Introduction to business law: functions of law - Iloka Benneth Chiemelie
https://ilokabenneth.blogspot.com/2013/11/introduction-to-business-law-functions.html
INTRODUCTION
Before starting up with the discussion of the functions of law, I would like us to have a view of what law is all about. Law is a system of rule set by the society to maintain order and protect harm to people and property. Law dates back to the ancient Babylonian king of 1760 BC.
Law can be classified in two ways, criminal law and civil law. The criminal law take charge of criminal behaviours and it is handled by the criminal justice system. The criminal justice system is one of the most important tools available to society for the control of anti-social behaviour. An effective criminal justice system needs to strike a balance between punishing the guilty and protecting the innocent.
The civil law is made to regulate behaviours of individuals in the society and it is undertaken by the civil system. The civil justice system is designed to sort out disputes between individuals, rather than between citizens and state, as the criminal system does – though in legal terms an “individual” may be a company or other organization, as well as one person. One party, known as plaintiff, sues the other, called defendant, usually for some harm to their interest. The aim of a civil justice system includes; to be fair in the results it delivers, to be fair in the way it treats litigants, offer appropriate procedures at a reasonable cost, deal with case with reasonable speed, be understandable to those who use it, be responsive to the needs of those who use it, provide as much certainty as the nature of particular cases allows, be effective, adequate resourced and organized.
In every society they are many rules and regulations that governs the system of the society, the way people live, what people do and how people act. This is aimed at maintaining order, peace and protecting the individuals who live in that society. Law functions in many ways to make our lives comfortable. This function of law is what we are going to discuss in this assignment. The assignment will provide a clear explanation of all the functions of law we will discussed. Each function discussed will be illustrated to life with a case study related to it to make it easier to understand what we are learning in this assignment.
This assignment contains four different parts, introduction, body, conclusion and reference. The introduction goes on to brief us about what the assignment is all about, the body explains the functions of law with cases, followed by the conclusion, and further readings in the reference.
FUNCTIONS OF LAW
1] DISPUTE REOLUTION
Dispute is generally affirmed with misunderstanding or disagreement on a given context between two or more parties (companies and staffs), in a business organization or outside a business organization between individuals. In every valid contract, there is an offer and acceptance between the parties which is in effect the agreement. The contract contains the terms and condition of the offer and upon acceptance the parties involved is vested to impose a legal action in the case of breach of the contract. Law helps to resolve dispute through the agreement made between the parties involved in the contract. Let’s take an example.
The Developer purchased land from the Council and covenanted to develop it in a certain way. In breach of the covenant he did not do so, but obtained planning permission to develop in a different way. The Council sued for the amount they might have received for agreed modifications to the covenant. The starting point or the conventional rule was that the remedy for breach of contract was an award of damages and damages at common law were intended to compensate the victim for his loss, not to transfer to the victim, if he had suffered no loss, the benefit which the wrongdoer had gained by his breach of contract. The Council had suffered no loss and therefore was only awarded nominal damages. Quoted from Denis Keenan (1998, p. 637)
De integro, we can see from the through the court ruling (per curiam) how the dispute between the council and developer was resolved based on the contract bestowed between the two parties and the fact that damages is only applicable when there is an incurred loss on any of the parties involved. The council sued the developer for damages, and damages by law were meant to compensate the victim for his loose, and the council suffered no loose. The rule of law is something that works according to order, with no preference and service to everyone according to the right the person has. The council agreed with the developer to use the land in particular way, but the developer obtained permission and used the land in a different way. The main idea is that the land was developed for the good of the society and no matter how it was developed; the developer obtained the right to do it. So the dispute was resolved by ruling against the council who sued for damage, the court lets them understand that damages according to law, must be with cases involved for loss since it is meant to pay compensation to the victim.
All disputed, with burden of proof (onus probandi), and by the reason of which (per quod) it has been breached by any member of the parties involved is resolvable under the ruling of a legal system upon which the conflict is laid for resolution. (Latin legal quotes 2009)
2] STANDARD OF ACCEPTABLE BEHAVIOUR
In every organizations there are set standard of behaviour and code of conducts that each person within the organization should always abide by once the person is still under the position offered him with contract which he must have accepted to abide with, before the position was offered to him. These standard acceptable behaviours agreed between parties involved in business can range from dressing code, greeting code, security code and the code of specialization and privacy. For example between Inti college and it’s staffs, it would be like, all female teachers must keep their hairs clean, and dress properly upon which, contrary to the contract would be justifiably punishable. Assuming that one teacher violated the law (contra bonos mores) and the college fired her and she happens to sue for breach of contract for the fact that the contract has not reached the termination date. The ruling will go for the college for the fact that she breached the contract before termination.
Britto –v- Zia company 1980 US
The case law in this area makes it incumbent on public managers and their organizations to develop performance appraisal systems that discriminated between employees solely in terms of their job performance. Britto sued the company for breach of contract which states promotions for staffs according to the date they started work in a case where the company promoted a staff that started after him. The court ruled the case based on appraisal on the bases of performance and the right of the company to promote whom they want to the position they want him or her to be in, once he or she is qualified to be in the position stated by Denis Keenan (1998, p. 638)
De facto, if we take the case into consideration, majority of the contracts on private company’s works in accordance with favouritism, the company puts the person they think can give them the best result in the best position they want him to be. That britto was employed first does not mean that he is qualified for promotion no matter the outcome of his duties. This showed us clearly how law can help in maintaining standards of acceptable behaviours. Let’s consider a situation where the contract was like, “liable to promotion no matter the outcome of his duties, or how he goes about with the daily obligations”, it would have been in the favour of britto. In view of what has been already accepted (ex concessis), the contract offered appraisal based on the performance of the staffs on their duties. Read it again, “appraisal”, without specification appraisal can be in any form. Promotion is definitely a way of showing appraisal that is what britto did not understand and that was why the ruling went against him because of that single word appraisal. Therefore, we always ought to read any contract before we sign them word by word and in cases where you don’t understand anything, just urge for clarity. The case above shows that law can help us to set a standard set of acceptable behaviours in the company. Apart from companies, law also helps to maintain order by regulating how people behave in the society. These orders can be acceptable mode of living and socialization. If the way people behave are not regulated, the outcome is infringing
3] PEACE AND ORDER
Maintaining peace and other is the basics of every law deployed anywhere in the globe. Law functions in many ways to maintain peace and other ranging from where you pack your cars in public places, the lane you drive in the road, how you make payments in public and crowded places. Taking CIMB bank into consideration, when you go to the bank, you need to get a customer coupon number and wait for your number appear on the LCD display screen, if there is no vacant seat you have to stand and wait until someone is done with his or her own transaction. If you don’t have the coupon, you will not be attended to and the coupons will be attended to one after the other, so there is nothing like favouritism or preferred customer. Now imagine if there was no coupon, maybe people have to queue up before being attended to. What will the environment will look like? Let’s analyse a case law of peace and order
This was a significant case argued before the United States Supreme Court in 1869. The case involved a claim by the reconstruction government of Texas that United States bonds owned by Texas since 1850 had been illegally sold by the Confederate state legislature during the American Civil War. The state filed suit directly with the United States Supreme Court, which, under the United States Constitution, retains original jurisdiction on cases in which a state is a party. In accepting jurisdiction, the court ruled that Texas had remained a state ever since it first joined the Union, despite its joining the Confederate States of America and its being under military rule at the time of the decision in the case. In deciding the merits of the bond issue, the court further held that the Constitution did not permit states to secede from the United States, and that the ordinances of secession, and all the acts of the legislatures within seceding states intended to give effect to such ordinances, were "absolutely null" as stated by Catherine et al (1996 p.58)
There is one fact clear to this case of law; the fact is that nobody is above the law when it comes to maintaining order and peace. The state of Texas was sued for illegally selling the confederate state legislature during the American world war. The court ruled in the favour of the state. if Texas because the ordinance of a state to secede from US, is absolutely null, and the state of Texas was under the military rule when the confederate state legislature was sold.
If we take into consideration companies or organizations across the globe and INTI College to be precise, there are certain rule made to maintain law and order in the college. Rules like attendance to classes, dressing code, parking order, enrolment dates. All this law maintain peace and other in the college and makes the daily activity less burdensome. If these laws are not implemented, coalition, and stop-over in the college. This would slow down the daily activities and make life uncomfortable to us in the college.
4] RELIABLE PLANNING OF FUTURE BUSINESS TRANSACTIONS
What is trust? Oh well you can define it in whatever way you want, but this is a word that does not exist in the day to day business transaction. That is why the need to be careful arises in our daily business transactions. The need to have a reliable business transaction is so important because an unreliable business transaction can have many disastrous effects like bankruptcy and loss of business assets. This is another function of law that is so important in our day to day lives. The goal of any business organization is profit and growth, but this two goals don’t often come easily, it needs allot of determination, and in contrasting effect, some organization go beyond legal measure to make the ends meet. Let’s see from the example below
Derry –v- Peek (1889) 4 App Cas 337
The Plymouth developer and district Tramways Company had power under special Act of parliament to run trams by animal power, and with the consent of the board of trade (now the department of trade and industry) by mechanical or steam power. Derry and the other appellants were directors of the company and issued a prospectus, inviting the public to apply for shares in it, stating that they had power to run trams by steam power, and claiming that considerable economies would result. The directors had assumed that the permission of the Board of trade would be granted as a matter of course, but in the event the Board of trade refused permission except for certain part of the tramways. As a result the company was wound up and the directors were sued for fraud. The court decided that the directors were not fraudulent but honestly beloved the statement in the prospectus to be true. As lord Herschell said: “fraud is proved when it is shown that a false representation had been made (A) knowingly, (B) without believe in its truth or (c) recklessly, careless whether it be true or false”. Denis Kennan (1998 p.635)
This is one clear example that shows how the law functions to build a reliable future transaction. There is a Latin saying that an absolute judgement needs no expositor (Absoluta sententia expositore non indigent) from the parliamentary law, it is clear that the company have been given authority by the Board to run the tram by mechanical or steam method, of which the company relied on to seek for their own benefit, but it turned out to be that the parliament denied their permission. From the jurisdiction, we can see how the law maintained a reliable transaction between the company and Trade Board as per the contract signed between them which gave the company the right to run the tram in a steam or mechanical way. Law plays a very vital role in our day to business when it comes to trust and reliance on the transactions we carry out on our daily business.
5] PROTECTING MORAL VALUES
Business is not all about money and transaction between companies and customers or other companies. When your dad is paying your school fees what do you think he is doing? Do you think he is just being a caring father? Well it goes beyond that. He is investing in what he thinks will yield greatly for him in the future. Why is it legal for a child to sue his or her parent in the case that they are not able to provide for their daily needs? This are real examples that shows how law not just protect our day to day business but also protects how we transact the business and the morals value of the parties involved. Let us take a look at the agreement between two brothers.
Gordon –v- Gordon (1973) 229 EG 99
Two brothers made an agreement for division of the family estate. The elder brother supposed he was born before the marriage of his parents and was therefore illegitimate. The younger knew that their parents had been married before the birth of the elder brother and the elder brother was therefore legitimate and his father’s heir. He did not communicate this information to his elder brother. Nineteen years afterwards the elder brother discovered that he was legitimate and the agreement was set aside following this action brought by him. He would have had no case if at the time of the agreement both brothers had been in honest error as to the date of their parent’s marriage. Coiled from Denis Kennan (1998 p. 699)
From the case, it is understood that maybe in the culture or tradition of England in 1973, a child born before marriage is not legally allowed to have any legitimate inheritance from the parents. The younger brother meanwhile, knew his elder was legitimate to undertake in the possession of the family estate but the elder did not know. In quest for self interest and selfishness, he did not communicate this issue to his elder brother. So the elder brother had to go nineteen years without any share in the family’s estate. But in the long run, the elder brother came to understand that he was born before their parent’s marriage and had to sue for the share of the family’s estate. The case goes on to tell us that the elder brother would have had no case if at the time of the agreement both of them were in honest error. This is a clear example of how law works in protecting moral values. The elder brother was granted the right to take part in the share of the families business coz he sued the court and the law took things to charge because, he who has the right to give, has the right o ask for return (Cujus est dare, ejus est disponere). The court based on this for the ruling of the case. Our societal law plays a vital role in protecting moral values in our families and society through implementing what is surpassed to be into the right direction for the right person. From the case we can see why a child has the right to sue his parents in the denial of his or her daily needs because he or she is legitimate to have his or her needs provided by his or her parents as much as he or she needs it for his or her own growth and the growth of the society at large.
6] ACCOUNTABILITY FOR ACTIONS CAUSING LOSS
Accountability is a very important issue in every aspect of life, business, governance, education etc. The idea for everyone to be accountable for what is under his custody is right, because without accountability there would be a devastating clinch to responsibility. For the growth of any business to be constant and consistent in improvement, the need for accountability is a major issue. This is because lack of accountability would definitely be to the company’s loss. I want to ask you, why is it that sometimes when client loan houses from the bank and in the case that there were not able to pay off within the specified time but have hopes of paying off after, in issuing a letter of extension to the bank, the bank will not consider them but just go about and other them out in other to sell off the house and get bank their money? Well that is an example of accountability at all cost. Looking at the example below, we can see how law makes everyone accountable for our actions.
Lancashire Loans Ltd –v- Black (1934) I KB 380
A daughter married at 18 and went to live with her husband. Her mother was an extravagant woman and was in debt to a firm of moneylenders. When the daughter became of age, her mother persuaded her to raise $2,000 on a property in which the daughter had an interest, and this was used to pay off the mother’s debts. Twelve months later the mother and daughter signed a joint and several promissory note of $775 as 85 per cent interest in favour of the moneylenders, and the daughter created a further charge on her property in order in other that the mother might borrow more money. The daughter did not understand the nature of the transactions, and the only advice she received was from a solicitor acting for the mother and the moneylenders. The moneylenders brought this action against the mother and daughter on the note. Held- that the daughter’s defence that she was under the influence of her mother succeeded, in spite of the fact that she was of full age and married with her own home. Quoted from Denis Kennan (1998 p.670)
In what way are we accountable? What do you think about a child and his parent in a shopping mall and the parent advised him to take a bottle of butter and put in his bag because she is aware that as a kid he might not be searched. If the stolen butter was recovered, who is responsible for it? The example above shows that accountability is not just for what you do, but also for what you assign people to do on your behalf. Imagine if there was no law, the daughter and mother would have been accountable for the loss. But the function of law in accounting for action causing loss, resulted in the ruling of the law against the mother because the inexperienced daughter was working under the influence of the mother. Law makes us all accountable for our actions causing loss in many ways, through the contract we sign or the rule and regulation that governs the company. It main function is to maintain order and peace and in that way we all are accountable for any action we act that causes loss against other like crime, theft, or fraud because equity follows the law (Aequitas legem sequitur).
7] ORDERLY CHANGE
Change they say is permanent, and as time goes by thing changes, including business and organizations. When we talk about orderly change, it means change under the right process and conditions. Assuming that the CEO of inti college, just came directly to a lecturer’s office, and sacked him for no reason of which the contract or law of Malaysia stipulate that the staff must be informed before time, do you think the change was orderly made? Do you think the lecturer has the right to sue? Yes he has. That is an example of what we mean by orderly change in business, and this is also one of the way law functions to make everybody equal no matter the position. This function of law gives everybody the right to sue and defend when being sued. No action arises from a contract without being considered (Ex nudo pacto actio non oritur)
Meikle –v- McPhail (Charleston Arms) [1983] IRLR 35 I
After contracting to take over a public house and its employees, the new management decided that economies were essential and dismissed the barmaid. She complained to an industrial tribunal on the grounds of unfair dismissal. Her case was based upon the fact that the 1981 Regulations state that a dismissal is to be treated as unfair if the transfer of a business or a reason connected with it is the reason or principal reason for the dismissal. The pub’s new management defended the claim under another provision in the 1981 Regulations which states that a dismissal following a transfer of business is not to be regarded as automatically unfair where there was, as in this case, an economic reason for making changes in the work-force. If there is such a reason, unfairness must be established on grounds other than the mere transfer of the business. The Employment Appeal Tribunal decided that the reason for the dismissal was an economic one under the Regulations that the management had acted reasonably in the circumstances so that the barmaid’s claim failed. Denis Kennan (1998 p.670)
This is a clear view of how law functions in maintaining orderly change. Most of us live in rented houses, and like the contract I signed with my landlord, it is also stated that, “in the case the landlord wants me to evacuate the house he would inform me at least one month before time”. And if he does not act according to the contract, I would definitely sue him for breach of contract. Changes are done orderly because of the rule of law. And on the other hand, you should also consider how the party affected is going to make up for the change. Every organization has ways of dismissing their staffs in the case their working position is not needed in the organization or thy fell that he is no more capable of handling the task. This is meant to regulate how people treat others, protect our jobs and strength the productivity in the company.
8] INPOSING GREATER RESPONSIBILITIES ON RELATIONSHIPS OF TRUST AND RELIANCE
Law also functions to maintain trust and reliance between the parties involved. This is aimed at improving business success and defending growth, but this case of law goes far more beyond business to the externalities of life. Consider a relationship between a man and a woman who one day went on to get married, and the wife supposedly bought a house on loan from the bank. The banks said she would be paying the house loan little by little for a specified period. Assuming that the woman happens to get involved in a big flow of cash, and she got the whole money required to pay off the house, and gave it to her husband to go and pay at the bank. Of which the husband did not pay and the woman later noticed. In this case there was nothing like contract or evidence to prove that she gave the money to her husband. What should the woman do then? Let’s understand more of this function of law from the example below.
R –v- Williams [1923] I KB 340
Williams taught singing. He told a 16 years-old female pupil that if she had intercourse with him it would improve her voice. The girl allowed him to have intercourse with her and made no resistance. She believed what he said and in any case, was not matured enough to know that he was having intercourse with her. She did not know that was what they were doing. He was convicted of rape. His appeal was dismissed. Lord Hewart, CJ said “she was persuaded to consent to what he did . . .because she thought it was a surgical operation” therefore there was in effect no consent. By Catherine et al (1988 p. 50)
From this case we can she how the criminal judge resolved the case. Mr Williams is matured enough to be responsible of the trust and reliance the parents of the 16 years old imposed on him following their relationship to be a private tutor to their child. From this consent, law helps to maintain a last trust and reliance on relationships between the parties involved of which in the case of misuse of the trust of reliance is liable to legal action by the plaintiff. Because by reason of a subsequent act (Ex post facto), no action arises as a result of immoral contrast (Ex turpi causa non oritur actio).
CONCLUSION
From the above discussions, we have heard a clue of what the functions of law looks like. In the modern day society, law has proved to be a means in maintaining order and peace among individuals in the society. Starting from the police force that maintains order in the society. To army, navy and air force that functions to protect our international boundaries. The court to that gives each person the right to sue to the council and customs of a society that makes use of elders to settle minor cases.
Though, law might have function in many ways to help us, there are still criticism about the law and the procedures through which they work. One of the criticisms is the fact that it is very expensive. Sometimes the plaintiffs spend more than they recover from damages, and that is why many people have given up in legal system for help. Delay is another upset in the legal system because this can lead to loss of evidence and the defendant disappearing which in turn renders the case useless. Thirdly, it has been know that the high number of out of court settlements can create injustice, because the parties usually hold very unequal bargaining positions. This are some clear examples of how the law does not suit the general public with its service since the main interest is to serve and protect.
Nevertheless, in cases where law are rightly implemented, it works out to serve and protect anybody within its designation no matter the position or class. The world would have been more dangerous than it is right now it there was no rule or law to regulate what people do, how they do it and where they do it. Lets us take for am example if there was no police to arrest the offenders and people are allowed to do whatever they want, what the world would look like would be very devastating. Because the armed robbers will parade their way into our society, kill and steal without being convicted, investments would definitely be a game of loss to investors.
So in general conclusion, laws are flexible to meet the needs of a changing society and litigants can assume that like cases will be created alike which creates certainty. That illustrates that the goods of law are worthwhile and should be appreciated.
REFERENCES
Catherine, E et al, 1996, Legal system, Longman: New York press.
Denis, K & Smith, K 1998, English law pitman pub, London.
Esther, B 2007, ‘commercial law literacy: what does it do, to whom and does it matter?’, journal of law, vol. 36, no 2, summer, pp 101-110.
Popham, B 2009, 'Saving the future', Weekend Australian Magazine, 7-8 Feb., p. 10.
Latin, Legal quotes, (1999) Date accessed 25/05/2009
Wikipedia, Law, (1999) Date accessed 25/05/2009.
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