Chapter 1 An Introduction to Legal Studies In this chapter: • Some important aspects of law • What studying law involves • Different kinds of ‘laws’ • How law is organised into ‘divisions’ or ‘areas’ • How law regulates conduct • How law is made • Finding the law • Understanding legal materials • How the courts interpret and apply the law • An approach to problem-solving exercises for students • Law, justice and ethics • The origins of modern Australian law [1.1] Some Important Aspects of Law Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. If you are reading this chapter, it is likely that you are about to study a law subject for the first time. Of course, you already have a general idea of what law is because law is an inescapable part of everyday life –just about everything we do is affected in some way by rules of law. But when you study law as a subject in a university course, there are things you need to be aware of that might not be obvious at first. Here is a list of some of them: ⬬ There are many different kinds of ‘law’. ⬬ The laws of a state can be usefully grouped in various ‘divisions’. ⬬ Particular laws regulate human behaviour in different ways. ⬬ Law is made in different ways and exists in different forms. ⬬ More law exists than you can ever reasonably hope to know. ⬬ Laws are not always precise, certain and easily understood. ⬬ The language of law contains many special terms and phrases. ⬬ The way law is understood and applied by the courts is not necessarily what ordinary common sense might suggest. ⬬ Law is more often used as an organisational tool than as the basis of enforcing rights in a court. ⬬ Studying law involves a wide range of skills, methodologies and approaches. ⬬ Laws change over time and the history of the law helps to understand current law. ⬬ Because of its historical origins, much of Australian law is similar to the law of many other countries. First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.1] An Introduction to Legal Studies 2 These (and other) aspects of the law make legal study challenging and interesting. Subjects called ‘business law’ or ‘commercial law’ (or something similar) in an undergraduate degree course are intended to give you a broad understanding of what law is and its relevance in the business world. Although you are not being trained to become a professional lawyer, it is important to realise that you will be expected to learn enough about the law and how it works to take it properly and realistically into account when engaging in business-related activities. You will be required to go beyond reading, memorising and explaining rules you have learned, and engage in a variety of tasks, such as problem-solving, that employ a wide range of different skills. The result of your legal studies will be that the law and legal thinking becomes part of your mindset, an important aspect of your world view and an invaluable reference point in deciding how to act and make proper choices in your daily life. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. This chapter outlines some key ways of thinking and talking about law and what is involved in the study of law. It will explain some important concepts and describe skills and techniques that will help you to study law successfully. Of course, law is taught somewhat differently in each university and even when the basic curriculum of a business law subject is similar between institutions, the emphasis given to particular topics and skills will vary. That does not matter. The essential skills and techniques are the same, and the general intention of any introductory law subject, however taught, is the same. It is to provide a framework for understanding the law and give you the ability to discern, comprehend and evaluate the likely answers to legal questions when they arise. This can be challenging but it is achievable if you understand and engage constructively in the whole range of tasks set for you. Of particular use in gaining a practical understanding of how rules of law fit together, and how they are applied in particular situations, are the eStudy modules that accompany this book. They take you through examples with questions that will get you thinking about and applying the law, giving you immediate and constructive feedback. You will learn a lot by taking the time to work through the relevant modules as your study progresses. This book provides a sequence of topics that you will find helpful if you have not studied law before. In Chapter 2, there is an explanation of the role of government in law-making and enforcement. In Chapters 3 and 4, you will find an explanation of how law is made in Australia. Chapter 5 explains how to find particular legal materials in databases. Then, in the following chapters, an account is given of legal topics that are important in business and commerce –the law of agreements (contract law); consumer protection law; the law of liability for harm caused intentionally or carelessly (tort law); the law of rights to property; the law when one person acts for another (agency law); and the law of business organisations (eg, companies). The table of contents at the beginning of this book sets out a more detailed list of the topics covered. Spend a moment reading through it. [1.2] Different Kinds of ‘Laws’ We need to think about the true nature of law and how best to define it. We can begin by saying that laws provide authoritative rules for how we are to behave. However, this description is not quite precise enough. This is because there are different kinds of such laws, for example, ‘natural laws’, ‘moral laws’, ‘laws of God’, ‘custom’ and ‘national law’. What is the difference between these various kinds of law? The answer lies in how they are identified and how they are enforced. ⬬ Natural laws are those rules of conduct that accord with our realised experiences of the physical world. We obey these laws because, in our experience, that is how things work. An example is that children are worthy of protection and care. This law of nature can be widely disregarded only at the peril of the species. [1.2] Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. First Principles of Business Law An Introduction to Legal Studies 3 ⬬ Moral and religious laws are rules of conduct derived from belief systems, sometimes recorded in authoritative texts, sometimes passed on by oral tradition. Such rules are obeyed as a matter of individual conscience or through membership of a religious community. An example would be the dietary rules prescribed by particular religions. ⬬ Custom consists of rules of conduct that have been established by long usage and are obeyed by members of a society because of peer pressure, or because they are convenient. An example would be the rituals, music and clothing styles commonly associated with marriage ceremonies. Obeying such rules provides continuity with tradition and a sense of shared identity. ⬬ National law is made up of those rules of conduct and organisation that the government of a particular country or ‘state’ recognises and enforces as law. The key concept here is ‘rules recognised and enforced by the authority of the state’. If the government of a state recognises a rule of conduct and enforces it, then that rule becomes part of the national law. It is important to realise that there may be some overlap between the rules of national law and the rules of other kinds of law. Many rules of conduct originate as customary, moral or natural laws, but become part of the national law when a government decides to recognise and enforce those same rules. For example, most religions prohibit the killing of one human being by another, and governments in most countries recognise and enforce this same rule. Another example is native title to land, where rules or usages developed by indigenous peoples become recognised in the national law of a country. Each country has its own national law. In this book, unless otherwise indicated, the unqualified word ‘law’ is used to refer to the rules of national law that are established and enforced in Australia. [1.3] Divisions of Law Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. When we look at Australian national law, we find that particular rules of law exist to deal with distinct situations, types of conduct or concepts. On this basis, the rules can be organised under named ‘divisions’ or ‘areas’ of law that indicate the type of situation, conduct or concept involved. This is useful because, once legal rules are categorised in this way, they can be organised and found more easily. There are many established areas (or divisions) of law. The names of some categories may be familiar to you, for example, criminal law and contract law. Other categories may be less familiar, such as tort law or administrative law. The table below sets out some of the traditional categories and sub-categories found in Australian law and briefly describes the situations, conduct or concepts involved in each one. Figure 1.1 Divisions of law Division of law Description Jurisprudence The science or philosophy of law. International law Agreements (treaties) between sovereign states and internationally observed customs. National law Law as applied within the borders of a particular state, for example, Australian law or Indonesian law. National public law Constitutional law The organisation, powers and processes of government. Administrative law Rules governing the processes of official decision-making. First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.3] An Introduction to Legal Studies 4 Division of law National private law –Traditional categories Specialist categories of national law Description Criminal law The prohibition and punishment by the state of conduct considered harmful to the general community. Civil law The creation and enforcement of private legal rights and duties between individuals. This category of law is very large, encompassing some of the other categories, such as contract law, tort law and property law. Tort law Liability for harm wrongfully caused by one person to another person or to their property. Contract law Private agreements that give rise to legally enforceable rights and duties. Agency The use of a representative to acquire or discharge legal rights or duties. Consumer protection law Legal protections for consumers in their dealings with suppliers of goods or services. Corporations law The creation, organisation and administration of companies. Property law The acquisition and transfer of private rights in goods and land. Business law Rules that are particularly relevant to business activities, taken selectively from the more traditional categories of law, such as contract law, agency, tort law, banking law, insurance law, employment law, corporations law and tax law. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. [1.4] How Laws Regulate Conduct Many rules of law regulate the behaviour of individuals with the purpose of benefitting the greater community. The way in which behaviour is regulated varies. For example, particular rules of law might either restrict, prohibit, punish, permit or reward specified behaviour. Here are some examples: ⬬ The law generally restricts the use of force by individuals and forbids unauthorised violence. This is the foundation of peace and good order in society. ⬬ Some laws prohibit and punish particular kinds of undesirable behaviour. For example, it is a rule of law that one person should not wrongfully take another person’s property. Such conduct is called theft or stealing. It is prohibited, and people who are caught stealing are punished by the state. ⬬ Other laws permit or reward particular behaviour that the government thinks is desirable. For example, a person may be allowed by law to import various kinds of goods into Australia. They may be further encouraged to do so by laws that give financial assistance (in the form of subsidies) to those who do so. ⬬ Some laws provide for the creation of rights and duties that can be enforced by an individual in court. There are appropriate remedies when such rights are interfered with, or when legal duties are not discharged. The creation of legally enforceable rights and duties allows individuals to plan for the future with reasonable certainty. This is especially useful in business. [1.4] Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. First Principles of Business Law An Introduction to Legal Studies 5 [1.5] How Law Is Made The law of a state can come into existence in different ways. It is important to know how law is made, and how the process of law-making affects the form in which that law is recorded and stored. One way for making new law is for the government of a state to ‘enact’ new rules through a law- making body. Such bodies are often called ‘legislatures’ and the law they enact is accordingly referred to as ‘legislation’, or ‘Acts’ of parliament. Legislation, in written form, has its own typical structure, follows particular conventions, and uses specialised language. Knowing about these things will help you to understand such laws. They are explained in detail in Chapter 3. Another important way that law is made is through the decisions which judges make when dealing with cases brought before them. Such law is referred to as ‘case law’. Written records of decided cases follow a particular format and style that, once known, makes understanding and dealing with case law easier. These matters are explained in detail in Chapter 4. Textbooks which organise and explain the law (as this book does) also follow certain conventions and practices that need to be understood. For example, textbooks may contain summaries of legislation and case law, and it should always be remembered that these are less detailed and authoritative than the full legal documents themselves. [1.6] Finding the Law There is too much law for any one person to know and remember in all its details. In modern times, all the laws of a state are recorded in writing, both in printed and electronic form. These materials (legal authorities) can be located in libraries and databases. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. Printed laws are typically published in numbered volumes, with separate collections of legislation and case law. Electronic versions of legislation and case law are collected in searchable databases. Laws are probably more accessible now than they have ever been in the past. But to find the law, it is essential to know how law is organised, what kinds of law exist, what terminology or concepts are useful in locating particular laws, and how to use indexes, descriptive words and search terms efficiently. These matters are dealt with in Chapter 5 and are important because, whenever you are relying on a legal rule, you may be expected to provide the specific source of that rule. This is called the citation of a legal authority. [1.7] Understanding Legal Materials Although your initial expectations may be different, you will find that legal materials are not always precise, certain or easily understood. There are many reasons for this. One is that the language in which older laws are expressed may not have the same meaning in more modern times. Another is that new situations may arise which were not considered when an original law was made, so it is uncertain how the original law applies to the new situation. A third reason is that law is often expressed in language that contains many special or technical words and phrases. Sometimes you may feel that learning the law is like learning a new language. Some ordinary English words have special legal meanings. Other words and phrases derived from old English, French, or Latin. You do not have to know these languages to learn the law, but you will have to learn what these sometimes rather strange words and phrases mean. First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.7] An Introduction to Legal Studies 6 While studying, you will find references in your materials not just to ‘the law’ but also to terms such as ‘legal concepts’, ‘legal principles’, ‘legal rules’ and ‘legal meanings’. These terms help to describe how law is structured and organised. ⬬ Legal concepts. These are the ideas that determine the scope and nature of a particular category of law. For example, in contract law, there is the broad concept of ‘contract formation’, under which fall the more precise concepts of ‘agreement’, ‘intention to be bound’ and ‘consideration’. Identifying and organising key concepts will enable you to build a mental framework of a specific area of law. ⬬ Legal principles. These are the broad precepts that recognise and give effect to a particular point of view, value or policy. For example, in Australian law, the concept of contract formation is based in part on the principle that a contract is only made if the parties intend to be legally bound by their agreement. It is a further principle that an intention to be legally bound is ascertained objectively rather than subjectively. ⬬ Legal rules. These provide the detailed mechanisms by which legal principles are given effect. Rules specify particular requirements or provide what should happen in specific situations. For example, there are many rules in contract law that specify the different ways in which agreement may be reached or what should happen if performance of an agreement becomes impossible. ⬬ Legal meanings. These refer to the particular meaning or significance that words or phrases have in law. For example, in contract law, the words ‘party’, ‘consideration’ and ‘frustration’ have specific legal meanings that differ from their ordinary meanings. ⬬ Legal authorities. These are the sources of particular legal principles, rules or meanings. For example, a legal rule may originate in a particular decision of a court or in an Act of a legislature. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. You should also note that the law changes constantly and this fact has several consequences. One is that the language and style of the written law varies between older law and newer law, both in the form of legislation and case law. Another consequence is that you always need to check that you are using up-to-date legal materials. Particular rules of law that you might learn as a student will not necessarily remain the same for ever. A third consequence of legal change is that the history of particular laws often provides insight into the origins, meaning and intent of current law. [1.8] How the Courts Interpret and Apply Law Legal study involves learning lots of concepts, principles and rules. But in addition, you must be able to select which law is relevant to particular situations, apply that law in a sensible way, and explain your reasoning and choices. To do this successfully, you will need a wide range of skills and abilities. These include: research, reading and comprehension; some memorisation and recall; the clear and well-ordered expression of ideas orally and in written form; the application of proper reasoning processes; the ability to argue both sides of a case; and predicting the likely outcome of a case. Analysing how judges decide cases illustrates the most appropriate technique for applying the law. In outline, courts hear and decide disputes by finding out the facts of the case, identifying the exact question to be decided, determining which law is most relevant to that question and applying the law in a reasoned way to decide the proper outcome. Here are the steps involved in the process: ⬬ First, the important (material) facts of the case are ascertained. The material facts of a case are those that reveal and determine the origins, scope and nature of the case. Inconsequential facts that have no bearing on these matters can be disregarded. [1.8] Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. First Principles of Business Law An Introduction to Legal Studies 7 ⬬ Second, the exact legal question (issue) that arises from the facts is identified and stated as precisely as possible. Sometimes the facts give rise to more than one issue, in which case the separate issues are stated and dealt with in turn. ⬬ Third, the principles and rules of law that properly apply to the particular kind of legal issue in question are found, explained and interpreted. These can be called the ‘relevant’ legal rules. ⬬ Fourth, the relevant principles and rules are applied to the material facts of the case to work out (deduce) what the appropriate outcome should be. A result should be sought that is consistent with similar cases decided in the past. A result is also sought which will generally be considered fair and reasonable. This is an extremely abstract description of the judicial reasoning process. It takes no account of the more detailed procedures and practices followed in Australian courts. For example, when a case comes before a court, each of the parties, usually represented by a lawyer, presents the evidence they rely on, either through the testimony of witnesses or the production of documents. Each party also has the right to question and test the evidence led by the opposing party. Both parties also have the right to argue which rules of law are relevant and what the outcome should be. The presiding judicial officer (sometimes assisted by a jury) then decides what evidence to accept, what law is relevant to the case and what the outcome should be. You should also note that an important distinction is drawn between what are called ‘criminal’ and ‘civil’ cases. The terminology and procedures are somewhat different in each case. Criminal cases are those in which a person (the accused) is charged by the state with conduct prohibited and punished by the law. An example is where a person is accused of stealing another person’s property, which is the crime of theft. Civil cases are those where one person is brought (summoned) before the court by another person, for failing to carry out the duties that the law requires of them. An example is where a person who has borrowed money from another fails to repay it. This is a breach of the borrower’s duty to perform a legally binding promise (a contract). The person to whom the promise was made can enforce the promise in the courts by suing the person who made the promise. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. It is important to understand the kind of reasoning that courts normally use when applying the relevant law to the facts of a case. The most common type of reasoning used is called ‘deductive’ reasoning. Here is a brief example: 1. If these are the facts Ben borrows $1,000 from his neighbour Peta, promising to repay the loan in seven days. Ben fails to repay the loan. 2. And if this is the question that must be decided Is a lender of money entitled to bring a legal action to enforce a borrower’s promise to repay the loan? 3. And this is the rule of law that should be applied to those facts In a contract for the loan of a sum of money, a creditor may bring a legal action to enforce the repayment of a loan by the debtor. 4. Then it follows that the result (outcome) of the case should be as follows: The court will order Ben to repay $1,000 to Peta. [1.9] An Approach to Problem-Solving Exercises for Students The reasoning process outlined in the previous section provides the model that you need to use when, as a student, you are set what is traditionally called a ‘problem-solving’ exercise. In such exercises, you are usually given a written narrative that sets out the facts of a particular First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.9] An Introduction to Legal Studies 8 situation. You are asked to advise one or other of the persons involved in the narrative of their legal position. While there are various ways this can be done, you will generally find it helpful to follow the same reasoning that judges use. This is the basis of what is called the IRAC method. IRAC is an acronym for Issue, Rule, Application and Conclusion. The acronym will help you to remember the sequence you should follow: first, analyse the facts given in the narrative and identify the legal issue or issues that arise. Then, taking one issue at a time, find and explain the relevant legal rules that should be applied to such issues. Next, apply the rules to the facts using deductive reasoning. Finally, draw a reasoned conclusion. Let us see how this works with an example: Narrative of given facts: A customer spills a drink on the floor of Joshua’s café. Joshua does not immediately clean up the spill. Another customer, Maya, slips on the wet spot and falls. She is injured in the fall and wants compensation from Joshua, whom she says should have known that someone might slip and fall if the floor was wet. Advise Joshua. Issue: Is a business owner who fails to prevent foreseeable harm to a customer who has entered their business premises legally responsible to pay compensation for that harm? Relevant legal rules: If a person fails to take reasonable steps to prevent foreseeable harm to another person to whom, in law, they owe a duty of care, they will be liable to pay compensation for the harm caused by their failure. A duty of care exists in law between the owner of a business and persons entering their premises. Note: Normally, the relevant rules should be explained in as much detail as time allows, with reference to specific sources. Application of the rules to the facts: Joshua, as the owner of the café, owes a duty to prevent harm to customers such as Maya who enter the café. By not quickly cleaning up the spilled drink, Joshua has not done what he should reasonably have done to prevent the harm to Maya. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. Conclusion: Having failed in his duty to avoid foreseeable harm, Joshua is legally responsible (liable) for Maya’s injury and must compensate her for it. As you become familiar with the different areas of law and learn a range of legal rules throughout this textbook and the e-modules, you will develop the ability to articulate issues, identify which area of law is relevant, find the most relevant rules and deduce the likely outcome. The IRAC method is a helpful guide to the proper approach. Also remember that properly applying the law often depends on your ability to read legal authorities carefully and to explain fine distinctions clearly, using the language of the law accurately. This is an extra challenge if English is not your first language, but it is worth making the effort. [1.10] Inductive Reasoning Inductive reasoning occurs when the legal rule that has been applied to decide a case can be inferred from the facts of the case and the decision reached. Although this is not the way judges usually decide cases, it can be a useful way of presenting the law to students. For that reason, the summaries of decided cases contained in this book are based on an inductive framework. It works like this: the facts of the case are explained, followed by a statement of the question that has to be decided. Then, the decision of the court is stated, followed by the legal reasons that justify and explain the decision. In outline, the inductive approach looks like this: Facts → Issue → Decision → Rule. This can be compared to the deductive framework described above, which is Facts → Issue → Rule → Application →Decision. Inductive reasoning is also useful when trying to understand a case in which the judge may not have clearly stated which particular rules of law they are applying to decide a case. This can happen, for example, when the judge reviews many different possible rules and discusses the difference between them before making their decision, but without actually stating which [1.10] Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. First Principles of Business Law An Introduction to Legal Studies 9 rule they have chosen to apply. By applying inductive reasoning, you can work out which was the rule that gave rise to the decision in the circumstances of the case. Inductive reasoning is not appropriate for students doing problem-solving exercises. In such exercises, the deductive framework of the IRAC method is appropriate. [1.11] The Relationship between Law and Justice Now that we know about the difference between laws and other rules, we can reflect on some broader questions about law and its functions. One important question is: what is the relationship between the law and the notion of ‘justice’? Justice is difficult to define, but here is a starting point: it means ‘giving every person what is properly due to them’ either as reward or punishment. It involves treating everybody in the same way, provided that there are no facts on which to make reasonable distinctions between them. And it involves the idea that the views of the general community are relevant in deciding what constitutes an appropriate outcome in particular cases. It has often been suggested that the ideal purpose of law is to achieve outcomes that are regarded as good and fair by the general community. This is what the Roman emperor Justinian, a great law-giver, meant when he said: ‘Law is the art of the good and the just’. Achieving justice is the objective that morally underpins using the power of the state to enforce legal rules. And, on a practical level, a community will more willingly support and conform to laws that are considered just. Of course, governments do not always make and enforce laws for good and just purposes. It is possible for governments to use their power to enforce unfair rules, such as discriminatory laws which unjustifiably favour one racial group or a particular gender, or a minority group. However, the fact that unjust laws exist from time to time does not diminish the validity of the idea that law ought to aim at achieving good and fair outcomes. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. 1.11.1 Balancing the Importance of Justice against Predictability The relationship between law and justice is an important one, but it is not simple. It is a relationship that has to take account of practicalities and realities that sometimes may be in conflict. One important aspect of modern law is that its application is reasonably predictable in most cases. This is very useful, because if we can find out the rules that govern particular kinds of behaviour, we can choose to act in accordance with those rules and avoid unwanted consequences. Sometimes, however, it is not possible to find a rule of law that clearly applies to the exact situation that has arisen. Many rules of law are expressed quite broadly and do not take account of special detailed circumstances. A broad rule of law that has worked well enough in the past might not seem to provide a fair or just outcome when additional or new circumstances are taken into account. When this happens, the requirements of justice and predictability may conflict and the judges who apply the law may have to make difficult choices. Sometimes justice is given preference; in other cases, certainty and predictability are seen as more important. The old adage ‘hard cases make bad law’ is a reminder that if too many cases are treated as exceptional in the pursuit of justice, this can damage the predictability and certainty of the legal system overall. [1.12] Law and Ethics Law is often influenced by what are called ‘ethics’. The word ‘ethics’ refers to ideas about right and wrong, or what is moral or immoral, based on the idea of avoiding unjustified and unnecessary harm to other sentient beings. The word derives from the Ancient Greek word ethos, meaning habit or custom, which reminds us that ethical views can First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.12] 10 An Introduction to Legal Studies differ between communities, depending on their circumstances and traditions. Ethics are concerned with identifying guiding values, such as honesty, fairness and empathy, and with establishing standards of conduct. An ethical question focuses on what is the ‘right’ choice or conduct in a particular situation. This is a different question to what is legal or illegal: conduct may, strictly speaking, be legal (ie, within the law) but not ethical, and vice versa. In some circumstances, where harm may be caused to another person, it may be necessary to choose between what the law allows or requires, and what ethical considerations dictate. 1.12.1 Ethics in Specific Settings Particular ethical values and standards of conduct apply to specific activities or professions. For lawyers, ethical questions might be how best to represent a client’s case while still fulfilling their duties, as lawyers, to the court. For accountants, ethical rules might relate to carrying out an audit accurately or keeping a client’s information confidential. For students at a university or college, ethical standards require honesty and completing one’s own work to the best of one’s ability. Submitting another person’s work as your own for the purposes of assessment is called plagiarism and is clearly unethical. Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. It is important to consider ‘business ethics’ –that is, the ethical values and standards relevant to business entities and business activities. Persons engaged in businesses tend to be motivated by profit. But profit is not the only thing which should guide business activities. Businesses are also expected to act ethically, for example, by treating their employees fairly, marketing their goods and services honestly and providing customers with safe and appropriate products. Most people also expect businesses to minimise any harmful impacts that their activities may have more broadly, such as on the natural environment or on wider communities. These days businesses are often judged on how environmentally sustainable their practices are. In addition, many businesses undertake charitable or socially beneficial projects as part of their ‘corporate social responsibility’ –such as participating in fair trade or providing free services to vulnerable groups in the community. Unfortunately, there are many examples of how business persons can engage in unethical conduct –for instance, paying male employees more than female employees when they are doing the same job; not taking responsibility for business activities that contribute to climate change or environmental pollution; paying unjustifiably high bonuses to company directors; making excessive profits on products that they control the supply of; marketing products (like tobacco or alcohol) that cause harm even if properly used; or taking the traditional knowledge of a community and using it for profit without compensation. While these things may not all be illegal under current Australian law, they are clearly unethical. Ethics are not created and enforced in the same way that law is. But ethical standards are sometimes compiled into what are called ‘voluntary codes of conduct’. These codes set out what kinds of behaviour and practices are to be complied with by companies and business persons in a particular sector, such as banking, or franchising. The codes are often based on ethical values. The extent to which such codes are enforced, and the mechanisms of enforcement, vary but they are generally regarded as distinct from formal legal regulation. It must also be remembered that many rules of law reflect ethical norms, by requiring or prohibiting specific kinds of conduct as acceptable or unacceptable. In this way, enforcement of the law reinforces what is seen as ethical or unethical. For instance, the Australian Consumer Law targets a range of dishonest or otherwise unethical business practices, like falsely offering gifts or prizes to consumers. In the chapters that follow, attention will be drawn to those circumstances where laws relate to particular aspects of business ethics. [1.12] Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. First Principles of Business Law An Introduction to Legal Studies 11 [1.13] The Origins of Modern Australian Law You might expect the laws of the different states that make up the modern world to be unlike each other, but in fact, their laws are often quite similar. This similarity suggests that they were not developed independently, but that they share a common origin. This is in fact the case. Australian law, like that of many other countries, borrows heavily from one of the major legal systems (called English common law) that developed over a long period in Western Europe. 1.13.1 English Common Law The development of English common law dates back to the 12th century CE.1 Before that, the various parts of England had their own local laws and customs, based on a mix of Norman and Anglo-Saxon influences. But these local laws became subordinate to new laws that were enforced throughout all of England by travelling judges who represented the King when deciding disputes. Over the years, this English ‘common’ law developed into a comprehensive system of law. Then, when England became a powerful nation, invading and colonising various parts of the world, English law was introduced as the law of their colonies. These legal foundations have, in the main, been retained since the colonies became independent states. This is what happened in Australia. For the same reasons, English common law is also the foundational law of most of the states that make up the United States of America, the English speaking parts of Canada and many countries in Africa and Asia –for example, Malaysia, whose legal system contains substantial elements inherited from English law.2 What about those countries that did not inherit English common law? The answer is that many of them took Roman law as the basis of their legal systems. 1.13.2 Roman Law Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. Roman law (ius civilis Romanus) began its development in the small city-state of Rome in 753 BCE3 and continued over the next 1,200 years as Rome expanded into a large empire. Towards the end of the empire, in 533 CE, the Emperor Justinian decided that all the established rules of Roman law should be reorganised and collected in a Digest. This Digest of Roman law, together with some other legal works, are collectively known as the Compendium of the Civil Law (Corpus Iuris Civilis). Just before the compilation of the Corpus Iuris Civilis was completed, the Western Roman Empire was invaded by tribes from the north and collapsed. Roman law was largely forgotten until, in the 12th century CE, copies of the Corpus Iuris Civilis were re-discovered in libraries in Italy. Knowledge of it quickly spread and Roman law became influential in the emerging states of modern Europe. It served as the foundation for several new European codes of law: the French Code Napoleon of 1804; the Austrian code of 1811; the German code of 1889; and the Swiss codes of 1889 and 1907. In later years, these codes were used as models by countries 1 2 3 The letters CE (Common Era) replace the previous use of AD (Anno Domini). It should be noted that the sources of law in Malaysia also include legislation enacted in Malaysia as well as local laws deriving from custom and Islamic law (the last-mentioned being applied only to Muslims in sharia courts). The letters BCE (Before Common Era) are used to replace what previously was rendered as BC (before Christ). First Principles of Business Law Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19. [1.13] Copyright © 2020. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved. Michael, Lambiris, and Griffin Laura. First Principles of Business Law, Thomson Reuters (Professional) Australia Pty Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/unimelb/detail.action?docID=6238359. Created from unimelb on 2023-07-19 15:15:19.
