HEXCO · Polytechnic · NC Accountancy

Business Law 1: Law in Society and Business

Learning Outcome 1 of 5

Free HEXCO NC Accountancy notes on Law in Society and Business, learning outcome 1 of 5 in Business Law 1. Law in society and business, the Zimbabwe legal system and general principles of law. Semester 2, module 310/22/M07.

Here we learn the meaning and purposes of law in Zimbabwe's society and business community, the postulates of good law, the real and personal rights of individuals, and the main divisions of law.

Every business deal, from buying a loaf of bread to signing a supply contract, takes place within the law, so an assistant accountant needs a basic understanding of what law is and how it is organised.

1.1 The Nature of Law in Zimbabwe

People living and trading together need rules to guide their conduct and settle their disagreements.

Law provides those rules and, unlike other rules, it is backed by the power of the State.

Definition of Law

Law is a body of rules of conduct, made or recognised by the State, which govern the behaviour of people in society and are enforced by the courts and other State organs through sanctions such as fines, imprisonment and orders to pay damages.

What makes law different from moral, religious or social rules is that it is binding on everyone and enforced by the State, so breaking it has legal consequences.

Purposes of Law in the Business Community

Law serves several purposes in Zimbabwe's society and business community:

Preservation of peace and order

Law sets rules and punishes those who break them, so people and businesses can live and trade without violence and disorder.

Achievement of justice

Law aims to treat people fairly, giving everyone what is due to them and correcting wrongs, for example by ordering a party who broke a contract to pay damages.

Protection of members of society

Law protects people's lives, property and rights, and protects weaker parties, such as consumers and employees, from abuse by stronger ones.

Dispute resolution

Law provides courts, tribunals and arbitration to settle disagreements, such as unpaid debts or disputes between partners, peacefully and finally.

Regulation of conduct

Law sets standards of behaviour in business, such as rules on registering companies, paying taxes, keeping records and treating workers, so that business is carried on in an orderly and fair way.

Certainty in business dealings

Because the rules are known in advance, businesses can plan and enter contracts with confidence that agreements will be enforced.

1.2 Principles of Modern Law

For law to be respected and effective, it must have certain qualities, known as the postulates of good law.

A law lacking these qualities may be unfair, unclear or impossible to follow.

Postulates of Good Law

The table explains each postulate and why it matters.

Postulate	Explanation
Equality The law applies equally to all.	Everyone is equal before the law, regardless of wealth, position, gender or race, as the Constitution of Zimbabwe guarantees.
Reasonableness The law must be fair and sensible.	A law should not demand the impossible or impose unfair burdens, and it should be in line with society's sense of justice.
Generality The law applies to people in general.	It is made for all people or all members of a class, such as all employers, not for one named person.
Certainty The law must be clear and known.	People must be able to find out what the law requires, so laws are published and written in clear language.
Authority The law must come from a lawful source.	It must be made by a body with power to make it, such as Parliament, so that it is legitimate and binding.
Positivity The law must be in force and enforceable.	A law is positive when it is actually in force, applied by the courts and backed by sanctions.

1.3 Legal Rights of Individuals

A legal right is an interest or claim that the law recognises and protects, so that the holder can enforce it in court.

Rights are divided mainly into real rights and personal rights.

Real Rights

A real right is a right held over a thing (property), which can be enforced against the whole world. The most complete real right is ownership; others include a mortgage or pledge held by a lender over property given as security, and a servitude, such as a right of way over a neighbour's land. For example, an owner can reclaim a stolen vehicle from whoever holds it.

Personal Rights

A personal right is a right held against a particular person to claim a performance, such as payment, delivery or a service, and can be enforced only against that person. Personal rights arise mainly from contracts and delicts. For example, a supplier who delivered goods on credit has a personal right to claim the price from the buyer, but not from anyone else.

Importance of Rights

Rights give security to people and businesses, because what they own and what is owed to them is protected. They allow property and claims to be traded, such as selling goods or assigning debts, they make credit possible, because lenders can take real rights as security, and they provide the basis for going to court when someone interferes with what is due. The Constitution also protects fundamental rights, such as the right to property, equality and fair treatment.

1.4 Divisions of Law

Law is a large body of rules, so it is divided into branches according to who it governs and what it deals with.

Knowing the divisions helps in deciding which rules and courts apply to a problem.

Public Law and Private Law

Public law governs the relationship between the State and individuals, and between organs of the State, where the State acts in its official capacity. Private law governs the relationships between private persons, including companies, where the State is not involved as an authority.

Public law	Private law
Constitutional law The structure of the State and the rights of citizens.	Law of persons and family law Legal status, capacity, marriage and children.
Administrative law The powers and decisions of government bodies.	Law of contract Agreements between persons.
Criminal law Crimes and their punishment.	Law of delict Wrongful acts causing harm to others.
Tax law Taxes such as income tax and VAT.	Law of property Ownership and other real rights.
International public law Relations between states.	Mercantile law Partnerships, companies, insurance and negotiable instruments.

Criminal Law and Civil Law

Criminal law deals with conduct that the State treats as a wrong against society, such as theft and fraud; the State prosecutes the accused, who must be proved guilty beyond reasonable doubt, and the result is a punishment such as a fine or imprisonment. Civil law deals with disputes between private persons, such as a breach of contract; the injured party sues, the case is decided on a balance of probabilities, and the result is a remedy such as damages. The same act can be both, for example an employee who steals money may be prosecuted and also sued to repay it.

National Law and International Law

National (municipal) law is the law of one country, applying within its borders, such as the laws of Zimbabwe. International law governs relations between states and international organisations, through treaties and custom, such as trade agreements under SADC or COMESA. International agreements generally become part of Zimbabwe's law only in the manner set out in the Constitution, usually through an Act of Parliament.

Substantive Law and the Law of Procedure and Evidence

Substantive law sets out people's rights and duties, such as the rules of contract that say when an agreement is binding. Procedural (adjective) law sets out how rights are enforced in court, such as how to issue summons and the steps in a trial, while the law of evidence sets out how facts are proved, such as which documents and witnesses may be used. Substantive law tells us what our rights are, and procedural law tells us how to enforce them.