METTUUNIVERSITY

College of Business and Economics

Department of Management
Course Name: Business Law

Course Code:MGMT3101
Group Assignment

Submission date:-24/12/13

Submitted to:- Ass.Prof. Sulieman.A

NAME OF STUDENTS ID NO

1.Ibsa Ademe -------------------------------------------------------RU6369/12

2.Nardos Tadese----------------------------------------------------RU6149/12
3.Kemal Osman ----------------------------‐------------------------RU6156/12
4.Cherinet Shimalis-------------------------------------------------RU6412/12
5.Jemal Abdi---------------------------------------------------------RU6269/12
6.Foziya Dawud-----------------------------------------------------RU6278/12

Table of Contents

Introduction ........................................................................................................ 1

1. Sources of the law .......................................................................................... 2

1.1. The Constitution ............................................................................................2

1.2. Proclamations...............................................................................................3
1.3. Treaties...........................................................................................................3
1.4.Regulations.....................................................................................................4
1.5. Directives.........................................................................................................4
2. Acquisition of personality for both artificial and physical persons.............4
2.1. Acquisition of artificial person......................................................................4

2.2. Acquisition of physical person........................................................................5

2.2.1. Principle .........................................................................................................5

2.2.2. The exception............................................................................................... 6

3. The essential requisites in the formation of contracts

between contracting parties...................................................................................8

3.1. Capacity................................................................................................................8
3.2. Consent................................................................................................................8
3.3. Object of contract...............................................................................................8

3.4. Form of contract ................................................................................................9

4. Sources of obligations .......................................................................................10

4.1. Law as a source of obligation............................................................................11

4.2. Contract as a source of obligation ..................................................................11

5.Termination of Offer .............................................................................................11

5.1. Termination by the Action of the Parties ........................................................11

5.1.1 Revocation or withdrawal of offer ..................................................................12

5.1.2. Rejection of the offer by the offeree ............................................................12

5.1.3 Counter-offer ..................................................................................................12

5.2. Termination by Operation of Law ..................................................................12

5.2.1. Lapse of time .................................................................................................13

5.2.2. Death or Incompetence of either party .......................................................13

6. Case question ........................................................................................................ 13

Summary .................................................................................................................14
References...............................................................................................................15

INTRODUCTION
By this document we will discuss six major topics. Under this major topics wewill discuss many
subtopics. Those six issues which with their related subtopics are the sources of the law,
like,the constitution, proclamations, treaties and regulations. The second issue is the acquisition
of personality for both artificial and physical persons are each deeply to explain. The third issue
is the essential requisites in the formation of contracts between contracting parties, such as
capacity, consent,object and form of Contracts.

The fourth topic is the sources of obligations of a persons, like,law and contract as a source of
obligation. The fifth issue is termination of an offer by the action of the parties (like, revocation,
rejection ,counter-offer) and termination by the operation of law (like, lapse of time,death or
incompetence of the either party) respectively .The last topic of discussion is extinction of
obligation by the set off prove case problem.

1.What are the sources of the law where you should look for in case you need to
refer to a law regarding certain matters?

In the context of legal research, the term „sources of law‟ can refer to three different concepts,
which should be distinguished.

 One, it can refer to the origins of legal concepts and ideas.

 Two, it can refer to governmental institutions that formulate legal rules.
 Three, it can refer to the published manifestations of the law.
The main sources of law in Ethiopian legal system are the Constitution, Proclamations, Treaties,
Regulations, and Directives. These are the likely documents you can use to exercise your legal
rights and the likely documents other people can use against you in case you have violated your
legal duties that are put for the benefit of others.

1.1 The Constitution

In every legal jurisdiction a constitution is considered as the supreme law of a land. Article 9(1)
of FDRE Constitution,

The Constitution is the supreme law of the land. Any law, customary practice or a decision of an
organ of state or a public official which contravenes this Constitution shall be of no effect.

It means the Constitution is the highest legal document in the country. It is the source of
government authority. Constitution grants power to the government to enact law to the
legislature.

1.2 Proclamations

The laws that the legislative organ enacts are called proclamations. In the Ethiopian case
proclamations are enacted by the house of people’s representatives. According to Article 55(1)
of FDRE Constitution,

The House of Peoples’ Representatives shall have the power of legislation in all matters
assigned by this Constitution to Federal jurisdiction.

Such matters include labor law, business law, and nationality law. Article 52 of the FDRE
constitution also grants power to the state councils to enact law. For instance since family laws
are state matters, state councils have the right to issue laws on family matters such as marriage
and divorce. These laws apply only to the concerned region only.
1.3 Treaties

Treaties or conventions are international agreements that have the force of law. Normally
international legal obligations emanate from treaties.

Article 9(4) of FDRE Constitution states,

"All international agreements ratified by Ethiopia are an integral part of the law of the land."

Article 13(2) of FDRE Constitution states that,

The fundamental rights and freedoms specified in this Chapter shall be interpreted in a manner
conforming to the principles of the Universal Declaration of Human Rights, International
Covenants on Human Rights and International instruments adopted by Ethiopia.

1.4 Regulations

The parliament usually delegates the power to make laws to the Council of Ministers (an organ
that constitutes the Prime Minister, Ministers and other people with the rank of ministers).In
this regard, refer to article 76(1) of the FDRE constitution,"the Council of Ministers comprises
the Prime Minister, the Deputy Prime Minister, Ministers and other members as may be
determined by law. " Laws issued by this organ are called Regulations. If the regulations
contravene with the proclamation the later prevails over the former.

1.5 Directives

It is once more an inevitability to assign the authority to make laws to ministries which have
enough expertise to issue rules in relation to the matters at hand. As such laws issued by
ministries are named directives.Regulations are inferior to the other sources of law mentioned
above. If directives are inconsistent with regulations, proclamations and most importantly with
the constitution, the former (directives) don’t have a legal effect.

2.Explain acquisition of personality for both artificial and physical persons.

2.1 Acquisition Of artificial person

Legal personality is not restricted to human beings. Artificial person’s also known as fictitious
persons or legal persons are non-human entities, which are recognized by law as persons and
given certain rights and duties and are, treated more or less like human beings for the sake of
convenience in control. Artificial persons can be an association, an organization, a company, a
group of person, state etc.

These artificial persons acquire legal personality in different mechanisms. These mechanisms
include

 legislation,
 registration and
 publicity.

For instance, public offices will start to have personality upon the enactment of establishment
proclamation or regulation with no other conditions attached to it. On the other hand, private
business organizations have to be registered with a competent public authority in order to
acquire legal personality. They should also comply with publicity requirements.

So, acquisition of personality by business organizations is effected by meeting the

requirements of both registration and publicity, and only as a result of such they can validly
start acts of civil life.

2.2 Acquisition of physical personality

Natural persons also known as physical or real persons, refers to human beings. Today, unlike
the ancient times where slaves were considered as mere property, all human beings are
considered as equal and the principle of personality has already changed.

2.2.1 Principle : Birth

Most legal systems accept birth as a time when personality of a human being begins. Similarly,
Art.1 of the Ethiopian Civil Code provides
“The human person is the subject of rights from its birth to its death”.

Birth refers to the complete extrusion of the baby from its mother's womb either in a natural
way or by a medical operation. Birth alone is a sufficient condition to confer personality under
the Ethiopian law, and no other requirements are attached to it.

2.2.2 The exception

As stipulated under Art 1 of the civil code, personality begins at birth as a matter of principle. As
per this provision, an unborn child is not a person in the eyes of the law and can have no rights.
However, this general rule has an exception in that personality may be granted to a merely
conceived baby without waiting for its birth for some purposes. Art 2 of the Ethiopian Civil Code
states that,

“A child merely conceived is considered as though born where its interest so requires provided it
is born alive and viable.”

Thus, as per this provision personality is granted to unborn child if the following three
cumulative requirements are met;

I.The interest of the child must require: The exception of granting personality for fetus
generally revolves around the interest of the unborn child. This exception is based on the
justification that a child who has already lost his father while being in its mother's womb should
not be subjected to further pain of losing a benefit which it would have secured had it been
born before its father's death.

In most cases, the interest of the unborn baby comes into the fore where a father dies before
the birth of the child leaving behind property. If a baby has to wait until birth to acquire
personality, i.e. if Art 1 of the Civil Code is strictly applied, it will definitely lose the succession to
its father's property because succession constitutes a juristic act and being a beneficiary when it
opens necessarily requires personality.
Opening of succession is legally made at the death of the father and the property would
devolve upon those having the capacity and the right to succeed at such time. Therefore, when
there is an interest of the baby at stake, the unborn baby in the womb should be regarded as
already born and should be allowed to take advantage of the interest.

II.The child must be born alive

In order to be considered as a person, the baby must be born alive so much so that, for
instance, personality will never be granted if the fetus is aborted.

III.The child born must be viable

Viability refers to the ability to live or the potential of surviving. This is to exclude from the
ambit of personality impotent newly born babies or those incapable of surviving because of
some congenital factors. The law takes certain presumptions to settle questions of what baby is
viable and what is not.

The law irrebutably presumes that a child that lives for 48 hours after its birth is viable, so that
no contrary evidence can be admitted to disprove this presumption. The law also provides
another presumption,rebuttable presumes that a child dies before 48 hours after its birth is
deemed to be not viable. However, this presumption is that can be shown to the contrary by
proving the child was viable. External factors that may have caused the death of the child
before 48 hours can be used to disprove the presumption of non-viability.

If, for instance, the baby dies on the 43rd hour after its birth because of mishandling by nurses
or by hunger or due to a car accident can be employed to challenge the above presumption by
proving that the baby would not have died had it not been for the extraneous factors.

3. Identifying the essential requisites in the formation of contracts between

contracting parties; Capacity ,Consent,Object and Form.

3.1 Capacity
It is the essence of acontract that there should beat least two parties and the contract involves
the meeting of two minds.Capacity means the ability to understand one sactions and the effects
of those actions. Persons with the capacity to contract are legally competent. Legal capacity
depends on the age of aperson, mental condition of a person and a criminal sentence(penal
sanction)passed on a person.Under the Ethiopian law,a person must be at least eighteen years
of age of a sound mind and free from any judicial interdiction.

3.2 Consent
Consent is a defect-free mutual agreement by the contracting parties. It is a manifestation of
freedom of contract, and therefore is the basis upon which rests the entire law of contractual
obligations. Consent carries a double aspect:
 The parties must agree on the scope of their undertaking (there must be agreement on each
and every important detail) and,

 There must be a willingness on the part of the contracting parties to make their undertaking
legally binding.

3.3 Object of contract

It is where parties actually undertake;It is the obligations of both parties;It may be to do, not to
do or to give;So object of contract is an agreement between the parties to do, not to do or to
give something;

Object of contracts are freely determined by the parties (Art 1711). However, the freedom is
not absolute. Though parties are free, their freedom is exercised with in the limit of the law.
Accordingly, the object of the contract must be (Art 17116);

 Sufficiently defined; to constitute an obligation enforceable in law, the rights and

liabilities given and imposed must be definite.
  Possibility of the object: a contract shall be of no effect where the obligation of the
parties or of one of them relates to a thing or a fact which is impossible and such
impossibility is absolute.
 Legality and morality of the object; no person can be bound by contract to violate any
law or moral value of the community.

3.4 Form of contract

It is the way in which the content of the contract exists or appears to others;It answers the
question how third parties, including a court know the agreement of the parties,So a contract
may exist either in written or oral form;

The law gives the freedom to the parties to choose a particular form(written or orally);But,
freedom of form is not absolute—it can be limited by law or offer(1682/2/);
The Ethiopian Civil Code requires the use of special forms for certain types of contracts. Some
of the contracts that the law expressly requires to be made in writing are:

 Contract relating to immovable (Art 1723): that contracts relating to such objects
should be in writing and registered with court or notary. Land and building are examples
of immovable property.

 Contract with public administration (Art 1724):Any contract to which a government

agency is a party, including any type of employment contract, should be made in
writing.
 Preliminary contract (Art 1721): It is a contract leading to the formation of another
contract. The best example is agency contract. If the agent’s power is to
 Long-term contracts (Art. 1725): Those contracts as contract of guarantee, the
insurance contract, and any other contract described as such have to be in writing.
  Variation of contract made in writing (Art 1722) : Variation of contract is a contract
itself (Art. 1675). So, if such contract relates to contracts which required to be in written
form, the variation should necessarily be made in writing.

4.What are the sources of obligations of a person? List and elaborate some of
the obligations which arise from the law?
Source of obligation indicates from where the obligation emanates.In Ethiopian legal system,
there are no clearly stated classifications of sources of obligations. Art.1675 of Ethiopian civil
code generally expresses obligations as arising from contractual agreements. The two sources
of obligations are ,

 the law as a source of obligation and

 contract. as a source of obligation

4.1 Law as a source of obligation

As far as an obligation arising from the law is concerned, it happens in situations when law
imposes obligations on persons to give or not to give, to do or not to do some acts recognized
in almost all-legal systems. Obligation arising from the law is a unilateral obligation imposed on
citizens or contracting parties without their consent. It includes among other things;

 Obligation to pay income taxes

 Obligation to render military services
 Obligations of creditors
 Obligation of debtors
 Obligations of families to their children etc.

4.2 Contract as a source of obligation

In contract, the will of the parties forms the basis of the obligation. It is something undertaken
willingly. No body forces you to make contract. You enter into a contract only if you are willing.
5.Describe the situations in detail where an offer is terminated?

An offer terminates generally by the action of the parties or through the operation of the law.

5.1 Termination by the Action of the Parties

An offer can be terminated by the action of the parties in any of three ways: by revocation, by
rejection or by counter-offer.

5.1.1 Revocation or withdrawal of offer; A withdrawal of an offer is possible when the

offeror revokes his offer before the offeree knew or at the time when he knows of the offer. A
withdrawal is therefore impossible after the moment the offeree has gained knowledge of the
offer.

5.1.2 Rejection of the offer by the offeree; Rejection of an offer is, either making
modification to the content of the offer or sending a “no” answer to the offeror. Offer is
deemed to be rejected “where acceptance is made with reservation or does not exactly
conform to the term of acceptance”

5.1.3 Counter-offer:- A rejection of the original offer and the simultaneous making of a new
offer by the offeree is called a counter-offer. It is required that the offeree's acceptance should
match the offeror's offer exactly. Any material change in, or addition to, the terms of the
original offer automatically terminates that offer and substitutes a counter-offer.

Art.1694 of the civil code

The offer shall be deemed to be rejected and a new offer shall be deemed to be made where the
acceptance is made with a reservation or does not exactly conform to the terms of the offer.

5.2 Termination by operation of Law

The power of the offeree to transform the offer into a binding legal obligation can be
terminated by operation of the law through the occurrence of the following events: lapse of
time; death or incompetence of the offeror or the offeree.

5.2.1 Lapse of time: offer may be made with or without a time limit for acceptance. An offer
terminates automatically by law when the period specified in the offer has passed (if a time
limit has been stipulated). If no time for acceptance is specified in the offer, the offer
terminates at the end of a reasonable period of time.

5.2.2 Death or Incompetence of either party; - An offeree power of acceptance is

terminated when the offeror or offeree dies or is deprived of legal capacity to enter into the
proposed contract. An offer is personal to both parties and cannot pass to the descendant's
heirs.

6.XYZ PLC owes Bedele Brewery Factory 1,000,000 birr and on another
transaction Bedele Brewery Factory owes XYZ PLC 1,000,000. XYZ PLC has
bought a track on loan from Mesfin Industrial Engineering for, 1,000,000.
Unfortunately, the PLC is declared bankrupt and consequently Bedele Brewery
Factory wanted to effect set-off. What would be your advice for Mesfin
Industrial Engineering if you were the organization’s legal advisor?

Set-off: Where two persons owe debts to one another, set-off shall occur and the obligations of
both persons shall be extinguished.

 The Mesfin Industrial Engineering have the right to protest the set-off going to be made
between XYZ PLC and Bedele Brewery Factory Because the set off concluded among
them shall be affect his right or his interest.
  As provided under Article 1837 of civil code of Ethiopia " set-off shall not affect the
rights which a third party may have in respect of one of the debt ". Hence the set-off
under taken between XYZ PLC and Bedele Brewery is affect the right or interest of
Mesfin Industrial Engineering.
 Therefore the set off between Bedele Brewery Factory and XYZ PLC is not permissible or
it's invalid set-off, and Mesfin Industrial Engineering has the right to require the
proportional set-off with respect to his right even if they set-off.

SUMMARY

In this document we tried to discuss six major topics. Under this major topics we will discuss
many subtopics. Those six issues which with their related subtopics are the sources of the law,
like,the constitution, proclamations, treaties and regulations. The second issue is the acquisition
of personality for both artificial and physical persons are each deeply to explain. The third issue
is the essential requisites in the formation of contracts between contracting parties, such as
capacity, consent,object and form of Contracts are discussed in detail.

The fourth topic is the sources of obligations of a persons, like,law and contract as a source of
obligation. The fifth issue is termination of an offer by the action of the parties (like, revocation,
rejection ,counter-offer) and termination by the operation of law (like, lapse of time,death or
incompetence of the either party) respectively .The last topic of discussion is extinction of
obligation by the set off prove case problem are the issues discussed in this short note
document.

REFERENCES
1) Paranjape, N. V., Studies in Jurisprudence and Legal Theory, ( Third Edition), Central Law
Agency, Allahabad, (2001).

2) Rene David and John E. C. Brierley, Major Legal Systems in the World today An Introduction
to the Comparative Study of Law
3) Woldetensay Wodemelak, Perspectives on the Ethiopian Legal System, Addis Ababa, Ethiopia
(2005),

4) Jacques Vanderlinden, Commentaries upon the Ethiopian Civil Code: the Law of Physical
Persons, H1. The Civil Code Ethiopia 1960 Articles 1675 to 1808.
5) The Civil Code Ethiopia 1960 Articles 1675 to 1808.

6) Richards Paul, Law of Contract 7th ed.2006.

7) Trietle, G.H, the Law of Contract 11th ed. 2005

8) Kreczunowicz, George Formation and Effects of Contracts in Ethiopian Law, 1983

9) David, Rene, Commentary on Contract in Ethiopia an English Translation by Michael

Kindred.SIU, 1969.

10) The Commercial Code of Ethiopia, 1960.