Lecture/Tutorial Notes – Business Law and Ethics
Tutorial 1: Introduction – Ethics, Jurisprudence and Justice.......................................................................................... 2
1.1 Introduction to Law, Ethics and Morality ............................................................................................................... 2
What is Law? ............................................................................................................................................................... 2
Ethics ........................................................................................................................................................................... 3
1.2 Jurisprudence: The Natural School of Law .............................................................................................................. 4
Classical Naturalist Philosophers ................................................................................................................................. 4
Modern naturalists ...................................................................................................................................................... 5
In the 20th century, there has been debate over the nature of law .......................................................................... 6
1.3 Jurisprudence: Other Schools of Law ...................................................................................................................... 7
The Positivists .............................................................................................................................................................. 7
The Pure Theory of Law............................................................................................................................................... 8
The Neo-Analytical School........................................................................................................................................... 9
The American Realists ............................................................................................................................................... 10
Feminist Legal Theory ............................................................................................................................................... 10
Utilitarianism ............................................................................................................................................................. 10
1.4
The Provision of Justice ......................................................................................................................................... 11
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
1
Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
1.1 Introduction to Law, Ethics and Morality
What is Law?
 Mrs. Dababneh’s Tutorial Defn.
Law is a set of rules regulating peoples’ interactions with each other with are enforceable
through sanctions.
 Dr. D. Meltz
Law is a complex system of social control, regulating conduct and governing ruled between
various relationships. It adjudicates disputes and punishes offenders, thus preventing
vigilantism, violence and the breakdown of social order.
 H. L. A. Hart Concept of Law
“The most prominent general feature of law … is that its existence means that certain kinds
of human contact are no longer optional but in some sense obligatory”
A law is a social rule which is obligatory and physically sanctioned
Influences on Law
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Religion
e.g. the laws of marriage (same sex marriage illegal after religious moralities)
History
e.g. land law
Politics
e.g. WorkChoices: Howard implementing them and Rudd reversing them as per their
political persuasions
Economic influences and theory
e.g. Trade Practices Act strongly influenced by the economic theory of competition
English “common law”
though Australian and British legal systems have since diverged due to GB joining the EU
and adopting many of their adversarial law based laws
Regional and int’l developments
e.g. AUSFTA and other free trade agreements
Expectations on the law

Law is expected to provide the “Rule of Law”, as well as justice in society. This includes the
following precepts central to the “Rule of Law”
o Law applies equally to all citizens
o One cannot be punished for actions that aren’t expressly illegal
o Law is not retrospective
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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Types of Law
There are two main types of law – the Common Law system (as used in Australia, Britain and many
other Commonwealth nations) and the Adversarial system (as used in most of mainland Europe)
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The Common Law System is based on “common judgments for common crimes”
o Judge is neutral, elected by peers and decides the sentence
o There is a jury of common man, who decide the facts of the case
The Adversarial System is based on a series of codified laws (i.e. derived from Roman law,
etc.)
o The judge orchestrates the trial, can ask questions
In many ways, the minor courts of Australia are moving towards an adversarial system, especially in
Family law.
Ethics
Defining Ethics:
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
Ethics are a moral standard that encode a consensus on social interactions and right and
wrong in society (Mrs. Dababneh). Ethics “Inquires into the moral values of human behavior
and conduct, analyzing ‘how we ought to act’”.
o These are derived from Reason, Custom and Education
o People act ethically to preserve Reputation (the relative esteem in which one is held)
and Character within a particular industry or social group. This in turn confers
legitimacy.
Ethics are the system encapsulating moral values and beliefs through which human actions
are judged and moral duties and obligations are established (Dr. D. Meltz)
Ethics balances the following attributes:
“Right”
Integrity
Probity
Honesty
Instinct
Wisdom
Experience
Moral courage
Empathy
Belief in self
Inner strength
“Wrong”
Greed
Egoism
Acquisitiveness
Opportunism
Apathy
Folly
Moral cowardice
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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There is current debate on whether or not morality should be legally enforced:
For
Maintaining “public morality”
Give authoritative meanings to right and wrong
Suppress vice
Prevent the undermining of social reason
Against
Law is unnecessarily restrictive
Law cannot be justified on the basis of unproven
assumptions of moral decline
Discourages the pluralist ideas of right and wrong
1.2 Jurisprudence: The Natural School of Law
The school of Natural Law defines law as a transcendental authority, applying equally to all peoples,
regardless of local laws
 Cicero
"True law is right reason in agreement with nature; it is of universal application, unchanging
and everlasting"
 It is based on the idea that there are certain irrevocable principles which are: permanent,
allow for mankind's continued existence, discoverable by reason and to which any law must
be subject.
 Furthermore, natural law states that:
o Laws are discovered through reason, not made
o Only laws that are natural are true laws, although attitudes to "non-true" laws differ
amongst different philosophers
Classical Naturalist Philosophers
Plato
 The Perfect State is one in which there are no laws, as they restrict human freedoms, but
rather a perfect ruler who was able to administer absolute justice
o This is because laws were simplifications which couldn't solve complex cases
 Since there was no such "perfect ruler", Plato hypothesized that the next best thing was a
"law state", where
o Rulers and courts were subservient to the law, and would judge impartially
Aristotle
 Aristotle claimed that law was "reason free from passion", and that, in lawmaking, moral
restriction and potential for development must be balanced
 Furthermore, Aristotle allowed for a global/transcendental code of natural justice as well as
local laws enshrined in "legal justice", although he still states that Natural law had
precedent
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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Stoic School
 Syllogism
o Laws are rational
o People are rational
o Therefore people have a natural inclination towards lawfulness
o This syllogism, like many others; oversimplifies and is inherently flawed due to the
fact that both of the original are flawed, and that they are combined in a superficially
logical, but deeply illogical manner. E.g. Socrates’ cat
 Furthermore, the stoic school states that "all men should live as equals under the guidance
of divine reason, as the law"
 Cicero then stated that, since laws could be made by tyrants, an "unjust law was no law at
all"
St Augustine of Hippo
 Man was corrupted by original sin, and since Law was made by man, it was the job of the
church to adjudicate between man-made laws and "natural" laws
St Thomas Aquinas
 4 parts of law
o Eternal law (lex aeterna), god's plan for the universe
o Natural law (lex naturalis), god's laws as discovered by man
 God gave humans reason so they could distinguish between good and evil,
then, following on with the Stoic School and Aristotle, evil acts are
"unnatural", and would therefore be banned under natural law, which is the
inference of god's law via reason.
o Divine law (lex divina) law as delivered by god to man (e.g. the bible)
o Human law (lex humana), an enactment of reason for the common god (if contrary
to the laws of nature, then it is a corruption of law)
 Aquinas also has an opinion on whether it is required to obey law which is contrary to
natural law. He states that a citizen must
o Disobey a human law if it conflicts with natural law, unless this would lead to civil
unrest
o Disobey any rule that goes directly against natural law, as the citizen has a greater
responsibility to follow "god's law"
 Furthermore, under Aquinas' model, the Church had the final say over which laws fell in
which category
Modern naturalists
 Replace "god" with a ruler who has received his authority via a social contract, the content
of which varies with different philosophies
 Originally, the citizen submits to a ruler for protection/to prevent anarchy. This ruler is then
entrusted to, under pain of populist revolt, rule in a balanced manner
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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Hobbes
 That mankind is, in his natural state, anarchic
 That mankind submits to leadership/the social contract as it is "necessary for man's self
preservations" and that it is a leader's priority to guarantee this; and that it is the
government's priority to ensure this "natural right"
 That it is the task of the law to balance the conflict between the interest of the majority and
that of the individual
Locke
 That mankind is, in his natural state, idyllic
 That mankind submits to the social contract in order to secure property
 That it is the ruler's duty to both maintain social and to maintain the rights which man had
"contracted" to have preserved
Rousseau
 "man is born free and everywhere he is in chains"
 The rule of law requires that the citizen submit, in Rousseau's opinion, to the general will;
here to allow the citizen/society to reach their potential
 His theory of surrendering to the general will might be seen as leaning towards
totalitarianism
In the 20th century, there has been debate over the nature of law
 Natural law has, in direct contrast with one of the precepts of justice, allowed for the retroactive law cases, a la Nuremberg trials, where, whilst morally just, they try the defendants
against charges which were not "expressly identified as illegal" before/in their own nation
Finnis
 Humans have three main drives which are also the attributes which make up goodness
o Life
o Knowledge
o Practical reasonableness
 This practical reasonableness is the glue of society, and can be divided into the following 6
precepts
o The active pursuit of those attributes which make up goodness
o Values and persons are to be treated neutrally
o There must be a proper use of detachment and commitment
o The pursuit of goals may be done efficiently but must not cause irrational harm to
others
o No choice should be made which contravenes the common good
o Man should be free to follow his conscience
 Finally, Finnis argues that disobedience, even where the law is immoral causes such damage
that is outweighs everything else
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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1.3 Jurisprudence: Other Schools of Law
Aside from the Naturalist school, there are several other, quite important schools of legal thought.
Whilst the Naturalist school is often described as proscriptivist, many of the others are considered
highly descriptive, focusing on describing the actual application of law in society – or within a
specific interest group. Descriptivists answer the question “What is the law?”
The Positivists
The positivist legal school of thought believes that it is inevitable, in progression, that law become
isolated from morality. They state that naturalists believed that law was only relevant in its
religious (and later rational) scope. They counter this, stating that “jurisprudence is concerned with
positive laws … as considered without regard to their goodness or badness” (TBook, p14, John
Austin).
Positivists were primarily concerned with
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The law as written by an author to subjects
The derivation of law’s power from authority
The “scientific” method; i.e. classifying the law
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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The Pure Theory of Law
The pure theory of law is both descriptivist and deconstructionist; describing not only the way in
which the legal system works, but from where it derives its authority ad infinitum. This theory was
primarily propagated by Hans Kelsen and can be seen as a part of positivism. “As a theory, it is
exclusively concerned with the accurate definition of its subject matter … it is a science and not a
politics of law” (Hans Kelsen).
E.g. The process of defining a law via the Pure Theory
A law must be punishable
The punishment must be legal
•i.e. sanctioned by a higher authority (e.g. the gov't)
The sanctioning body must have legal power
•e.g. the gov't's power as derived from the constitution
The Constitution must have been derived from an authority
•e.g. the constitution was passed by the English Monarchy in 1901
This process must continue untill the "grundnorm": The
original authority on which all law is based
The “Grundnorm” being a hypothetical, undefined authority on which all current law is based.
Under this system, Kelsen stipulates that a law must be obeyed for the legal system, with the
citizen disregarding whether or not it “ought” to be obeyed. This point is highly contentious.
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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The Neo-Analytical School
The Neo-Analytical school posed a theoretical response to the Positivists:
Positivists
That law is derived from its authority over the
populace
All laws are punitive
Neo-Analytical
Since laws often apply to the authority who makes
them, they are more than a mere threat
Turning a permissive law into a punitive one is
artificial and is only logical in a very superficial
manner
Laws often emerge from custom
Sovereigns are often limited by a constitution and
the court
The rule of law continues between laws, so there is
habitual obedience to the law, not to the sovereign
from which the law derives its authority
Laws are commands
Sovereigns are all-powerful
Law derives its power from the sovereign
Hart (the primary neo-analytical philosopher) also makes use of a dichotomous key in classifying
social rules.
Social Norm
All laws stem from Social Norms
Is this rule enforced?
• if no, it is a habit
• if yes, it is a rule
Is this rule met by criticism or obligation?
Are there sanctions against this rule being
broken?
Habit
Rule
Criticism
Obligation
Physical
Sanction
Hostility
This is a law. Does this rule impose an obligation?
• if yes, this is a primary law
• if no, this is a secondary law
If this law provides the authority for a primary law
it is a lawof authority
If this law changes a primary law it is a law of
change
Secondary
Law
Primary Law
Law of
Change
Lawof
Adjudication
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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Hart states that the following flaws prevent a law from being moral:
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Failure to establish a rule; being unclear
Failure to be made known to the people who it binds
Being improperly retrospective
Failure to be understandable
Being contradictory
Being outside of the jurisdiction/power spectrum of the authority making them
Failure to be stable (changing quicker than is traceable and practical)
Failure to administer the laws as announced
The American Realists
The American Realists were essentially Descriptivists, a la the Positivists. However, instead of
describing the legal system as outlined in the law, the American Realists aimed to describe the way
in which the legal system worked in reality. This includes describing prejudices, biases and other
flaws of process.
Roscoe Pound stated that law was a mechanism balancing conflicting interests and securing the
maximum of existing wants with the minimum of friction.
The two major branches of American realism were:
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Fact Skeptics (Jerome Frank)
o Concerned primarily with the decisions and processes of the trial court
Rule Skeptics (Karl Llewellyn)
o Concerned primarily with the decisions of appellate courts
These have evolved into the more modern movements of Jurimetrics and Judicial Behaviouralism.
Feminist Legal Theory
Feminist legal theory tries reconciling two feminist goals; that women be treated equally under the
law, and that the legal system takes into account that men and women have different aspirations.
Post-Modern feminist theory states that there is no such thing as a unitary female opinion, and, in
its extreme, rejects the concept of feminist legal theory.
Utilitarianism
The central precept of Utilitarianism is that it aims to please a majority.
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“Based on principles that conduct should be directed towards promoting the greatest Good
of the greatest number of persons” – Jeremy Bentham
“Based on principles that conduct should be directed towards promoting the greatest
happiness of the greatest number of persons” – John Mill
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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The central flaw of this system is that minorities’ rights become compromised. Bentham’s theory
might also support authoritarianism, since it states that the goal is the “greatest good”, which, in
this theory, would be judged by a [necessarily imperfect] authority. Mill counters this by stating
that the primary goal is the “greatest happiness”, whereby those under the authority are seen to
judge the conduct of those with the authority.
1.4 The Provision of Justice
Justice is primarily concerned with two precepts:
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That every man is equal before the law
That one cannot be persecuted for something which is not expressly illegal
These provisions were theorized by Plato and Aristotle, and are considered timeless.
Kant, however, stated that justice was not found in equality, but in equality of opportunity. This is
harmonious with Milton Friedman’s opinion that “if you put equality before freedom you will get
neither, if you put freedom before equality you will get a high degree of both”.
The modern legal system, in many ways, undermines these precepts; including judicial bias, social
and gender bias in many ways.
Business Law and Ethics – Tutorial 1: Introduction – Ethics, Jurisprudence and Justice
2009 Yochi Ottensooser
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