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Summary Business Law and ethics H1-12 H14 €6,49
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  3. Universiteit Van Amsterdam (UvA)
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  5. Business Law and Ethics (6012B0428Y)

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Summary Business Law and ethics H1-12 H14

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English summary of the subject Business Law and Ethics (University of Amsterdam). All chapters except for chapter 13, the book is as follows: International law and business - A global introduction Author: Mr. Dr. B.F.W. Wernaart - first edition Noordhoff Uitgevers

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  • H1-h14 except h13
  • 18 mei 2020
  • 48
  • 2019/2020
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Chapter 1 – What is law and where can we find it?
1.1 The organization of just behaviour
In everyday life we are engaged in legal issues and act in compliance with many legally
binding rules. Such rules are necessary to organize just behaviour in a given society → to
regulate what is just to avoid chaos. Law is a tool to create such rules. “Law organizes just
behaviour in a society.”, law does this by applying two different kind of rules: rules on
content (substantive law) and rules to maintain this content (formal law).

To organize just behaviour in a society, we first need standards that define the ‘rules of the
game’ that people are required to obey. These rules are about the content of what people
are supposed to do, or not to do, such as driving on the right side of the road. Substantive
law is composed of those legal rules that define the content of just behaviour.

However, such substantive rules in itself are rather pointless when there are no means to
maintain these rules. If there are no consequences when substance law is violated, a society
is depending on the good will of the people to obey the law. But there are people that do
not obey. For those formal law is composed, this law is composed of legal rules that
maintain substantive law.

So, in summary: substantive law is to organize the ‘just’ behaviour and formal law is to
maintain the intended behaviour.

Substantive and formal rules are both created to regulate two particular relations within
societies: the relation between the government and its citizens and the relation between
citizens.
▪ Public law is the law that regulates the relation between a government and its
citizens.
- Public substantive law: Regulating this relationship between the state and its
citizens is one of the purposes of law and is referred to as public law. The
state adopts the substantive law for the benefit of society in general and acts
when one misbehaves, for the sake of society. On the one hand, these legal
rules authorize a state to interfere when people are misbehaving.
Simultaneously, these rules also restrict the power of a state: the state has to
act in accordance with its competences laid down in these rules. An example
is traffic rules.
- Public formal law: there are formal rules that regulate the legal procedures
that need to be taken into account when a citizen misbehaves. Mostly, a state
is not unlimitedly competent in punishing a citizen: formal procedures need
to be followed, and evidence should be of a particular quality before a state
may interfere in the life of a citizen.
▪ Private law is the law that regulated the relation between citizens or those who acts
as citizens. Private law also regulates the relation between an individual and a
company, or between companies. Occasionally, a government institution may also be
considered acting as a citizen. This could be when a parliament orders food for their
lunch break. In such cases, they do not act in their capacity as a government
institution but participate in business just as an individual would.

, - Private substantive law: We need some substantive rules that regulate the
relation between the quarrelling parties to solve these issues.
- Private formal law: and also here, rules to maintain the law are necessary.

There are several branches of law between public and private law, see picture below:




1.2 The meaning of just behaviour
The perception of what ‘just’ is will differ per society. However, in general one could say that
‘just’ is defined by three basic values that are commonly shared in every society: justice,
opportuness and legal certainty. The exact way this balance is designed greatly determines
the characteristics of the society’s legal system.
▪ Justice is the moral conviction of a given society expressed in law. While moral
convictions are widely shared and appear in some shape or form in almost all legal
systems around the world, there are other moral convictions expressed by law that
are highly controversial, in example the justice in death penalty. One should however
be careful in identifying law with justice as a synonym. In the first place, law usually
expresses the moral conviction of the legislature. This does not mean however that
this moral conviction is shared with all the citizens of that particular state. In the
second place, law does not always express a moral conviction: sometimes law is a
tool to effectively regulate something in society that needs to be done (opportuness),
or to establish clarity on someone’s legal position beforehand (legal certainty).
▪ Opportuness is the expression of effectiveness by a given society in law. Sometimes,
law is not used as a tool to express a moral conviction but rather a tool to effectively
regulate something in society. In most situations, justice and opportuness go very
well hand in hand with one another. However, sometimes in a given society,

, something needs to be regulated by law from an effective or practical point of view
while it is perceived to be an unjust legal standard.
▪ Legal certainty is the expression of legality in a given society. The idea is that every
citizen and the relevant government should be able to know the legal consequences
of their actions beforehand, and not afterwards. This is also defined as the principle
of legality → law should, to a certain extent, be predictable.

1.3 The origin of law
One could endlessly debate the source of law. However, two approaches in legal philosophy
are traditionally distinguished regarding the origin of law: the natural approach, which
assumes that law emerges from nature and the positivist approach, which assumes that law
emerges from codified standards.

In a natural law approach, it is assumed that laws emerge from nature. This means that a
law does not need to be codified (written down) first to be a law, but already exists
regardless of its appearances. An example of this, is the human right. In these treaties
human rights are recognized for each individual. In their preambles, it is stipulated that:
‘these rights derive from the inherent dignity of the human person’. In the covenants, it is
therefore assumed that people have human rights simply because they were born.

The advantage of a natural law approach is that law (and justice) is not depending on any
formalization, and therefore can be applied because it is only reasonable to do so. The
disadvantage is that natural law can be subdue to many different forms of understanding,
leading to legal uncertainty.

In a positivist law approach, it is assumed that law comes forth from codification. This
means that law is only law when it has been written down first. The advantage of such an
approach is that people know beforehand what the rules of the game are (in line with
principle of legality). Next to that, in most legal systems the forming of written codes is
subdue to strict rules in which a certain degree of quality and consent of the people that are
bound by this law is guaranteed → to protect people against extreme understandings of
natural law. However, the disadvantage of a positivist law approach is that written law is
always two steps behind reality, because one cannot create rules beforehand that flawlessly
provide solutions to every possible case. It might lead to over-formalizing relations in
society, when only written standards can be applied → bureaucracy.

Natural law and positivist law are two opposing extremes in elucidating the origin of law. In
most legal systems, one needs a bit of both to function properly in a balance that suits the
involved society. This balance is not only different per legal system but may also shift over
time.

1.4 Legal sources
The following sources are generally used: codified standards, the application of law, legal
writings and teachings, religious writings and teachings, customary law and legal principles.
In each legal system there are differences in the usage and hierarchy of legal sources. All
sources have elements of both positivist law and natural within them, however the balance
is different.

, In codified standards there is naturally a strong emphasis on legal positivism, because
written codes are exactly what positivist consider to be the source of law. In legal principles,
there is a strong emphasis on natural law, because a principle is usually an abstract value
that represents a foundation in law, which naturally applies without the need to be codified.
A codified standard can never be fully comprehensive and offer a clear solution to each
individual legal conflict. There is always a need for a certain room for interpretation. On the
other hand, a legal principle is sometimes considered to be too vague and imprecise to apply
to a real case, and in the eyes of a positivist may not be legitimately applied without the
consent of a legislature. Therefore, a legal principle might need some support in written
standards in order to be specific enough to be effectively used. In other words, positivist law
and natural law approaches may also complement rather than oppose one another.

Codified standards are written rules produced by a legislator (lawmaker, one that writes and
passes law mostly politicians). On the international level, written standards are usually
created in the form of a contract between states. Such a contract is often referred to as a
treaty → a treaty is a written contract between two or more states who consider
themselves bound to its content relative to each other.

In legal terminology a distinction is made between a treaty between two countries, and a
treaty between more than two countries. The first is called a bilateral treaty, while the latter
is called a multilateral treaty. A bilateral treaty is a treaty to which two states are party.
Such treaties deal with matters that primarily relate to the interest of the two involved
countries only (certain aspects of trade, usage and maintenance of a river that flows through
both territories). Sometimes a bilateral treaty is used to determine the exact state
boundaries.

A multilateral treaty is a treaty to which more than two states are party. Such treaties deal
with matters that relate to the interest of more than two countries (trade regulations →
NAFTA, EU, WTO, IMF or treaties for human rights).

While the approach differs per country, the state’s consent to be bound by a treaty is usually
expressed in two steps: the signature and the ratification of the treaty.
▪ The signature of a treaty implies the consent of the responsible negotiator on behalf
of the state to the treaty. In most legal systems, the signature on behalf of the state
must be approved by a legislative body, to guarantee some political control over the
performance of the negotiator.

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