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Business Law

TOPIC 1: INTRODUCTION TO THE

AUSTRALIAN LEGAL SYSTEM PART 1
2 LEARNING OUTCOMES

On completion of Topic 1, you should be able to:

◦ Understand the importance of the law as a regulatory tool in
society and enterprise
◦ Discuss the sources of law in Australia.
◦ Recognise and explain the characteristics of the Australian Legal
System.
◦ Understand the differences between civil and criminal law under
the common law system
3 A DEFINITION OF LAW

LAW is set of legally-binding rules, regulating people’s interactions

with one another (and with the government), applicable to all members
of the STATE and ENFORCED by the STATE (by prosecution or
litigation).
4 DIFFERENCES BETWEEN LAWS AND
RULES

RULES:
- Not legally binding;
- Apply to a sub-set of society; and
- Enforced by a sub-set of society
5 LAW AS A REGULATORY TOOL

• The law is a regulatory tool that:

• prescribes what people (including enterprises) cannot do
• informs people what they can do and
• informs people what they must do
• The law also allows for the settlement of disputes through the courts
 6 RELEVANCE OF LAW TO

BUSINESS
The law is relevant to the following aspects of running a business:
• Business Structure
• Registering a business name
• Leasing Premises
• Obtaining appropriate licences and permits
• Employment Contracts
• Purchase/Supply/Sale Contracts
• Liability for injuries to employees or customers
•Consumer and Competition Law
7 LEGAL SYSTEMS

• A ‘LEGAL SYSTEM’ is the framework in which the

law is created, applied and enforced.

• There are many different legal systems throughout the

world.

• Two important legal systems are:

COMMON
COMMON LAW
LAW CIVIL
CIVIL LAW
LAW
SYSTEM
SYSTEM SYSTEM
SYSTEM
8 CIVIL LAW SYSTEM

• Civil law system

• Has its origins in Roman law and Napoleonic Codes.
• The meaning of the term ‘civil law’ depends on the way it is
used.
• It could mean:
• a reference to a legal system used in much of Europe,
Latin America and parts of Asia;
• a reference to an area of law (private law) within the
common law system, governing relations between private
individuals;
9 COMMON LAW SYSTEM

• Common law system

• Australia inherited the common law system from England.
• There are multiple meanings of the term ‘common law’. It
could mean:
• a reference to a legal system used in many
Commonwealth countries (British law legal system)
• A reference to the law historically developed by the
Common Law courts in England as opposed to Equity, a
body of law developed by the Courts of Chancery
• A reference to case law (as opposed to Statute Law).
ORIGIN OF COMMON LAW

• Prior to 1066 - most parts of England were governed by

customary law which differed across the country
• 1166 – King Henry II declares ‘circuit judges’ shall
travel and apply the law of Westminster to all parts of
England
• The application of this new ‘common law’ was seen by
many as harsh and inflexible, particularly after the
passing of the Provisions of Oxford in 1258

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ORIGIN OF EQUITY

• Due to the strict/inflexible application of the common law, people

made pleas directly to the King to hear their cases
• Role was taken over by the King’s Chancellor
• By the 14th century petitioning the King’s Chancellor had become
so popular, the Courts of Chancery were established.

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CHARACTERISTICS OF EQUITY

• Decisions based on notions of fairness and justice

• An equitable remedy has to be specifically asked for, it is not
available ‘as of right’.
• If there is a conflict between equity and common law, equity
prevails;
• Examples of Equitable Remedies: Injunctions, Specific
Performance, Rescission.
• These remedies are only available where the common law
remedy of damages is not sufficient or not appropriate.

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 SOURCES OF LAW
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There are TWO main SOURCES OF LAW in Australia

STATUTE
STATUTE LAW
LAW also
also
COMMON
COMMON LAW
LAW also
also known
known as:
as:
known
known as
as LEGISLATION
LEGISLATION
CASE
CASE LAW
LAW ACTS
ACTS OF
OF
PRECEDENTS
PRECEDENTS PARLIAMENT
PARLIAMENT

If there is clash between Statute Law and Common Law, Statute Law overrides
Common Law because of parliamentary sovereignty.
 SOURCES OF LAW- CONTD…
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Within the Common Law (Case Law), there are 2 further sources of law.

EQUITY
EQUITY LAWLAW
COMMON
COMMON LAW LAW originating
originating from
from the
the
originating
originating from
from the
the Courts
Courts of
of Chancery
Chancery in in
Common
Common LawLaw Courts
Courts of
of England.
England.
England.
England.

If there is a clash between common law and equity law, equity law will prevail.
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COMMON LAW
16 COMMON LAW

• COMMON LAW is the law created via the

reported decisions of judges.

• Also known as:

case law; judge-made law; un-enacted law

It is based on the DOCTRINE OF PRECEDENT

DOCTRINE OF PRECEDENT
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The doctrine of precedent was developed to provide the

necessary consistency, predictability and therefore fairness
in the law.
18 DOCTRINE OF PRECEDENT

• Before we can consider this doctrine we need to understand the following concepts:

• A. COURT HIERARCHY

• B. MATERIAL FACTS

•
AUSTRALIAN COURT
HIERARCHY
20 MATERIAL FACTS

• A material fact is a fact that is relevant to establishing the elements

of a law.
• Eg. In a case of murder, premeditation would be a material fact
towards determining whether the accused had intention to commit the
crime. The gender of the accused or the time of day would not be
material facts in this case.
DOCTRINE OF PRECEDENT
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• The doctrine of precedent involves a Judge making a

decision based on the decision made by a judge in a
previous case with similar facts.
• It is based on the concept of STARE DECISIS
which means ‘let the decision stand’.
22 DOCTRINE OF PRECEDENT

• There are TWO types of PRECEDENT

• BINDING & PERSUASIVE

• A binding precedent MUST be followed by a judge.

• A persuasive precedent MAY be used by the judge for
guidance, if the judge decides it would be appropriate to do so.
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DOCTRINE OF PRECEDENT
• BINDING
• A previous decision with the same MATERIAL FACTS
MUST BE FOLLOWED by a judge in a SUPERIOR COURT in the same COURT HIERACHY

• PERSUASIVE
• A previous decision with the same MATERIAL FACTS
MAY (NOT MUST) BE FOLLOWED by a judge in an INFERIOR COURT in the same COURT
HIERACHY
OR by a judge in a different COURT HIERACHY (for eg in a different state)

•
24 DOCTRINE OF PRECEDENT

• RATIO DECIDENDI versus OBITER DICTA

• When following a BINDING precedent, the judge is
only required to follow the Ratio Decidendi (binding
legal principle) and is not bound to follow the Obiter
Dicta contained in the decision
•
 DOCTRINE OF PRECEDENT
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Ratio Decidendi
The reason for deciding based on the application of a
rule of law to material facts before the case

Obiter Dicta
An additional statement of opinion made by the judge
that was not essential to the decision. It may be
persuasive though in a future similar case.
 LEGAL CASES AS PRECEDENT

When a precedent is cited it may be:

• adopted – followed or applied
• affirmed – agreed with the earlier decision
• overruled – an appellate court decides a similar matter, in a later
case, on the basis of a different legal principle; the decision (ratio
decidendi) in the later case in the higher court is to be followed
• distinguished – the court finds some material difference between
the facts of the two cases
• disapproved – if the court cannot overrule a case it may state (by
way of obiter) that the earlier case is no longer good law.

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 LEGAL CASES AS PRECEDENT

Advantages of precedent:
• promotes consistency
• certainty
• efficiency
• justice – equality and fairness.
Disadvantages of precedent:
• precedent may not be relevant to today’s circumstances,
but has to be followed;
• slow to respond to community changes;
• may require an Act of Parliament to change.

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28

STATUTE LAW
29 STATUTE LAW

• Today, statute law is the most important source of law

as the majority of law comes from the
Legislature/Parliament.
• Many of the common law principles have been
written into statute law.
• If there is ever a conflict between the two,
statute law will prevail.
 STATUTE LAW

• It can often react faster to, and better reflect, current community needs
than the common law.
• It is important to cite Acts (or statutes) appropriately
• Federal (Commonwealth): Corporations Act 2001 (Cth)
• State: Partnership Act 1892 (NSW)

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31 STATUTE LAW

• The MAIN SOURCE of law in Australia today

• Law made by the LEGISLATURE (Parliament)- Federal
(Commonwealth), State or Territory.
• Alternatively referred to as LEGISLATION , ACT or
ENACTED law.
• Parliament could delegate its law-making power to Government
Departments and Local Councils. When they make law, it is
called DELEGATED LEGISLATION (eg regulations, by-laws,
ordinances).
THE LEGISLATURE/PARLIAMENT

NSW
 Bicameral (Two houses)
 Lower House – Legislative Assembly (93 seats)
 Upper House – Legislative Council (42 seats)
 Government Leader – The Premier
 Queen’s Representative – The Governor

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 THE LEGISLATURE/PARLIAMENT

Commonwealth
 Bicameral
 Lower House – House of Representatives (151 seats)
 Upper House – The Senate (76 seats)
 Government Leader – The Prime Minister
 Queen’s Representative – The Governor General

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