ABE Principles of Business Law 2008
.pdfBusiness Management
Study Manuals
Diploma in
Business Management
PRINCIPLES
OF BUSINESS LAW
The Association of Business Executives
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© Copyright, 2008
The Association of Business Executives (ABE) and RRC Business Training
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Diploma in Business Management
PRINCIPLES OF BUSINESS LAW
Contents
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Unit |
Title |
Page |
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1 |
Nature and Sources of Law |
1 |
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Nature of Law |
3 |
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Historical Origins |
6 |
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Sources of Law |
9 |
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The European Union and UK Law: An Overview |
12 |
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2 |
Common Law, Equity and Statute Law |
23 |
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Custom |
25 |
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Case Law |
26 |
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Nature of Equity |
32 |
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Application of Principles of Equity |
34 |
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Equity and Common Law |
36 |
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Classification of Equity |
37 |
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Legal and Equitable Rights |
38 |
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Nature of Statute Law |
39 |
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Interpretation of Statutes |
41 |
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Codification and Consolidation |
44 |
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Appraisal of Statute Law |
45 |
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Delegated Legislation |
45 |
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3 |
The Administration of Justice |
49 |
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Organisation of the Courts |
50 |
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Administrative Justice |
61 |
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Public International Law |
64 |
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Judges and Juries |
65 |
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Organisation and Role of the Legal Profession |
67 |
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4 |
The Law Relating to Associations |
73 |
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The Concept of Corporations |
75 |
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Corporations in Law |
77 |
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Companies |
79 |
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Companies in Law |
84 |
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Unincorporated Associations |
93 |
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Partnerships |
93 |
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5 |
Contract Law 1: Fundamentals of Contracts and their Creation |
101 |
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What is a Contract? |
103 |
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The Agreement |
107 |
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Classification of Statements and Terms |
115 |
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Consideration |
117 |
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The Intention to Create Legal Relations |
125 |
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Capacity to Contract |
127 |
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Unit |
Title |
Page |
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6 |
Contract Law 2: Contract Regulations |
131 |
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Privity of Contract |
133 |
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Joint Obligations |
138 |
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Assignment |
139 |
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Mistake |
140 |
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Misrepresentation |
148 |
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Undue Influence |
151 |
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Void and Illegal Contracts |
155 |
7 |
Contract Law 3: Performance and Discharge |
165 |
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Performance |
166 |
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Discharge by Agreement |
169 |
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Discharge by Breach |
171 |
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Discharge by Frustration |
173 |
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Remedies for Breach of Contract |
178 |
8 |
The Sale of Goods 1: The Contract, Property and Title |
187 |
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Sale of Goods |
188 |
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Distinction between Sale and other Supply Contracts |
191 |
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Formation of Contract of Sale |
193 |
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Passing of Property |
196 |
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Transfer of Title by Non-Owners |
207 |
9 |
The Sale of Goods 2: Terms and Conditions |
211 |
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Frustration |
212 |
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Delivery |
214 |
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Acceptance and Payment |
218 |
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Statements Relating to Goods |
220 |
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Statutory Implied Terms as to Description and Quality |
222 |
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Exemption Clauses |
229 |
10 |
The Sales of Goods 3: Disputes and Remedies |
235 |
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Remedies of the Seller |
237 |
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Remedies of the Buyer |
244 |
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Supply of Goods and Services Act 1982 |
247 |
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Role of the Commercial Court |
247 |
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Resolution by Arbitration |
248 |
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Rules for the Conduct of Arbitration |
251 |
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Arbitration Proceedings |
253 |
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Rights and Duties of the Arbitrator |
254 |
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Arbitration Awards |
256 |
11 |
Law of Agency 1: Agency Agreements and Agents |
259 |
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General Nature of Agency |
261 |
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How Agency Arises |
263 |
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Ratification |
266 |
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Categories of Agents |
270 |
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Duties of Agents to their Principals |
272 |
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Rights of Agents against Principals |
278 |
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Commercial Agents (Council Directive) Regulations 1993 |
282 |
Unit |
Title |
Page |
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12 |
Law of Agency 2: Authority, Liability and Termination |
285 |
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Authority of Agents |
287 |
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Delegation of Authority |
290 |
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Rights and Liabilities of the Principal to Third Parties |
291 |
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Liability of the Principal for the Wrongs of the Agent |
293 |
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Relations between Agents and Third Parties |
294 |
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Termination of Agency |
298 |
13 |
Employment Law 1: The Contract of Employment |
303 |
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Distinction between Independent Contractor and Employee |
304 |
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Other Categories |
307 |
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The Need to Distinguish between Categories |
309 |
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Contract of Employment |
310 |
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Equal Pay |
314 |
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Other Terms and Conditions |
316 |
14 |
Employment Law 2: Termination of the Contract, Discrimination and |
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Tribunals |
323 |
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Notice |
325 |
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Written Statement of Reasons for Dismissal |
326 |
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Constructive Dismissal |
326 |
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Redundancy |
327 |
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Unfair Dismissal |
329 |
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Employment Tribunals |
332 |
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Race Relations Act 1976 |
335 |
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Sex Discrimination Acts 1975 and 1986 |
339 |
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Disability Discrimination Act 1995 |
343 |
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Health and Safety at Work Act 1974 |
345 |
15 |
Principles of Consumer Credit |
349 |
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Hire Purchase |
350 |
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Consumer Credit Act 1974 (as amended by the Consumer Credit Act |
|
|
2006) |
350 |
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The Consumer Credit Agreement |
357 |
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Withdrawal and Cancellation |
359 |
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Rights during the Currency of the Agreement |
360 |
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Obligations of the Creditor in Relation to the Quality (etc.) of the Goods |
364 |
16 |
Consumer Protection |
367 |
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Introduction |
368 |
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Trade Descriptions Act 1968 |
368 |
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Fair Trading Act 1973 |
372 |
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Consumer Safety |
373 |
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The Role of Local Government |
377 |
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Manufacturers and Product Liability under the Law of Tort |
378 |
Unit Title |
Page |
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|
17 |
Negotiable Instruments 1: Bills of Exchange |
383 |
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Introduction |
385 |
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Characteristics of a Bill of Exchange |
385 |
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Acceptance |
387 |
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Transfer of Bills of Exchange |
390 |
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Methods of Discharge |
394 |
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Liability of Parties on the Bill |
394 |
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Release from Liability |
398 |
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Liability "Outside" the Bill |
399 |
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Forgeries |
399 |
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Dishonour of a Bill |
401 |
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Consequences of Dishonour |
403 |
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Incomplete Bills and Alterations |
405 |
18 |
Negotiable Instruments 2: Cheques |
409 |
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Introduction |
411 |
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The Nature of a Cheque |
411 |
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Banker/Customer Relationship |
413 |
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Crossing a Cheque |
416 |
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Special Protection of Paying Banker |
418 |
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Special Protection of Collecting Banker |
420 |
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Promissory Notes |
422 |
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1 |
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Study Unit 1 |
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Nature and Sources of Law |
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Contents |
Page |
||
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A. |
Nature of Law |
3 |
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Definition |
3 |
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Classification of Laws |
3 |
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Criminal and Civil Liability |
4 |
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The Set of Rules |
5 |
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Objectivity |
5 |
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Enforcement |
5 |
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Impartiality |
5 |
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The Rule of Law |
5 |
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B. |
Historical Origins |
6 |
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The Anglo-Saxons |
6 |
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The Danes |
6 |
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Position before the Norman Conquest |
6 |
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The Normans |
6 |
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Curia Regis |
7 |
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Itinerant Judges |
8 |
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Court of Admiralty |
8 |
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The Law Merchant |
8 |
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Canon Law |
9 |
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Court of Chancery |
9 |
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C. |
Sources of Law |
9 |
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Unwritten Law |
9 |
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Written Law |
10 |
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The Pattern of English Law |
10 |
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The Law of the European Union |
11 |
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D. The European Union and UK Law: An Overview |
12 |
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Composition of the European Union |
12 |
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Institutions of the European Union |
13 |
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Application of Union Law |
14 |
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The European Union and Interpretation of Law |
14 |
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(Continued over)
©ABE and RRC
2 Nature and Sources of Law
Parliamentary Sovereignty and the European Union |
15 |
Single European Act 1986 |
16 |
The Treaty on European Union 1992 (The Maastricht Treaty) |
17 |
European Communities (Amendment) Act 1998 |
21 |
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©ABE and RRC
Nature and Sources of Law |
3 |
A. NATURE OF LAW
Definition
The word "law" is difficult to define, particularly as it is used in many different ways. It contains, however, the concepts of orderliness, universality and objectivity. It is concerned with behaviour and not with causes, and either contains an element of inevitability, e.g. scientific laws, such as the laws of gravity, or of sanction, e.g. divine laws.
Some philosophers have postulated the existence of Law of God which regulates the actions of mankind. principles of natural justice.
natural law by which they mean the This concept is often known as the
In the narrower concept of law, there must be a set of rules which can be applied objectively with someone to enforce them.
There have been many attempts to put these into a workable definition, some more successful than others. One of the better is that of Salmond:
"Law consists of any principle which is recognised and enforced by the courts in the administration of justice".
Another, which is possibly superior to that of Salmond, since it has a slightly wider application, is that of James:
"A body of rules for the guidance of human conduct which are imposed upon and enforced among the members of a given state".
Classification of Laws
Salmond, after stating that law in its general sense includes any rule of action, says that it includes the following categories:
Imperative Law
These are rules of action imposed on men by authority, e.g. by the state.
Physical or Scientific Law
These are rules which formulate the uniformities of nature, e.g. the law of gravitation. You can distinguish them from man-made laws, in the sense that they merely state observations on a state of affairs that already exists.
Natural or Moral Law
These are rules formulating the principles of natural justice. This conception of law is derived from Greek philosophy and Roman law, and has found more favour with Continental jurists than in English jurisprudence. It overlaps to some extent with physical or scientific law. In the English language, law and justice are two separate words, showing that we recognise them to be two separate things – a distinction that is not made in most other languages.
Conventional Law
These are rules agreed upon by persons for the regulation of their conduct towards each other. Agreements entered into by, for example, the parties to a contract or members of a company (who agree to be bound by the rules of its Articles of Association) are enforceable under the law of the land. Other agreed systems of rules, e.g. the rules of a football club or the laws of chess, may not be enforceable by law.
©ABE and RRC
4 Nature and Sources of Law
Customary Law
These are rules of action embodied in custom. We shall consider later the importance of custom in the development of the English legal system.
International Law
These are rules which govern sovereign states in their relations with each other.
Civil Law
This is the law of the state, as applied in the state's courts of justice. It is into this category that English law falls.
Criminal and Civil Liability
In essence, it can be said that a crime is a wrong against the state, while a civil wrong is one against an individual.
You should note the following major distinctions:
State Action and Private Action
In the case of a crime, while under certain circumstances an individual may prosecute, the prosecution will normally be brought by the state. In a civil wrong, such as breach of contract, the injured party may bring an action against (or "sue") the party liable, and may recover damages or other forms of satisfaction.
Redress and Punishment
The purpose of a civil action is to redress a wrong, whereas the aim of a criminal prosecution is to punish the wrongdoer, to prevent him or her from repeating the crime and to discourage others from committing similar crimes.
Settlement and Withdrawal
A criminal action can be withdrawn only with the leave of the Crown, whereas the claimant in a civil action can settle out of court or withdraw his/her claim at any time.
Indictment and Writ
Criminal proceedings are initiated by indictment or summary procedure, whereas civil proceedings are commenced by action resulting from the issue of a Claim Form.
A fundamental difference thus exists between criminal law (dealing with crimes) and civil law (dealing with civil wrongs) and each branch is, in general, administered by different courts on different principles.
Criminal law is concerned with offences against the state, i.e. crimes such as murder, burglary, theft. The more serious criminal cases are dealt with by a judge and jury; less serious offences (the overwhelming majority) are dealt with by magistrates. The two parties are the prosecution and the accused. The prosecution is conducted on behalf of the Crown via the Crown Prosecution Service, in important cases by the Attorney-General. If the accused is found guilty by the jury, he/she is convicted and sentenced by the judge; if not, he/she is acquitted.
Civil law is concerned with private litigation, e.g. breaches of contract, disputes concerning property. The claimant issues a Claim Form, setting out the facts he/she alleges against the defendant and asking for damages or other remedy. The defendant puts in a defence to the allegations of the claimant. The case is then tried by a judge and jury, or by a judge sitting alone, without a jury. Today, there is normally no jury in civil cases, unless one of the parties makes special application that a jury should be summoned. If there is a jury, it decides the facts of the case and the judge decides the law. Then, the judge, if the jury has found for the
©ABE and RRC