates norms by allowing, ordering or prohibiting social behavior. This shows the normative feature of the law. Based on this feature, law can be classified as permissive, directive or prohibitive. a. Permissive Law Permissive laws are laws that allow or permit their subjects to do the act they provide. They give rights or options to their subjects whether to act or not to act. By: Ana Hassen Aliyyi (2017) For Business Law Class 5  BUSINESS LAW Haramaya University College of Law (HU CoL) Illustration: “Accused persons have the right to be informed with sufficient particulars of charge brought against them and to be given the charge in writing.” [Article 20(2) of the 1995 FDRE Constitution]. b. Directive Law Directive Law orders, directs or commands the subject to do the act provided in the law. It is not optional. Therefore, the subject has a legal duty to do it whether s/he likes it or not, otherwise, there is an evil consequence that s/he incurs unless s/he does it as directed by the law. Illustration: Every company shall keep at its head office a register showing the number and value of shares and debentures held by each director in a) the company; b) its subsidiary company; and c) in any holding company of which the company is a subsidiary. [Art 313 FDRE commercial Code 2021] 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 follow as the consequence of the violation. All criminal code provisions are prohibitive law. Illustration “No one may enter the domicile of another against the will of such person, neither may a search be effected therein, except in the case provided by law.” [Civ. C. Art 13]. “No one may” shows that anyone is discouraged from acting as provided by the law and so it is a prohibitive law. C. Sanction Every member of society is required to follow the law. Where there is a violation of the law, sanctions would follow. Sanction according to Black’s Law Dictionary [Garner; 2004: 1368], is a penalty or coercive measure that results from failure to comply with a law. The main purpose of a sanction is to prompt a party (a wrongdoer) to respond. In other words, sanction will make the wrongdoer think that he/she made a fault and he/she should correct it. The sanction may be criminal. A criminal sanction is a sanction attached to criminal liability [Garner; 2004: 1368]. If the fault committed is defined by criminal law, the person will be liable to a sanction provided under the criminal law. 1.3. Functions of the Laws Law has different functions and plays many pivotal roles in society. Without a comprehensive and efficient legal regime, it is hardly possible to imagine an orderly social existence. Without law, the thread which serves as a social cohesion would easily be torn apart. Social interaction without law is nothing more than chaos and turmoil. By: Ana Hassen Aliyyi (2017) For Business Law Class 6  BUSINESS LAW Haramaya University College of Law (HU CoL) Thus, the law is quite essential for the very existence of peaceful and orderly social interaction and sustainable development. In the absence of law, society lives in the state of nature which means a social condition which is characterized by no systematic social interaction, no individual property, civil war, use of force, no orderly change, etc. Generally, the following are some of the main functions of law: 1. Keeping peace and order within a society: One of the fundamental functions of law is to maintain peace and order by establishing rules and regulations that govern behavior. It provides a framework for resolving conflicts and disputes in a peaceful and orderly manner, ensuring the stability and harmony of society. 2. Shaping moral standards: Law plays a role in shaping and reinforcing moral standards within a society. It reflects the values, beliefs, and ethics of a community and helps establish a shared understanding of what is considered right and wrong, just and unjust. 3. Promoting social justice: Law serves as a tool for promoting social justice by ensuring fairness and equality in the distribution of rights, resources, and opportunities. It provides a mechanism for protecting the rights of individuals and groups, and for addressing discrimination and societal inequalities. 4. Maintaining the status quo - maintaining social peace and order: Law acts as a stabilizing force by preserving the status quo and preventing disruptive or harmful activities. It establishes boundaries and guidelines that help maintain social peace, order, and stability. 5. Facilitating orderly planning and change: Law provides a framework for planning and implementing societal changes in an orderly manner. It sets out procedures and regulations for making and implementing laws, ensuring that changes occur in a structured and predictable way. 6. Providing the basis for compromise: Law offers a structured framework for resolving conflicts and disputes through negotiation, mediation, or adjudication. It provides a common ground for parties to find mutually acceptable solutions and encourages compromise to maintain social harmony. 7. Maximizing individual freedom: While the law imposes certain restrictions on behavior, it also aims to maximize individual freedom by protecting individual rights and liberties. It establishes a legal framework that safeguards personal autonomy and ensures that individuals can exercise their freedoms without undue interference. 1.4. Sources of Law in General Sources of law mean tracing where the law drives its validity and origin or content from. In broad terms, there are two main categories of sources of law namely: material and formal sources. By: Ana Hassen Aliyyi (2017) For Business Law Class 7  BUSINESS LAW Haramaya University College of Law (HU CoL) 1. Material Sources of Law Material sources indicate the origin or contents of the law. Among the material sources of law, the most common and important are custom and religion. Most of the time custom and religion are used as the primary material source of law. Law is, at least theoretically expected to reflect the customs, religion, values and morality of the society. We have noted above that law is a generally accepted norm of the society which implies the primary material sources of law are the custom and religion of the society. Though most Ethiopian laws were copied from foreign sources, custom and religion have been used as material sources. Even custom and religion are recognized as material sources of law under the Ethiopian Constitution. Hence, we can say that custom and religion are the common material sources of law. However, there are times when custom and religion are rejected to bring new behavioral change in society. For instance, in case the custom and religion are against the universally accepted principles and when they are considered to teach and maintain harmful and traditional practices, they are rejected from being sources of law. 2. Formal Sources of Law Formal sources of law deal with the validity claim of the law. It traces the Authority or Organ which enacted the law. Based on the Organ which enacted the law we have the following formal sources of law: The Constitution, International Agreements, Proclamations and Court Decisions. The Constitution is the Supreme law of the land which is above every other law because it is the parent of all other laws. International Treaties and Parliamentary laws or proclamations are ranked in second place next to the Constitution while other laws such as regulations, directives and notices are ranked third, fourth and fifth, respectively. Regulations are enacted by the Council of Ministers, Directives by Ministries and notice is enacted by each departmental Bureaus. 1.5. Classification of Law  Why do we classify laws in various ways? Based on different factors, laws are classified into different categories. The main reasons for and purposes of classifying laws are for easy management and administration, efficient study and convenience. Generally, based on the following four factors, we may have the following classifications of laws: I. Based on Geography By: Ana Hassen Aliyyi (2017) For Business Law Class 8  BUSINESS LAW Haramaya University College of Law (HU CoL) Based on geographical location and scopes of application of the Laws we have International and National laws and Federal and State Laws. International Laws: International laws are a set of rules and principles that govern the relations between sovereign states and other international entities. These laws are agreed upon through treaties, conventions, and customary practices among nations. International laws cover a wide range of subjects, including human rights, diplomatic relations, trade, environmental protection, and armed conflicts. They apply to all countries and aim to promote cooperation, resolve disputes, and establish standards of behavior on a global scale. National Laws: National laws, also known as domestic laws or municipal laws, are the laws enacted and enforced within a particular country or jurisdiction. These laws are created by the legislative bodies of a nation, such as a parliament or congress, and apply to all individuals and entities within that country's borders. National laws cover a broad spectrum of areas, including criminal law, civil law, commercial law, family law, and labor law, among others. They vary from country to country and reflect the unique legal systems and cultural values of each nation. Federal Laws: Federal laws are laws that are enacted at the national level and apply uniformly across an entire country. They are created by the central government or federal legislature and have authority over all states or provinces within the country. Federal laws typically address matters that fall under the jurisdiction of the national government, such as national defense, immigration, taxation, bankruptcy, and intellectual property. These laws establish a consistent legal framework throughout the country and ensure uniformity in certain areas of regulation. State Laws: State laws, also known as provincial or regional laws, are laws enacted by individual states or provinces within a federal system. In countries with a federal structure, such as the United States, Ethiopia, Australia, or Germany, each state or province has its own legislative body with the power to create laws within their respective jurisdictions. State laws often cover areas such as education, transportation, healthcare, land use, and criminal offences that are not explicitly reserved for the federal government. II. Based on the Functions of the Laws Based on the specific functions of laws, we can classify laws into:  Substantive and Procedural;  Public and Private and  Civil and Criminal laws. By: Ana Hassen Aliyyi (2017) For Business Law Class 9  BUSINESS LAW Haramaya University College of Law (HU CoL) Substantive Laws are those groups of laws which lay down the rights and duties of the citizen, while Procedural Laws are laws which serve for the enforcement of substantive rights. Public Laws regulate the relationship between the Government and the public or the people whereas Private Laws regulate the relationship between the individuals. Civil Laws are laws which state civil rights and duties while Criminal Laws formulate crimes and their punishment. III. Based on Authority Based on the authority or organ that enacted the law we have primary and secondary laws. Primary laws are all laws which are enacted by the parliament while secondary laws are all other laws which are enacted by other subsidiary organs through delegation. IV. For Convenience Based on the convenience of administration and study of the law we may have:  Procedural law and evidence law  Civil law and commercial law/ Business law Civil laws are laws that govern civil matters, it provides civil rights and duties. Some Examples include Family law and Law of succession. Business laws on the other focus on the legal aspect of business transactions. Example. Law of sale, law of insurance, law of business organization etc. Be informed that, civil laws and business laws have some sort of similarities, though they have different aspects i.e. civil and business respectively. Both business and civil laws govern the relationships between/ among/ individuals. They are grouped under private laws. By: Ana Hassen Aliyyi (2017) For Business Law Class 10  BUSINESS LAW Haramaya University College of Law (HU CoL) 1.6 Business Law The legal aspect of business transactions and operations is governed by the dynamic and complex field of business law, also referred to as commercial law. Business laws are a branch of law that specifically focuses on the legal aspects of commercial transactions, business entities, and the relationships between businesses, employees, customers, and other stakeholders. It includes but is not limited to the following; laws governing general contracts, laws governing special contracts like contracts of sale, contracts of agency, contracts of insurance, contract of labor and employment. It includes laws governing traders and business organizations, the law of Banking and negotiable instruments. 1.6.1 Nature of Business Laws The nature of business law is multifaceted and dynamic. It encompasses a set of legal rules, regulations, and principles that govern the conduct of business conditioning and deals. Business law provides a framework for businesses to operate within the legal frame, ensuring compliance with applicable laws and regulations, and resolving controversies in a fair and orderly manner. The true nature of business law can be characterized by the following crucial aspects. 1. Order and Stability: Business law aims to establish and maintain order and stability in the business transactions by furnishing a predictable and harmonious legal framework for businesses to operate. It sets out the rights/entitlements/ and duties of businesses, establishes legal norms and morals, and provides mechanisms for resolving controversies and administering legal disputes. 2. Protection of Interests: Business law protects the interests of colorful stakeholders involved in business conditioning, including shareholders, workers, suppliers, and the general public. It provides legal safeguards to ensure that their rights and interests are defended and provides mechanisms for seeking remedy in case of violations. 3. Regulation and Compliance: Business law includes regulations and conditions that businesses must misbehave with, similar to licensing, permits, taxation, employment laws, environmental regulations, and consumer protection laws. It sets out the legal framework for businesses to operate immorally and responsibly. 4. Facilitation of Deals: - Business law provides rules and regulations that grease (facilitate) business deals, including contract law, marketable law, and transnational trade law. It enables businesses to enter into binding agreements, apply contracts, and conduct deals in a fairly sound manner. By: Ana Hassen Aliyyi (2017) For Business Law Class 11  BUSINESS LAW Haramaya University College of Law (HU CoL) 5. Rigidity to Changing Business Environment Business law evolves and adapts to changes in business transactions, including technological advancements, globalization, and changing social and profitable dynamics. It provides a flexible and adaptable legal framework that can respond to changing business requirements and challenges. 6. Resolution of Disputes Business law provides mechanisms for resolving controversies that may arise in the course of business conditioning, similar to action, arbitration, and indispensable disagreement resolution styles. It promotes fair and effective resolution of controversies, reducing queries and threats for businesses. 7. Compliance with Ethical Standards Business law encourages businesses to operate morally and responsibly, by setting out legal norms and principles that align with ethical considerations. It promotes fair competition, transparency, responsibility, and social responsibility in business conditioning. Generally, the true nature of business law encompasses a comprehensive legal frame that provides order, stability, protection of interests, regulation, facilitation of deals, rigidity, disagreement resolution, and compliance with ethical norms in the conduct of business conditioning. 1.6.2 Sources of Business Laws There are many sources from which the business law evolves. Some of these main sources are: Constitution The text of the FDRE Constitution is considered as the supreme law of the land. All laws and authority flowing from and traceable to the Constitution are recognized as lawful power. Any activity, practice or decision of the government organ which contradicts the Constitution is null and void. Every national law including Business laws is enacted through the authority of the Constitution. Statutes A Statute can be defined as an act of the legislature in written form. “Legislative actions, called statutes, are another important source of law. The assortment of rules and regulations put forth by Legislatures is what we call statutory law.” All legislation enacted by the House of People's Representatives in the form of proclamations are statues. Council of Ministers regulations and directives issued by each ministry are considered statutes. For example, the 2021 Commercial Code of Ethiopia Proclamation No. 1243/2021 is one of the sources of Business Law. Cases By: Ana Hassen Aliyyi (2017) For Business Law Class 12  BUSINESS LAW Haramaya University College of Law (HU CoL) Judicial decisions, in the form of precedents, are one of the most important sources of law. Case laws play an important role in shaping the law and bringing out its relevance as per the prevailing conditions in society. The interpretation offered by the judges in the form of “ratio decidendi” 1 aids in clarifying the nuances of the law. Example. The Decision of the Ethiopian Supreme Court cassation bench has the force of law and it is one source of business law. Custom Custom is one of the most important sources of law. It is possible to detect two basic elements in the make-up of the custom - material facts, which is the actual behavior of states founded upon the performance of the State’s activities and practices; psychological element, which is the belief by the state that behaved in a certain way that it was a legal obligation to act that way. There are several factors concerning the nature of a particular practice – Duration, repetition, consistency and generality. “A substantial part of business law is customary, notwithstanding advances made in science and technology. International agreement: Treaties are a source of international business law. They are one of the sources that have been mentioned under Article 38 of the Statute of the International Court of Justice. Treaties are obligatory and are founded upon the customary principle that agreements are binding upon the parties and must be performed in good faith. As per Article 12 (2) of the FDRE constitution, international agreements are part and parcel of the constitution. End of Chapter One Thank you for your attention! 1 “Ratio decidendi” is the rule of law on which a judicial decision is based on. By: Ana Hassen Aliyyi (2017) For Business Law Class 13  BUSINESS LAW Haramaya University College of Law (HU CoL) Chapter Two LEGAL PERSONALITY Introduction This chapter will provide you with an understanding of the concept of legal personality which refers to the recognition of certain entities, such as individuals, corporations, or organizations, as having rights, obligations, and legal standing under the law. Legal personality grants these entities the capacity to participate in legal relationships, enter into contracts, sue or be sued, and enjoy legal protections. The Commencement and end of physical personality, how personality is acquired, exercised and extinguished, and attributes of legal personality will be discussed and addressed. 2.1. Definition of the Term “Person” In the first place, a person is defined by Black's Law Dictionary as an individual member of society. It can also refer to an institution, such as a company, that is legally acknowledged as having the same rights and obligations as a human being. It is a concept that encompasses the attributes, characteristics, and qualities that make someone a distinct and unique human entity. A person is typically characterized by their consciousness, self-awareness, rationality, and capacity for moral judgment. 2.2. Types of Persons There are two types of persons: i. Natural persons/ physical persons/ and ii. Legal /artificial persons/juridical persons/ The natural person encompasses all human beings who are born alive and viable for more than 48 hours. (Ethiopian Civil Code Art 4) Hence, the personality of a physical or natural person is acquired through birth and staying for more than 48 hours. As opposed to an artificial person made by law, who is a single member of society, a natural person is a human being. A natural person is a being who physically resembles a human being at birth. Every human being is regarded as a person in the eyes of the law regardless of whether they meet any further subjective requirements. Alternatively, a person's legal personality is assumed or bestowed upon them automatically at the time of their physical birth. Thus, from the moment of birth until the moment of death, every physical person has rights and obligations. By: Ana Hassen Aliyyi (2017) For Business Law Class 14  BUSINESS LAW Haramaya University College of Law (HU CoL) Legal persons are all fictitious entities which are considered as a persons by law. Legal persons are also known by names such as fictitious, artificial or juridical persons. Legal persons are entities such as companies (corporations) such as business organizations, Institutions and Associations and so on created by law and given certain legal rights and duties of a human being. An artificial person is a being, real or imaginary, treated more or less as a human being for various legal purposes. Such persons are also fictitious persons (for their existence is fictional), legal, or moral persons. (Refer to articles 394 -549 of the Civil Code of Ethiopia) As the clue is in the name, these are not human beings. They cannot, by themselves, do what human beings can do physically. They are represented (even led) by physical persons to do their activities. Legal personality is not conferred on them naturally. Hence, personality is not presumed to them. Their existence, unlike human beings, is fictitious. Legal personality is given to them by law, artificially, for the sake of convenience in control and upon the fulfilment of specific legal requirements such as application to the required office, registration, publications, legality of the object of incorporation, etc. Physical persons exist in reality, and we can see and touch one another. However, juridical persons are creations of the human mind. It must be noted that juridical persons differ from the “managers” and “employees” who work for them. They are also different from the “buildings” they use as premises because such premises are analogous to the houses where physical persons live. Although we cannot physically touch, see, and perceive juridical persons, we can conceive them as entities. The term “persons” attached to them signifies that they participate in legal relations or juridical activities. The legal recognition of entities other than physical persons became necessary when they started to participate in juridical relations as entities separate and distinct from their owners or members. Such entities acquire personality upon recognition by domestic laws and upon their subsequent establishment, registration, and publicity, as the case may be. 2.3. Legal Personality The legal status of someone who is viewed as a person by the law is known as legal personality. It is the legal theory (device) that determines whether an artificial or human creature qualifies as a person under the law. The law uses personality as a tool to define or identify entities to which it grants specific rights and privileges. Being the object of rights and obligations in the eyes of the By: Ana Hassen Aliyyi (2017) For Business Law Class 15  BUSINESS LAW Haramaya University College of Law (HU CoL) law is known as legal personality (legal personhood). Thus, someone is considered to be a person if they are the object of rights and obligations; this phenomenon is known as legal personality. 2.4. Commencement of Physical Personality The human person is subject to rights from its birth to its death” (Article 1 of the 1960 Civil Code of Ethiopia). The words “human person” (under Article 1) refer to anyone who is a member of mankind; i.e. to anyone who has the distinct features of a human being. Deformities and handicaps are acceptable as long as they are the sorts that could occur through various natural or other misfortunes. But in case the new-born offspring’s variation from the common features of human beings is such that coining some other new word becomes necessary, it can’t be considered a human person. For example, a creature with four eyes and tails is not a natural person no matter how it resembles a human being. Physical personality begins from birth and lasts until death. Birth is thus the beginning of physical personality, and will be briefly discussed below.  Birth  When is a child considered to have a separate existence?  Does the legal existence of a person begin as of birth without any other requirement? The term “birth” may create some problems of interpretation. Black’s law dictionary defines birth as “the act of being wholly brought to separate existence.” “In this respect, one tends to make a distinction between the complete extrusion of the child from his mother’s womb and the cutting of the umbilical cord. At any rate from that moment on, the child becomes a person in the legal sense of the word and, in the ultimate instance, birth will be established through medical evidence.” (Vanderlinden: 10) The other issue that needs to be addressed is whether the legal existence of a person begins as of birth without the requirement of viability, i.e. the capability to live outside the womb, which according to Article 4 is presumed if the child lives for 48 (forty- eight) hours after birth. There are two contending interpretations. According to the first interpretation, the only condition for the acquisition of personality is birth; and the issue of viability arises by way of an exception only when the interest of the conceived child requires the tentative acquisition of personality under the mandatory conditions that the child be born ‘alive’ and ‘viable’, short of which the personality granted shall be annulled. The By: Ana Hassen Aliyyi (2017) For Business Law Class 16  BUSINESS LAW Haramaya University College of Law (HU CoL) second line of interpretation contends that for a child to acquire personality she/he should in all cases be born alive and viable. Many lawyers support the first interpretation because they argue that we can’t resort to interpretation if the law is clear. Article 1 is so clear that the issue of interpretation can in no way arise. And, Article 100 does not implicitly preclude declaration of birth if a child has not lived for 48 hours. The provision requires the declaration of birth notwithstanding (i.e. - even if) the child dies within 48 hours after birth. Had personality not been acquired before 48 hours, there would have been no reason for recording a child who died within this period. According to supporters of the first interpretation, the birth of a stillborn child (for example), is not declared because it doesn’t acquire personality. On the contrary, the duty to declare birth even if the child has not lived for 48 hours verifies the requirement of recording the personality of the child no matter how short it lived. A declaration of birth and the drawing up of a record of birth are required when the child has lived for forty-eight hours, notwithstanding that he dies before the expiration of the time fixed for drawing up the record of birth (the 1960 Ethiopian Civil Code Art 100).  Anticipated Personality Conception and viability There are instances where the interest of a conceived child is put at stake if personality is attributed only after birth. A case in point is the inheritance right of a child whose father has died before he is born, as envisaged under Article 834 of the Civil Code. Similarly, the interest of a conceived child should be protected when a parent dies under circumstances that entitle the children of a deceased to receive damages, life insurance or other payments. Article 2 is meant to solve such problems. It reads: A child merely conceived shall be considered born whenever his interest so demands provided that he is born alive and viable (Article 2). A child is deemed to have been conceived on the 300th day preceding its birth (Article 3). A conceived child may acquire personality while he is still in his mother’s womb provided that: a) His interest so requires, particularly where the interest of a conceived child requires that he be called for succession (Article 834), b) He is born alive, and, c) He is viable (i.e.- capable of living for at least forty-eight hours after birth (Arts. 4/1 and 4/2). By: Ana Hassen Aliyyi (2017) For Business Law Class 17  BUSINESS LAW Haramaya University College of Law (HU CoL) The three cumulative conditions for granting personality to a conceived child are the interest of the child, life and viability. 2.5. Attributes of Personality Attributes of personality refer to those characteristics or attributes that distinguish beings endowed with a legal personality from those with no legal personality. Accordingly, the attributes of personality are Name, Nationality, Domicile and Residence and exercise of rights and duties. ❖ Name The basic use of the name is for identity. There is no direct relationship created between the person and his/her/its name. But there may be a relationship between the name and a legal person as most of the time legal persons use names which indicate their purpose and objectives. All-natural people shall have one or more first name, Patronymic(father) name and Family (Grandfather) name. The order of writing the name of a natural person is Family name, first name and father’s name. For instance, the student with the name Hagos Desta Gemechu should write his/her name as follows: Gemechu Hagos Desta. However, this form of writing names has never been practiced in Ethiopia except on official International documents. A person may have more than one first name but one of such names should be a primary and official name. The name of a person should not impugn the morality or law of the land. Furthermore, it is not legally possible to assume the name of one’s father, mother, brother and sister. Particularly, abuse and usurpation of name bears civil and criminal liabilities.  Abuse of a name is using one’s name in bad faith and to the prejudice of another person with the same name. It is illegal to use your name confusingly and misleadingly to use the goodwill or reputation of others.  Usurpation is assuming the name of another person for personal gain and by causing damage to the holder of that name. A common instance is when an amateur singer uses the name of well-known singers to get undue acceptance from the crowd. Anyone is free to change his/her name at any time so long as doing so brings no damage to others. Nonetheless, you cannot change your father’s name at will. The first name is given to the child by the father and the mother can give one in the absence of the father or an additional By: Ana Hassen Aliyyi (2017) For Business Law Class 18  BUSINESS LAW Haramaya University College of Law (HU CoL) name. A child whose father is unknown shall have a patronymic name of his/her maternal grandfather. Legal persons shall also have a name which does not contravene public interest and public morality. All business organizations have a trade name. All institutions and associations also have a name.  The second attribute of personality is nationality. All physical personnel acquire a nationality of the country where they are born or of their family. Legal persons have the nationality of a country where they are seated or incorporated.  Residence and domicile are also one of the attributes of personality. All persons have one or more residences and only one domicile. Residence is defined under Article 174 of the civil code as a place where a person normally resides. According to Article 180 of the code, a trader or business organization has a residence in a place where they carry out their business. Domicile is an extension of residence for it incorporates residence as one of its elements. Domicile is defined under Article 183 of the Civil Code: as a place where a person has established his principal seat of his business and his interests, to live there permanently. Anyone who lives in a particular area for more than 3 months is a resident while he has to establish some business and personal attachment with such place and must show an interest in living there for an indefinite period to become a domiciliary.  The last attribute of personality is an exercise of rights and shouldering of duties. All people regardless of their economic, social and political status acquire “Patrimony” upon acquiring personality. Patrimony is the state of having some rights and duties towards or against this world or specific person. It is clearly stated under Article 1 of the civil code that all persons are the subjects of rights and duties from their birth to their death. Though this article seems to apply only to physical persons, it is equally applicable to Legal persons too. The fact that all people are subject to rights and duties from birth to death does not necessarily mean that they can exercise such rights and bear duties automatically and without any condition. Incapable person cannot personally exercise their rights but through their representatives. By: Ana Hassen Aliyyi (2017) For Business Law Class 19  BUSINESS LAW Haramaya University College of Law (HU CoL) For instance, Minors can acquire rights and incur liability by acting through their Guardian or Tutor. Legal persons such as business Organizations shall act through their Agent or Manager. But it is a Person that can sue or be sued, not the Representative or the Agent. 2.6. End of Personality Personality that is acquired by nature or by the operation of the Law can be extinguished due to various reasons. The common grounds for the extinction of personality are Death and Absence of a Natural Person and Dissolution and Bankruptcy of Legal persons. Loss of Nationality may not be taken as loss of personality. With the Extinction of Personality comes the termination of rights duties and Patrimony in general. By: Ana Hassen Aliyyi (2017) For Business Law Class 20