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Summary Business Law 2- BA2 Business economics
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This is a summary for the course Business law 2 in the second semester of the second bachelor at the VUB.
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Business Law 2 Summary: Business Economics Ba2Lecture 1: origin and the nature of Law
1. What is Business Law
Legal definition: Enforceable rules governing relationships among individuals and between individuals & their society. The law sets out rights,
duties and obligations of citizens or a rule of civil conduct prescribed by the supreme power in a state, commanding what is right and prohibiting
what is wrong.
Law is also referred to as judicial decisions or statutory enactment.
Law must overlap with ethics, make decisions with interest for people’s wellbeing.
Law = “Stability and Predictability” -> The Law regulates conduction in society
a) At Personal Level: Citizens need to be able to determine “right from wrong”.
b) Business Level: Degree of “Legal Certainty” in business dealings.
It’s no exaggeration: Fortunes are made and lost on legal questions such as: Can I rely on my counterparty (Even if I don’t know them)?, What if
this deal turns sour? Will we end up in court? Will the Law stand behind us?
From a Business point of view, what is legally right and wrong? -> that depends on how stable the legal environment is where you intend to do
business? Look to the particular country where you are sitting at a particular moment in history, particular country. The law has dealt with
business issues in very different ways at different times and places in history.
E.g. Abortion, Euthanasia, Prostitution, death penalty, woman’s rights such as the right to vote, drinking, gay marriage -> Most of these
of these are Legal in some countries, but illegal in other countries or the time that they became legal differs from country to country
depending on the ethics and the religion/beliefs of that country (Right to vote of Woman only in 2015 in Saudia-Arabia, Drinking is legal
in Europe at 16 and in America at 21,..)
The law is constantly evolving: Early Nomadic tribes (no written law) -> Code of Hammurabi (Ancient Babylonian) -> Greek concepts of Democracy
-> Roman Code (533) -> Early common law courts (1066) -> Napoleonic Code (1804) -> Today’s modern laws/court decisions.
Law reflects values and beliefs of society or its ruling group. There is a close relationship between morality and any rule that society will enforce.
2. Origin of law
The origin of law is obscure, society cannot exist without law, individual power and cunning constituted the first law and primitive governments
merely presided over the lex talionis or law of private retribution.
As societies became more complex, it became necessary to adopt rules of conduct for various purposes (to forbid objectionable behaviour (public
law), to make an injured party whole (private law) and to end disputes (private law)
3. Law and morality (guiding question)
Law generally represents the developing, common morality of human beings. Governments seek to proclaim as right only what most citizens
already perceive to be right. There is a close relationship between law and morality. Law not only has it origin in morality, but it is easier to enforce
when citizens yield to the government for moral reasons.
Important principle: Conduct that a reasonable person conscientiously deems moral and just is unlikely to collide with law.
Examples: even if moral conduct proves illegal, in violation of a rule that society will normally enforce, society’s enforcement in a specific case may
be muted, restrained or even suspended.
4. Influences on the Law
Especially important in the international business context -> What Is the current Legal Environment? Society’s current attitudes?Can the Law be
“behind the times”? -> Law can be behind in time, law tries to catch up with reality. We cannot live without Law, we need to have some rules &
regulations to hold onto.
5. Key Questions for international Business Persons
How will the Local, legal environment affect my business decision making? -> What is the degree of predictability? What are Business implications?
May different laws can affect a single business decisions?
Example: You are the CEO of a manufacturing company that want to expand overseas with 500 local factory workers -> How will the local laws of
various countries influence your decision on where to build a new manufacturing plant?
Minimum wage laws (you want to build where you can hire workers the cheapest), employment laws, taxes, child labour laws,
environmental laws, trade laws, mergers & acquisitions, sales, competition law, banking, corporate fraud, intellectual property, agency,
product liability, laws on bankruptcy.
6. International private law and international law
International private law = Set of rules or procedural law that regulates relationships between persons (or entities) of different nationalities). Also
known as “Conflict of Laws”. Determines which legal systems and law of which jurisdiction will apply to a legal dispute among individuals involving
a foreign element.
International law = transnational rules that national courts use to regulate three primary relationships -> relationship between two nations,
relationship between a nation and an individual, relationship between person/entities from different countries.
o Sources: int’l conventions & treaties, customs/general practice, widely accepted general principles of law and all other sources used in
national law (such as judicial decisions & scholarly writings)
o Examples of international conventions & treaty? -> treaty of Versailles, treaty of Rome (establishing European Economic community).
7. Common vs civil law (guiding question)
Civil law: “continental European Approach”
Oldest & most influential legal system, more important
Roman-Germanic: codified law based on Roman Code
, Legal rules set out in one comprehensive & systemized code and accompanying statutes ex. Family law, property law, succession law,
low of obligations, commercial law, labour law, criminal law, etc…
Countries with a civil law system -> Argentina, Brazil, Chile, Venezuela, Austria, China, Egypt, Finland, Sweden, Germany , Greece,
Indonesia, Iran, Italy, Japan, Mexico, Poland, South Korea, Tunisia, Belgium
Common Law: “Anglo-Saxon Tradition”
Law is found on a “case-by-case basis”, binding the arbiter of a dispute to the rule elicited from the determination of an earlier dispute.
Law is based on court decisions rather than formal codes: “precedent”
Overall accumulation of judicial decisions- law is developed and pronounced by country
Stare decisis (stand by the decisions): requires courts to follow their own precedents, binds all of the lower courts of a jurisdictions to
determinations of the highest court in that same jurisdiction. Stare decisis is not absolute, a decision of the highest court can be amended
either by this court’s chancing its mind or by legislative mandate.
Countries with a common law system -> Australia, Bangladesh, Canada & South Africa (mixed), Ghana, India, Israel, Jamaica, Kenya,
Malaysia, New Zealand, Nigeria, Singapore, United Kingdom, United States, Zambia
8. Development of Civil Law
Based on Written codes of Justinian and Napolean.
German and France’s code -> Franco-Germanic Civil Law.
The progress of law through the centuries can be traced through the activities of four “lawgivers” who attempted to state the law in keeping with
their perceptions of evolving civilization and to provide remedies for those wronged. The laws of certain countries are still based on the principles
set forth in these codes.
9. Know the concepts: Do you know the basics?
1) In what major way does the common law differ from the civil law? -> the common law emphasizes precedent, civil law emphasizes the wording
of the applicable code. Common law codes are collections of statutes and don’t set out the entire law on a particular subject.
2) Why should a definition of law emphasize enforcement? -> if it is not enforced, it has no effect on society. If government passes many laws but
does not police them, the citizenry loses its respect for the government and law.
3) Are there any circumstances under which society exist without law? -> Society involves a lot of persons, it is hard to imagine common existence
without enforced rules. When individuals are self-controlled, friction is minimized but not eliminated.
4) Why is it likely that the common law system will produce a greater number of lawyers than the civil law system. -> there are many precedents
in the common law system, much scope for argument and disagreement, encourages litigation (encourages need for lawyers)
5) Is it easier to know your “rights” in a civil law country or in a common law country? -> Civil law may seem more definitive to rights but a clear
code may not lead to strong, understandable rights in practice. A society’s willingness to sustain rights is more uncertain in Civil law countries.
10. 3 ways that international law has helped to shape my life
1) Driving with the help of a Global positioning system (GPS) -> by creating a worldwide communication network and preventing governments from
claiming exclusive rights to places where satellites are located in geostationary orbit -> without the help of a GPS, I would be totally lost, when I
am at a place that I haven’t been before, I would be nothing without a GPS. When I am on vacation, I use a GPS for everything.
2) Making it possible for you to drive a car in another country. By establishing a standard international driver’s permit -> If it was not possible to drive
a car in another country, it would be much more difficult to travel because then you cannot drive to another country or rent a car in another
country and not all places are easily reachable using public transportation.
3) Watching live news and events from around the world on TV on mobile devices -> it is very important to know what is going on everywhere in the
world, so being able to watch news and events from all around the world is very necessary.
Lecture 2: Case Study on Conflict of Laws: Yahoo! vs La Ligue Contre Le Racisme et l’Antisémitisme
, 1. U.S. declaration of independence
Document that declared the American colonies independent from England
July 4, 1776
“We hold these truths to be self-evident, that all men are created equal, that
they are endowed by their Creator with certain unalienable Rights, that among
these are Life, Liberty and the pursuit of Happiness”
U.S. Constitution: Fundamental law of the U.S. which was ratified by the states
in 1788
- Creates three branches of government
Legislative (makes laws): Made up of the House of
Representatives and the senate, known as he congress. The
legislative branch makes all laws, declares war, regulates
interstate and foreign commerce and controls taxing and
spending policies.
Executive (carries out laws): Made up of the President, vice
president, the cabinet. The executive branch carries out and
enforces laws.
Judicial (interprets laws): Made up of the supreme court and other federal courts. The judicial branch interprets the laws and the
administration of justice.
- Protects individual rights by limiting the government’s ability to restrict those right.
2. Bill of rights
First 10 amendments to U.S. Constitution
Guarantees fundamental rights and protects these rights from intrusive government action
First Amendment: Includes freedom of speech, freedom to assemble (freedom of the different religions to come together and demonstrate their
religions, hold parades), freedom of the press and freedom of religion.
Freedom of speech -> right to engage in oral, written and symbolic speech protected by the First Amendment
Categories: Fully protected speech -> Cannot be prohibited or regulated by the government, Exceptions -> Hate Speech.
3. Exceptions to the First Amendment
Hate Speech
Dangerous speech or words that are likely to provoke a hostile or violent response
Speech that incites the violent or revolutionary overthrow of the government
Must be “likely to cause violence or harm before it can be deemed criminal”.
Other Examples of Unprotected Speech by the first amendment.
Defamatory language: speech that is defamatory is likely to damage someone’s good reputation by saying something bad and untrue about them.
Child pornography
Obscene speech: filthy, disgusting words or pictures.
European Union Approach to Unprotected Speech: Speech can be prohibited even if it is only “abusive, insulting or likely to disturb public order”,
however, European laws on the issue are not uniformly applied across the EU.
4. Conflict of laws
Also known as “Private International Law:” concerns relations across different legal jurisdictions between persons and sometimes companies or
other legal entities.
Definition: a set of procedural rules that determine which legal system, and the law of which jurisdiction, applies to a given dispute
5. Yahoo! Inc vs La Ligue Contre Le Racisme et l’Antisémitisme: US vs French laws
Case of First Impression -> Under Common Law, the court must follow a precedent but their wasn’t a precedent in this case. It was the first time
that the court had to make a decision regarding a case of free speech on the internet. There have been free speech cases before but not on the
internet -> “Landmark Case” about the Internet and 1st Amendment
Based on the Yahoo case study, what is meant by the term “conflicts of Laws”? -> Because Nazi Memorabilia are illegal in France, display of any
objects representing symbols of Nazi Ideology subjects the person to criminal and civil liability. The international League against racism and
Antisemitism filled suit against Yahoo and the French court ordered Yahoo to eliminate all internet access in France to Nazi memorabilia. Yahoo
then took the case to a federal district court in the U.S.: Can a Foreign court dictate what will or will not appear on a U.S company website? Does
such an order violate the U.S. constitutional right to freedom of speech and expression -> in this example you can clearly see that there are conflicts
of Laws. French courts say to remove the Nazi Memorabilia from the site while the U.S. court say not to do this because this will violate the First
amendment.
*criminal liability -> You can end up in prison and civil liability -> you can end up with a fine.
What arguments would help to validate Yahoo’s position?
They shouldn’t punish American people, just because the Nazi Memorabilia are not allowed in France, It would be better to punish the
French and subject them to civil liability when they buy any Nazi Memorabilia. It is the responsibility of the French whether they buy the
goods or not. The servers of yahoo are based in the US.
The Americans have freedom of speech and expression according to the first amendment of the constitution: They should be able to
express in what they belief.
French Museums also display the Nazi ideology.
Chilling effect: if they allow this court order from France, it will create a chilling effect all over the world. If they start listening to foreign
court orders, they will have to allow not just France but also Iran to dictate their laws.
What arguments would strengthen the League’s position?
The French law should be respected on French Soil.
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