The law affects every aspect of our lives; it governs our conduct from birth to death and its effects extend from our birth to death. We live in a society that has developed a complex set of rules to govern the activities of its members. Some laws regulate work conditions (e.g., by setting minimum standards of health and safety), some laws regulate leisure activities (e.g., by banning alcohol in carts and coaches meant for football matches), and some laws regulate personal relationships. (e.g., by banning marriages between close relatives). So, what is ‘law’ and how is it different from other types of rules? Law is a set of rules, enforceable by the courts, that govern the government of the state and the relations between the state and its citizens and between one citizen and another. Personally we face many ‘rules’. The rules of a particular sport, such as the off-side rules in football, or the rules of a club, are made to bring order to a particular activity. Other types of rules may actually be social conventions, such as not speaking ill of the dead. In this case, the ‘rules’ are merely a reflection of how the Community considers appropriate behaviour. In any case we would not expect the rule to have the force of law and be enforced by the courts.
In this article we will consider a specific area of law: the rules that affect the business world. We will consider such topics as the requirements necessary to start a business venture, the rights and duties resulting from a business transaction, and the consequences of a business failure. To understand the legal implications of business activities, it is first necessary to examine some basic features of our English legal system. It is important to remember that English law refers to the law that applies to England and Wales. Scotland and Northern Ireland have their own distinct legal systems.
There are many ways to classify law; The most important are the following:
1 Public and private law
The distinction between public and private law has been clarified.
(a) Public law: Public law deals with the relationship between the State and its citizens. It covers a number of specific areas, such as:
(i) constitutional law: Constitutional law deals with the functioning of the British Constitution. This includes matters such as the status of the monarchy, the composition and procedures of parliament, the functioning of central and local government, citizenship and the civil liberties of individual citizens.
(ii) Administrative law. There has been a dramatic increase in the activities of the government in the last hundred years. Schemes have been introduced to help ensure a minimum standard of living for all. Government agencies are involved, for example, in the provision of State retirement pensions, income support and child benefits. A large number of disputes arise from the administration of these schemes and a law, the Administrative Law, has developed to deal with complaints from individuals against decisions of the administrative agency.
(iii) Criminal law. Certain types of wrongful acts pose such a serious threat to the orderliness of society that they are considered crimes against the entire community. Criminal law makes such anti-social behaviour an offence against the State and perpetrators may be punished. The State assumes responsibility for detecting, prosecuting and punishing the perpetrators.
(b) Private law:Private law is primarily concerned with the rights and duties of individuals towards each other. State involvement in this area of law is limited to providing a decent way of resolving the dispute that has arisen. Thus, the legal process is initiated not by the State, but by the aggrieved citizen. Private law is also called civil law and is often considered contrary to criminal law.
2 Criminal and civil law: Legal regulations are generally divided into two categories: criminal and civil. It is important to understand the nature of this division because there are fundamental differences in the objectives, procedures and terminology of each branch of law.
(a) Criminal law: Criminal law deals with the prohibition of certain types of wrongful conduct and the punishment of those involved in prohibited acts. Criminal proceedings are usually conducted under the name of the Crown and are called prosecutions. In 1985 responsibility for the prosecution process passed from the police to a newly formed independent Crown Prosecution Service under the direction of the Director of Public Prosecutions (Crime Prosecution Act 1985). It should be noted that prosecution may be carried out by bodies such as the local authority’s Trade Standards Department and also by private individuals, for example, a shopkeeper prosecuted by a shop detective. In criminal cases, you have a prosecutor who prosecutes the defendant in the criminal courts. The consequences of being found guilty are so serious that the standard of proof is higher than in civil cases: charges of criminal conduct must be proved beyond reasonable doubt. If the prosecution succeeds, the defendant is found guilty (convicted) and can be punished by the court. The Criminal Justice Act 2003, sets out in law the objectives of sentencing first-time adult offenders, which are penalties, crime reduction, correction and rehabilitation of offenders, and reparation.
Penalties available by the court include community orders such as imprisonment, fines, or requiring unpaid work. If the prosecution is unsuccessful, the defendant is found not guilty (acquitted). A businessman may find himself in breach of criminal law under acts such as the Companies Act 2006, the Consumer Protection from Unfair Trading Regulations 2008 and the Health and Safety at Work etc. Act 1974.
(b) Civil law: Civil law deals with private rights and obligations arising between individuals. The purpose of this trial is to redress the injustice that has been suffered. Enforcement of civil law is the responsibility of the person who has been wronged; the role of the State is to provide the necessary procedure and courts to resolve the dispute. In civil proceedings, a claimant sues the defendant in civil courts. The claimant will succeed only if he can prove his case on the basis of probabilities, that is, the evidence is heavier in favour of the claimant than that of the defendant.
If the claimant wins his suit, the defendant is deemed liable and the Court will order appropriate remedies, such as damages (financial damages) or an injunction (order to do or not to do something). If the claimant is not successful, the defendant is found not liable. A number of laws affecting the practitioner, particularly contract, tort and property law, are part of civil law.
The distinction between criminal and civil law does not depend on the nature of the wrongful act, since the same act may give rise to both civil and criminal proceedings. Consider the consequences of a common motor accident. Julie was crossing the road at the zebra crossing when she was hit by a car Gordon was driving. An ambulance took Julie to a local hospital where she was diagnosed with a broken leg. Meanwhile, the police arrive at the crash site and perform a breath test on Gordon. The result was positive and Gordon was charged with a criminal offense for excessive drink driving. He appeared in the local magistrate’s court and was convicted. He was disqualified from driving for 18 months and was fined £400. The penalty is awarded to the court: it does not go to compensate the victim of the criminal act. However, a criminal court now has limited power to order the offender to pay compensation for any ‘personal injury, loss or damage’ suffered by the victim of his offence (under section 130 of the Powers of Criminal Courts (Penalty) Act 2000). Julie must file a separate civil suit against Gordon to redress the personal injustice she has suffered. She sues Gordon for tort of negligence and seeks damages for the injuries she sustained. The case is heard in county court where Gordon is found guilty. He is ordered to pay damages of £6,000. Typically, the losing party in a civil suit bears the expenses of the winning party. Gordon is therefore ordered to pay the expenses incurred in Julie’s trial.
3. Common law and equity: Legal rules can also be classified according to whether they are part of the common law or of parity. The difference between these two legal systems lies in history and can only be properly understood by examining the origins of English law. English legal developments can be traced back to 1066, when William of Normandy defeated King Harold at the Battle of Hastings to gain the crown of England.
Before the arrival of the Normans in 1066, there was really no such thing as English law. The Anglo-Saxon legal system was based on the local community. Each region had its own courts in which local customs applied. The Norman Conquest did not have an immediate effect on English law; in fact, William had promised the English that they could maintain their customary laws. The Normans were great administrators and soon began a process of centralization that created the right climate for the development of a uniform law system for the entire country.
The Norman kings ruled with the aid of the most important and powerful men in the country, who formed an institution called the Curia Regis (Council of Kings). This assembly performed many functions: it functioned as a primitive legislature, performed administrative functions, and exercised certain judicial powers. There were two types of meetings of the curia regis: occasional assemblies attended by barons and frequent but short meetings of royal officials.
These officers began to specialize in certain types of work and departments were formed. This trend eventually led to the development of courts to hear a particular type of cases. By the end of the 13th century the courts that came into being were called Common Law Courts and were located in Westminster. First came the establishment of the Court of Exchequer. It settled taxation disputes, but later expanded its jurisdiction to other civil cases. The court to be established thereafter was the Common Pleas Court. It heard disputes of civil nature between one citizen and another. The Court of King’s Bench, which was the last court, became the most important of the three courts due to its close relationship with the King. Its jurisdiction covered civil and criminal matters and it developed supervisory functions over the activities of the lower courts.
The Normans exercised central control by sending representatives of the king from Westminster to all parts of the country to supervise the local administration. At the beginning these royal commissioners performed a number of functions: they kept accounts of land and property, collected taxes, and settled disputes brought before them. Gradually his judicial powers became more important than his other functions. Initially, these commissioners (or judges) applied local customary law during hearings, but over time local customs were replaced by a set of rules applicable to the entire country.
After completing his travels around the country, the judge returned to Westminster where he discussed the practices he had encountered. By sorting out these practices sequentially, rejecting unfair practices, and accepting unfair practices, they created a uniform form of law throughout England. Thus, by selecting certain practices and applying them to all similar cases in the future, the common law of England was created.
A civil suit under common law began by issuing a writ, which was purchased from the offices of the chancery, a department of the curia regis under the control of the chancellor. Different types of actions were covered by different writs. The procedural rules and type of suit varied according to the nature of the writ. It was necessary that the correct writ be selected, otherwise the claimant would not be allowed to pursue his action.
Over time, common law became an extremely rigid system and in many cases it became impossible to obtain justice from the courts. The main defects of the common law were the following:
It became a custom for aggrieved citizens to petition the king for assistance. As the number of petitions increased, the king handed them over to the Curia Regis and a committee was set up to hear the petitions. Hearings were presided over by the Chancellor and petitions were sent over time only to him. By the 15th century the chancellor himself had begun to hear petitions, and the Court of Chancery was established. The rules applied by the court were called parity.
Early chancellors were elected from the clergy and their decisions reflected their religious background. They checked the discretion of the parties and then ordered what was fair and equitable. Initially, each chancellor did what he saw as appropriate. The decisions of each chancellor were different and resulted in considerable uncertainty for the petitioners. Eventually, the chancellors tended to follow earlier decisions and a large body of fixed rules developed. The decisions of the Court of Chancery were often different from those of the Courts of Common Law. This remained a source of conflict until the early 17th century, when James I decreed that parity would prevail in the event of conflict. For many centuries the English justice system continued to evolve with rules administered by two separate courts.
Parity is not a complete system of law. Equitable principles were created to remove specific defects in the general method. These were drawn up to supplement, and not to supersede, the rules of the common method. Parity has made a significant contribution to the development of the English method, particularly in the following areas:
1. Recognition of new rights: The common law did not recognize the concept of trust. Trust arises when a settlor (S) transfers assets to a trustee (T) to be placed on trust for the beneficiary (B). The common law considered T to be the owner of the property and ignored B’s claims. However, the Court of Chancery required T to act in accordance with its discretion and to conduct the trust on behalf of B. Thus, equity recognized and enforced the beneficiary’s rights under a trust. The Court of Chancery also assisted borrowers who pledged their property as security for loans. If the loan was not repaid by the agreed date, the common law position was that the lender (mortgagor) became the owner of the property and the borrower (mortgagor) still had to pay the outstanding amount.
Equity gave the mortgagor the right to repay the loan and recover its assets, even if the repayment date had passed. This equitable principle is known as parity of redemption.
2. Introduction of new measures: New equitable rights were implemented through new equitable measures. In the area of contract law, the Court of Chancery developed measures, such as injunctions, specific executions, revocations and corrections, which would be checked. These remedies were not available as rights as ordinary law remedies: they were discretionary. The Court of Chancery could have refused to grant an equitable remedy, for example, if the claimant himself had committed an improper act.
By the 19th century the administration of justice had reached a desperate state and had been severely criticized. The existence of separate courts for the administration of common law and equity meant that a person who sought assistance from both common law and equity had to bring two separate cases in two different courts. If a person started a trial in the wrong court, he could not find a remedy until he took his case to the right court. The proceedings of the Court of Chancery had become notorious for its length and expense. (Charles Dickens satirizes the chancery delay in his novel Bleak House.)
The numerous shortcomings of the English justice system were comprehensively reformed by several statutes in the 19th century, culminating in the Judicial Acts of 1873-75. A Supreme Judicial Court, consisting of the Court of Appeal and the High Court, was established to replace the separate Common Law Courts and the Court of Chancery. Since then, every judge was given the right to administer both common law and equality in his court. Thus, a claimant seeking common law and equitable treatment will have to present only one suit in a court.
The Acts also confirmed that where there is a conflict between common law and equitable justice, equitable justice should be given priority. These reforms did not have the effect of removing the distinction between the two rules: common law and equitable justice are still two separate but complementary legal systems. A judge may use both rules to decide a case.
Before considering the specific areas of law governing the activities of business organizations, we must first consider the branches of law that most affect business organizations and also some basic principles of liability. A basic function of the law is to determine the circumstances in which a person may be held accountable for his or her actions. Legal liability describes a situation where a person is legally liable for a breach of an obligation imposed by law. Such obligations may arise from the operation of civil or criminal law. The activities of business organizations are subject to a wide range of potential liability. Therefore, before considering the law governing the formation, operation and dissolution of business organizations, we must first examine the framework of the nature and scope of legal liability for wrongful acts.
Any crime is a crime against the state. The consequences of a criminal conviction are not limited to the punishment imposed by the court. For example, if a person is convicted of theft, printing his name in local newspapers can cause embarrassment and embarrassment and cause him to lose his job. The penalties are so severe that criminal law usually requires an element of moral culpability on the part of the offender. Therefore, the prosecution must establish two essential requirements: actus reus (forbidden act) and mens rea (guilty mind). For most criminal offences, it is necessary to have both elements in order to generate criminal liability. If you pick up someone’s umbrella thinking it’s your own, you can’t be guilty of theft, because you don’t have blame.
However, there are some statutory offenses where Parliament has abolished the requirement of mens rea. Only by committing a wrongful act is the perpetrator liable. These are called crimes with strict liability. Unlike the Food Safety Act 1990, selling foodstuffs for human consumption that do not comply with food safety requirements is an example of an offence of rigid liability. The prosecutor is not required to prove that the seller knew that the foodstuff did not comply with food safety requirements. He could secure a conviction by proving that the foodstuff was unsafe and had been sold. The seller may defend himself by proving that he has taken all reasonable precautions and taken reasonable precautions to avoid the offence.
The law of property deals with rights that may arise in connection with anything that may be owned. Thus, property includes land, objects, and intangible rights such as loans, patents, or the creditworthiness of a business. To fully understand the other principles of business law that you will encounter first, it is necessary to consider the relationships that arise between individuals and property, namely the rights of ownership and possession.
1. Ownership: Ownership describes the greatest rights of a person in relation to property. An owner receives full power to use and dispose of property permitted by law. For example, the owner of this book has the right to read it, lend it to a friend, rent it, pledge it as bail for a loan, or even tear it to pieces. An owner does not enjoy full rights; sanctions may be imposed to protect the rights of other members of the community. Ownership of a home does not give residents the right to repeatedly have uncontrollable parties to harass neighbors.
2. Possession: Possession consists of two elements: physical control and the intention to exclude others. For example, you have your worn watch, clothes kept in the cupboard at home and your car parked at your work, everything is in your possession. Ownership and possession often go hand in hand, but can also be divided. The viewer of the rented TV maintains possession of the set, but ownership remains with the TV renting company. If your house is stolen, you remain the owner of the stolen property, but the thief (illegal) takes possession.
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