INTRODUCTION TO BUSINESS LAW

CHAPTER 1
 INTRODUCTION

 Islamic law is the lex loci of Malaysia.

 Prior to the coming of the English Law, the Malay Customary and the Islamic Law were
enforced in the State of Malay Peninsula.
 Two (2) laws practiced by the society:
i. Adat Temenggong
ii. Adat Perpatih
 The former was developed during Malacca Sultanate when the Islamic law was
undoubtedly enforced through Undang-Undang of Malacca and Undang-Undang Laut
Melaka.
 However, the advent of English Invaders has brought a very significant impact on the
implementation of the English Legal System in Malaysia.
 One of the factors is the provision of Section 3 and 5 of the Civil Law Act 1956.
 These provisions cover not only on the reception of the common law and rules of equity in
Malaysia but also in the commercial matters in the lacunae of the local law.
 CONCEPT & MEANING OF LAW

 Layman:
As a general rule of conduct.

 Legal definition:
“The body of principles, enacted or customary, recognized and applied by the state
in the administration of justice.”

 Karl Marx:
“Law was an instrument used by the wealthy class (capitalists) to dominate and
exploit the weaker and labouring class.”

 Positivists:
“Law as the command of the sovereign power enforceable by sanction. Whether it is just
or unjust so long as it is made by the sovereign power it is considered as law.”
 DIVISIONS OF LAW

Criminal Civil

 Prosecutor vs. Defendant  Plaintiff vs. Defendant

 Standard of Proof “Beyond Reasonable  Standard of Proof “Balance of
Doubt” Probabilities”
 The outcome whether conviction or  The outcome whether the court gives a
acquitted judgment to the plaintiff or defendant
 Eg: robbery, rape, theft etc.  Eg: breach of contract, negligence, libel
etc.
 SOURCES OF MALAYSIAN LAW

SOURCES OF MALAYSIAN LAW

WRITTEN LAW UNWRITTEN LAW

Federal Constitution
English Law ISLAMIC LAW
Custom Judicial Decision
State Constitution
Common Law Rules of Equity
 WRITTEN LAWS:

 Federal Constitution
- It is the supreme law of the country, any law passed after the Merdeka Day which
is inconsistent with this constitution shall be declared void.
- It lays down the power of the federal and state government.
- It can only be amended with the two third (2/3) majority of the Parliament.

 State Constitution
- Each state has its own constitution to regulate the government of each particular
state in Malaysia.
- It shall be void if it is inconsistent with the Federal Constitution.
 Legislation
- Enacted by the Parliament or State Assemblies under the powers conferred on
them by their respective constitutions.
- It begins with a bill which goes through a series of processes before it comes to
be a law.
- Parliament may make laws with respect to any matter in the Federal List or the
Concurrent List in the 9th Schedule.

 Subsidiary Legislation
- The proclamation, rules, regulation, by laws or other instruments made under
the lawful authority and having legislative effect.
- Eg: Minister or City Council.
- It shall be void if it is inconsistent with the above laws.
 UNWRITTEN LAWS
(A portion of Malaysian law which is not written or enacted
by the Parliament or State Assembly)

 English Law
- It consists of 2 major components:
i. common law – law created by the custom of the people and decisions
of the judges.
ii. rules of equity – the rules which are devised to eliminate injustice
caused by strict application of common law.

 Customs
- Those daily and collectively established practices by some communities, ethics or
race from generation to generation.
- In Malaysia: Adat Temenggong, Adat Perpatih, Hindu Laws, Chinese Customary
law etc.
 Judicial Decision
- The decisions of upper courts bind the decision of lower court.
- Thus, the precedent is considered to be the law to be followed by the lower
courts.

 Syariah Law/ Islamic Law

- Based on the Quran and Sunnah.
- This law is applicable only to the Muslim and governed by the Syariah Court.
HIERARCHY OF COURTS IN MALAYSIA
 JURISDICTION OF COURTS

Federal Court
 Jurisdiction:
To hear criminal and civil appeals from the Court of Appeal and High Court and to
determine constitutional questions which have arisen in the proceedings of the High Court
but is referred to the Federal Court for a decision.

Court of Appeal
 Jurisdiction:
- To hear and determine any appeal against any High Court decision criminal
cases.
- To hear and determine civil appeals generally where amount or value of the
subject matter of the claim is at least RM250,000.

High Court
 Unlimited jurisdiction in civil and criminal powers.
- It has also an appellate power to hear civil and criminal appeals from the
Magistrate’s and Session Courts.
(iv) Sessions Court
 Jurisdiction:
- To try any criminal matters except punishable with death.
- In a civil matter, this court has jurisdiction to try the case not exceeding RM1
million.
- However, matters relating to land, specific performance, injunction and
bankruptcy are excluded from its jurisdiction.

(v) Magistrate Court

 Jurisdiction:
- It has a criminal jurisdiction to try the criminal offences for which the maximum
term of punishment does not exceed 10 years imprisonment but may only pass not
exceeding 5 years imprisonment, a fine RM10,000, whipping up to 12 strokes and the
combination of any of the above.
 JUDICIAL PRECEDENT

 The inferior court is bound to follow the decision of the superior court.
 Provided that the issue of the present case is identical to the previous case of which it is
followed.
 For example, the Federal Court in Malaysia generally was bound by its own decision and
binds all inferior courts.
 This principle works as follows:
(i) Vertically – Superior court bind all courts subordinate to it; and
(ii) horizontally – a court (usually an appellate court) is bound by
a. its own previous decision
b. the decisions of its predecessor and
c. the decisions of courts of co-ordinate jurisdiction
• The inferior court is bound to follow the decision of the superior court which is called the
ratio decidenci of the case.
• Ratio decidenci must be distinguished with obiter dicta.
 Ratio decidenci – reason for the decision
- relate to the issue of the present case

 Obiter dicta – a remark of the judge

- not related to the issue of the present case
 HIERARCHY OF COURTS IN MALAYSIA

Prior to 1985 1985-1995 1995 till now

Privy Council Supreme Court Federal Court

Federal Court High Court Court of Appeal
High Court Sessions Court High Court
Sessions Court Magistrate’s Court Sessions Court
Magistrate’s Court Penghulu’s Court Magistrate’s Court
Penghulu’s Court
 OTHER TYPE OF COURTS/TRIBUNALS

1) Industrial Court:
 A tribunal to deal primarily with the trade disputes which occur between
employers, employees and trade union.
 Industrial Relation Act 1967
 Dealt with cases such as unfair dismissal, trade disputes and other issues related to the
relation between the employer and employee’s union.

2) Labour Court:
 A tribunal which is established under the Employment Act 1955.
 The act is primarily concerned with those employees whose basic salary under the
RM1500.
 Has jurisdiction to resolve any matters concerning labour dispute such as wages, annual
leave, compensation to unfair dismissal and etc.