Learning Journal Unit 1

University of The People

Business Law and Ethics

BUS 3305-AY2023-T4.

Instructor: Prof. Tammy Cowette

Submitted by: James Odumbe

April 11, 2023

Reflection

Q1. How does an effective system of law provide a better environment in which businesses

can operate successfully?

“An effective legal system provides a stable and predictable legal framework that can aid in the

success of businesses by providing clarity and consistency in the laws and regulations that

regulate commercial activity.” (Lau & Johnson, 2012). Here are some ways that a competent

legal system might improve the business environment:

Protection of property rights: Companies need to feel confident that their property rights are

safeguarded and will be upheld in the event that someone tries to violate them. Businesses can

benefit from a successful legal system by having clear guidelines and processes for enforcing

contracts and safeguarding intellectual property rights, such as patents and trademarks.

Resolution of disputes: Disputes are an unavoidable aspect of doing business, and a strong legal

system may give enterprises a fair and effective framework for doing so. This can assist

companies in avoiding expensive and time-consuming litigation and guarantee that conflicts are

settled quickly and effectively.

“Business operations must be conducted in a transparent, predictable, and consistent regulatory

framework. Businesses can benefit from a sound legal system by having access to clear

guidelines that are applied equally and consistently.” (Lau & Johnson, 2012).

Contract enforcement: Contracts are the backbone of business, and a strong legal system may

assist firms in upholding their legal obligations by offering a framework for the creation and

enforcement of contracts. Businesses can do this to prevent disputes and guarantee that their

contractual responsibilities are fulfilled.

“Legal certainty is essential for businesses to plan ahead and undertake long-term investments.

By ensuring that the laws are unambiguous, uniform, and predictable, an efficient legal system

can offer this certainty.” (Lau & Johnson, 2012).

Q2. How does this compare to situations in which there is little effective law governing

business relations?

Businesses may encounter a number of difficulties that can make it difficult to conduct

successful operations in circumstances where there is little effective law governing commercial

relations. The following are some potential problems that might develop in such circumstances:

Uncertainty makes it challenging for businesses to plan ahead or make long-term investments

since they may not be aware of the laws or how they will be applied.

Lack of protection: Businesses may be at risk of theft, fraud, or other types of exploitation if

there are no effective laws defending property rights.

Corruption: In the absence of strong rules, corruption may spread more widely, making it

challenging for companies to compete fairly.

Arbitrary enforcement: “Laws may occasionally be present but applied in a capricious or

unpredictable way, making it challenging for enterprises to comply with them or to plan ahead.”

(Lau & Johnson, 2012).

Disputes: Without effective laws for resolving disputes, businesses may have little recourse when

conflicts arise, which can lead to lengthy and costly legal battles or even violence.

In conclusion, an effective system of law provides businesses with a stable and predictable legal

framework that can help them operate successfully by providing protection of property rights,
fair and efficient dispute resolution, a clear regulatory environment, contract enforcement, and

legal certainty.

“Businesses may have a variety of difficulties that may limit their capacity to conduct successful

operations under circumstances where there is little effective law governing business relations.

These obstacles include ambiguity, a lack of protection, corruption, arbitrary enforcement, and

trouble adjudicating conflicts. Contrarily, a strong legal framework may offer businesses the

security, predictability, and protection they require to run successfully.” (Lau & Johnson, 2012).

References

Lau, T., & Johnson, L. (2012). Importance of Rule of Law to Business. Lardbucket.org.

https://2012books.lardbucket.org/books/business-and-the-legal-and-ethical-environment/s04-04-

importance-of-rule-of-law-to-b.html