Law – Introduction & The Legal Framework

In this summary of law, we will be covering the legal framework, to facilitate student learning key concepts are in BOLD. In this article, legal foundations are explored along with an introduction to law. “There is no universally accepted agreement on ‘what law is’, but a starting point is that law is a set of rules, developed over a long period of time, regulating people’s interactions with one another.” (Gibson & Fraser, 2012) Law set by government is an order of control over society to regulate economic and social behaviour in their favour. Sources of law include rule and regulations, orders and by-laws. Without action there would be no need for laws as only action entails economic activity, the government would cease to have superior authority and coercive control. “For the purposes of the law, the reference to a ‘person’ includes not only a reference to human beings but also extends to entities or organisations that can have rights and obligations in much the same way as natural persons.” (Gibson & Fraser, 2012) In a world of trade and economic action, the law is seen by society to keep in line a method for society to function. As if, society could not live and cooperate without law. Through legislation (Acts of Parliament) governments prioritise the needs and desires. In Australia the law system is case law (decisions of the courts). To read more on ‘the law’, a great book is The Law by Frédéric Bastiat

“To determine whether a rule is law, consider where it came from, how it deals with an offender who has broken the rule, the type of punishment and by whom it is handed out.” (Gibson & Fraser, 2012) Law only states what people cannot do and can do, therefore, it basically controls the actions of people within its jurisdiction. One must not commit a crime, but must pay taxes, this comes across a little contradictory in that one has no coercive powers to defend themselves over the coercive powers of the government. One might say governments need this power to protect society against bad, however, as the government has this coercive power combined with the power to regulate in law what defines right and wrong, how can the government be subject to punishment when they themselves commit wrongdoings, it is themselves indeed. In Australia, the law also guarantees freedoms permitting free enterprise and providing a means to settle disputes peacefully. The law can therefore, also not guarantee freedoms or make it difficult to settle disputes peacefully. Take the latter disputes, in particular when involving one dispute against the government for closing down the family business, due to unpaid taxes or unpaid licence fees it is very unfair that one would be subject to severe penalties, when it should be the government at wrongdoing. To expand on this point, look at this from another perspective if a gang of thieves took the family business, as the owner did not cooperate to pay the towns annual fees to this gang, the owner has the law on their side. The owner has no help of law when robbed by governments, nor in any other situation when an action threatens the coercive power of government monopoly.

“If the legal system under which we live is to be effective and have widespread community acceptance, then a number of characteristics must be present, including: certainty; flexibility; fairness; and accessibility.” (Gibson & Fraser, 2012) These are the characteristics of law. The law must have a degree of acceptance and certainty to be enforced and abidance to. The law must be flexible and able to adapt to different situations, where justice is dealt with in a timely fashion and everyone is subject to a fair trail. “Equity: fairness and justice.” (Gibson & Fraser, 2012) Equity in law prevents civil unrest, in that the law system has control just enough to promote freedom and liberty.  To ensure injured parties are compensated. Plaintiff: the party commencing a civil action in a court of first instance.” (Gibson & Fraser, 2012) The law must also be accessible, see my post on the Australian Citizenship test as its an example of introducing Australian law and our rights to new citizens.

Civil law system: a complete legal system with its origins in Roman Law and the Napoleonic Code.” (Gibson & Fraser, 2012) Systems in civil law comes from a judge to make decisional law with precedential authority to prior court decisions on the principle that it is unfair to treat similar facts differently on different occasions. Civil law is laws between citizens, whereas common law is between the state and citizens. “Common law: that part of English law developed from the common custom of the country as administered by the common law courts.” (Gibson & Fraser, 2012) Common law is developed by judges, federal and state superior courts, and tribunals, who decide individual and future cases, see video one Common Law vs Civil Law Source: (Chasluim11, 2015). Common law is unwritten and unenacted law. “Writ: a document issued by a court commanding the person to whom it is addressed to do, or stop doing a particular act.” (Gibson & Fraser, 2012) A conflict between common law and equity (which shall be covered in later module), equity would prevail, see video two Common Law & Equity Source: (Genn, 2013). Alternatively, watch the historical development of the law of equity video by Philip Burke. “Common law is one of the two sources of law, where the other is Statutory law and delegated legislation. “Statute law: laws passed by parliament.” (Gibson & Fraser, 2012) Statue “[law] is made by the Commonwealth, state and territory parliaments in the form of Acts or statues of parliament.” (Gibson & Fraser, 2012) Statue always prevails over common law when a conflict arises between them.

As there is not just two legal systems nor one law accepted nationally, there must be a law system to facilitate relations between states, in order to trade or communicate with other countries who have different legal systems. “International law: that body of law concerned with regulating conduct between nation states.” (Gibson & Fraser, 2012) International law is constantly subject to decisions and research to verify and update the law or rule for a legal dispute or discourse. Two international law sources which affect domestic businesses are international law customary rules and treaties and conventions. Municipal (or domestic) law: that body of law concerned with regulating the relations or conduct between individuals and organisations within a state’s borders.” (Gibson & Fraser, 2012) To be subject to municipal law or domestic law one does not have to be a citizen of the country. Municipal law is law at the national, domestic, or international law level and is defined in opposition to international law, ruling that for individuals in a particular country they reside in and not of their country of citizenship law.

Private law: that body of law concerned with regulating the relationships between individuals within the state-for example, contract law and tort law.” (Gibson & Fraser, 2012) With private law an order is undertaken by free individuals and businesses competing for voluntarily transactions and the production of goods and services, see video three Culture in Hoppe’s Private Law Society Source: (Hoppe, 2015). “Public law: that body of law concerned with the relationship between the state and the individual-for example, criminal law and constitutional law.” (Gibson & Fraser, 2012) Pubic law can be criminal law and constitutional law, though certain public laws can be coercive in referring to tax law.

Other minor law impacting on business are Roman law and law merchant. “Roman law: civil code that form the basis of the civil law system.” (Gibson & Fraser, 2012) Roman law is no longer applied in law today, although law is based and derive from Roman law. “Law merchant: that part of the common law relating to mercantile matters.” (Gibson & Fraser, 2012) Adopted by traders, law merchant is a body of customary rules and principals for mercantile trade. “In criminal cases the action is brought by the Crown on behalf of ‘the people’ (not the police, as they enforce the law) against a ‘person’ for the commission of an act that the state considers to be a crime and that should be punishable by a penalty if it can establish its case against the accused beyond reasonable doubt.” (Gibson & Fraser, 2012)


Reference List (American Psychological Association)

Gibson, A. & Fraser, D. (2012). Business law. (6th ed.). New South Wales, Australia: Pearson Australia.

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Copyright © 2016 Zoë-Marie Beesley

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