Law and the Legal System

Key Concept
• Definition of Law • The features of a legal
• Sources of Law system
• Categories of Law • The Purposes of a
• Ethics and Law Legal System
• Law in Business and • Kinds of Legal Systems
Society • Legal Environment
• The Rule of Law • Reasons for Studying
• Legal System the Legal Environment
• Task of Legal System of Business
 Law
• Law is the command of sovereign. It means,
– Law has its source in sovereign authority
– Law is accompanied by sanction
– The command to be a law should compel a course of
conduct
• Law refers to established standards or guideline for
action or behavior in society whether they originate
from a higher authority or from the custom and
common practices of people
• Law as principles used by courts
• Law as a scheme of social control
• Law as a Justice
 Law
• Law is a set of rules and regulations that
control the behavior of a society.
• “Law is a rule of conduct binding the members
of the state”
• Law is a binding custom or practice of a
community.
 Law
• According to Holland: “Law is a rule of external human
action enforced by the sovereign political authority”. If
we analysis the definition we get three characteristics
of law. These are:
– Law is a rule relating to the actions of human beings.
– Law attempts to regulate the external actions of human
beings.
– Law is enforced by the state.
• According to Salmond: “Law is the body of principles
recognized and applied by the state in the administration of
justice”.
 Law
• According to Woodrow Wilson, “Law is that portion of
the established habit and thought of mankind which
has gained a distinct and formal recognition in the
shape of uniform rules backed by the authority and
power of the government.”
• “Laws are the rules specifying what is right or wrong”
-----BLACK STONE
• “ Law is a social control”------PLATO
 Sources of Law
• Constitution
• Legislation
• Judicial Decisions
• Administrative Law (The rules, regulations, and
decisions of administrative agencies)
Principal Classifications of Law
 Categories of Law
• Substantive law
• Procedural law
• Public law
• Private law
• Civil law
• Criminal law
• Common law and
• Statutory law
 Categories of Law
• Substantive law: It defines rights and impose on
the members of society the duty to respect
those rights. It deals with whether the
defendant is guilty or liable. Example: defining
elements of a enforceable contract.
• Procedural law: It details the means or methods
by which those rights or duties will be enforced.
It deals with the rules of the court under which
litigation takes place. Example: How the law of
contract will be enforced.
 Categories of Law
• Substantive law: It defines rights and impose on
the members of society the duty to respect
those rights. It deals with whether the
defendant is guilty or liable. Example: defining
elements of a enforceable contract.
• Procedural law: It details the means or methods
by which those rights or duties will be enforced.
It deals with the rules of the court under which
litigation takes place. Example: How the law of
contract will be enforced.
 Categories of Law
• Public law concerns the relationships between
people and government. Criminal law are the
examples of public law. Both constitutional law
and administrative law are also types of public
law.
• Private law: concerns the relationships between
individuals and firms within the society. Deals
with disputes among citizens. Contract law,
corporation law are the example of private law.
 Categories of Law
Civil law
• purpose of the law is to protect individuals or
persons is called civil law.
• focuses on wrongs against individuals.
• involves mainly private law. Contract law,
property law are the evidence of civil law.
• Individual claims that his or her rights have been
infringed and brings the lawsuit. Sam vs Ram
• Purpose is not to punish the wrongdoer but to
compensate the person who has been wronged
 Categories of Law
Criminal law
• If the purpose of the law is to protect the society
as a whole rather than one of its member is
called criminal law.
• focuses on wrongs against the society.
• The society initiates the case. People vs smith
• Purpose is to determine whether the defendant
committed a criminal act and whether the court
must be therefore impose some punishment.
 Categories of Law
• The terms common law and statutory law are
used to indicate the general source of law within
a society.
• Common law originate from the customs and
practices of the people. Now a days it refers to
the case law that results from court decisions
• Statutory law generally refers to the laws that
have been formally adopted by the legislative
bodies.
 Ethics and Law
• The relationship between law and ethics is
complex and controversial. Both law and ethics
prescribe guidelines for behavior. Some people
think obeying law is the same as behaving
ethically; others don’t believe so. Ethical
standard may require people to violate the law.
• Compliance with law is mandatory but ethics are
not. Ethics is the study of right and wrong.
 Ethics and Law
• For many business law analysts, compliance with
the law is an ethical minimum. Ethical firms
perhaps sacrifice some profits in some
endeavors that affect human rights, the
environment, or technology because it is the
right thing to do.
• E.g., the promise of McDonald’s to use only
recycled paper; it is not illegal to use new paper.
 The Rule of Law:
• The concept of equality of all persons before law is basis of
what is called the rule of law.
• The rule was summarised by Dicey as follows:
– No man is punishable or can be lawfully made to suffer in body or
goods except for distinct breach of law established ordinary legal
manner before the ordinary courts
– No man is above law
– Result of statute and judicial decision determining the right of
private persons
• A rule of law, using Holmes’s definition, is a statement that
if certain facts exist, then the judicial branch of government
will take certain action or refuse to take certain action at
the request of someone involved
 Law in Business and Society
• Law and business are inextricably intertwined. Business
is the organization of capital and labor to produce a
product or service. Every aspect of that organization is
subject to the regulation of law. Buying and selling,
employment practices, and even the nature of the
organization itself are examples of business activity
controlled by law. Therefore, any business decision has
a legal component, and the prudent business manager
should take care of it.
 Law in Business and Society
• The term society is used to mean a community or a group
of persons, living in any region, who are united together
by some common bond. But ‘law’ unlike social rules, is
enforced by the state.
– Bring order
– Enable progress
– ensure security and peace
 Schools of Legal Thought
• Historical
• Analytical
• Natural
• Sociological, and
• Realist.
 Historical
• The historical school gives great weight to
custom and history as a source of law. Law
comes from the habits and traditions of
people.
• Similarly, the laws relating to business
transactions have developed out of the
manner of doing business and customary
business practices.
 Analytical
• The analytical school of legal thought is based
upon a belief and reliance on logic as the basis
of law. Under this philosophy, law is conceived
by reason and logic.
• Law comes from the sovereign or government
because of the need for order and a system of
known rules to follow. Social order logically
requires definite rules for governing human
conduct.
 Natural
• The natural school of legal thought gives great
weight to the influence of religion and divine
principles in developing the law. Law arises
from right, reason, and the intelligence of man
as derived from his Creator.
• Law distinguishes right from wrong. The
natural law philosophy has given us courts of
equity and, indeed, much of our constitutional
theory.
 Sociological
• The sociological school of legal thought gives
recognition to the law as a scheme of social
control. This legal philosophy considers the law to
be the result of competing social forces and
values.
• Law results from the purposes that are to be
accomplished. The sociologist uses facts and
economics and social theory in developing the
law, and he or she views the law as the means of
resolving disputes and conflicts between different
groups and interests in society.
 Realist
• The realist school of legal thought is a
development of this century. The realist school
takes a very pragmatic approach to law. Law
comes from experience. Realists are impressed
with the role of facts and are willing to recognize
exceptions to almost every general rule of law.
• Realists recognize that law is constantly changing.
These schools of legal thought further
demonstrate the difficulty of defining “law” and
of understanding its sources, uses, and
development. It will be helpful to keep the
various philosophies in mind, as the subject
matter of this text is studies
 Legal System
• The legal system of a country refers to a set of
law, institutions, procedures and arrangements
that aims at establishing order and justice in the
society.
• Professor Hart. listed five factors which had to
co-exist to create a legal system. These are as
follows:
– Rules which either forbade certain conduct
– Rules requiring people to compensate those
whom they injured;
 Legal System
– Rules stating what needs to be done in certain
‘mechanical’ areas of law such as making a
contract or making a will;
– A system of courts to determine what the rules
are, whether, they have been broken and what
the appropriate sanction is; and
– A body whose responsibility is to make rules, and
amend or; repeal them as necessary.
 Legal System
• The main purpose of legal system is the
administration of justice which has three
aspects:
– Institutional aspect
• includes courts civil, criminal and special; the
judiciary, i.e. the judges; the legal profession, i.e.
advocates; law officers, e.g. the Attorney-General,
public prosecutors, public pleader, registrars of the
court etc; and the jail and police
 Legal System
– Procedural or functional aspect
• Includes the procedure of investigation, inquiry,
filing a suit, taking evidence, steps in appeal,
reviews.
– Conceptual component aspect
• Includes the historical development, the rules of
judicial precedent, statutory interpretation,
legislation, legal reform, legal aid etc.
 Task of a legal system
• To maintain order
• To provide a forum for the resolution of dispute
• Other task:
– Protecting expectation
– Maintaining a political authority
– Bringing about social change
 The features of a legal system

• A legal system must be reasonable.

• The legal system must be definite, not vague.
• The law must be flexible
• The law needs to be practical and oriented to
action rather than thought.
• All laws must be published.
• The legal system must be a final one.
 The Purposes of a Legal System
• Achieving justice
• Providing police power
• Maintaining peace and status quo
• Providing answers
• Providing protection
• Providing rehabilitation
• Facilitating the commercial transactions
 Kinds of Legal System
• Common law legal system:
– common law is based on traditions, precedent, and
customs and usage
– The courts fulfill an important role by interpreting the
law according to those characteristics.
– The United States and the United Kingdom are examples
of countries with common law system.
 Kinds of Legal System
• Civil Law legal system :
– also called a codified legal system, is based on a detailed
set of laws that make up a code.
– Rules for conducting business transactions are a part of
the code. Germany, France, and Japan, operate on a civil
law basis.
• Theocratic Law legal system :
– based on religious perception.
– The best example of this system is Islamic Law, which is
found in Muslim countries
 Kinds of Legal System
• Theocratic Law legal system :
– Islamic Law or Shariah, is based on the following
sources
• The Quoran, the sacred text
• The Sunnah, or decision and sayings of the Prophet
Muhammad (PUH)
• The writings of Islamic scholars
• The consensus of Muslim countries legal communities
Legal Environment of Business
• Is a term that describes the relationship of the law to
businesses
• Concerned with the study of legal institutions and
process that affect business activities and with the law
that affect the atmosphere or environment in which
business activities are conducted
• Changes when technology or society changes
• At the same time, law shapes business practice and
technological growth.
 Reasons for Studying the Legal
Environment of Business
• Understanding the legal implications
• Developing decision making skill
• Increased professional legal accountability
• Reducing skyrocket costs of litigations
• Conducting legal audit
• Alternative dispute resolution
• Deregulation
 Reasons for Studying the Legal
Environment of Business
• Plan activities based on what the law allows or requires
• Governmental regulation of business.
• Securities regulation and environmental concern and
enforcement activities
• Business location and operation
• Perform effectively and efficiently.
 Commercial or Mercantile Law

• The laws or rules related to industry, trade, and

commerce are called commercial or mercantile law.
• Defined as that part of law which regulates the
transaction of the mercantile community.
• Commercial suit
– A suit between merchants, bankers, and traders, relating to
mercantile transactions is commercial suit.
• Scope :
– Contract, partnership, sales of goods, negotiable instruments,
companies etc.
 Sources of Bangladesh
Commercial Law
• Parliament
• English mercantile law
• Judicial decisions or precedents
• Custom and usage
• Scientific commentaries