Topic 1; Introduction to Business Law (2017)

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Universidad Universidad Pompeu Fabra (UPF)
Grado International Business Economics - 1º curso
Asignatura Introduction to business law
Año del apunte 2017
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Fecha de subida 02/08/2017
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Introduction to Business Law TOPIC 1 INTRODUCTION TO BUSINESS LAW TOPIC 1 WHAT IS THE LAW? WE NEED IT FOR STABI LITY, CERTAINTY, EVE N SECURITY. WHO'S THE ONE SAYING WHAT THE LAW IS, WHAT IS PARLIAME NT, WHO ARE THOSE IN CONGRESS AND SENATE, WHO PUTS THEM THERE? Primary Law: It's the SUBSTANCE, what the rule of conduct is, how to act. "If we act according to this, the consequences are these ones", these are the ones legally enforced.
Secondary Law: It gives powers to organs, so the law itself says "this organ can create legal rules". So, they produce "legally binding norms", they have conferring power. The constitution, contract law, inheritance law, … → They are secondary laws! A Legal Rule is a behavioural rule which constrains a general binding order for all members of a community because it has been issued by bodies or social groups especially authorized for doing so (representative democracy). In primitive societies, there were rules also, such as the "the strongest survives/rules" and specially social rules. As a society we tend to punish those who don't act according to the norm.
There are differences between different legal systems: there are centralized ones (such as the French one), and un-centralized ones (such as the Spanish one, where there is the Spanish law and Catalan law, sometimes one is above the other one, or Belgium, where the taxes change whether in which region you are).
CHARACTERISTICS OF A LEGAL RULE: The legal rule has to be general. If a rule is too specific, there's a lot that can be lost (for example, the former law in the united states that defined rape). The problem of this is that if things are general, it can be very ambiguous, there can be several meanings and several interpretations possible.
The legal rule has to be stable, no quick changes (problem, because it may be hard to adapt to changes in society, etc.). It has to be predictable so we can know how to act.
The legal rule has to be prospective: there is no retroactivity, you cannot punish something that's prior to the establishment rule. In criminal law, in one instance is allowed: if when you commit a crime, and you have 10 years of sentence, and then a law passes and says that for that crime, it's 5 year sentence. Then, it's allowed for that law to apply to the criminal.
The legal law is promulgate: the simple act of publishing the law and saying from when it's applied. There's a problem; nowadays, there's too much information.
The legal law has to be clear. That's one of the basic characteristics of the legal rule, people must know exactly what happens. When it's not clear what a rule means, what counts is the interpretation of the judge.
1 Introduction to Business Law TOPIC 1 The legal law must be non-contradictory. Imagine that in the same rule, you have two contradictory sentences, and not even the judge can help you. A regular judge will send that law to constitutional court, and they will decide whether to change it or not.
The legal rule must be congruent. That means that everyone (all the branches: lawyer, judge and administration) has to be in accordance on what a rule actually means. It's an agreement.
The legal rule must be possible. You cannot demand to a fabric to not pollute at all, for example.
→ What's the difference between a law and a judgement? Why do we need judgement? Why do we go to court? People might misunderstand the law, and because of that, there's a conflict. That's why people go to court. The UE also was created to solve conflicts between countries.
Procedures link to legitimacy. We accept thinks such as tax rules because people accept the power of those who put the laws there.
We have a monopoly of coercion, which means that there are "things" (organizations, e.g.) that control specifically one subject (there's someone taking care of taxes, police of criminals, etc.) so there isn't an anarchy. It everyone could punish anyone, that wouldn't be useful.
International Law: An international law which states decides to follow in order to maintain social order.
The EU has a constitution (Treaty of Lisbon), and then it also has rules and regulations.
THREE POWERS: Division of powers is super important (even though there are problems (someone can be a judge, and their partner a congressman), but in reality no one can have to position in two different powers.) Legislative Power: Congress: the one directly elected by us, they make laws Senate: controls the congress Together they make laws such as the constitution. All the laws that we know have been created by this two. If an international law has been created, it's the congress and senate the ones that say yes or no. International law once it's signed is obligatory for the country.
Judicial Law: Companies don't go to courts as it is, they actually go to Multipersonal Tribunals, or even arbitrage. They are way faster than courts, so much more useful for companies.
Executive Power: Government and Public Administration. They aren't only applying the law, they are also putting regulations, giving details for the law. The public administration decides what is your exact obligation, creating its own rules.
The point of law is to prevent people of doing the wrong thing, to be sure than less and less people do the wrong thing for the society.
2 Introduction to Business Law TOPIC 1 For understanding what the law is we have to understand: Normative Scheme: What the law is.
Legitimacy: who can enact the rule and what he procedure is.
Enforcement: or punishment, actually, that usually centralized but it doesn't need to be.
THE NEED FOR LAWS Regulate individuals’ behavior: correspond with what is acceptable to the majority of individuals Promote coordination between the different agents in society Provide certainty: if you do or don't do something, what the consequence is BASIC FUNCTIONS OF THE LAW 1. Facilitating Planning:   Coordination between individuals.
Prisioner's Dilema: ¿do they confess or do they stay silent? 2.Providing Legal Certainty 3. Maintaining Order and Keep Peace PUBLIC/PRIVATE LAW Public Law: Regulates the relationship between the state and the individuals.
P.Ex: Criminal Law → the state says you cannot do something, it affects public interests Financial Law → How to collect taxes, how much of who Public Law → determining relationships between regions, saying who has the power to decide over what.
International Public Law → determining the relationship between two states, like for examples, ambassadors and councils.
Constitutional Law → the body of law which defines the relationship of different entities within a state Labour Law → When you sign a contract at work, everything that's not said in the contracts is in the Labour Law (minimum wage, maternity leave…) Private Law: It regulates the relationship between individuals and companies (individual/individual; company/company; company/individual) 3 Introduction to Business Law TOPIC 1 P.Ex: Civil Law → it includes: family law (kids, divorces…), contract law….
Commercial Law →not protection only between companies, but also consumer International Private Law → if people of two different countries make a contract, and there's a problem, this is the law that tell us which country laws apply Labour Law*→ the contract that you get with your employer PRODUCTION OF LEGAL RULES: LEGAL TRADITIONS/FAMILIES 1. Common Law 2. Civil Law 3. Socialist Law 4. Islamic Law - Religious Law 5. Mixed Systems *Importante saber que países tienen que tipos de leyes COMMON LAW Common Law started in England. The wanted to unify the country, increasing the kings power at the expense of the feudal lords. Lots of places have common law because they used to be British colonies.
Common law is "judge made law" → if you are going to a conflict because of a contract, in civil law you look at the law, on the other hand, in common law the judge decides about that case, looking into the specific circumstances, an setting a precedent for all the next cases. The precedent that you find, the "law" that you find aren't the same in the USA and UK (for example)→ every country has its own cases. The final decisions might be similar, but the cases that they caused them aren't the same. So the judge decides if there's a precedent, and if he sees that there isn't, he makes a new law.
The jurisdiction of the common courts was limited by the writ system.
• Writ (form of action): ‘ a command of the King directed to the relevant person (official, judge), containing a brief indication of a matter under dispute and instructing the addressee to call the defendant into his court and to resolve the dispute in the presence of the parties’ The writ wasn't only a solution to the problem, out of that solution, it didn't only come a solution, it also generated a precedent→ for future cases, you look at the previous case and the previous solution, and then you know how to solve similar problems That was the basic, simple system of common law → you have a case and then you decide in future really similar cases 4 Introduction to Business Law TOPIC 1 If the case is similar, but not really similar, you have a problem: they had to evolve from writs to equities, because that and also because sometimes monetary compensation isn't "useful" (if you kill someone, they're not going to resurrect if you give them money) • A plaintiff unable to obtain a proper writ was left with no remedy. To counter this problem and provide relief other than money damages, in 15th century a formal Court of Chancery was created with jurisdiction over pleas in equity.
To be left with no remedy→ to be left with no solution, no reward, something that compensates for your loss Jurisdiction→ the right to decide, the power to do it Where to find common law: in yearbooks and reports • Collection of common law court cases and judicial opinions recorded and organized by year. Yearbooks were the earliest editions compiled in England from the midthirteenth century until 1535, when they were superseded by officially printed and bound editions called Reports.
Precedent: the case that's already decided, extremely similar to "your case", that tells you how to act Stare Decisis: a model that tells you how to act in the presence of precedents There are two components: → Binding precedent → Persuasive precedent Persuasive precedent: to persuade; to convince someone, to make him believe something. Persuasive precedent means that the precedent has power of persuasion.
When the trial court is deciding, you as a lawyer find support for your own arguments in other cases, it has power of persuasion, the more cases that you find that have been decided in a similar way, the more power your persuasion has. You don't have to act the same way. It usually has the same power (comes from the "same level") or lower Binding precedent: it comes from a court that is higher (more important) than yours. For trial court, the Supreme court and the Appellate Court are bindings. That means that if you have the same facts as a previous case, you have to decide the same way that the court "above" you decided.
Both are precedents, but the persuasive one helps you to decide and the binding one makes you act in some way. If you don't act the same way, you appeal. That is a complaint that your case was decided wrongly to a higher court. Even if the appellate court says you are wrong, you can go to the Supreme Court.
Judges there have to decided from the info that the lawyers give him, they cannot search information by himself. Even if he knew something that would help one party, but that party doesn't bring it up, he cannot use it, because the judge's opinion might be biased then.
5 Introduction to Business Law TOPIC 1 A general attorney is the lawyer of the state, is the person that for example, prosecutes the murders, he does it in the name of the state. He is the lawyer of the state.
A lawyer is what we know in everyday, it helps you with a legal case.
PLUSES AND MINUSES OF COMMON LAW The precedents can be precise and flexible and the same time → they can be applied for a specific case, but when a thing changes, then the precedent doesn't help, there's no rule for it. Decision based on particular facts gives some assurance that in subsequent identical fact situation a similar conclusion will be reached. Common law lawyers have become exceptionally skillful at distinguishing fact situations in order to reach a different decision.
The statute would not be able to include all these factual variations and possible solutions to them, and that's why common law needs judges. That's why in the US, the more money you have the more thing you can get away with, because the smarter the lawyer, the easier that is getting away from the law.
Binding precedent carries with it two legal effects: • HORIZONTAL STARE DECISIS same (level) court • VERTICAL STARE DECISIS higher court(s) • What exactly did we figure out stare decisis is? Stare decisis means to stand by the things decided. If you have a bad legal rule, the possibilities if it being overruled are extremely small, so bad legal rules stay there and survive through precedent→ you could have a rule of the eighteenth century surviving and being used in court.
There's a horizontal relationship between states, because if a court of "California" decides from a precedent, and then other states use that case as precedent, if a lot of cases among different states star using each other precedents Additional Sources of Law in Common Law Legislation: it says such things as "a judge can be put in the us supreme court under these procedures", "there is a US supreme court"….. e.g. SOX → it’s a law that happened after the economic crash, and this is a law that says "banks can do this and this, but they cannot do this if they are doing this…." it limited the powers of banks.
Custom: custom is a habit, is habitual law, something that we are used to repeat, they are social laws in legal terms, it helps us when there's a void Conventions: they are international treaties, they signed them, so they have to go with it, but they don't go by it.
Common Law: 1. Mostly unwritten 2. Stare decisis 6 Introduction to Business Law TOPIC 1 3. Adversarial, and not ex officio (by the jurisdiction)→ it means that you always have to have two parties and a neutral judge that decides the party that's right. In criminal law, however, since if you are dead you cannot sue the murderer, the state is one of the parties, but if the general attorney has to prove its place: if a general attorney doesn't work well, the judge says "you have not argued well so the other guy walks" 4. Role for juries: the judge says what you can present to de jury and what not, and the jury decides is someone is guilty or innocent. However, the judge decides the punishment. They are mostly used in criminal law cases. The presence of the jury depends on the crime.
5. Judicial review: means the right to appeal, you can have a sentence in the trial court, and they appeal it in the apellate court and the supreme court.
DISTRIBUTION OF THE COMMON LAW→ Most of the commonwealth (in South Africa there's a mixed system, and in Quebec they have civil law)+USA (Except Lousiana who has civil Law) + Great Britain (Except Scotland, where they have roman law) CIVIL LAW Is predominant in Western Europe. It has its origin in the codification process occurred around Europe on the 18th century Codification: Code: an authoritative, comprehensive and systematic collection of general clauses and legal principles, divided into books or parts. They were the traditionally source of law, now it's constitutions. Constitutions started to substitute codes when states started to appear.
The influence of Roman Law it's exceptionally important for civil law. Roman citizens used "lus civile" (civil law) instead of "lus gentium". They had Corpus luris Civilis, in which the Emperor Justinian I codified and consolidated Roman law up until that point. Those codes were lost and rediscovered in the 11th century in Bologna.
Canon law also had a huge influence; they were laws developed by the church., and also Germanic law, that were mostly tribes. (because it influenced roman law when they started the expansion of the roman empire). Customary laws and local regulation also were taken into account and have had their influence.
It's always been quite hard to change a legal rule, but in that time was quite hard, because mostly the rules were written by the emperor, so if he wrote a "bad law", it was difficult to change it and it stayed in the code.
Codification process is a historical development. It took time for the rule to develop.
Intellectual foundations were the Natural Law and Enlightenment. The Natural Law were common social norms, that were the ones that existed in that time. In the 18th/19th century codes started to appear in all Europe: Napoleonic Code in France, Código Civil in Spain, Code of Joseph II in Austria… This codes covered everything, from family law, to commerce law, to criminal law. The basic notions haven't changed, and since codes like this are really general, this codes are the bases of our laws today. Those laws and the rules for society. In common law you find this things in cases.
7 Introduction to Business Law TOPIC 1 Civil Law is written, codes created the civil law rather than revelling existent law, and as they were written, they replaced what was previously there. Here precedent is not necessary binding. If the Supreme Court says something, however, since it's the ultimate authority to interpret the law, all courts have to act like that. But, if a court in you level decides something, you don't have to do the same thing.
It's inquisitorial rather than adversarial, specific in civil law. The judge has the right to allow questions to the defendant. In civil law, the judge acts like a hand of the state, that's why he has the right to be less objective, to act questions, if he needs clarification of something, he can ask the defendant.
Civil law in general doesn't use juries, usually they just use them for really serious cases.
Austria in serious criminal cases, Belgium in serious criminal cases and for political crimes and for press crimes (except those based on racism or xenophobia) and for crimes of international law (genocide (kill on the intent of getting rid of a certain group), crime against humanity), France only when prosecuted for a crime that is an offence which may bring at least 15 years'. The juries are people who know something about the case, who has specific knowledge (who knows when is ok to kill someone in self-defence).
SOURCES OF LAW IN CIVIL LAW COUNTRIES We divide the sources in the more general way; in primary sources that are binding and they tells us the rule and secondary sources that helps us to understand what the rule is saying or if the primary law is ambiguous, they explain it. Secondary sources aren't binding, but they might have weight when primary sources are absent, unclear or incomplete, such as case law and the writings of legal scholars. Primary law is enacted law and custom for a number of countries, sometimes also general principles of law.
Case law is primary in common law, but in civil law is secondary.
In EU: Primary Legislation= The Treaties; General Principles (CJEU), International Treaties Secondary Legislation = Directions and Regulations, Decision, Opinions, Recommendations If Spain makes a international treaty w/ another country, and goes against EU law, EU law has more power, so the treaty cannot happen. This is why EU is an sui generis (has its own substance, is different) entity, because it's not a regular international treaty, it's below the constitution of the countries.
The Treaty of Lisbon is like the constitution in the EU. The Court of Justice of European Union (CJEU) is really strong, so the general principles that they decide are also Primary legislation. EU also signs International Treaties, and they are also Primary Legislation. The secondary legislation, due to the powers given to EU in the treaties, EU has the power to give direction, regulations, decision, opinions and recommendations.
LEGAL INTERPRETATION → why we need lawyers.
1. Literal Interpretation (e.g. if you kill you go to prison. Simple things that don't need explanation) 8 Introduction to Business Law TOPIC 1 2. Contextual Interpretation (it means that you have an unclear rule, but that rule is put in a chapter called "property rights", and then you know the context of the rule, so you know what you should know and the rule becomes clearer) 3. According to historical and legislative background (is something that is pushed aside, and only the people that are making the rules now, and common people don’t know. It's important) 4. Sociological interpretation or interpretation according to the social reality of time.
(rare) 5. Teleological Interpretation/Preferential Application (it means what makes the most sense on the case that we are talking about.) 6. Logical Interpretation 7. Interpretation according to the constitutional principles 8. Interpretation according to the EU principles and laws (principle ≠ law; it's something really general) SOCIALIST LAW It was originated in 1917 w/ the Russian Revolution and URSS. Completely based in codified Marxist/Leninist ideology. Marx didn't believe that individual property makes you more produce, he thought that they make you more greedy. Emphasizes communal values over individual rights, low-tolerance crime control (they don't really like people that talk against the system) The State is the only owner, people are just lifetime users of a house, for example.
Chinese Socialist Law: socialist law combined w/ aspects of Confucius, it reinforces the values of compassion and tradition. It's different to the Russian law, because the values underneath are different. It's written, precedent is not recognized and its inquisitorial.
There is also socialist law in Cuba, Vietnam, Eastern Europe, Venezuela… In socialist law you have "quasy-jury system": a collegial bench, one to three professional judges and two to four lay people's assessors, it's also very punitive ISLAMIC LAW (SHARIA) Shari'a means a path to follow. In legal terms we say Shari'a instead of Islamic law.
Constitution it's based on the Coran. Qur'anic precepts, interpretation and commentary.
Distinctions: 1. Based on direct revelation from God, so you cannot change it 2. Attempts to regulate behaviours and thought process 3. Does not require uniformity of Law (it doesn't need to be unified applied.) It's between being inquisitorial and adversarial; to access a judge is really regulated.
There's no precedent and no juries.
9 Introduction to Business Law TOPIC 1 THE RULE OF LAW It means that we all agree that there are fundamental values that are inherit to our legal system, we as member of society recognise that those rules are formalized in writing and contained in revered documents. Substantive laws and administrative procedures are implemented to hold the state and its agents to those values and principles.
The rule of law is a general principle of law, and at the same time it represents a social norm.
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