Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

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.

251

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

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

252

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 con-

253

duct. 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.

254

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

255

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

(1)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.

(2)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, individu-

256

al autonomy, fairness, and economic efficiency—support enforcement of promises, it is no surprise that contract principles are among the most firmly rooted in law.

(3)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.

(4)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 prom- ise—a remedy known as specific performance.

(5)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.

(6)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

257

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.

(7) 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

258

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.

259

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.

260