ASSIGNMENT OF BUSINESS LAW

GROUP ASSIGNMENT

1. Discuss the most important functions of the law in societies.

 Laws protect individual rights and liberties. The Bill of Rights was added to the
U.S. Constitution to guarantee several important protections. The laws protect
individuals from other individuals, from organizations, and even from the
government. The First Amendment of the Bill of Rights prohibits the government
from making any law that would interfere with an individual’s right to free
speech. There are some exceptions based on what is considered free speech.

 Laws provide a framework and rules to help resolve disputes between individuals.
Laws create a system where individuals can bring their disputes before an
impartial fact-finder, such as a judge or jury. There are also legal alternatives
where individuals work together to find a solution, such as by using alternative
dispute resolution (ADR). There are courts at every level, from local to federal, to
decide who should win in a dispute.

 Without laws, there would be no way to set standards. It is easy enough to see
why murder and theft are crimes, but laws also provide a framework for setting
many other kinds of standards. Without the Federal Code of Regulations, it would
be difficult for individuals or businesses to transact businesses using banks.
Federal regulations provide enforceable rules and protections regarding taxes,
commercial transactions, employment laws, insurance, and other important areas.

 Laws help societies to maintain order. What would society be like without the rule
of law? You might need to provide your own protection because there would be
no police force or army.  Without federal banking protections, you might need to
find other ways to get what you couldn’t provide for yourself. With the structure
and organization of laws come order and predictability. Individuals can feel safe,
leading to wider social structures and greater productivity.

2. List and discuss six types of business organization under Ethiopian commercial law.
a) Partnership: is where two or more persons who intend to join together make

contributions for the purpose of carrying out activities of an economic nature and of
 participating in the profits and losses arising out thereof, if any. According to the
Commercial Code of Ethiopia, contributions in partnership are possible in the
following conditions. Each person shall make a contribution, which may be in money,
debts, other property or skill; Property or the use of property may form a contribution;
Unless otherwise agreed, contributions shall be equal and of the nature and extent
required for carrying out the purposes of the partnership.
b) Joint venture: It is a secret (discreet) or clandestine type of partnership in that the

joint venture agreement as among the venturers lacks the characteristics of

divulgation or publicity or registration or transparency to third parties. It is only one
of the partners (the manager) who is only known to the public as if he is doing his
own individual business. Otherwise, the agreement between the manager and the rest
of the venturers or the venture per se does not have legal personality.
c) General partnership: consists of partners who are personally, jointly, severally and

fully liable between themselves and to the partnership firm’s undertakings. This
means that each partner is responsible for and must assume the consequences of the
actions of the other partner(s). All members share the management of the business.
The death or withdrawal of a general partner, or the expiration of the term of the
general partnership, will dissolve the partnership. Continuation of the partnership
following such events may be dealt with, however, in the partnership agreement.
Since a partnership is generally a “voluntary” association, any general partner who no
longer desires to be associated with the partnership may withdraw and force
dissolution. Dissolution of a partnership, as a general rule, requires the winding up of
its affairs and a liquidation of the partnership’s assets.
d) Limited partnership: Some members are general partners who· control and manage

the business and may be entitled to a greater share of the profits, while other partners
are limited and contribute only capital. Limited partners take no part in control or
management and are liable for debts to a specified extent only. A Legal document,
outlining specific requirements, must be drawn up for a limited partnership.

e) Share Company: Compared to the rest of business organizations in Ethiopia, this is

the most modern and well-organized corporate form. Per Article 304 of the com.
code, a share company is a company whose capital is fixed in advance and divided
into shares and whose liabilities are met only by the assets of the company. The
concept of limited liability of shareholders is well practiced here than the rest of the
 business organizations in that shareholder are liable only to the extent of their
contribution or shareholding. They are always (by their very form) commercial in
nature.

f) Private Limited Company: This is the other variety of company in Ethiopia. But
viewed under a microscope it is a hybrid of a general partnership and a share
company. For instance, on the one hand, like partnerships it cannot operate in a high-
profile business; it cannot even issue negotiable securities, and there is no ease of
transfer of shares to a third party. On the other hand, like share companies there is the
concept of limited liability of partners. In terms of the ceiling requirement of
membership (which is 50) and the initial capital in need to be subscribed (which is
15,000 ETB), it differs from share companies (where there is no ceiling requirement
of membership and initial capital is 50,000 ETB).

3. Write three cumulative requirements to grant personality for merely conceived

(unborn) child.
a) Conception: per article 3 of the same code, a child is deemed to have been conceived
on the 300th day which precedes its birth.
b) There needs to be an interest (mostly economic) of the fetus to be protected in its
favor nevertheless, it is yet to be born. For instance, the right to succession or
Donation. The presumption of the law is, if the child is to be born after nine months
why should we preclude him from enjoying his rights merely because it is yet to be
born. and
c) The child should be born (when it is born) Alive and Viable. I.e., when the child is
born after the completion of pregnancy, it should be born.
INDIVIDUAL ASSIGNMENT (20%)

1. Write the characteristics (natures) that differentiate share company from others
business organizations (entities).

The important characteristics of a company are as follows: Registration, Legal Entity,

Perpetual Succession, Transferability of Shares, Limited Liability of Members, Capital,
Common Seal, Board, Buy-Back of Shares, Separation of Ownership and Management,
Management and Control, Taxation, Incorporated Association of Persons, Risk-
Bearing, Articles of Regulations and Prescribed Mode of Winding Up.

2. Discuss remedies for non-performance contract.

a) Forced (Specific) Performance of the contract: this is a remedy in which the creditor
requests the court to force the hands of the debtor to perform his obligation according
to the contract or the law. This is designed to satisfy the victim party by enforcing the
terms of the contract. It may be done either by compelling the debtor (failing party) to
perform his or her obligations or by authorizing the creditor (victim) party to perform
the debtor’s obligation at the cost and expense of the debtor. The former is usually
referred to as forced performance, while the latter is called substituted performance.

b) Cancellation of the Contract: the second remedy available to the creditor is

cancellation of the contract. This may take place either by court judgment (judicial
cancellation) or the unilateral act of the creditor. Unilateral cancellation is a condition
where by a party cancel the contract where a provision to this effect has been made in
the contract and the conditions for enforcing such information are present
(materialized). In all other cases, the creditor may apply to court for declaration of
cancellation and it is the court that is vested with the ultimate power to declare
cancellation or not. The effect of cancellation is to put the parties to the position that
would have existed had the contract not been made. Thus, the creditor can claim
restitution of what he has paid or delivered during performance.

c) Compensation or Damages: the third remedy is damages (compensation). The creditor

can claim compensation for the damage or loss he has incurred as a result of non-
performance. This remedy may be claimed in addition to (additional) either of the
above remedies or independently. In applying any of or a combination of these
remedies, one should take in to account not only the interest of the creditor (victim
 party) but also that of the debtor (failing party) i.e., for example, the debtor cannot be
required to pay excessive compensation or his personal liberty be deprived under the
guise of the legal remedies.
3. Briefly discuss on validity requirements in order to conclude legally enforceable
contracts.
 There Must Be a Bargain
 There Must Be Consideration
 The Subject Matter of the Contract Must Be Legal
 The Parties Must Have Legal Capacity to Enter into a Contract
 The Parties Must Voluntarily Enter into the Agreement