North South University

Department of law
Course: Legal Environment of Business
Legal framework
Mid-Term 1
Muniza Kabir
 Syllabus

• Definition of law
• Rule of law
• Source of law
• Statute
• Delegated legislation
• Judicial Precedent
• Court System
• Scope of Commercial Law
• Different type of laws
 DEFINITION OF LAW
• Several attempts to produce universally acceptable definition of law
• McCoubrey and White- the question “what is law?” has no simple answer
• Thurman Arnold- It is obvious that it is impossible to define the word “law” and
that it is also equally obvious that the struggle to define that word should not ever
be abandoned.
• The system of rules that a particular country/government develops in order to
regulate behaviour of its members and ensures that the individuals or community
adhere to the will of the state. (general)
• According to Austin, law is the command of the Sovereign. It means:
1) Law has it’s source in sovereign authority
2) Law is accompanied by sanctions and
3) The command, to be a law, should compel a course of conduct. Being a
command, the law must flow from a determinate person or group of persons
with the threat of displeasure if it is not obeyed.
• Sovereignty is, however only a part of the state. So in ultimate sense, law
emanates from the state.
 Cont.
• Holland – law is “a rule of external human action enforced by the sovereign
political authority”. 3 essential characteristics of law are derived from this
definition:

1) Law is a rule relating to the actions of human beings

2) Law attempts to regulate the external actions of human beings
3) Law is enforced by the state
 Constitution
• The concept of constitution is concerned with the role and powers of the
institutions within the state and the relationship between the citizen and the state.

• Constitution is something that gives legitimacy to the government and define the
powers under which a govt. may act

• Professor KC defines constitution of a state as:

…..(constitution) the whole system of governance of a country, the collection of
rules which establish and regulate or govern the Govt.”

• Thomas Paine reveals a more complex set of idea: A constitution is not the act of a
govt., but of people constituting a govt., and a govt. without a constitution is
power without right …. A constitution is a thing antecedent to a government; and a
government is only the creature of a constitution.
 Fundamental Constitutional Concept.

• The rule of law represents one of the most challenging concepts of the
constitution. As it is capable of different interpretation by different people.

• The rule of law insists that every person- irrespective of rank and status in society-
be subject to the law.

• For the citizen, the rule of law is both prescriptive - dictating the conduct required
by law - and protective of citizens-demanding that government acts according to
law.

• The rule of law as a yardstick for measuring both the extent to which government
acts under the law and the extent to which individual rights are recognized and
protected by the law.
 RULE OF LAW

• The “rule of law” (ROL) doctrine is one of the fundamental concepts of English law-
also one of the basic principles of the constitution of Bangladesh.
• ROL is the ultimate justification for the existence of a legitimate political system. It
is a necessary ingredient to provide a governmental system with a moral
justification of its laws.
• Hilaire Barnett-the ROL represents a challenge to state authority and power,
demanding that powers both be granted legitimately and that their exercise is
according to law.
• ROL demands that power is to be exercised in a manner which is just, fair and
reasonable and not in an unreasonable, or arbitrary manner leaving room for
discrimination.
• In the most basic sense, the ROL is a system that attempts to protect the right of
citizens from arbitrary and abusive use of govt. power.
 Elements of the ROL
• In his book The Morality of Law, American legal scholar Lon Fuller identified eight
elements of law which have been recognized as necessary for a society aspiring to
institute the rule of law. Fuller stated the following:
• 1.    Laws must exist and those laws should be obeyed by all, including government
officials.
• 2.    Laws must be published. 
• 3.    Laws must be prospective in nature so that the effect of the law may only take
place after the law has been passed. For example, the court cannot convict a person of
a crime committed before a criminal statute prohibiting the conduct was passed. 
• 4.    Laws should be written with reasonable clarity to avoid unfair enforcement.
• 5.    Law must avoid contradictions.  
• 6.    Law must not command the impossible. 
• 7.    Law must stay constant through time to allow the formalization of rules; however,
law also must allow for timely revision when the underlying social and political
circumstances have changed. 
• 8.    Official action should be consistent with the declared rule. 
 The concept- ROL

The concept rule of law is capable of different interpretations by different people-

 Interpreted either as a philosophy or political theory

 The concept rule of law has gradually developed through different philosophers
like –

 Aristotle,
 Cicero,
 Karl Marx,
 Joseph Raz and
 A.V. Dicey
Greek philosopher Aristotle:

• Stated in his book ‘The Politics’ that ‘the rule of law is preferable to that of any
individual’.
• Instructs that the power of man is not absolute, but is rather controlled and
limited by the requirements of a higher law (natural law).

• Natural Law: Moral or legal Duty, Ex, Mankind to reproduce itself.

Cicero (106 – 43 BC):

True law is right reason in agreement with nature; it is of universal application,

unchanging and everlasting: it summons to duty by its commands, and averts from
wrongdoing by its prohibitions. We cannot be freed from its obligations by Senate
or People, and we need not look outside ourselves for an expounder or interpreter
of it. And there will not be different laws at Rome and at Athens, or different laws
now and in the future, but one eternal and unchangeable law will be valid for all
nations and for all times, and there will be one master and one ruler, that is, God,
over us all, for He is the author of this law, its circulatorator, and its enforcing
judge.
Political Theory

Karl Marx:

• Marxism insists that law represents the interests of the powerful within society.

• Class: Bourgeoisie & Proletariat

• The rule of law represents no more than a false idealization of law designed to
reinforce the political structure and economic status quo in society.

• Although the rule of law appears to be “objective,” meaning that it is fairly applied
to all people, it is actually subjective and unfairly applied.
Professor Joseph Raz:

The ROL is a political ideal which a legal system may lack or may possess to a
greater or lesser degree. It is also to be insisted that the ROL is just one of the
qualities which a legal system may possess and by which it is to be judged. It
is not to be confused with democracy, justice, equality, human rights of any
kind or respect for persons or for the dignity of man.
 A.V. Dicey

• The British model of the rule of law owes much to Professor Albert Venn Dicey. In
his book ‘Introduction to the Study of the Law of the Constitution’ Dicey
suggested that the rule of law has three meanings:

• No punishment may be inflicted other than for a breach of the law.

• Irrespective of rank and status all are equal under the law.
• Rights and freedoms are best protected under the common law.
 No punishment may be inflicted other than for the breach of
the law

• Individuals should not be subject to wide discretionary powers. (Ministers,

Executives)

• A system of government based on laws (rules) and not men (discretion).

• Retrospective legislation

• Burmah Oil Co. Ltd v. Lord Advocate (1965) AC 75.

 Irrespective of Rank and Status all are equal under the law:

• Equality before the law

• Not arguing that all persons have equal powers and rights.

• There are obvious exceptions to it in practice.

 Diplomatic immunity,
 High Court judges,
 Parliamentary privilege,
 Special powers,
 Homosexuality.
 Rights and Freedom are best protected under the
common law

• The rights to liberty and to assembly are determined by the courts.

• Citizens are free to do whatever the law does not prohibit.

• Equal Pay Act 1970; Sex Discrimination Act 1975

 The implication of ROL in the 21st Century

• The Legislature

• The executive

• The Judiciary and

• The criminal process

 In short…

• The law is the servant of ‘the sense of rightness’ in the community, and
whilst the rule of law places law above every individuals; irrespective of
rank and station, it remains, paradoxically, subject to the ultimate
judgment of the people.
 Sources of English Law
The term 'sources of law' is used in several different senses.
(a) Historical sources –

 Common law
 Equity.

( b) Legal sources -
There are four legal sources:

(I) judicial precedent,

(ii) legislation,
(iii) EC law, and
(iv) custom.

(c) Subsidiary sources –

not currently responsible for the direct creation of law. They include, for example, Law
Merchant, Roman Law and Canon Law.
 Historical Sources

Common law:
The Norman Conquest in 1066-no system of law which was common to
the whole country.
Rules of local custom were applied by local courts. To improve the system,
the King sent royal commissioners on tour of different parts of the realm
to deal with crimes and civil disputes.

Equity:
The development of equity was based on a number of 'equitable maxims',
or principles.
(a)he who comes to equity must come with clean hands.
(b)Equality is equity.
(c)He who seeks equity must do equity.
(d)Equity looks at the intent, not the form.
 Legal Sources

Judicial precedent is based on three elements:

(a) There must be adequate and reliable reports of earlier decisions.

(b) there must be rules for extracting from each earlier decision on a
particular set of facts the legal principle to be applied in reaching a
decision on a different set of facts.

(c) Precedents must be classified into those which are binding and those
which are merely persuasive.
 Statute law
Statute law is made by Parliament.
The UK joined with the European Community in 1973 since then the UK Parliament’s
sovereignty of its law-making powers were restricted.

European Community law

Free movement of goods, workers, capital and service
The European Community Act 1972
Two types of sources which are primary and secondary
Primary:
The treaties such as the Treaty of Rome
Secondary:
(a) Regulations (b) Directives and (c) Decisions

Custom
In early mediaeval times the courts created law by enforcing selected customs. Custom is now
of little importance as a source of law, but it is still classified as a legal source of law.

A custom becomes legally recognized when it is accepted by a court and incorporated in a

judicial decision.

In disputes over claims to customary rights, such as to use the land of another or to remove
things from it, the alleged custom may be established.
 Sources of Law
Statutes of the Legislatures:
The legislature is the main source of law in modern times. The State legislatures possess law
making powers and have exercised their powers extensively. The greater part commercial law
is statutory.
 
English Mercantile Law:
Many rules of English Mercantile Law have been Incorporated into Bangladeshi Law through
statutes and judicial decisions. English Mercantile Law is a mixture of diverse elements.
 
Judicial Decisions or Precedents: 
• Judges interpret and explain statutes. Rules of equity and good conscience are incorporated
into law through judicial decisions.
• Whenever the law is silent on a point, the judge has to decide the case according to his idea
of what is equitable
• Decisions of the superior English courts like the Courts of Appeal, Privy Council, and the
House of Lords, are frequently referred to as precedents which might be followed in
interpreting Bangladeshi statutes and as rules of equity and good conscience.

Custom and Usage:  

A customary rule is binding where it is ancient, reasonable, and not opposed to any statutory
rule. A custom becomes legally recognized when it is accepted by a court and incorporated in
a judicial decision.
 The Structure of the Legal System

• For most people outside the legal profession, the legal system is something of a closed book,
surrounded by the mystery created by archaic language and costumes. In fact, for the most
part it consists of practical and down-to-earth sets of procedures designed to provide
resolutions to - ordinary problems.

• Publicity tends to focus on the higher courts and, in particular, on criminal proceedings. 98%
of the cases heard by the courts take place in magistrates' courts, however, and a vast
number of civil cases are heard.

CIVIL COURT STRUCTURE

House of lords European court

LEAFFROG PROCEDURE Court of appeal JCPC

Civil division

High court
RESTICTIVE PRACTICE
QBD FAMILY CHANCERY EMPLOYMENT APPEAL
COURT
TRIBUNAL

CROWN COURT
APPEAL

CASE STATED COUNTRY COURT

MAGISTRATE
• CRIMINAL COURT STRUCTURE

APPEAL

CASE STATED

EUROPEAN COURT

HOUSE OF LORDS JCPC

COURT OF APPEAL

HIGH COURT OBD

CROWN COURT

1ST INSTANCE RE HEARING

COMMITAL 1ST INSTANCE

MAGISTRATE
 Commercial Law

 The term Commercial Law, rules relating to industry, trade and commerce. Often
considered to be a branch of civil law and deals with issues of both private and
public law. It is also called business law.

 Particularly, laws relating to contract, partnership, negotiable instruments, sale of

goods, companies etc.

 There is no fixed line of division between commercial law and other branches of
law, nor is there any conflict or contradiction between them.

 The law of contract, which is a very important part of commercial law, is applicable
not only to merchants and bankers but also to other persons.
• Branches of Commercial Law:

1. Company Law
2. Competition law
3. Consumer Protection
4. Contract law
5. Environmental law
6. Intellectual property law
• Copyright law
• Patent law
• Trademark law
7. International trade law
8. Labour Law
 Different types of Law

• The legal system of every country consists of different types of law. There is no specified or general rule as to how many
types of law are incorporated in the legal system of a each and every county.

• These are few non-exhaustive list of different types of law that a country may have:
• Admiralty (Maritime law)
• Bankruptcy law
• Business/corporate law
• Criminal law
• Civil Rights law
• Entertainment law
• Environmental law
• Family law
• Health law
• Intellectual property law
• Labour law
• International law
• Real estate law
• Tax law
• Military law
• Immigration law
• Personal injury law
• Public law