Business Law - Case Study Example

Business Law Introduction: English laws are mainly based on Common Law. It could be mainly ified into public laws and private laws. Public laws examine and judge the legal relationships between State and individuals, and are found in Common Law, Arbitration Laws and various immigration laws, etc. On the other hand, private laws regulate the conduct of individuals and firms, and include in its scope, aspects like contract laws, sale of goods, tort statutes, property laws and regulations impinging employment, family, etc. How laws, including business laws are made in the UK context: It is now necessary to consider how laws are made in the United Kingdom. There are several procedures which need to be undergone before a Bill could be formally inducted as a law and they are as follows: 1. First Reading: At the first stage, the title of the proposed Bill is read out, written and published. 2. Second Reading: The Minister responsible for the Bill deliberates on the purpose and objective of the proposed Bill. Subsequently, there is a general debate on the general principles which govern the Bill, and if it survives the discussions, it goes to the next stage. 3. Committee Stage: The Bill is discussed threadbare by the Standing Committee, consisting of either the full house of MPs, or a part of them. All aspects, including proposed amendments to the original are considered and the bill is put to vote. 4. Report Stage: The Bill is formally reported to the House and appropriate amendments are considered by the House. 5. Third Reading: At this stage the Bill is deliberated. Minor alterations, if necessary, are made and it then proceeds to the other House for approval. The next stage is the House of Lords, where similar procedures as delineated above, are followed. It is interesting to note that while HOL has no power to veto a Bill, it may delay it for considerable amount of time. The Final stage is the Royal Assent which is a foregone one. All bills, including business ones have to go through the above procedure in order to become effective laws that control business in the United Kingdom. It is seen that the lawmaking in the UK has been hampered by two important factors. The first being that, unlike other countries, the UK does not have a written constitution, and secondly, the laws are not codified, in the sense, there are no single, or set of written laws that could be used for settling legal disputes among litigants. Thus, it is seen that the UK legal system is arranged in a “hierarchical structure” wherein the higher Courts may seek legal information available from earlier cases, and need to apply these, sometimes with modifications to the current cases. This could be enforceable in lower courts also, and lower courts are bound by it. Thus it would not be wrong to suggest that in UK, the judges do make laws while delivering justice to the litigants. (MacIntyre, 2008). Another aspect that needs to be seen in the case of UK laws is that major laws are either criminal or civil. The legal aspects and perspectives for criminal law are different from civil laws. While criminal law delivery systems are punitive, in that the alleged offender needs to be punished for his crimes, in civil cases, especially in business laws, the aim is restorative, in that the law seeks to restore his material status or financial position to a stage had the event leading to the case not taken place. Thus, the main aim of the courts would be to provide pecuniary or economic compensation to the aggrieved, and try to restore his position prior to the occurrence of the tort or civil wrong. It is seen that the business laws in the United Kingdom relate mainly to contract laws, sale of goods, tort and malfeasance and other economic laws. In the context of contract act, the main aspects are with regard to each party to the contract, performing his or her part of the deal. In the event of non-performance or violation, liability may ensue. It is seen that House of Lords (HOL) is the highest law providing body and under it there are various courts, for instance the Courts of Appeal for criminal acts and civil acts. Under these COA, are the High QBD, Chancery and Family High Court. The High Courts, in turn, have subordinate Crown Courts and County Courts., under whom we have Magistrate Courts. (A general introduction to law n.d.). The Courts provides for resolving disputes among individuals which come under civil cases and between the State and individuals which come under the purview of criminal cases. Courts of the 1st instance are the courts from which cases may originate and could move upwards to HOL. With UK’s induction into the EU, the aspects of International Court of Justice (ICJ) also impacts upon UK laws which may be bound by EU legislature. Non Court solutions: Besides Court battles, there are other Alternate dispute resolution processes (ADR)by which an solutions could be brought about with litigants- in terms of mediation, arbitration, etc. The chart below explains alternate dispute resolution in details: Table showing relative merits of ADR procedures: Serial Aspect Mediation Arbitration Court proceedings 1. Cost of process Economical Quite high Very high 2. Duration Short Fairly long Protracted 3. Type of verdict impacted by Consensus among parties Arbitrators perspective Discretion of court 4. Nature of process By mutual agreement Depends on views presented to arbitrators Witnesses and facts presented to court 5. Duration of process 60-90 days 1-2 years Make take number of years depending upon type of case, etc 6. How process begins When talks fail When mediation fails When arbitration fails 7. Binding upon parties Not binding award is binding Can be appealed against 8. Choice of parties Could back out anytime Cannot back out pending arbitration award Should accept courts’ verdict subject to appeal 9 Parties to process Mediator + parties Arbitrator + parties Court + concerned parties 10 Underlying factor Mediator provided framework for parties to discuss and finalise solution Arbitration studies case, discusses with parties and provides award after due deliberation Court examines witnesses under oath and studies every aspect before providing verdict 11. Acceptability Need to be acceptable by all parties May be in favour of one party to disadvantage of another Court’s order may be in favour of right party and loss to wrongdoer party. Human Rights Act 1998: It is now necessary to consider the aspects of the Human Rights Act 1998. It is seen that HRA 1998 is to establish consonance with the European Council of Human rights (ECHR) and is in harmony with ECHR laws. The main idea behind HRA 1998 is to procure justice for aggrieved persons under international laws in UK itself, so that s/he need not have to approach the courts at Strasbourg for taking up the case. However, the powers of the HRA are limited in that it cannot overrule an act of Parliament, and is held by it, unless orders are issued by higher courts. Aspects of codification and amending (recasting) Coming to the aspects of codification and amending (recasting) act it could be said that, in order to reduce the volume of EU laws and to ensure its cogency and transparency, a large number of rules and amendments may be bound together as one law. (Codification and recasting 2009). Similarly, it is seen that in certain cases, there may be amendments to existing laws that may give rise to new law. It is seen that by using the amending or recasting procedure, the newly amended text is added to the other amendments that have been made from time to time, thus presenting it in a full textual form, without the need for separate codification. (Codification and recasting 2009). The UK Sale of Goods Act, 1979, as modified and amended by the Sale and Supply of Goods Act 1994, is by far, the most important commercial piece of legislation in the United Kingdom, in as far as chattels, or movable goods are concerned, and the most contentious, thought provoking and mind challenging at that, for two reasons. Firstly, in terms of the fact that it may not be uniformly and consistently applied by English courts to address litigation aspects of modern business transactions, and secondly, the Courts themselves may differ on how to provide the kind of justice needed and its delivery systems. Much has been decided based on the jurisdictional framework of cases and its surroundings, the arguments put forth by respective lawyers and how courts respond to such deliberations. Under UK laws, from the seller’s perspective acceptance of goods and making payment for the purchased goods are important. However, the buyer needs to ensure that goods conform to order and are of satisfactory quality. Satisfactory quality under Section 142(A) of the Sale of Goods Act means“Goods should be of satisfactory quality i.e. they should meet the standard a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances.” (The law relating to the supply of goods and services 2005, p.9). The various factors that influence aspects of quality may include, among other things, fitness for purpose for which goods have been supplied, final looks of the product, devoid of minor imperfections, and being safe and of lasting nature. It is now necessary to consider certain decided UK case laws to understand the impact of business laws. The first would be the case of Hedley Byrne & Company Ltd v. Heller & Partners Ltd (1964). In this case, the applicant, Hedley Byrne sued a bank that seconded the financial soundness of a client company, although with a rider that the information was only for “private use and without responsibility on the part of the bank and its officials." (Hedley Byrne v. Heller 2005). However, when the company went bankrupt, the applicant sought action against the bank for recovery of their dues, but the Court held that the disclaimer was sufficient to absolve the bank of blame. However, this could not be enforced in the case of Smith v. Eric S. Bush [1990] 1 AC 831 (House or Lords) in which the lack of care on the part of the valuer gave a clean chit to a house, which, however, was damaged after changing hands. The mortgagor, who had relied on the authority of professional valuer, sued them for negligence and the Court decided that the disclaimer was violative of Unfair terms Act 1977 and was thus ineffective. (Beale & Tallon 2002, p.548). Thus it may be concluded that, in as far as the general English business laws are concerned, it seeks to be recompensing and provide a fair balance between the need to seek economic justice while at the same time, offer all the participant litigants an opportunity to present their case honestly and positively in order to arrive at a just solution. However, it is seen that with the accession of the United Kingdom into the European Economic Community in 1973, the impact of business has become more far reaching and entails a larger geographic expanse, covering businesses among member countries also. European Union (EU) laws: Community Laws: It is seen that the sources of community laws are the primary legislature, viz.community treaties accompanied by secondary laws, like regulations, decision and directives. (European community law n.d.). It is seen that in the UK context, Community laws are considered sacrosanct and even above national laws. This was vindicated in the Factortame v. Secretary of State for Transport(1991) in which The petitioner were Anglo-Spanish fishing companies who accomplished by indicating both that they had been illegally debarred from fishing in British waters and that they were entitled to damages to recompense them for the result of this. (Philips, Walker & Clarke 2002). European Court of Human Rights: Normally it is seen that in case of European Convention laws is in conflict with State or domestic laws, it is necessary for national laws to be amended in order to provide for implementation of EC laws and conventions. But this is not applicable in the case of ECHR laws which deal with Human rights. In other words, it may not be wrong to interpret that member State laws, even in the face of inconsistencies with ECHR laws, could still be predominant in areas outside the purview of ECHR issues. But in the cases of ECHR, it is believed that the verdicts of national courts determine internal laws, and it is to these decisions that law of precedents need to be applied. Therefore, the application of European laws needs to respect the framework of domestic and local laws in its installation and enforcement of diktats. (Birkinshaw, & Kombos 2006). Common Market for member countries: One of the major aspects of the EU is to have a common market for member countries, in order to be able to encourage free trade without barriers,or restrictive practices. In order to achieve a common European market, which promotes uninhibited trade, and foster community fraternity and co-operation in all major areas, it is imperative that there are consistent laws and conformity among trading nations, without which a common market policy may not be achieved. This may be accentuated by the fact that certain countries may have national laws that may not be in line, or consonance with EU laws. Thus, it has become necessary to have European directives that seek to achieve consistency among the national laws of countries to common directives, applicable without fear or favour among all member countries equally. It is seen that directives initiate measures to be implemented but leaves the method of implementation to each member state, within a given timeframe and there is a great deal of autonomous control that allows member states to choose their own specific means of initiating EU laws. (Directives: power point presentations n.d., p.10). The main objective of European directives is to render consistency in national laws, and towards this end, member countries may be required to suitably amend, or make laws that would make it consistent with EU laws. Such directives may be more significant than national laws, and this may entail members to do something, or refrain from doing something which is inconsistent with EU directives. “EU directives lay down certain end results that must be achieved in every Member State. National authorities have to adapt their laws to meet these goals, but are free to decide how to do so. Directives may concern one or more EU countries, or all of them.” (Directives- definition 2009). It is seen that in most cases, member countries need to abide by the directives issued by the EU as enunciated in Article 226 of the EU Treaty. Thus, infringing member states would be given ample opportunities to set their national laws in line with EU laws, failing which it would be discretionary on the part of EU command to hold them responsible for infringement and take such action as is deemed necessary under the circumstances. This could also be in terms of approaching the International Court of Justice (ICJ) for providing succour and enforcing compliance for EU laws. The ECJ has played a pivotal role in cases involving individuals and organisations involving two member counties where a third country is also involved. Peter Rehder v. Air Baltic Corpn, (2009) In a recent case of Peter Rehder v. Air Baltic Corpn, decided on July 9, 2009, involving seeking of compensation for losses caused by delayed departure of international flight, the court held that the competent court to deal with such compensation claims, at the discretion of the passenger, would be the court having jurisdiction at the point of departure, or the courts at the point of arrival, as agreed in the contract. (Rehder 2009). It is now necessary to consider the Three Pillars which embody the EU as enunciated in the Treaty of Maastrich, which underpins the European Treaty. The three pillars are: 1. PILLAR 1- Community pillar which consists of the European Union, (EU) the European Atomic Energy Commission (EURATOM) and the European Coal & Steel Commission (ECSC) 2. PILLAR 2- The enunciation of a common foreign and maritime policy envisaged under Title V of the EU treaty 3. PILLAR 3- The pillar devoted to law enforcement, viz. police and the jurisprudential understanding and co-operation in matters of dealing with crime in society found in Title VI of the EU treaty. (Pillars of the European Union n.d.). The major aspects of the EU have been the free movement of goods, services, workers, capital and currency. It is seen that free movement of persons, which was first taken in three pillars is now in the first pillar, after the enforcement of the Treaty of Amsterdam. There are certain norms that need to be enforced in terms of community aspects or inter-government matters. It is also seen that the Commission is empowered to submit cases to Council and the European Parliament who are empowered to deal with them appropriately. In such cases a simple majority will suffice. But in the case of second and third pillars, initiation of action needs to be “shared between the Commission and the Member States, and unanimity in the Council is generally necessary.” (Pillars of the European Union n.d.). Justification of the EU in business: It is seen that modern business is complex and intricate involving many international players. This is accentuated when the aspect of global business involving intercontinental or interstate business is involved, wherein different countries may have different laws and procedures. It is likely that laws may differ, even conflict on key areas, thus rendering the EC policies quite at risk and jeopardy. This is where the EC steps in, acting as negotiator. International bodies which seek to boost and promote trade and commerce, ensure that barriers to movement of capital, currencies, goods and services among member countries, per se, are smooth and unhampered. Standardised laws and consistent trade practices ensure that the growth of the economies, GDP and wealth distribution among EU members are uniform and one member country does not gain unreasonable benefit at the detriment of another such member. Again, in the event of litigation, as often happens in the case of diverse member states, the aim of the EU in as far as business laws are concerned is to bring abut equity and justice for the common good of all concerned member states. However, to enforce consistent EU laws, the co-operation and collaboration of member states and others are also necessary. Conclusions: It is very important that countries bury their own self-seeking interests and consider the common good of the European Union in all their commercial ventures and thereby ensure that all member states are well positioned to contribute their maximum towards the common interests of their locales, community, national interests and most importantly, towards the best interests of the EU. The business laws enunciated by the EU through its articles are designed to just serve one major objective of seeking to establish a common business goal for the whole of Europe, irrespective of the inner constitutional aspects of member countries and its impact on business. References A general introduction to law: ULMS n.d. (Provided by customer). 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Heller: facts 2005, Nation Master.com, viewed 14 July 2009, http://www.nationmaster.com/encyclopedia/Hedley-Byrne-v.-Heller MacIntyre, E 2008, Business law: Chapter1: the legal system, England: Pearson Education Limited, Amazone.co.UK, Fourth edition, viewed 14 July 2009, http://www.amazon.co.uk/gp/reader/0582894220/ref=sib_rdr_ex?ie=UTF8&p=S01T&j=0#reader-page Philips, M R, Walker, R & Clarke 2002, In the supreme court of judicature court of appeal (civil division) on appeal from high court of justice supreme court costs office costs judge Wright, viewed 14 July 2009 http://www.hrothgar.co.uk/YAWS/frmreps/932.htm Pillars of the European Union n.d., Europa Glossary, viewed 14 July 2009, http://europa.eu/scadplus/glossary/eu_pillars_en.htm Pillars of the European Union: the glossary is being updated given the recent signing of the Treaty of Lisbon n.d., Europa Glossary, viewed 14 July 2009, http://europa.eu/scadplus/glossary/eu_pillars_en.htm Rehder, p 2009, c-204/08: judgement of the court (fourth chamber) 9 July 2009, viewed 14 July 2009, http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&jurcdj=jurcdj&newform=newform&docj=docj&docop=docop&docnoj=docnoj&typeord=ALLTYP&numaff=&ddatefs=4&mdatefs=7&ydatefs=2009&ddatefe=11&mdatefe=7&ydatefe=2009&nomusuel=&domaine=&mots=&resmax=100&Submit=Rechercher The law relating to the supply of goods and services: the sale of goods act 1979: conforming the contract 2005, Dti: Traders Guide, viewed 14 July 2009, http://www.berr.gov.uk/files/file25486.pdf Read More