Introduction

The study of law is the study of people, a civilization, as it has existed and as it currently exists. As a discipline, the law embodies the history, values, and culture of a society. It is a series of concepts and rules that shifts to meet social changes. The productive activity of a society – its business practice – is one of the major facets of this study. The legal environment of business, therefore, involves the legal system, its principal actors, and the major substantive rules of law that influence economic activity.

Law is not separate from the culture, history, and times in which it exists. The study of law is not limited to learning legal rules. Understanding the legal environment of business, therefore, requires a broad understanding of the people and basic trends that influence the relationship between law and business.

Business managers come into contact with law on a daily basis. They are regularly confronted with contracts and the need to comply with government regulations. At times, they may come into conflict in their business relations, necessitating legal help. This legal involvement brings managers in touch with legal jargon and lawyers. To gain an appreciation of law and to be effective as a manager, it is necessary to have some understanding of the legal system – the purpose of law, sources of law, classification of law, the interplay of law and morality, and the place and function of lawyers.

Law impacts business decision making. Many recent surveys of business executives disclose that a chief concern for the coming decades is the legal environment within which business operates. From contracts to products liability to international marketing and new technologies to our environment, the law is the overriding factor in the businessperson’s mind.

All the definitions of law imply that law regulates human conduct and that through courts it resolves controversies. The goal of law is justice, but law and justice are not synonymous, just as legal justice and social justice are not synonymous. Justice has been defined as that which is founded in equity, honesty, and righteousness. It is the attempt of honorable persons to do that which is fair. Justice is the purpose of government and civil society. Apparently, the achievement of justice depends upon the concept of right and wrong in the society involved.

Social justice recognizes more rights and duties than does legal justice, although the trend of the law is toward equating these concepts. Perfect justice would require that all persons discharge all their obligations and duties so that all other persons may enjoy all their rights and privileges. Our society through law determines which rights and duties will be protected and strives through its judicial system for perfect justice. Of course, the law is incapable of perfect justice because it is in the hands of imperfect people and operates with imperfect procedures. As law approaches perfect justice, legal and social justice tend to merge.

The law has two basic functions in the conduct of business. First, the law provides the information needed to educate business people. The law’s major influence on business decisions is alternative courses of action. The second basic function of the law is to resolve controversies and to impose sanctions for conduct contrary to law. Such conduct may be illegal in the sense that some law or legal principle is violated or it may be illegal in the sense that a party did not perform as agreed or as the law may require.

Text 2 Text 2

Read the text. Be ready to answer the following questions:

1.What is law? 2.What have rules of conduct evolved to maintain? 3.What do these rules consist of in more primitive societies? 4.When do rules of conduct become more formalized? 5.What is a legal system? 6.What does a legal system consist of? 7.What functions do the courts serve? 8.What rules do the courts apply in performing these functions?

Business Law

In its most basic sense, law is the body of rules and principles of conduct that are enforceable through sanctions. Within every society, rules of conduct have evolved to maintain harmony and order. In more primitive societies these rules consist only of customs and norms that are enforceable through informal social sanctions. As societies increase in size and complexity, however, rules of conduct become formalized, usually through government that adopts and enforces the rules for the society. Although law preserves peace and stability, it is ineffectual unless society develops a legal system – institutions and procedures for enforcing the law. The legal system consists primarily of the courts. The courts serve two important functions: they provide a forum and process by which those who fail to conform to

the law are punished by the government and they provide a system to resolve disputes among private individuals who cannot agree upon proper rules of conduct. In performing these func­tions, the courts apply rules of law previously es­tablished by the government or, in the absence of such rules, develop new legal principles to main­tain order. Courts thus impose sanctions against those who fail to follow legal rules. The threat of these sanctions usually is sufficient to in­duce compliance with the law.

The law governs the conduct of all persons including artificial persons (such as corporations) as well as natural persons (human beings). Because businesses are considered persons and, thus, members of society, many of the legal rules and principles affecting business are merely general laws that affect all persons. For example, the rights and duties of a property owner are estab­lished by general property law whether the property is a factory owned by a business or a private resi­dence owned by an individual. Other legal rules have been established specifically to govern the conduct of businesses and business re­lationships. The securities laws regulate the sale and trading of the stocks and bonds issued only by businesses. Antitrust laws enacted to protect com­petition affect only those in business.

Law both restricts and facilitates business oper­ations. Some laws, such as those prohibiting price fixing or requiring a safe workplace, clearly limit business practices. In contrast, other legal rules are designed to facilitate or encourage business activi­ties. Few businesses, for example, could operate without reliable and enforceable principles of con­tract law that allow the sale, purchase, and ex­change of goods and services. Businesses would not invest in plant and equipment without the as­surance that their property rights in these items will be protected by law. Although law clearly affects the oper­ation of businesses, business also influences the de­velopment of the law. For instance, the law of neg­ligence developed initially to provide compensation for injuries resulting indirectly from the emergence of a modern, industrialized society. Entire new areas of law—such as antitrust, securities regula­tion, and environmental law—have been created in response to changing business activities. As busi­nesses increased production of goods, the law of products liability developed to determine whether manufacturers and distributors should be responsi­ble for injuries caused by their products. In short, business and law engage in a dynamic process, each shaping and influencing the development of the other.

Despite the law's importance as a source of rules of conduct, few societies could function effectively if they depended solely on law as a basis for social conduct. The morals—principles of right, good, and fairness—of individual members of a society provide a more informal and pervasive basis for standards of conduct. From norms, beliefs, and values, individuals develop ethics, systems of moral standards and beliefs that address the most fundamental issues of social conduct such as hon­esty, loyalty, fair treatment of others, and respect for human life and dignity. Like law, ethics pro­vide standards of conduct for individuals. Unlike law, however, ethics are not imposed or enforced by an external authority such as the government. Rather, ethical standards derive from an individu­al's internalized moral principles and are applied by the individual. Thus, through law society imposes and enforces legal standards of conduct applicable to all of its members while through ethics an indi­vidual develops and applies his or her own moral standards of conduct. The purpose of law then is to govern the conduct of all members of society while ethics provide guidance for individual conduct.

Although law and ethics derive from different authorities and for different purposes, they often are related, especially in a democratic society in which the people are the source of power. Law generally reflects basic moral prin­ciples shared by members of its society because people will not long comply with a body of rules that they consider wrong or evil. Thus, a law pro­hibiting murder not only preserves order but also reflects a widely held ethical belief that human life should be protected. In other cases, however, legal rules are morally neutral—for example, the law's requirement that all vehicles be driven on the right side of the road. In still other cases, the law may partially reflect moral principles but may not fully incorporate an ethical standard as the legal stan­dard. Most people would agree, for example, that lying is immoral but under American law, lying is illegal only in limited circumstances, such as when it constitutes perjury or fraud. Similarly, most in­dividuals believe that it is unethical to break prom­ises, but law enforces only those prom­ises that meet the requirements of a legal contract.

Look through the text once again and say which statements are true. Correct the false ones.

1.The law governs the conduct of only artificial persons.

2.Businesses are not considered persons.

3.The rights and duties of a property owner are established by general property law.

4.Law only restricts business operations.

5.Business also influences the development of the law.

6.All societies can function effectively if they depend solely on law as a basis for social conduct.

7.Ethics provide standards of conduct for individuals.

8.Ethics are imposed by an external authority.

9.Law generally reflects basic moral principles shared by members of its society.

Text 3

Read the text. Be ready to explain the terms given in bold.

Classification of Law

The law often has been described as "a seamless web" in which principles are hopelessly and endlessly intertwined. However, there are ways to classify legal subjects that advance understanding of the law and legal principles.

One means of classifying the law is to divide it into matters of public law and matters of private law. Public law includes constitutional law, administrative law, and criminal law. Constitutional law involves the interpretation and application of either the federal or a state constitution. Administrative law describes the legal principles that apply to government agencies, bureaus, boards, and commissions. Criminal law encompasses all legal aspects of crime. In each of these areas, society, or the people, are directly involved in the issues. Their interests are represented by a governmental agency, officer, or official whose obligation is to see that justice is accomplished and the goals of society achieved. Public law provides a major portion of the legal environment of business.

Private law encompasses those legal problems and relationships that exist between individuals, as contrasted with those in which society is involved. Private law is traditionally separated into the law of contracts, the law of torts, and the law of property.

Contract law addresses agreements between two parties. Tort law addresses wrongs other than a breach of contract, by which one party injures another. Property law deals with all aspects of ownership and possession of both tangible things and intangible rights. Our whole economic system is based upon the rights of individuals to acquire and use private property.

Historically, conflicts among individuals and businesses that could not be resolved by the parties have been formally resolved by utilizing the court system. The process of resolving conflicts through lawsuits filed in court is known as litigation.

The party who files a civil action seeking money damages is called the plaintiff. The party sued is known as the defendant. The term defendant is used to describe the person against whom a criminal charge is filed by the prosecuting state or federal government. When a defendant wants to sue the plaintiff, the defendant files a counterclaim. Most jurisdictions use the term counterplaintiff and counterdefendant to describe the parties to the counterclaim. Thus, the defendant becomes a counterplaintiff and the plaintiff also becomes a counterdefendant when a counterclaim is filed.

In actions involving equitable relief, the party initiating the case is the petitioner. The other party in an equity case is the respondent. The same terms are used when a petition for a writ of certiorari is filed after the right to an appeal has been exhausted.

When the result at the trial court level is appealed, the party appealing is usually referred to as the appellant, and the successful party in the trial court is called the appellee. Most jurisdictions, in publishing decisions of reviewing courts, list the appellant first and the appellee second, even though the appellant may have been the defendant in the trial court. As a result, the names used in a case are somewhat misleading. Since the party first named is not always the plaintiff, you need to be aware in studying cases, that the first-named party in the case title may be the defendant-appellant.

In most state jurisdictions and in federal courts, the law allows all persons to join in one lawsuit as plaintiffs if the causes of action arise out of the same transaction or series of transactions and involve common questions of law or fact. In addition, plaintiffs may join as defendants all persons who are necessary to a complete determination or resolution of the questions involved. It is not necessary that each defendant have a personal stake in every claim.

In addition, if a defendant alleges that there cannot be a complete determination of a controversy without the presence of other parties, he or she may bring in new third parties as third-party defendants. This procedure usually is followed when there is someone who may have liability to a defendant if the defendant has liability to the plaintiff.

Text 4

The paragraphs of the text have been jumbled. Read the text and put them into the right order.

The Law of Contract

(4) Although the law generally allows individuals to order their conduct by private agreement, "free­dom of contract" is certainly not absolute. Increas­ingly in recent years the law has imposed limita­tions upon private contract to prevent abuse in the bargaining process and enforcement of agreements that are illegal.

(1) The policy favoring performance of promises is supported on many theoretical grounds. Histori­cally, giving a promise or concluding an agreement constituted a solemn commitment, based upon re­ligious, moral, or ethical grounds, to perform. This "sanctity of contract" approach is bolstered by the law's general recognition of private autonomy in contract matters. Under the principle of "freedom of contract," the law allows individuals to regulate their own affairs by private agreement by recogniz­ing the promises embodied in the agreement as le­gally binding. Yet another approach supports en­forcement of contracts on grounds that a promise, once made, induces others to rely upon it, creating an expectation of performance. Finally, and per­haps most important, promises are enforced be­cause the needs of modern business and society generally require recognition of binding promises. Because all of the foregoing considerations—per­sonal responsibility or morality, individual auton­omy, fairness, and economic efficiency—support enforcement of promises, it is no surprise that con­tract principles are among the most firmly rooted in law.

(2) In its most general sense, the law of contracts con­cerns the legal effect of promise-making, determining when performance of a promise is legally re­quired, and governing the relationship between parties to a contractual promise. Promises and their legal consequences are therefore the basis of con­tract study. The fact that certain promises are legally binding is fun­damental to modern society. In a developed economic order the claim to promised advantages is one of the most important of the individual interests. Let’s consider credits. Credit is a principal form of wealth. It is a presupposition of the whole economic or­der that promises will be kept. Indeed, the matter goes deeper. The social order rests upon the sta­bility and predictability of conduct, of which keeping promises is a large item. In other words, the basic premise of contract law, expressed in the Latin phrase pacta sunt servanda (agreements shall be kept), reflects a more funda­mental premise of human conduct generally.

(7) People make promises all the time: to show up on a date, to pay back a loan, to obey certain rules. Contract law is concerned with a special class of promises, for a contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Thus, not all promises are contracts. What distinguishes contractual from noncontractual promises are the consequences of failure to per­form. A promisor who fails to perform a noncon­tractual promise incurs no legal liability. If, how­ever, a promise is contractual, the promisee is generally entitled to a contract remedy in the event of the promisor's nonperformance or breach. The most common remedy available for breach of con­tract is an award of dollar damages. If in the opin­ion of the court money is an inadequate remedy, the court may force the promisor to actually per­form the breached promise—a remedy known as specific performance.

(6) Contract law is the basic framework of all com­mercial law. Although contracts are often viewed and dis­cussed as a separate and distinct topic, many other topics are merely refined applications of con­tract principles. For example, rights and duties in property, commercial paper, agency, partnership, corporations, secured transactions, and insurance are frequently determined on the basis of contractual relationships. Even when a transaction is governed by statute the statutory rules may, in many cases, be changed by a contract between the parties.

(3) In legal terms, a promise is simply a commitment or undertaking that some­thing will or will not happen in the future. The per­son making the promise is the promisor, and the person to whom the promise is made is the prom­isee. For example, if Sam promises to sell goods to Betty and to deliver them in thirty days, Sam is the promisor and Betty the promisee. Sam indicates that something will happen in the future; goods will be delivered. Alternatively, the promisor can indi­cate that something will not happen in the future. Suppose, for example, that Sam, in exchange for an agreed sum of money, indicates that he will not file a lawsuit against Betty. The definition of a promise includes both types of commitments.

(5) No aspect of modern life is free from contractual relationships. The ordinary consumer who buys a house, purchases a television or other good, bor­rows money, leases an apartment, rents a car, in­sures his or her property or life, acquires rights and obligations based on contract. Businesspeople pur­chasing raw materials or equipment, building a plant or retail store, selling goods or services to customers, borrowing money, selling stocks or bonds, or insuring their property are involved in contracts. Contract law provides the certainty, sta­bility, and predictability required for the smooth and efficient performance of these and many other essential transactions.

Look through the text once again and prepare 12-15 wrong statements. Let the class correct them.

Text 5

Read the text. In each paragraph, find the topic sentence or phrase and those related and unrelated to it.

Contracts

Broadly defined, a contract is an exchange of promises enforceable by law. Many business and personal transactions — including marriage, estate plan­ning (wills), and credit purchases — involve contracts. Contracts may be either express or implied. An express contract is derived from the words (either oral or written) of the parties; an implied contract is derived from the actions or conduct of the parties. The law of contracts deals largely with identifying the exchanges that can be classified as contracts. Intent is the essence of a contract. In addition, the following factors must usually be present for a contract to be valid and enforceable:

An offer must be made. One party must propose that an agreement be entered into. The offer may be oral or written — for example, a salesperson may telephone or write a prospective client, offering to sell the client materials at a certain price. Or the offer may take the form of an act — for example, the telephone company offers to provide service by placing a pay phone on a street corner. In any case, the offer must be firm, definite, and specific enough to make it clear that someone intends to be legally bound by the offer. Finally, the offer must be communicated to the intended party or parties.

An offer must be accepted. For an offer to be accepted, there must be clear intent (either spoken, written, or by action) to enter into the contract. The acceptance must also be communicated to the other party or parties. Fur­ther, the acceptance must satisfy the terms of the offer — that is, if John offers to sell Mary his stereo for $200 and Mary says she would take it for $180, Mary has not accepted the offer. Rather, Mary's response is a counteroffer, which may or may not be accepted by John. In commercial law, the Uniform Commercial Code allows additional or different terms to become part of the contract unless (1) the offer expressly limits acceptance to the terms of the offer, (2) the new terms materially alter the offer, or (3) the party making the offer objects to the new terms within a reasonable amount of time.

Both parties must give consideration. A contract is legally binding only when the parties have bargained with one another and exchanged something. This bargained-for exchange, or consideration, does not have to be money, goods, or services. But it must impose a legal detriment, the assumption of a duty or the forfeit of a right, to one or both parties. For example, when a house is sold, the purchaser incurs a legal detriment by agreeing to pay a certain amount to the seller. Likewise, the seller incurs a legal detriment by agree­ing to give up his or her interest in the home. The relative value of each party's consideration does not generally matter to the courts. Thus, if people make what seems later to be a bad bargain, it is not the court's concern. Consideration is legally sufficient when there is a bargained-for exchange and legal detriment.

Both parties must give genuine assent. A valid contract must be free of fraud, duress, undue influence, and even mistake. Each party must enter into a legal contract voluntarily, and each must understand the terms in the same way.

Both parties must be competent. The law gives to certain classes of people only a limited capacity to enter into contracts. Minors, people who are se­nile or insane, and in some cases those who are intoxicated cannot usually be bound by a contract for anything but the bare necessities: food, clothing, shelter, and medical care.

The contract must not involve an illegal act. The law will not enforce a promise that involves an illegal act. For example, a gangster cannot get help from the courts to enforce a contract to deliver illegal drugs at a prearranged price. Nor can a contract be enforced if it is inconsistent with general public policy or is unconscionable.

The contract must be in proper form. Most contracts can be made orally, by an act, or by a casually written document; however, certain contracts are required by law to be in writing. For example, the transfer of goods worth $500 or more must be accompanied by a written document signed by both parties. The written form is also required for all real-estate contracts. When the law requires a written document, any change in the agreement must also be written.

Most valid contracts are obeyed by both parties. Each party does what was promised, and the contract is terminated by being car­ried out or by performance, which discharges both parties. But sometimes a contract will not be fulfilled (or discharged) because both parties agree to end it. A contract may also be discharged because of impossibility of perfor­mance— for example, (1) the death or serious illness of a person who has promised personal performance and for whom there is no substitute, (2) the change of a law making performance of the contract illegal, or (3) the de­struction of the subject matter of the contract. However, when one party has no legal excuse for failure to live up to the terms of a contract, the other party may claim breach of contract.

Look through the text once again and speak on a) different types of contracts;

b) the main factors to be present for the contract to be valid

Text 6

Read the text. Be ready to answer the questions after the text. Give your own examples of different types of contract.

Classification of Contracts

A number of terms are used to help classify contracts. Mastery of the terms provides an important basis for further understanding of the topic.

Many contracts arise from discussions in which parties actually discuss the promised terms of their agreement. These are called express contracts. Express contracts are those in which the agreement is manifested by words, either spoken or in writing. A negotiated purchase of land for construction of a manufacturing plant is an example of an express contract.

If words are not the vehicle for express­ing agreement, the contract is implied. There are two types of implied contracts: implied in fact and implied in law. A contract implied in fact arises from the conduct of the parties rather than from words. For instance, seeking professional services at a doctor's office implies a contractual agreement to pay the going rate for services even though no express promise to pay is made.

The second type of implied contract consists of contracts implied in law, referred to as quasi-contracts. Under this theory, the court will con­struct a contract (even though one did not exist) to avoid unjust enrichment—an unfair windfall to a party. Generally, three elements must exist before the court will construct a contract without contrac­tual assent:

• A benefit conferred on the defendant.

• Knowledge or appreciation of the benefit.

• Circumstances where it would be inequitable to permit the defendant to retain the benefit with­out paying for it.

If a debtor overpays a creditor $5,000, the debtor can force the creditor to return that amount by suing under quasi-contract. It would be an unjust enrichment to allow the creditor to keep the $5,000. Note that quasi-contract is not an answer to every situation in which no contract exists. Over the years, courts have come to apply quasi-contract in a fairly limited number of cases based on unjust enrichment.

Another classification of contracts concerns those that are unilateral and those that are bilateral. A unilateral contract involves a present act given return for a promise of future performance. Promise to pay $50 for ride to Florida during spring break illustrates the unilateral contract. An example is catching a bank robber in return for the promise of reward. In bilateral contracts, each party makes a promise to perform the other: Smith promises to deliver a deed to the land on October 31. Jones promises to pay Smith $50,000 for the land on that date. When it is unclear whether the parties to an agreement intend a unilateral or bilateral contract, courts usually presume that the contract is bilateral.

An executory contract is one the contracting parties have not yet performed. An executed contract is one the parties have performed.

Void contracts are really not contracts at all. They are agreements that lack an essential contractual element. Often this element is legality of purpose. For example, in states where gambling is illegal, a bet on a football, game is void. This usually means that a court will not enforce the betting agreement. The opposite of a void contract is a valid one, which contains all the proper elements of a contract.

A voidable contract binds one of the parties to an agreement but gives the other party the option of withdrawing from it. Contracts based on fraud or misrepresentation are two important examples of voidable contracts. Fraud involves an intentional misstatement of a material (important) fact that induces one to rely justifiably to his or her injury. Intentionally calling a zircon a diamond and persuading someone to purchase it on that basis is a fraud. Sometimes failures to disclose a material fact can also be a fraud, as when a landowner sells a buyer land knowing that the buyer wishes to build a home on it and does not disclose that the land is underwater during the rainy season. The defrauded party can withdraw from the contract. Misrepresentation is simply a misstatemet without intent to mislead. However, a contract entered into through misrepresentation is still voidable by the innocent party.

Other examples of voidable contracts are those induced by duress or undue influence. Duress means force or threat of force. The force may be physical or, in some instances, economic. Undue influence occurs when one is taken advantage of unfairly through a contract by a party who misuses a position of relationship or legal confidence. Contracts voidable because of undue influence often arise when persons weakened by age or illness are persuaded to enter into a disadvantageous contract by a family member or other person.

Another way of classifying contracts is to distin­guish between formal and informal ones. This dis­tinction is largely a matter of historical importance. There are three types of formal contracts. The con­tract under seal is the least significant today. When parties entered into a solemn contract for which they expected performance, they would seal the contract with a signet of heated wax. Courts were prone to enforce contracts entered into with such formality. Today, contracts under seal are little more than an historical note. A second type of formal contract is the recognizance, a bond binding a person to do an act. An example of a recognizance would be an agreement before a court to pay a sum of money unless the recognizor, the person signing the recog­nizance, appeared in court on a fixed date. Finally, negotiable instruments are considered formal con­tracts. The most common form of negotiable instru­ment is a draft drawn on a bank, commonly known as a check. All contracts other than those under seal, recognizances, and negotiable instruments are in­formal contracts. Today, informal contracts are as enforceable as formal contracts if they meet the re­quirements.

1. Where do many contracts arise from?

2. What classifications of contracts can you name?

3. What contracts are called express contracts?

4. Differentiate between implied in fact and implied in law contracts.

5. Explain why void contracts are not contracts at all?

6. What contract is the opposite of a void contract?

7. What does duress mean?

8. When does undue influence occur?

9. What is specific about a voidable contract?

10. What three types of formal contracts can you name?

Text 7

Read the text. Draw the tree-diagram of the text. Retell the text according to your tree-diagram.

Promulgation and Enforcement of Principles of Commercial Law

There are four basic instruments for developing and promulgating principles of commercial law external to the contract itself: (1) treaties, (2) statutes, (3) court decisions (and occasionally decisions by arbitral bodies) and (4) gov­ernment regulations. Most International scholars also believe that legal prin­ciples can emerge from pronouncements of international organizations such as the United Nations and through the growth of international custom; but in most instances, these latter sources have less to do with actual day-to-day commercial arrangements then the four basic sources first enumerated.

Treaties. Treaties are documents that control relationships between nations. They may be negotiated and executed between two countries (bilat­eral treaties) or among a number of countries (multilateral treaties). Conceptually, they are devices by which each country voluntarily surrenders some sovereignty in order to enter into the agreement. In other words, there is no power currently in existence (other than perhaps victory in war) that can compel a country to enter into a treaty, but once a country enters into the treaty, it generally becomes bound to the terms of that treaty. There are, of course, occasional problems of enforcement of treaty obligations. The International Court of Justice at the Hague (sometimes referred to as the World Court) is viewed as an appropriate body to adjudicate disagree­ments under a treaty, but some countries consider themselves free to ignore the court's jurisdiction in certain circumstances.

There are three steps in implementing a treaty. First, the terms of the treaty are negotiated and the participating countries prepare a final draft. Second, the final version is signed by the participating countries as a signal that they approve the final version of the negotiated document. This does not mean, however, that the treaty becomes immediately enforceable. Third, the treaty is ratified by each country's government. The process of ratification differs from country to country. Some countries permit ratification decisions to be made by the executive authority. In other countries a legislative body must give its approval before the ratification process is complete. Fourth, treaties enter into force when a sufficient number of countries (a number generally spelled out in the treaty itself) ratify the agreement. A country may acceed to a treaty, thus considering itself bound by the treaty's terms without formal ratification.

There are many different types of treaties that affect commercial rela­tionships. One of the most common is the bilateral treaty known as Treaties of Friendship, Cooperation and Navigation." Such treaties spell out many of the details of one country's commercial relationship with another. Multilateral treaties are having an increasing impact on commercial relations among countries.

Statutes. As the term is used in this section, statutes refers to the pro­mulgation of principles of law by the governments of individual countries that govern commercial transactions as a whole. In some countries, these principles are stated as part of the civil code. In the United States, private commercial dealings are governed mainly by statutes enacted by the legisla­tures in the individual states, rather than by the national government.

Court decisions. In virtually all countries, a great deal of commercial law is developed by courts' deciding individual cases brought by parties who claim to have suffered some legal injury in the context of a specific commer­cial undertaking. Many disputes arising out of international commercial agreements are first decided in the context of an arbitration proceeding, after which the winning party takes the arbitral award to some court for enforce­ment. In a common law system, the cumulation of individual court decisions leads to the development of legal principles (so-called "judge-made" law) that are just as valid as anything enacted by the country's legislature. Even in countries outside the common law system, the resolution of individual cases in court often helps fill in the gaps in that country's civil and commercial code.

Government regulations. In many countries with a centralized system of government, there is no difference between government regulations and statutes since virtually all authority flows directly from the central gov­ernment.

Look through the text once again and say whether the following sentences are true or false. Correct the false ones.

1. There are three basic instruments for developing and promulgating principles of commercial law.

2. Treaties are documents that control relationships between nations.

3. The international Court of Justice at the Hague is viewed as an appropriate body to conclude treaties.

4. There are four steps in implementing a treaty.

5. The process of treaty verifications doesn’t differ from country to country.

6. The most common type of treaties is Treaty of Friendship, Cooperation and Navigation.

7. Multilateral treaties are having a decreasing impact on commercial relations among countries.

8. A great deal of commercial law is developed by courts’ deciding individual cases brought by parties.

9. Many disputes are first decided in the context of an arbitration proceedings.

10. In a common law system, the cumulation of individual court decisions leads to the development of legal principles.

Language

1. Practise reading of the following words correctly. If necessary, use a good dictionary.

Discipline, facet, necessitate, legal jargon, survey, equity, righteousness, equate, judicial, controversy, enforceable, perjury, lawsuit, appellee, bilateral, detriment, legal, statute, promulgation, duress, trial, appellant, procedure, lawsuit

2. Find in the texts the words similar in meaning to the following.

Human behaviour; set of rules; rules embrace customs and norms; perform economic and social activities; courts perform two important functions; the court uses rules of law; law influences the operation of business; the basic issues of social conduct (text 1); Issues of public law; justice is achieved; law is divided into; deals with all facets of ownership (text 2); is a main form of wealth; according to the principle; promises included in the agreement; makes others rely on it; it gives right to (text 3) contract stems from; intent is the core of a contract; the party must offer; contracts concern identifying the exchanges; conclude a legal contract; doesn’t comply with general public policy (text 4)

3. Rephrase the following sentences.

1.Private law is split into the law of contracts, the law of torts, and the law of property. 2.The party initiating the case is the petitioner. 3.No aspect of modern life is free from contractual relationships. 4.The law of contracts concerns the legal effect of promise-making. 5.Another approach supports enforcement of contracts on ground that a promise, once made, includes others to rely upon it. 6.The law has imposed limitations upon the private contract to prevent abuse. 7.Some countries permit ratification decisions to be made by the executive authority. 8.Treaties have a great impact on commercial relationship among countries. 9.Many disputes arising out of international commercial agreements are decided in the context of an arbitration proceeding. 10.They are as valid as anything enacted by the country’s legislature. 11.Treaties enter into force when a significant number of countries ratify the agreement. 12.The civil law system traces its origin to Roman law.

4. The following pairs of words are synonyms. In what do they differ? Show your understanding in your own sentences.

affect – influence officer – official ownership – possession

impose – induce enact – enforce legislation – jurisdiction

assure – ensure offer – propose select -- elect

vary – differ price – value opt -- choose

5. Give all possible derivatives to the following words. Translate them into Russian.

Law, legal, jury, justice, appeal, defend

6. Give the definition or explain in your own words the following

Law, lawsuit, legislation, legal,, illegal, litigation, lawful, trial, court, justice, trial court, judge (n), claim, counterclaim, appellant, appellee, plaintiff

7. Complete the table

Noun adjective verb

art --- ---

--- --- enforce

--- reliable ---

--- --- restrict

negligence --- ---

--- --- apply

classification --- ---

--- --- enact

--- wrong ---

--- official ---

--- --- oblige

file --- ---

--- --- sue

--- --- appeal

procedure --- ---

contrast --- ---

--- obligatory ---

--- --- constitution

--- legislative ---

law --- ---

trial --- ---

8. Match the verbs from A with the nouns from B.

A 1.recognize B a. rights and privileges

2.discharge b. justice

3.employ c. legal aspects of crime

4.approach d. a law

5.maintain e. rights and duties

6.encompass f. obligations and duties

7.resolve g. controversies

8.enforce h. a contract

9.enter into i. an essential element

10.lack j. harmony and order

11.implement k. a treaty

9. Make your own sentences in which the word contract is the subject and the following verbs are used as the predicate.

Contract: concerns, reflects, allows, regulates, is enforced, induces, is negotiated, arises from, binds, must, is terminated, is obeyed, is not fulfilled, resolves, recognizes, determines

10. Fill in the gaps with the necessary prepositions.

1.Stories appear … magazines, ... television. 2.People conceive … business law only … terms … such cases. 3.The company is to provide compensation … the injuries. 4.The most fundamental issues … social conduct are honesty, loyalty, fair treatment … others, and respect … human life. 5.No aspect of modern life is free … contractual relationships. 6.Some copyrights are valid … the lifetime … the creator plus 50 years. 7.The social order rests … the stability and predictability of conduct. 8.Court actions do contribute … business law. 9.The courts apply rules … law previously established … the government. 10. the top executives were sued … mismanagement. 11. It refers … all types of contracts. 12. … all his attempts he was unable to pay his debt. 13. It was quite unexpected … the part of the company to refuse our help. 14. According … the law they are to compensate … all your losses. 15. The firm agreed to do it … exchange … better conditions … the market. 16. This is his fault. He has done it … the wrong time. 17. I can’t give you any answer right now … … the uncertainty of the possible development of the situation.

11. Work with a good dictionary. Translate the following idioms into Russian. Think of the situations where you could use them.

Lose face; lose ground; lose heart; lose one’s battle; lose one’s cool; lose one’s marbles; lose one’s shirt; lose one’s way in broad daylight; lose the day; make a big play of smth; make a clean sweep; make a good showing; make a killing; make a meal of smth; make a name for oneself; make a mountain out of a molehill; make ends meet; make headway; make or mar; make smb’s day; make one’s way; make the right noises; make waves.

12. Give the Russian equivalents to the following.

Law is the body of rules and principle; norms are enforceable through sanctions; adopts and enforces the rules for the society; rules are adopted and enacted by the government; rules are embodied in constitutions; rules of law impose sanctions; induce compliance with the law; legal rules; reliable and enforceable principles; engage in dynamic process; principles of right, good and fairness; derive from moral principles; provide guidance for individual conduct; do not comply with a body of rules they consider wrong or evil; widely held ethical belief; acquire rights and obligations; performance of a promise; legally binding; the claim to promised advantages; presupposition of the whole economic order; basic premise of contract law; constitute a solemn commitment; “sancity of contract” approach; enforcement of contract; individual autonomy; impose limitations, defrauded party.

13. Give the English equivalents to the following.

Контрактные отношения; определить стабильность и предсказуемость; обещания и их юридические последствия; заключить соглашение; предупредить (упредить) нарушения; нарушение контракта; последствия невыполнения контракта; нести ответственность за; иметь право на; неадекватная мера; суд может заставить; правила поведения; в рамках сообщества; традиции и нормы; суды выполняют две важные функции; ранее установленные правила; разрабатывают новые правовые нормы; регулируют продажу и операции с ценными бумагами; выплатить компенсацию; закон о защите прав потребителей; применяемые по отношению ко всем членам общества; пользоваться правами и привилегиями; принципы, разделяемые всеми членами общества

14. Read the following passage attentively. How many spelling mistakes have you found? Correct them.

Bankraptcy laws are intended to protect both a campany or a person with not enough asets to pay dets and the creditors to wome the dets are owed. Bankruptcy is a legal procedure by wich a court divides up the remaining assets of an insolvent person or company amon the people and organization to whome maney is owed.

When bankrupsy is declared, nearly all of the assets of the debtor are eventually sell for cash. The processes are used to pay court costs and other costs, unpaid employee wages up to a maximum limit for each worker, taxes, and sicured loans. If any money is left after these charges, it is divided among general creditors acording to the percent of total debt each is owed. The creditors then have no furter claims.

15. Match the beginning with the suitable ending.

1. Treaties are documents

2. The civil law system traces its origin

3. The resolution of individual cases in court often helps

4. A country may accede to a treaty,

5. Most international scholars believe

6. Patent law guarantees

7. Justice has been defined as

8. Contract law provides

9. One party must propose

10. The law of contracts deals with identifying the exchange

11. The law gives to certain classes of people only a

12. The law will not enforce a promise

13. Most valid contracts

1. thus considering itself beyond by the treaty’s terms without formal ratification.

2. that legal principles can emerge from pronouncements of international organizations.

3. that rights to the new item will be released eventually.

4. that which is founded in equity, honesty, and righteousness.

5. to Roman law.

6. that control relationships between nations.

7. fill in the gaps in that country’s civil and commercial law.

8. the certainty, stability and predictability for the performance of transactions.

9. that an agreement be entered into.

10. limited capacity to enter into contracts.

11. that can be classified as contracts.

12. that involves an illegal act.

13. are obeyed by both parties.

16. Fill in the gaps with the words from the box

substantial case law criteria generally ideas registration to protect the public information measures formula trade secrets

It is often wisest … a new idea through the law of trade secrets, rather than patent or copyright registration. A trade secret is defined by the Uniform Trade Secrets Act and by … development. Both under the act and as a result of case law development, a trade secret is … that:

1. is not … known.

2. is protected through some security … to maintain secrecy.

3. is valuable.

4. requires a … expenditure of time, money, or labour to develop.

To illustrate, product … such as making a cigarette 100 millimeters long or making a stainless steel razor blade would not be entitled to trade secret protection since they would fail to meet … 1, 2, and 4 above. In contrast, the … to make Coca Cola, or a new freeze-drying process would all be considered trade secrets.

Trade secrets require no … or expensive fees. Trade secrets are not disclosed to… . A further benefit of trade secrets law is that …, unlike patents and copyrights, may be protected forever.

17. Translate from English into Russian.

1.The failure of one party to live up to a contractual agreement is called breach of contract. 2.A contract is a legally enforceable, voluntary agreement between two or more parties. 3.Bankruptcy is a legal procedure for individuals and firms that cannot pay their debts. 4.Deregulation is the process of reducing the involvement of government in the regulation of business, by eliminating legal restraints on competition. 5.Collective bargaining is a process by which the representatives of the firm meet and attempt to work out a contract with union representatives. 6.Mediator is a third party to a labour dispute who tries to get union and management to reason and works at improving communication between them. 7.Arbitrator is a third party to a labour dispute who makes the final, binding decision about some disputed issue. 8.Civil courts usually do not require compliance but instead impose liability for noncompliance. 9.The legality of a contract is determined by our courts and legal system. 10.The Justinian Code set the stage for many of the concepts of the present civil law system, and has many of the attributes of a modern legal system. 11.Stability and predictability largely flow from the establishment of clear and easily understood rules that allow people in business to draft and negotiate their own agreements. 12.Arbitration allows parties a degree of flexibility which is denied to them in judicial settlement. 13.National legal systems emerged through the process known as codification, a movement that began in the Scandinavian countries and later found its way into the remainder of Europe.

18. Use Infinitive Phrases instead of the equivalent Russian attributive clauses.

1.This is the firm (которая может предоставить вам такие услуги). 2.To tell the truth, they have nothing (чем они могли бы вам помочь). 3.They were the first (кто начал разрабатывать этот проект). 4.These are not the evidence (которые можно использовать при принятии решения). 5. There is nobody here (кто мог бы объяснить ситуацию). 6.This is the problem (которую нужно решить как можно скорее). 7.These are the key terms (которые должны быть включены в контракт). 8.Define the parameters (которые необходимо определить, прежде чем начать работу). 9.Here are the questions (на которые необходимо ответить). 10.The monetary policy has become another means (которое ускорило концентрацию капитала).

19. Complete the sentences, using a Gerund.

1.Is she in the habit of …? 2.The old gentleman is in danger of … . 3.He stopped me when I was just on the point of … . 4.She went white at the thought of … . 5.Is there any hope of …? 6.There was no possibility of … . 7.You need have no fear of … . 8.He left home with the idea of … . 9.I had no intention of … . 10.He took a special pleasure in … . 11.I was faced with the prospect of ... . 12.It’s no use pretending you are taking no interest in … .

20. Translate from Russian into English, using a Gerund.

1.Чтение прессы – неотъемлемая часть его утреннего ритуала. 2.Они обсуждали эти вопросы, не зная еще последних новостей. 3.Он не мог не ответить на это предложение. 4.Я предпочитаю личную встречу телефонному разговору. 5.Она не одобряет сверхурочную работу. 6.Мы настаиваем на выплате комиссионных немедленно. 7.Каждый из нас заинтересован в получении этого контракта. 8.Он не очень силен в принятии тактических решений. 9.Мы с нетерпением ждем встречи с вами. 10.Я стараюсь избегать обсуждения таких вопросов с незнакомыми людьми. 11.Я помню, что разговаривала с ней по телефону. 12.Я думаю, они не будут возражать против подписания этого соглашения уже на этой неделе.

21. Work with a good law dictionary and match the Latin and Russian equivalents.

1. a posteriori a. сила закона

2. a prima facie b. временно

3. a priori c. судебный обычай

4. de facto d. с соответствующими изменениями

5. de jure e. по общему согласию

6. de lege lata f. неписанный закон

7. in foro g. придерживаться прежних решений

8. inter partes h. необходимое условие

9. intra vires i. что и требуется доказать

10. in via juris j. задним числом

11. ipso facto k. изменению не подлежит

12. ipso jure l. за и против

13. lex non scripta m. для видимости

14. mutatis mutandis n. в силу самого закона

15. ne varietur o. в силу самого факта

16. omnium consensus p. между сторонами

17. pacta sunt servanda q. законным путем

18. pro et contra r. в действительности

19. pro forma s. в силу закона

20. pro tempore t. заранее, априори

21. quod demonstrandum est u. на первый взгляд

22. sin qua non v. в пределах полномочий

23. stare decisis w. договоры должны соблюдаться

24. usus fori x. перед судом

25. vis legis y. с точки зрения действующего закона

Speaking

1. Work with good dictionaries and propose some definitions of law. Choose the best one from your point of view. Explain your choice.

2. What are the purposes of law?

3. Do you thing that law fulfills its purposes? Explain.

4. What is the relationship between law and morality?

5. “Law is ineffectual unless the society develops a legal system”. Prove it.

6. Give your own examples to prove that not only law affects the operations of business but business also influences the development of the law.

7. The law often has been described as a “seamless web” Why? Try to explain.

8. “No aspect of modern life is free from contractual relationships” Prove it.

9. “Law and justice are not synonymous” Explain.

10. Explain why Product Liability Law is a concern of business law.

11. Prepare a short report (4-5 minutes) on one of the following topics:

    1. “Law and ethics in governing the conduct of all members of society”

b) “The morals provide an informal basis for standard of conduct.”

Writing

1. Choose one of the following statements as the topic of your essay.

“ Law is a Bottomless-Pit, it is a Cormorant, a Harpy, that devours everything”. (John Arbuthnot).

“If there were no bad people, there would be no good lawyers”. (Ch. Dickens)

“Law means good order”. (Aristotle)

“It is better that ten guilty persons escape than one innocent suffer”. (W. Blackstone)

“The people’s good is the highest law”. (Cicero)

“A verbal contract isn’t worth the paper it is printed on”. (S. Goldwyn)

“Wherever law ends, tyranny begins”. (John Lock)

“Ignorance of the law excuses no man”.

2. “Cultural mores are sources of law”. Analyze this statement. Give an example of such a custom that is strongly ingrained in any society.

Key Vocabulary

law Public Law respondent

justice Criminal Law appellant

impose sunctions Private Law appellee

legal system Tort Law law enforcement

jurisdiction Property Law treaty

court Contract Law court decision

trial expressed contract valid

lawsuit implied contract duress

litigation legal detriment bilateral contract

plaintiff breach of contract multilateral contract

defendant void contract statutes

petitioner voidable contract copyright

sanctions detriment defrauded party

enact party arbitration

perjury fraud bargain

SUPPLEMENTARY READING

Unit 1. Cross -Cultural Communication

Text 1

Six Fundamental Patterns of cultural Differences

Part 1

Six fundamental patterns of cultural differences – ways in which cultures, as a whole, tend to vary from one another – are described below. The descriptions point out some of the recurring causes of cross-cultural communication difficulties.