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AN INTRODUCTION TO
LAW, LEGAL SYSTEMS
AND GLOBALIZATION
OBJECTIVES
To understand the essential features of a
legal system, including our Constitution
To appreciate Globalization as relevant to
Law and Legal Institutions
To study the different forms and principles
of Civil and Tortious liabilities
LAW
Law is a system of rules, usually enforced
through a set of institutions.
It shapes politics, economics and society
in numerous ways and serves as the
foremost social mediator in relations
between people.
Law governs a wide variety of social
activities.
Law :
The term `law refers to rules of conduct enforced by the
State to maintain peace and order in the society
Austin has defined law in the following words : `A law is
rule of conduct imposed and enforced by the
Sovereign.
Salmand defined law as `the body of principles
recognized and applied by the State in the
administration of justice.
Holland defined law as ``rule of external human actions
enforced by Sovereign Political Authority.
Definition of Law :
MEANING OF BUSINESS LAW
Business law is a branch of General Law. It relates to industry, trade and
commerce. It includes law relating to contracts, sale of goods, partnerships,
negotiable instruments, companies, cooperative societies etc. Further, consumers
are a special constituent of any business. Consumers Protection Act not only
recognizes the importance of safeguarding the rights and interests of the
Consumers but also puts every business on alert and answerable to the consumer
3. SOURCES OF BUSINESS LAW
1. English Mercantile Law
2. Statutes of Indian Legislature
3. Judicial Decisions
4. Customs and Usage
What is the Role of Law?
To establish and enforce norms or societal
morals
Achieves justice?
To limit power of the Government and other
authorities
Enforces accountability?
To examine reason in all activities
Typology of Law
Legal remedies = Constitutional, Civil,
Criminal, Contractual and Tortious
Legal systems and Judicial approaches =
Common Law and Civil Law
Principles of interpretation = Statutory,
Constitutional and Evidentiary
1: Analyzing What is Law ?
Natural Law view.
Positivist view.
Historical view.
Legal Realism view.
Natural Law
Assumes that law, rights and ethics are based
on universal moral principals inherent in nature
discoverable through the human reason.
The oldest view of jurisprudence dating back to
Aristotle . (system of laws existing in particular
place. the system of laws that exists in a
particular place or that affects a particular area
of activity)
Jeffersons Declaration assumes the Laws of
Nature.
Natural Law
Rev. Martin Luther King, Jr.
Letter from the Birmingham Jail, April 16,
1963. [T]here are two types of laws: just
and unjust laws. . . . A just law is a man-
made code that squares with the moral
law . . . . An unjust law is a code that is
out of harmony with the moral law. . . .
An unjust law is a human law that is not
rooted in eternal and natural law.
Legal Positivism
Law is the supreme will of the State that
applies only to the citizens of that nation
at that time.
Law, and therefore rights and ethics, are
not universal. The morality of a law, or
whether the law is bad or good, is
irrelevant.
Legal Realism
Jurisprudence that holds law is not simply
a result of the written law, but a product
of the views of judicial decision makers,
as well as social, economic, and
contextual influences.
2: The Common Law Tradition
American law is based largely on English
Common Law which was based largely on
traditions, social customs, rules, and cases
developed over hundreds of years.
The Common Law Tradition [2]
At common law, there were two separate
court systems with two different types of
remedies:
COURTS OF LAW (monetary relief), and
COURTS OF EQUITY (non-monetary relief)
based on notions of justice and fair dealing.
Courts of Law
Also called kings courts where judges
were appointed by the king.
Remedies limited to those provided at law,
i.e., land, chattel (something that you
own), money.
Judges resolved disputes by application of
rules of law to the facts of the case before
the court.
Courts of Equity
Equitable relief was sometimes available
in instances where a strict application of
the law to the facts of the case compelled
a result that was legal but unjust.
Remedies Today
Today federal and state courts of general
jurisdiction have consolidated remedies at
law and remedies at equity.
Generally, the same court can fashion a
remedy that includes both damages and
equitable or injunctive relief.
Stare Decisis
Stare decisis is a Latin phrase meaning to
stand on decided cases.
Makes the law stable and predictable.
Increases judicial efficiency by relieving courts
of having to reinvent legal principles for each
case brought before them.
Stare Decisis and Precedent
Stare decisis is judge made law based on
precedent.
Precedents are judicial decisions that give rise
to legal principles that can be applied in future
cases based upon similar facts.
Precedents and other forms of positive law, such
as statutes, constitutions, and regulations, are
referred to as binding authority and must be
followed.
Cases of First Impression
In cases of first impression where there
is no precedent, the court may refer to
positive law, public policy, and widely held
social values in order to craft the best new
precedent.
Legal Reasoning
Method used by judges to reach a
decision.
Many courts and attorneys frame decisions
and briefs using the IRAC format: Issue,
Rule, Application (Analysis), and
Conclusion.
Types of Legal Reasoning
Deductive Reasoning: Makes use of
syllogism, a type of logical relationship
involving a major premise and a minor
premise.
Linear Reasoning: Proceeds from point
to point, with the final point being the
conclusion.
Reasoning by Analogy: Analysis that
compares facts of present case with
facts of similar previously-decided
cases.
4: Classifications of Law
Every type of law will be either:
Civil or Criminal, and either
Substantive or Procedural, and either
Public or Private.
Civil vs. Criminal
Civil law defines the rights between
individuals or individuals and
governments.
Criminal law defines an individuals
obligations to society as a whole.
Substantive vs. Procedural
Substantive law defines or creates the
rights and obligations of persons and
governments.
Procedural law provides the steps one
must follow in order to avail oneself of
ones legal rights or enforce anothers
legal obligations.
7: Businesspersons
and the Law
Laws regulate all areas of business.
Factors business owners must consider:
Is contract enforceable?
Contract for goods vs. services?
What happens if someone breaches the
contract?
Dispute Resolution?
Contract law regulates everything from
buying a bus ticket to trading on derivatives
markets.
Property law defines rights and obligations
related to the transfer and title of personal
and real property.
criminal law offers means by which the
state can prosecute the perpetrator
Major Legal Systems
Common Law derived from case
circumstances; Judges role is dominant
Adversarial system
Civil or Continental statutory bases; Judges
discretion is minimized
Inquisitorial system
Religious or customary based on traditional
texts and practices
Civil Laws
Private Law = regulate rights and duties
between individuals
Contracts and Civil actions
Equitable bases of interpretation
Equity and equality balance of interests
Probabilities and preponderance
Compensatory remedies
Criminal Laws
Relates to only specific offences and results in
deterrent punishments no victim perspective?
Not retrospective; right to silence
Strict interpretation and fair trial principles
procedural guarantees
Beyond all reasonable doubt
Prosecution by the State on the rationale of
public welfare and deterrence
Economic Crimes
Features of Economic Crimes:
Cause economic loss to society; not just to
victims
Multiple negative effects
Specific modus operandi
Fraudulent intent
Evidentiary difficulties expert testimony
Quest for the Truth
Object of Criminal Justice = accurate truth
substantial and scientific
DNA Profiling; Narco-analysis; Medico-legal;
Forensic methods and resources
Fingerprinting; graphology; phonetics
Documentary and Cyber evidence
Reliance on Expert evidence
Structure of the Courts
Civil side = Civil Judge District Court High
Court Supreme Court
Criminal side = Magistrate Sessions Court
(District) High Court Supreme Court
Aided by Police and Prosecution
Jurisdiction/Powers = determination of facts
appreciation of evidence material questions of
facts and law decisive on facts; appeals on law
Exercise of Judicial Powers
Regular Appeals and Review in superior Courts
Special Appeals in the Supreme Court
Writ powers of High Courts and the Supreme
Court (of emergent nature)
Review and Curative powers of Supreme Court
The Constitution of India
Preamble Sovereign, Socialist, Secular, Democratic
Republic
Justice, Liberty, Equality & Fraternity
Inherent Qualities of the Indian Legal System
Longest in the World 395 not out !
12 Schedules and 22 Parts
Government and its three branches
Fundamental Rights
Enforceable only against State except Right
against exploitation and Right of Personal
Liberty which are enforceable against fellow
citizens too
Is Company a State only public function
Certain Rights are only for Citizens Right to
freedom of speech & expression; to form
associations; to move freely and reside
anywhere in India; occupation
Fundamental Rights
Right to Equality bedrock of all Rights
Equality before the Law; and Equal
Protection of the Laws
Classification based on intelligible differentia
Must have a nexus with the Objective
Eschews Arbitrariness
Caste based Reservations; AIDS Drugs Policy
Equality?
Fundamental Rights
Fundamental Freedoms only to citizens
Reasonable restrictions public order
and interests of general public
TEN Sports and Cricket on DD
Restrictions on the Media in reporting on
terror strikes and rescue attempts
Right to Property
Earlier a Fundamental Right
Now a Constitutional Right
Deprivation only by authority of law
Public interest and Just compensation
Singur controversy; SEZs
Directive Principles of State Policy
Non enforceable by Courts
Welfare of the People
Right to Work
Distribution of Economic Resources
Living wage for workers
Participation of Workers in management of
Industries
Federalism Law making Powers
Union, State and Concurrent Lists to facilitate smooth
trade and commerce
Union = Defence, Ports, Aircrafts, Railways, Intellectual
Property, Trade and Commerce; Total 96 with residuary
power
State = Land Rights, Production, supply and distribution
of goods; Total 66
Concurrent = Contracts, Banking, Economic and Social
Planning; Total 47
Government Contracts
On behalf of President or Governor
They are not personally liable
Is Government Company like any other?
PPPs and other Public Contracts
Economic Policy of the State
Nature of Judicial interventions
Globalization of Law
To appreciate the relevance of
International legal principles in
the Indian Legal System
Effect of International Law
Transnational Dispute Resolution Mechanisms
Institutional models: WTO; ICJ; Commercial
Arbitration mechanisms
Application of International Principles within the
Legal System of a Nation
Enforcement of International Covenants
Formation and Compliance of Treaties
Adoption by Domestic Institutions Courts and
Legislatures
WTO Constitutional Principles
Most Favoured Nation (MFN)
National Treatment
One Member One Vote
Reverse Consensus Rule
WTO Principles
Single Undertaking except in Plurilateral Form
Dispute Settlement multi-tiered structure
Enforcement Sanctions and Countermeasures
Supreme respect for Negotiations at all stages
Specific Challenges
WTO - International Trade Regulation
Captured by vested interests?
Defensive Mechanisms and Trade
Remedies
Objectivity in the Rules?
Dispute Settlement Mechanisms
Level-playing field?
LAW OF TORTIOUS
LIABILITY
To understand the extent of
legal duty to take care and the
corresponding enforceable remedies
What is a Tort?
Civil Wrong an affront committed in a
private sphere, but against a duty owed to
a society
Different from Criminal Law; Contract Law
Typology of Torts
Negligence
Defamation Libel and Slander
Trespass to person (assault, battery,
confinement) and to property
Nuisance Public and Private
Abuse of legal procedure harassment
Accidents & Environmental Hazards
Basic Principles
Duty to take care reasonable standard
Breach of that duty
Injury and Damage caused by such breach
Damages payable as Compensation
Basic Principles
Remoteness of Damage and Test of
Reasonable Foresight
Compensation is the objective restitutio
in integrum
Res ipsa loquitor (facts speak for
themselves) rule of evidence
Injuria sine damnum
Ashby v. White (1703) legal right
injured, but no damage
Nominal damages awarded
Damnum sine injuria
Mayor of Bradford v. Pickles
Use of own land but, with bad motive
City of Bradford was affected by such an act
No legal right was injured
General Defences
1. Volenti non fit injuria if volunteered
by the plaintiff with knowledge + consent
Consent could be express or implied
Medical Negligence Prior Informed Consent
2. Inevitable accident
Uncertain and unforeseen
Despite reasonable care by the defendant
General Defences
3. Act of God (vis major)
Involvement of Natural forces
Unforeseen extraordinary impact
4. Right of Private Defense
To protect person or own property
Necessary and Reasonable force standard
Proportionality expected electric fencing
General Defences
5. Statutory Authority
Activity causing injury should be authorized
Does not apply to such authorized activities
undertaken in a negligent manner
6. Contributory Negligence when the
plaintiff is also partly liable
Kinds of Liabilities
1. Vicarious Liability
2. Strict Liability
3. Absolute Liability
Vicarious Liability
Responsibility and liability imposed for
actions undertaken by certain others
Principal is liable for Agents acts
Partners are liable for each others acts
Master is liable for the servants acts what
about Government servants?
Contract of Service & Contract for Service
Strict Liability
Rylands v. Fletcher (1868)
Negligent work, even of Independent Contractors
Source of damage from own land
Strict Responsibility attributed to any damage
caused by actions on own property
General Defences can be claimed to overcome
liability
Absolute Liability
Indian Supreme Court improvised the
Strict Liability principle
Cases involving violation of the Environment
No application of General Defences
Compensatory liability mandated
Deep pocket principle
Discussion
Nature of Contract
Synopsis :
1. Introduction
2. Meaning of Business Law
3. Sources of Business Law
4. Business Law in India
5. Contract Act, 1872
6. Meaning of Contract
7. Essential elements of a valid Contract
8. Classification of Contracts
4. BUSINESS LAW IN INDIA
1. Contract Act, 1872
2. Negotiable Instruments Act, 1881
3. Sale of Goods Act, 1930
4. Partnership Act, 1932
5. Companies Act, 1956
6. Securities Contracts (Regulation) Act, 1956
7. MRTP Act, 1969
8. Foreign Exchange Management Act, 1999
9. Patent Act, 1970; Copy Right Act, 1957; Trade and
Merchandise and Marks Act, 1958
10. Sick Industrial Companies (Special Provision) Act, 1985
11. Consumer Protection Act, 1986
12. Environment (Protection) Act, 1986
13. Essential Commodities Act, 1955
14. Information Technology Act, 2000
15. Competition Act, 2002
5. CONTRACT ACT, 1872
1. Applicability : The Contract Act, 1872 is the most important constituents
of Indian Mercantile Law. It affects every person since every one of us enters
into a contract virtually every day.
2. Coverage of the Act
The act deals with the basic principles of the law of contracts. It deals with
general principles of Contracts and special contracts as given below in the
following chart.
Chart - 1
Indian Contract Act
Special types of
contracts
Sec. 124 - 238
General Rules
relating to
Contracts
Sec.1 - 75
1. General Principles of Contracts (Sec.1-75) :
General principles of contracts include rules and laws relating
to communication, acceptance and revocation of proposal
(Sec.2-9) voidable contracts (Sec.10-19 A and 22-23), void
agreements (Sec.11,2230, 32, 36. 56, 57 and 64-67),
contingent contracts (sec.31-36), performance of contracts
(Sec.37-67) certain relations resembling those created by
contracts (Sec.68-73) and consequences of breach of contract
(Sec.73-75).
2. Special Types of Contracts :
Sec.124 to 238 deal with special types of contracts. These are
contracts of Indemnity and Guarantee (Sec.124 to 147)
Bailment and pledge (Sec.148 181) and Agency Contracts
(Sec.182 238).
6. MEANING OF CONTRACT
1. Contract Definitions :
Let us go through some definitions relating to contract.
Salmond : A contract is an agreement, creating and defining the
obligation between parties.
Sir William Anson : A contract is an agreement enforceable at
law made between two or more persons by which rights
are acquired by one or more to acts or forbearances on the
part of others.
Sir Fredrick Pollock : Every agreement and promise enforceable
at law is a contract.
Contract Act : Section 2(h) of the Act states that an agreement
enforceable by law is a contract. Therefore, a contract
essentially consists of two elements : (i) an agreement,
and (ii) its enforceability by law.
6.2 Essential Requirements of Contract
1. Two parties
2. An agreement :
Consensus-ad-idem
3. Legal obligation
6.3 Agreements which are not contracts :
1. Agreements relating to social matters
2. Domestic agreements between husband and wife
Balfour Vs. Balfour (1919)
In this case, on leaving England for Ceylon, the husband
agreed to pay 30 pounds to his wife every month till she
remained in England. As he failed to send the promised
amount regularly, the wife sued him for recovery of the
amount. But her suit was dismissed on the ground that it
was an informal arrangement and there was no
intention to create legal relationship
Agreement = Offer + Acceptance
6.4 All contracts are agreements but all agreements are not
contracts
6.5 All obligations do not constitute contracts
Torts or civil wrongs
Quasi contracts
Judgements of Courts
Status of obligations like relationships of husband and
wife
7. ESSENTIAL ELEMENTS OF A VALID CONTRACT
According to Section 10 all agreements are contracts if they
are made by the free consent of the parties competent to contract, for a
lawful consideration and with a lawful object, and are not hereby
expressly declared to be void. Thus, an agreement becomes a valid
contract if it has the following elements.
1. Offer and acceptance
2. Intention to create legal relationship :
3. Lawful Consideration
4. Competence of parties to Contract
5. Free consent
6. Lawful object
7. Agreement not declared as void
8. Certainty and possibility of performance :
9. Legal formalities
CLASSIFICATION OF CONTRACTS
Chart 2
Classification of Contracts
Validity and
Enforceability
Mode of
Creation
Extent of
Execution
Obligation
to perform
Classification of contracts on the basis of validity and Enforceability :
1. Valid contracts
2. Voidable contracts
3. Void Contract
Classification of contracts on the basis of Mode of Creation :
1. Express Contracts
2. Implied contracts
3. Quasi Contracts
Classification on the basis of extent of execution :
1. Executed Contracts
2. Executory Contract
Classification on the basis of
the obligation to perform :
1. Unilateral Contracts
2. Bilateral Contract
CONTRACT
CONTRACT - According to sec.2(h), a
contract is defined as an agreement
enforceable before the law.
AGREEMENT - According to sec.2(e),
every promise or set of promises forming
consideration for each other.
PROMISE - According to sec.2(b),
when a person made a proposal to
another to whom proposal is made, if
proposal is assented there to.
OFFER - According to Sec.2(a), when a
person made a proposal, when he signifies
to another his willingness to do or to abstain
from doing something.
CONSENSUS - AD IDEM-
According to Sec.13, meeting of minds or
identity of minds or receiving the same thing
in same sense at same time.
Agreement Legal Obligation
Contract
All agreements are contracts
but all
contracts are not
agreements.
CONTRACT = AGREEMENT +
ENFORCIBILITY BEFORE LAW
ESSENTIAL ELEMENTS
OF A VALID CONTRACT
(Sec.10)
1.Offer & acceptance.
2.Intention to create legal relationship.
3.Consensus - ad - idem.
4.Consideration.
5.Capacity to contract.
6.Free consent.
7.Legality of object.
8.Possibility of performance.
9.Writing & registration.
VALID CONTRACTS
Absolute contract
Contingent contract(Sec. 31-36)
Express contract
Implied/Quasi contract(Sec.68- 72)
Valid contract - If all the condition are
fulfilled it is called as a valid contract.
Contingent contract - In a contract
to do or not to do something, if an event
is collateral, does or doesn't happen.
Express contract - When contracts
are either in writing or in oral.
Implied contract - When contracts
are neither in writing nor in oral.
Absolute contract - A contract which
is not dependent on fulfillment of any
condition.
OVoid contract
Is void(Void - ab - initio)
Becomes void
OVoidable contract
OIllegal contract
OUnenforceable contract
Invalid contract - In a contact if
any one condition is not fulfilled.
Is void (Void-ab-initio) - An
agreement which is not valid from
the beginning.
Becomes void - An agreement
which is valid in the beginning but
due to some supervening
impossibility the contract becomes
void.
Illegal contract - An agreement
forbidden by law.
Unenforceable contract - It is
valid but due to some technical
defect the contract becomes void. In
case defects are removed the
contract is enforceable.(lack of
registration, lack of signature etc.,)
Voidable contract - A contract
which is valid unless until avoided
by either the party.