MODULE 1: BUSINESS AND ITS LEGAL ENVIRONMENT

What is “Law”?

•Law consists of rules that regulate the conduct of individuals, businesses, and other organizations within society. It is intended to protect persons and their property from unwanted interference from others.
•Enforceable rules governing relationships among individuals and between individuals and their society



Functions of the law

•Keeping the peace
•Shaping moral standards
•Promoting social justice
•Maintaining the status quo
•Facilitating orderly change
•Facilitating planning
•Providing a basis of compromise
•Maximizing individual freedom



Basic Sources of Law

• Customs & usages
• Constitution
• Statutes and Ordinances
• Decided cases and Precedents
• Foreign Laws
• Miscellaneous

Administrative Law
Treaties
Executive Orders

•Constitution establishes the structure of the government (legislative, Executive, Judicial )
•A treaty- compact made between two or more nations.
•Statutes- written law enacted by the legislative branches of union and state governments
•Ordinances- law enacted by local government bodies
•An executive order- an order issued by a member of the executive branch of government.
•Administrative Law- legislative and executive branches of union and state governments establish administrative agencies to enforce and interpret statutes enacted by union and state legislatures.
•A judicial decision- decision about an individual case issued by a court

Classification of Law

•Substantive or Procedural Law

•Public and Private Law

•Civil or Criminal Law

EXPLANATIONS

•Substantive law deals with whether the defendant is guilty or liable
•Procedural law deals with the rules of the court under which litigation takes place
•Public Law- involves the govt.- Labor law, securities, criminal law
•Private law involves disputes among citizens- Contract law, torts, corporation law
•Civil law involves mainly private law disputes-contract law, torts, property law
•In criminal law, the state prosecutes a defendant for violating a criminal statute

Doctrine of Stare Decisis

•Stare decisis—Latin for “to stand by the decision”—means adherence to precedent.
•Based on the common law tradition, past court decisions become precedent for deciding future cases.
•Precedent is a rule of law established in a court decision. Lower courts must follow the precedent established by higher courts.
•Judges use precedent (decisions in previous cases) to determine the outcome of a current case
•Functions of stare decisis: efficiency, uniformity, stability, and predictability
•However, some cases are “cases of first impression”

BUSINESS AND ITS LEGAL ENVIRONMENT

•With the growing strength of consumer movements and rising levels of awareness among stakeholders, corporations are realizing that stakeholders and consumers are no longer indifferent to unethical practices like financial irregularities, tax-evasion, poor quality products and services, kick-backs, non-compliance with environmental issues, and hazardous working conditions.Many Indian companies too have recognized the importance of integrity, transparency, and open communications. They believe that the goodwill resulting from adopting and successfully implementing a code of business ethics will, in the long run, translate into economic gains.Today, investors want to ensure that the companies they invest in are not only managed properly, but also have proper corporate governance. They regard corporate governance as a control mechanism that ensures the optimum use of the human, physical and financial resources of an enterprise.
•Companies have now begun to integrate ethics into their corporate cultures and concentrate on putting appropriate corporate governance mechanisms in place.

What is Business ethics?

•Business ethics is a form of applied ethics that examines ethical principles and moral problems that arise in a business environment.
•In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism which is a major branch of philosophy, encompassing right conduct and good life ) is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws.
•The improvising of legal ethics in business scenario is called Commercial law (sometimes known as business law)

What is Commercial law ?

Commercial law (sometimes known as business law) is the body of law which governs business and commercial transactions. It is often considered to be a branch of civil law and deals both with issues of private law and public law.
Commercial law includes within its compass such titles as principal and agent; carriage by land and sea; merchant shipping; guarantee; marine, fire, life and accident insurance; bills of exchange and partnership. It can also be understood to regulate corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Many countries have adopted civil codes which contain comprehensive statements of their commercial law.

List of business law topics
•Contracts
•Corporate law
•Intellectual property
•Negotiable instrument
•Property law
•Financial regulation
•Tax law
•Arbitration

What is the importance of studying business law?
the main reasons are given below:
•It is helpful in maintaining business in legal ways as it promotes ethics on the whole.
•To make a student aware of those laws which regulate business and corporate world in a country.
•To resolve business disputes in a legal format.
•To have a better society