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Business Law and EthicsChapter 1: What is law and where can we find it?
1.1 The organization of just behaviour
Substantive law – is composed of legal rules that define the content of just behavior
• Think of these as the general laws that a society must follow such as a speed limit. These are laws
that govern how citizens must act in a society
Formal law – is composed of legal rules that maintain substantive law
• Think of these as the procedures or punishments that follow someone violating a law. Formal law
enforces the law and spells out how the laws should ‘work’ in a sense.
o Example: the point system in Morocco for traffic violation. In addition to fines one may lose
‘points’ everytime they break the law. If they get enough points (new high score!) They can no
longer drive within the country.
Public vs Private Law
Public law - the law that regulates the relation between a government and its citizens - enforcement of the law.
Such as traffic codes, etc.
Public formal law – regulates the legal procedures. (aka how the law is to be enforced/regulated in legal practice.
Private law - The law that regulates the relation between citizen or those who act as citizens (legal persons)
Important to note that a company can also act as a private person. When you steal apples at the AH because you’re
too lazy to weigh them this violation would fall under private law.
1.2 The Meaning of Just Behavior
Three components:
1. Justice is the moral conviction of a given society expressed in law (codification)
o Justice can be thought of as the moral standards or values that is shared amongst a society. Such as
the general agreement that killing other people is not cool. Important to note that the idea of
justice can differ for individual people because not all people agree that killing people is uncool (I.E
Charles Manson.)
2. Opportuness is the expression of effectiveness by a given society in law (modification)
o This is an unclear way of saying that laws should be the efficient and pragmatic. An example of this
would be during the Greece crisis, while they were in debt they lowered salaries and raised the age
of retirement. This was not seen as justice as many Greek people disagreed with these changes,
but this was the most pragmatic way to solve the fact that they were billions of dollars in debt.
3. Legal certainty is the expression of legality in a given society (predict the legal consequences of behavior)
o Fancy way of saying that for something to be considered just behavior the action must first be
known to be illegal, so someone can’t plead ignorance when they commit a crime. Also, important
to note, you can persecute a person for a crime that wasn’t a crime during the time it was
committed.
,1.3 The origin of law
Origin Of Laws:
• Natural law – In a natural law approach it is assumed that laws emerge from nature
o Pro: Natural law defines the human rights so they are reasonable to imply
o Con: Natural law is vulnerable to perspective and therefore due to legal uncertainty
▪ Problematic because in 1940 Germany the Nazi’s thought it was natural to assume that
Jewish people were inferior and it became codified in their law (Nuremburg Laws.) If you
are familiar with history, this didn’t turn out too well.
• Positivist Law - In a positivist law approach, it is assumed that law comes forth from codification
(being written down and formalized)
o Pro: Protection of people from extreme understandings of natural law
o Con: Written law is always behind on reality
▪ Also lack of generalizability. Positivist laws are extremely specific, so though the law may
be clearly understood, it cannot be generalized to other situations where the slight
differences in the wording of the law making it inapplicable. Thus codified laws should be
generalizable by making the wording open to different situations instead of just one.
1.4 Legal sources
Legal Sources: (ranked from legal positivism to natural law)
1. Codified Stands
2. Application of Law
3. Legal writings and teaching
4. Religious Writings and Teachings
5. Customary Law
6. Legal Principles
Codified Standards: written rules produced by a legislator
• Essentially just written laws. Important that there is room for interpretation and a certain flexibility, so
the codified standards can be applied in various cases
• Legal positivists assume that the codification of legal rules is the ultimate source of law
• Basis of civil law which will be discussed in latter chapters
International treaty is a contract between states who consider themselves bound to its content relative to each
other
, • Either Bilateral (2 countries) or Multilateral (more than 2 countries)
• Need to Signed and ratified. Signing is done by a representative of the state or country. Ratification
happens when the congress/legislation approves the treaty following the signing sof the treaty.
o Monism: Treaty enacted immediately. Laws conflicting new treaty are immediately invalid as
the treaty is now the new law.
o Dualism: Laws are first transformed so that they are congruent with the new laws set forth by
the treaty.
Application of Law: The legal standard needs to be concretized to a specific case – this asks for interpretation
• Fancy way of saying that laws are enacted on the basis of precedents or former court rulings. High courts
may rule in a certain way for a case, their ruling then becomes the basis for which future decisions need
to be based upon.
o Stare decisis is a legal principle in which courts have to follow the legal reasoning as applied in
previous cases. (what I just explained above.) Lower courts must rule in the same way that
higher courts once did.
• Basis of common law - will be discussed in later chapters. (Predominantly Anglo- Saxon countries)
Legal Writings and Teachings: Scholars as experts will comment on legal developments or collect and structuralize
legal information
• Legal decisions can be based upon pre-existing legal writings and teachings. This was the case for a
major Canadian Supreme court decision.
Religious Writings and Readings: law can be based upon religious beliefs/values
• Non secular – make laws based on religion
• Secular – separation of church and state. (not based on religion) Most common = Sharia law (based
on teachings of the Quran.)
Customary Law: In this case, a written standard is not the source but an established practice, accepted as a source of
law by its users
• Usus – people can reasonably expect the application of this legal practice, for it has become a sort of
a tradition
• Opinio iuris sive necessitates – a legal custom can only be a valid source of law when those who are
involved with its application are of the opinion that the custom should indeed be a legal rule
• Essentially laws are based upon the customs of the society, was once common in African tribes.
Legal Principle: general value that applies in law
• A general value would be something like that the general agreement that torturing other people is
indeed not cool.
• Ius cogens – fundamental right
o universally binding legal principles
Chapter 2: Comparative Law and legal systems
Goal of the chapter is to explain the purpose of comparative law and then looks at its application. Then It will look at
the legal families used through out the world. Finally it will offer explanation on how to law comparison is actually
done.
, 2.1 The Purpose of Comparative Law
Comparative law dates back to ancient Greece but hasn’t been prominent since until the 1900 Congress for
Comparative Law brought it back to the forefront for academic studies in law. The author is saddened because
comparative law is mostly reserved and utilized by PHDs and academia rather than actually used in practice.
According to Zweigert & Koetz, comparative law has five main purposes:
1. Gaining of Knowledge
2. Evaluating the better law
3. Substantiate the application of law
4. Improve legal education
5. Unification of law
These will be discussed in more detail below and as usual with this book it repeats it self countless times in each
section so for simplicity sake I often repeat along with it. Key Takeaway – All 5 purposes are interdependent and thus
have significant overlap in achieving each.
Gaining of Knowledge
By using comparative law (looking at laws across different countries and societies) one is able to broaden their scope
of what law is and better be able to understand the purpose and potential of law. It applies to business because if
you can understand how laws are different and see the implications the differences have on similar scenarios one is
better able to determine the cost of conducting business in a country compare to others. Key Takeaway – This
section just rambles about how the Dutch and Belgians are different but basically keeps repeating that you can be
smarter if you try to find the differences between countries legal systems.
Evaluating the better law
Comparative law attempts to determine which law is the best (and thus superior). This is down by first gaining the
knowledge of the laws of each country, and then evaluating (with methods not discussed) which is better. Legislative
bodies often look to ally or similar nations to see how
their laws are before passing a law regarding a similar topic. This is because they can see how different versions of a
law impacted each society and then decide what best works before passing the bill.
Businesses conduct a DESTEP analysis which the last P stands for “politics and legal aspects.” It is very important
to overlook the potential implications a nations legal and political environment could have on the potential costs
and benefits of conducting business in a country.
Substantiate the application of law
Before applying law governments and courts will often compare the law with similar nations to see how the
implement the law so they can best understand what needs to be done to most effectively implement the law.
An Example is the former states of the British Commonwealth which all have similar legal systems. When one country
wants to implement a new law it’s best bet is to look at one of the other former member states and see how (if they
have a similar law) they implemented it.
Improve Legal Education
Comparative law serves to broaden the horizons and understanding of law students. This helps the student to “crawl
out of his shell” and better be able to determine his/her own view point on ethics and legal perspective. If one
doesn’t practice comparing law their opinion will be heavily influenced by their local legal system and political
environment.
Second comparative law is excellent when applied by international businesses looking to start operations in a
new country. (again, to be able to see the costs or benefits related to the legal system)
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