COURSE: BUSINESS LAW

CHAPTER ONE
INTRODUCTION TO LAW
 Business activities and the
legal environment
 As those entering the world of business will
learn, laws and government regulations affect
virtually all business activities—from hiring and
firing decisions to workplace safety, the
manufacturing and marketing of products,
business financing, and more. To make good
business decisions, a basic knowledge of the
laws and regulations governing these activities
Many Different Laws May Affect
a Single Business Transaction
Consider an example. Suppose that you are the
president of Liban Company that creates. And maintains
computer network systems One day, Ali, an operations
officer for Southwest Distribution Corporation (SDC),
contacts you by e-mail about a possible contract
concerning SDC’s computer network.
Many Different Laws May Affect
a Single Business Transaction
The legal requirements for an enforce-able contract. Are
there different requirements for a contract for services
and a contract for products? What are your options if
SDC breaches (breaks, or fails to perform) the contract?
Other questions might concern payment under the
contract. Answers to these questions can be found in the
laws that relate to negotiable instruments.
Many Different Laws May Affect
a Single Business Transaction
Also, a dispute may occur over the rights of
Libans software, or there may be a question of
liability if the software is defective. Questions
may even be raised as to whether you and Ali
had the authority to make the deal in the first
place.
 Ethics and Business Decision Making

Businesspersons must also take ethics into

account, ethics generally is defined as the study
of what constitutes right or wrong behavior.
Today, business decision makers need to
consider not just whether a decision is legal, but
also whether it is ethical.
 What is “Law”?
Defining the term ‘law’ is not an easy task because the
term changes from time to time and different
scholars define the term variously.
Law consists of collection of rules. These rules are
issued by an authority. In addition, these rules have
binding force and are obeyed and followed by
citizens. Sanction or other legal consequence may
help the law to be abided by citizens.
 What is “Law”?
 law consists of enforceable rules
governing relationships among individuals
and between individuals and their society.
These “enforceable rules” may consist of
unwritten principles of behavior
established by society, or they may consist
of written laws and court decisions created
by modern legislative and judicial bodies.
 FUNCTIONS OF LAW
 Why we need law? What functions does
law have in your localities?
 It is well known that law is a dynamic
concept, which keeps on changing with
time and place. It must change with
changes in the society
 The end is securing of social justice
 FUNCTIONS OF LAW
 Bentham gave a very practical version for
the purpose of law, which according to
him, is maximization of the happiness of
the greatest number of the members of
the community.
 The purpose or the object of law is to
ensure justice. The justice may be either
distributive or corrective.
 FUNCTIONS OF LAW
 Distributive justice seeks to ensure fair
distribution of social benefits and burden
among the members of the community.
 Corrective justice, on the other hand,
seeks to remedy the wrong. Thus if a
person wrongfully takes possession of
another’s property, the court shall direct
the former to restore it to the latter. This
is corrective justice.
 FUNCTIONS OF LAW
 Social control – members of the society
may have different social values, various
behaviours and interests. It is important to
control those behaviours and to inculcate
socially acceptable social norms among
the members of the society.
 FUNCTIONS OF LAW
 One of the important functions of law in any
society is to provide stability, predictability,
and continuity so that people can know how to
order their affairs. If any society is to survive,
its citizens must be able to determine what is
legally right and legally wrong.
 Features of law
 Permissive laws allow or permit their
subjects to do the act they provide. They give
right or option to their subjects whether to act
or not to act.
 Directive law orders directs or commands
the subject to do the act provided in the law. It
is not optional. Therefore, the subject has legal
duty to do it whether s/he likes it or not.
 Features of law....continue..
 Prohibitive law discourages the subject
from doing the act required not to be
done. If the subject does the act against
the prohibition an evil follows as the
consequence of the violation. All criminal
code provisions are prohibitive laws.
 Features of law....continue..
 Sanction: Each and every member of a
society is required to follow the law.
Where there is violation the law sanction
would follow. Sanction according to Black’s
Law Dictionary [Garner; 2004: 1368], is a
penalty or coercive measure that results
from failure to comply a law. The main
purpose of sanction is to prompt a party
(a wrong doer) to respond.
 Hierarchies of law
 A hierarchy of law means the
subordination of the laws of the land on in
context Somaliland as hereunder.
 A. Constitution
 The constitution of the republic of
Somaliland which is proclaimed in 2001,
serves as the supreme law and the main
source of law of the land. All other laws of
the land must be comply with the
constitution in therefore any laws or acts
which contrives the constitution is null and
void.
  
B. Proclamation
 Proclamations, sometimes also called the statutes, are
legal document issued by the legislature.
 The term ‘legislation’ is derived from Latin words, legis
meaning law and latum which means “to make” or
“set”.
 Legislation includes activities, which result into law
making or amending, transforming or inserting new
provisions in the existing law. Thus, there can be no
law without a legislative act.
 C. Regulation
 The law making power of the state is left to the
legislature. But it becomes impractical and
difficult for the law maker to issue laws on
specific or detailed matters. This difficulty
arises from shortage of time and lack of
knowledge of matters to be regulated by the
law. To avoid this problem, the legislature
routinely delegates the authority to make the
laws to the counsel of ministries. The laws
issued by this organ are called regulation
 Classification of law
A. Substantive law
includes all laws that define, describe,
regulate and create legal rights and
obligation. For example rule stating a
person who has injured another through
negligence must pay damages
 Classification of law..continue..
B. Procedural establishes the methods of
enforcing the rights and duties established by
the substantive law. Question about how a
lawsuit should begin, what papers needs to be
filled, which court will hear the suit, which
witnesses can be called. And so on are all
question of procedural law. In brief, substantive
law tells rights and duties and procedural law
tells us how to enforce the substantive law.
Classification of law..continue..
Substantive law Procedural law
 Constitutional law  Criminal procedure
 Criminal law  Civil procedure
 Contract law  Evidence law
 Taxation law
 Classification of law

Public Law versus Private Law

A. Public law
Public law addresses the relationship
between the persons and their
governments, Criminal law, administrative
law and constitutional law, are generally
classified as a public law, because they
deal with persons and their relation with
government.
 Classification of law
B. Private law
whereas private law addresses direct
dealings between the persons.
private law governs and guides how
contracts are formed, performed and
remedies available in case of breach of
contract, private law deals the inter-
relationship between private individuals,
such as in a contractual relation.
 Classification of law
A. Public law B. Private law
 Constitutional law  Contract law
 Criminal law  Corporation law and law
 Law of taxation of partnership
 Administrative law and  Law of agency
many others  Law of contract of sale of
goods
 Classification of law
Civil cases vs. criminal cases
A. Civil cases
Civil cases are non-criminal cases which a private
party seeks a remedy, against another private party.
These actions regulated by the civil law. The person
who injured is the plaintiff and the person to whom
the civil action is brought is called the defendant. In
civil cases the plaintiff typically seeks damages that
are some monetary amount from the defendant to
compensate for the injury to the plaintiff.
 Classification of law
B. Criminal cases
In a criminal case the public or the society at large is
deemed to be the injured, rather than individual. The
person initiating criminal cases is thus the
government, typically through the public prosecutor or
the police. The action must be in violation of criminal
law. The remedies the public prosecutor normally
seeks are imprisonment, fine (money given to the
government as punishment).
 Classification of law
An important feature distinguishing
criminal law and civil law is the legal
consequence for the wrongdoer. Violation
of criminal laws may lead to fines or
imprisonment, or both, whereas violation
of civil law usually involve compensating
the parson harmed by paying money
damages.
 SCHOOLS OF JURISPRUDENTIAL THOUGHT

 How judges apply the law to specific cases,

including disputes relating to the business
world, depends in part on their philosophical
approaches to law. Part of the study of law,
often referred to as jurisprudence, involves
learning about different schools of
jurisprudential thought and discovering how
the approaches to law characteristic of each
school can affect judicial decision making
 SCHOOLS OF JURISPRUDENTIAL THOUGHT

1. The Natural Law School

The natural law tradition is one of the oldest and most
significant schools of jurisprudence.According to
Aristotle, natural law applies universally to all
humankind. The notion that people have “natural rights”
stems from the natural law tradition.
 SCHOOLS OF JURISPRUDENTIAL THOUGHT

2. The Positivist School

According to the positivist school, there is no
such thing as “natural rights.” Rather, human
rights exist solely because of laws. If the laws
are not enforced, anarchy will result. Thus,
whether a law is “bad” or “good” is irrelevant.
 SCHOOLS OF JURISPRUDENTIAL THOUGHT

3. The Historical School

The historical school of legal thought emphasizes the
evolutionary process of law by concentrating on the origin and
history of the legal system
4. Legal Realism
Legal realism is based on the idea that law is just one of many institutions in
society and that it is shaped by social forces and needs. The law is a human
enterprise, and judges should take social and economic realities into account
when deciding cases.
 The Sources of Somaliland Laws
1. Civil Law Tradition
2. Sharia Law
3. Customary Law
 The Hierarchy and Structure of the Courts

1. District Courts.
2. Regional Courts.
3. Appeals Courts.
 The Supreme Court
 The Hierarchy and Structure of the Courts

1. District Courts:- The district courts deal with

all claims based on Sharia, which are primarily
matters relating to family law and succession.
Regional Courts
 Regional courts deals with all civil and
criminal litigation which does not fall within
the jurisdiction of the District Court.
 The Hierarchy and Structure of the Courts

3. Courts of Appeal:- deal with all appeals from the

District and Regional Courts.
4. Supreme Court:- The Somaliland Supreme Court is
the highest judicial organ in the country. The Supreme
Court deals with:
1. All appeals from the Appeal Courts.
2. Jurisdictional issues between the courts of the land.
 The Hierarchy and Structure of the Courts

3. Administrative Suits relating to the final decisions of

public bodies.
4. Declaration of General election presidential and
parliamentary) results and decisions on any complaints
relating to such elections, and appeals from lower
courts’ decisions in respect of complaints relating to
local government elections.
 1.6 Legal personality
Simply the concept of legal personally
provides us with entities or beings that are
considered to be the subject of law that
who possess rights and obligation,
personality tells us about the holders of
these rights and bearers of these
obligation. And these can be classified into
two: human beings (natural persons) an
artificial persons( or legal persons)
 A. Natural persons
 This refers human beings created by Allah.
since human beings are considered to
have legal personality, they are entitled to
enjoy rights and obliged to carry out
obligations under the law.
 Generally the legal personality of natural
persons begins at the time of birth.
Starting from that time the child will be
considered to be the subject of law and
begins to enjoy his/her legal rights.
 A. Natural persons
 Also another question will arise when
these rights and obligations ends. So the
termination of legal personality death
brings an end to the personality of human
being. When human being passes away,
they are no more subject of the law and
their rights and obligations will be
immediately transferred for their heirs.
 
 B. Legal persons
 
 This refers to the entities that are pure
created by the operation of law. For
business convenience the law gives legal
personality to business organizations, for
political purpose, political associations are
accorded rights and obligations. For legal
intent and purpose these associations are
considered to be persons, i.e. entities
having legal personality.
 B. Legal persons
 organizations that are recognized as a
person’s will have the following
 To sue and be sued their own name and
capacity
 To own and administer their property in
their own name
 To inter into contractual relation
 And generally to perform legal acts which
are consistent with their nature
END OF CHAPTER ONE