lOMoARcPSD|15781725
lOMoARcPSD|15781725
Lectures Foundations of Business Law
Lecture 1: An introduction to legal systems – Chapter 1
Introduction to the course
Goal: Become aware of typical legal problems that someone could encounter when working.
Global law used: Anglo-American law. Language of international interactions is English.
Example legal system exam question [slide 2]:
He reasons from principles to facts, not from facts to principles. He asks himself ‘what shall we do this
time’, not ‘what did we do last time’. This describes a lawyer from the civil law system.
+Know the difference civil law and common law systems.
The nature of law:
- Jurisdictional laws are not like fundamental scientific principles.
- Law – is a command proceeding from the supreme authority of a state and addressed to
the persons who are subjects of that authority.
o Reflects the predominant norms and values of a given society at a given point in
time. These norms can shift over time:
▪ E.g. in the past homosexuality could be prosecuted, but now not.
▪ In the past you couldn’t be prosecuted for marital rape.
▪ What stayed the same: Females can’t be prosecuted for rape, because you
need to have a male genital.
How do lawyers’ reason?
- Lawyers are trained to think in terms of looking for problems and how to protect their
client from potential problems.
- Law – rarely black and white: lawyers cannot always predict with anything like certainty
how legal rules will be interpreted (no certainty).
- Lawyers do not approach things the same as managers do (do not use statistical analysis).
Understanding and communicating with lawyers
Tool of the law: language
- Language can be ambiguous Can be interpreted in different ways (which may cause friction
between people).
- E.g. “the company agrees to replace any units found to be defective within three
months” Has two different interpretations:
o Only have 3 months to point out any defects or a promise by the company to replace
a defective unit within 3 months (doesn’t matter when I point it out).
Types of legal systems: common law and civil law systems; origins, characteristics and differences in
approach.
The legal framework
The principle objective of a legal system is to establish rules and principles to regulate relationships.
- Where interests conflict, the law attempts to resolve differences by the application of these
rules and principles.
->
, lOMoARcPSD|15781725
E.g. Conflict between two people: Employee made a mistake on a bystander’s car. Who will you
sue?
o Answer: Small claim (law of thought). Sue the worker’s employer.
o When you are an employer, you need insurance for this specific reason.
- Business activities take place within a legal framework that sets out the rights and obligations
of the participants.
Two types of legal framework: Public and private law
• Private law (civil law): concerned with the private rights and obligations of individuals.
A company can be treated as an individual. E.g. tort law and contract law.
o Civil action: an official complaint made by a person or company in a law court against
another person who is said to have done something to harm them, that is dealt with
by a judge. (taking legal action)
o Deals primarily with financial compensation
• Public law: concerned with the relationship of individuals to society, for example criminal
law which imposes sanctions for anti-social activities.
o These forms of law may have both a national and international dimension.
Legal system map
Blue = civil law (Dutch)
Red = common law (American)
Brown = mix of common and civil
law Black = Customary law
Yellow = Religious law
->
, lOMoARcPSD|15781725
Common law systems: It is uniform
- The law was developed in the Middle Ages in England and Wales as the law administered in
the king’s courts. The king used his power to centralize the system.
- Local customs and uses were either assimilated or abandoned to form one set of laws
‘common’ (i.e. uniform) to all throughout England and Wales.
- The law grew in response to deciding individual disputes brought before the courts.
- It developed as a case law system. Cases are the source of law. They form precedents that
must be followed.
Civil law systems
- In civil law systems the law is put together into a formal written code. The code
provides comprehensive and systematic regulations.
o In the Dutch system three major code books are used.
- Cases Interpret the code but are in general not a source of law.
o In this system you can never win a case by citing a precedent. These cases tell you
how to read the code, you can interpret them but are not a source of law.
o Exception: Germany
- Modern civil law systems have been influenced by Roman law as codified by the
Emperor Justinian in the 6th century AD.
o The historical basis of Dutch law (Napoleonic law) Code Napoleon – drafted in 1804
France and implemented in conquered lands in Europe.
Difference in approach
1. Common law systems: Always go back to the cases, were there similar cases before.
Practical, but not academic. You couldn’t study this in the past, there were only roman law.
- Common law jurist reason from certain cases, applying the legal principles laid down in
those cases to new cases with similar facts.
- Hierarchy is very important: Everything that the Supreme court decides binds everyone and
as you go down the pyramid you can bind all the courts below that court.
2. Civil law systems: Law is laid down in the code but are not binding.
- Jurists argue from the general principles of law laid down in the codes of law. Cases
provide guidance to interpreting the code but are generally not binding.
- In principle a lower court does not have to be bonded by what a higher court decides.
->
, lOMoARcPSD|15781725
The states have different court systems:
In the USA federal court system
- When to use it: When your company is not a national company. Or if you are going litigate
an international company.
o Competition law (antitrust law): a law that promotes or seeks to maintain
market competition by regulating ant-competitive conduct by companies.
Alternatives to the courts
Alternative dispute resolution (ADR):
- Mediate: you have a dispute and the mediator will help the parties to come to a solution
- Conciliation: Comes up with solutions, you can accept or deny.
- Arbitration: Very common for businesses. Arbitrator is an expert in the field. The hearing is
private (protects the privacy of the company). Going to court in comparison to arbitration
is public.
*International contracts
▪ Need to decide whose law is going to govern over the contract?
▪ If there is a dispute, which forum is it going to be dealt in: Court or arbitration.
Both parties must stick to what was decided.
->
lOMoARcPSD|15781725
Lectures Foundations of Business Law
Lecture 1: An introduction to legal systems – Chapter 1
Introduction to the course
Goal: Become aware of typical legal problems that someone could encounter when working.
Global law used: Anglo-American law. Language of international interactions is English.
Example legal system exam question [slide 2]:
He reasons from principles to facts, not from facts to principles. He asks himself ‘what shall we do this
time’, not ‘what did we do last time’. This describes a lawyer from the civil law system.
+Know the difference civil law and common law systems.
The nature of law:
- Jurisdictional laws are not like fundamental scientific principles.
- Law – is a command proceeding from the supreme authority of a state and addressed to
the persons who are subjects of that authority.
o Reflects the predominant norms and values of a given society at a given point in
time. These norms can shift over time:
▪ E.g. in the past homosexuality could be prosecuted, but now not.
▪ In the past you couldn’t be prosecuted for marital rape.
▪ What stayed the same: Females can’t be prosecuted for rape, because you
need to have a male genital.
How do lawyers’ reason?
- Lawyers are trained to think in terms of looking for problems and how to protect their
client from potential problems.
- Law – rarely black and white: lawyers cannot always predict with anything like certainty
how legal rules will be interpreted (no certainty).
- Lawyers do not approach things the same as managers do (do not use statistical analysis).
Understanding and communicating with lawyers
Tool of the law: language
- Language can be ambiguous Can be interpreted in different ways (which may cause friction
between people).
- E.g. “the company agrees to replace any units found to be defective within three
months” Has two different interpretations:
o Only have 3 months to point out any defects or a promise by the company to replace
a defective unit within 3 months (doesn’t matter when I point it out).
Types of legal systems: common law and civil law systems; origins, characteristics and differences in
approach.
The legal framework
The principle objective of a legal system is to establish rules and principles to regulate relationships.
- Where interests conflict, the law attempts to resolve differences by the application of these
rules and principles.
->
, lOMoARcPSD|15781725
E.g. Conflict between two people: Employee made a mistake on a bystander’s car. Who will you
sue?
o Answer: Small claim (law of thought). Sue the worker’s employer.
o When you are an employer, you need insurance for this specific reason.
- Business activities take place within a legal framework that sets out the rights and obligations
of the participants.
Two types of legal framework: Public and private law
• Private law (civil law): concerned with the private rights and obligations of individuals.
A company can be treated as an individual. E.g. tort law and contract law.
o Civil action: an official complaint made by a person or company in a law court against
another person who is said to have done something to harm them, that is dealt with
by a judge. (taking legal action)
o Deals primarily with financial compensation
• Public law: concerned with the relationship of individuals to society, for example criminal
law which imposes sanctions for anti-social activities.
o These forms of law may have both a national and international dimension.
Legal system map
Blue = civil law (Dutch)
Red = common law (American)
Brown = mix of common and civil
law Black = Customary law
Yellow = Religious law
->
, lOMoARcPSD|15781725
Common law systems: It is uniform
- The law was developed in the Middle Ages in England and Wales as the law administered in
the king’s courts. The king used his power to centralize the system.
- Local customs and uses were either assimilated or abandoned to form one set of laws
‘common’ (i.e. uniform) to all throughout England and Wales.
- The law grew in response to deciding individual disputes brought before the courts.
- It developed as a case law system. Cases are the source of law. They form precedents that
must be followed.
Civil law systems
- In civil law systems the law is put together into a formal written code. The code
provides comprehensive and systematic regulations.
o In the Dutch system three major code books are used.
- Cases Interpret the code but are in general not a source of law.
o In this system you can never win a case by citing a precedent. These cases tell you
how to read the code, you can interpret them but are not a source of law.
o Exception: Germany
- Modern civil law systems have been influenced by Roman law as codified by the
Emperor Justinian in the 6th century AD.
o The historical basis of Dutch law (Napoleonic law) Code Napoleon – drafted in 1804
France and implemented in conquered lands in Europe.
Difference in approach
1. Common law systems: Always go back to the cases, were there similar cases before.
Practical, but not academic. You couldn’t study this in the past, there were only roman law.
- Common law jurist reason from certain cases, applying the legal principles laid down in
those cases to new cases with similar facts.
- Hierarchy is very important: Everything that the Supreme court decides binds everyone and
as you go down the pyramid you can bind all the courts below that court.
2. Civil law systems: Law is laid down in the code but are not binding.
- Jurists argue from the general principles of law laid down in the codes of law. Cases
provide guidance to interpreting the code but are generally not binding.
- In principle a lower court does not have to be bonded by what a higher court decides.
->
, lOMoARcPSD|15781725
The states have different court systems:
In the USA federal court system
- When to use it: When your company is not a national company. Or if you are going litigate
an international company.
o Competition law (antitrust law): a law that promotes or seeks to maintain
market competition by regulating ant-competitive conduct by companies.
Alternatives to the courts
Alternative dispute resolution (ADR):
- Mediate: you have a dispute and the mediator will help the parties to come to a solution
- Conciliation: Comes up with solutions, you can accept or deny.
- Arbitration: Very common for businesses. Arbitrator is an expert in the field. The hearing is
private (protects the privacy of the company). Going to court in comparison to arbitration
is public.
*International contracts
▪ Need to decide whose law is going to govern over the contract?
▪ If there is a dispute, which forum is it going to be dealt in: Court or arbitration.
Both parties must stick to what was decided.
->
