Introduction to business law

1st lecture ppp of Business Law I

Law

A system of rules created and enforced through social or governmental institutions to regulate behavior. It regulates economic activity, and preserves a moral order. It forbides or prescribes behaviour.

Sanction

Legal rules threaten disregarding the norm with some disadvantage, like being imprisoned or having to pay money. This consequence is called a sanction. The sanction is enforced by the state. There are criniminal, civil and administrative and constitutional sanctions.

Legal norm

A standard or rule that guides behavior and is recognized as binding within a legal system. Legal norms establish expectations and responsibilities for individuals and organizations.

Legitimacy of legal norms: natural law

The doctrine of natural law refers to a meta-legal authority: the law is correct if it conforms to the human nature, to divine revelation or to reason.

The legitimacy of legal norms: positivist doctrine

The positivist doctrine is satisfied with that law if it is made up of social norms which are generally accepted and adhered to or are formally enacted or are regularly enforced.

Applying and interpreting the Law

To apply the law means to bring the facts of the case at hand under a particular rule of law. We convert the general and abstract norm norm into an individual and specific one.

1. First we have to ascertain all seemingly relevant facts of our case. 2. Then we look for the appropriate rule. 3. Next we identify all its elements. 4. Then we have to check whether the facts before us fit the elements of the rule.

Interpretation of the Law: literal interpretation

What does the term ordinarily mean?

Interpretation of the Law: systematic interpretation

What is the context with other legal provisions?

Interpretation of the Law: historical interpretation

How did the rule develop?

Interpretation of the Law: teologival interpretation

What is the purpose of the rule?

Dogs and the interpretation of the Law

Consider the rule that forbids the presence of dogs in a butchery. Does this also apply to guide dogs? According to the literal rule or grammatical interpretation, the interpretation should match the literal meaning of the words in the rule. Guide dogs are dogs, aren’t they? Therefore, a rule about dogs also applies to guide dogs.

The canon of interpretation that states that rules should be interpreted literally is called the “Literal Rule,” and the resulting interpretation is called “grammatical” or “literal interpretation.” According to another theory, the legislator meant to achieve particular results, and the rule was seen as a means to obtain these results. If a legal decision maker gives the rule an interpretation that makes it suit the intention of the legislator, she is said to apply the mischief rule.

Suppose that the legislator created the prohibition of dogs in butcheries in order to prevent unhygienic situations in food stores. It considered the case of guide dogs but nevertheless decided not to make an exception, because hygiene was considered to be very important. If a legal decision maker wants to follow legislative intent, he must interpret the rule to make it also apply to guide dogs.

When an interpreter looks at the purpose of a rule, she may also try to determine the purpose of the rule. When we speak of purposive or teleological interpretation, the decision maker applies the so-called golden rule.

Assume again that the legislator created the prohibition of dogs in butcheries in order to prevent unhygienic situations in food stores. If a legal decision maker recognizes this interest, but finds the interest of visually handicapped persons more important, she might interpret the rule to make guide dogs fall outside the rule’s scope

Constitutional Law

Rules pertaining to the state and its organs, and the fundamental rights of individuals.

Administrative Law

Taxes, media law, etc…

Criminal Law

Certain kinds of wrongdoing pose such a serious threat to the good order of society that they are considered crimes against the whole community. The criminal law makes such anti-social behavior an offence against the state and offenders are liable to punishment. The state accepts responsibility for the detection, prosecution and punishment of offenders. The criminal law is concerned with forbidding certain forms of wrongful conduct and punishing those who engage in the prohibited acts. Criminal proceedings are normally brought in the name of the state and are called prosecutions. The consequences of being found guilty are so serious that the standard of proof is higher than in civil cases: the allegations of criminal conduct must be proved beyond a reasonable doubt. If the prosecution is successful, the defendant is found guilty (convicted) and may be punished by the courts. Punishments available to the court include imprisonment, fines, or community orders such as an unpaid work requirement. If the prosecution is unsuccessful, the defendant is found not guilty (acquitted)

International Law

International law, the law that regulates relations between states and international organizations, is also a branch of public law and is therefore sometimes also called international public law.

Private Law

Private Law has two branches: civil law (contracts, torts, property, family law, inheritence) and business law (commercial law, company law, insurance, banking, unfair competition, intellectual property, etc). Private law is primarily concerned with the rights and duties of individuals towards each other. The state’s involvement in this area of law is confined to providing a civilized method of resolving the dispute that has arisen. Thus, the legal process is begun by the aggrieved citizen and not by the state. Private law is also called civil law and is often contrasted with criminal laws.

Enforcement of the civil law is the responsibility of the individual who has been wronged; the state’s role is to provide the procedure and the courts necessary to resolve the dispute.

Lex Superior/Hierarchy of norms

Rules stand in an order based on a hierarchy between legislative bodies. i. e. parliament-government/local government. The Lex Superior principle holds that in case of conflict, the superior rule precedes over the inferior rule.

national laws prevail over laws of the province, EU law over the national laws

Lex Specialis

More specific rule prevails over the more general rule.

Lex Posterior

Most of the time, when a new rule is created that is in conflict with a preexisting rule, the old rule is simultaneously and explicitly derogated from. (exception: criminal law, more severe punishment)

Presumption

It is the assumption (acceptance) of the truth of a fact without direct proof, an inference as to the existence of one fact from the known existence of some other fact/s. Rebuttable presumption: megdönthető vélelem, the inaccuracy may be proven

The rebuttable presumption of innocence, of good faith, of ownership and of paternity

the presumption of innocence: ”No one shall be held guilty until proved guilty in a court of law”,

the presumption of good faith “Every person is presumed in good faith until the contrary has been proved”,

the presumption of ownership “The person in possesion of a movable chattel is presumed to be its owner”,

the presumption of paternity “The man, cohabited with the child’s mother in the period between the three hundredth and the one hundred and eightieth day before its birth, is presumed the father of the child” “the husband is presumed to be the father of a child born during the marriage”

Irrebuttable presumptions

sexual intercourse with a minor who is under fourteen will be punished in all conditions (even if with the consent of the minor),” or “Everyone is presumed to know all entries in the land register”

Fiction of law

The assumption that a certain thing is true, and which gives to a person or a thing a quality which is not natural to it: electricity is an object, adoption, corporate personality, fictious father.

Law of obligations (kötelmi jog)

Deals with the rights and duties between individuals in connection with legal transactions and unlawful acts.

Law of real property (dologi jog, tulajdoni jog)

Concerned with the person’s rights with respect to physicsl property.

Absolute rights vs relative rights

Absolute rights are rights of the individual that are to be rspected by everybody, the individual can enforxe those rights against everybody (e. g. property, personality rights). Relative rights exist between one individual against another individual (eg. obligations)

Posession rights

Possession (birtok) is the physical control of a thing. As property rights are absolute rights that have to be respected by everybody, possession is important in that it gives an indication of the legal situation: The person who has a thing in his possession is considered to be the owner; the consequence of this legal assumption is that anybody who disputes that the possessor is the owner, has the burden of proof. Possession may be lawful, e.g. in the case of the tenant, or unlawful, e.g. that of a thief.

Contracts

Contracts are bilateral or multilateral legal transactions that create mutual obligations between individuals or between individuals and states.

Contracts are bilateral or multilateral legal transactions that create mutual obligations between individuals or between individuals and states.

Tortious liability

A tort consists of the breach of a duty imposed by the law. The law of tort seeks to compensate the victims of certain forms of harmful conduct by an award of damages or to prevent harm occurring by granting an injunction. negligence (mulasztás) nuisance (károkozás), trespass (birtokháborítás), defamation (libel and slander) (rágalmazás, becsületsértés) and conversion. (kártalanítás) compensation (kártérítés)

Criminal liability

The prosecution must establish two essential requirements: actus reus (prohibited act) and mens rea (guilty mind).

Strict liability

If you pick someone’s umbrella up thinking that it is your own, you cannot be guilty of theft, because of the absence of a guilty mind. There are, however, some statutory offences where the performance of the wrongful act alone makes the offender liable.

Selling food for human consumption which fails to comply with food safety requirements is an example of an offence of strict liability. (The seller may be able to defend herself by showing that she has taken all reasonable precautions and exercised due diligence)

Civil liability

Contractual liability arises when two or more persons enter into a legally enforceable agreement with each other. Every business transaction, from buying and selling goods and services to employing staff, is governed by the law of contract.

Substantial law vs Procedural law

The difference between substantive law and procedural law lies in their purpose and function within the legal system:

1. Substantive Law – Defines the rights and duties of individuals and legal entities. It establishes what actions are considered legal or illegal and the consequences of violating those laws.

   • Example: Criminal laws that define offenses (e.g., theft, murder), contract laws that outline obligations between parties, and property laws that determine ownership rights.

2. Procedural Law – Outlines the processes and rules that must be followed to enforce substantive laws. It governs how legal cases are handled in courts, ensuring fair treatment and due process.

   • Example: Rules of evidence, court procedures, filing deadlines, and how a trial is conducted.

Simple Analogy:

• Substantive law is like the rules of a game (what actions are allowed or not).

• Procedural law is like the instructions on how to play the game (how to enforce the rules).

Both are essential for a functioning legal system—substantive law determines the "what," while procedural law determines the "how."

Procedural law

Rules for court procedures and for the organization of the judiciary.

There are branches of procedural law for each of the major branches of substantive law:  rules for civil procedure, criminal procedure, administrative procedure (environmental law or tax law), The European Union has its own procedural rules.

Civil procedure

The plaintiff (claimant) files a statement of claim (complaint) with the appropriate court.
It contains the basis for the claim, ie. the details why the plaintiff is suing the defendant, and a claim for relief ie. what the court should order the defendant to do e.g. pay the plaintiff a sum of money.
After a preliminary consideration by the court the complaint is served upon the defendant (alperes) and the court orders her to defend the allegations.
Summary judgment or trial by one or more professional judges or by a jury (esküdt, ülnök).
The trial ends at first instance – if no settlement can be reached – with the verdict (jury) or with the judgement.
There is usually an appeal to higher court (appellate court) to review the decision. The appellate court can affirm, amend or reverse the decision of the lower court, order a new trial or order the case to be dismissed.

Inquisitorial procedure

The roles of judge and parties differ as to whether the civil procedure is based on the adversarial or on inquisitorial system.

In most civil law (continental European) countries: inquisitorial: When a complaint is made by an aggrieved party the state through a judge will conduct an inquiry.

The judge plays an active role in the trial and not the parties.

 It decides on what evidence to call including the witnesses and what questions to be asked from the witnesses and is more like an inquisitor than an arbiter of justice.

The judge will advise the parties as to how to proceed.

Adversial procedure

In an adversarial (also known as ‘accusatorial’) trial the parties organize the trial:

The lawyers have total control over the case, i.e. what evidence to call.

The judge plays a passive role.

Her duty is to ensure that the trial is conducted in accordance with the law and to deliver judgment at the end of the trial.

Sources of law: legislation

In an adversarial (also known as ‘accusatorial’) trial the parties organize the trial:

The lawyers have total control over the case, i.e. what evidence to call.

The judge plays a passive role.

Her duty is to ensure that the trial is conducted in accordance with the law and to deliver judgment at the end of the trial.

Sources of law: regulations

In an adversarial (also known as ‘accusatorial’) trial the parties organize the trial:

The lawyers have total control over the case, i.e. what evidence to call.

The judge plays a passive role.

Her duty is to ensure that the trial is conducted in accordance with the law and to deliver judgment at the end of the trial.

Sources of law: Court’s decisions

In an adversarial (also known as ‘accusatorial’) trial the parties organize the trial:

The lawyers have total control over the case, i.e. what evidence to call.

The judge plays a passive role.

Her duty is to ensure that the trial is conducted in accordance with the law and to deliver judgment at the end of the trial.

Sources of law: International law (customary law)

In an adversarial (also known as ‘accusatorial’) trial the parties organize the trial:

The lawyers have total control over the case, i.e. what evidence to call.

The judge plays a passive role.

Her duty is to ensure that the trial is conducted in accordance with the law and to deliver judgment at the end of the trial.

Sources of law: International public law, academic writing

International public law governs the relations between states and international organizations. Its rules are created by the states either customarily or by way of international agreements. The generally accepted rules of international law are recognized part of the domestic law.

Academic writing

On the continent academic discussion has a considerable influence on the courts. Courts are expected to refer to the opinions expressed in the discussion.  

Conflict of laws or private inernational law

Adjudication of a matter which involves some foreign element, for instance, the fact that one of the parties is a foreign citizen, or that the matter at issue arose, wholly or in part, in another country – as in the case of a contract signed in one country and breached in another – and the like.

Jurisdiction

1.territoriality— a country has jurisdiction to regulate/adjudicate whatever occurs within its territorial boundaries (except for immunity, agreements, etc.)

2.personality— a country can have jurisdiction over an occurrence that harmed or committed by its national

Conflict of laws: LEX FORI

the law of the place of situation;
the law of the place where obligation was established, for instance, the place where the contract was concluded (lex actus; lex loci contractus);
the law of the place where the legal act is to be carried out, for instance, the fulfillment of a contract (lex loci solutionis);
the law of the place of situation of the property forming the subject matter of the dispute (lex situs)

Conflict of laws: LEX PERSONALIS

the party's place of habitual residence, domicile (lex domicilii)

their national law (lex ligeantiae)

Soft law

Laws that are not officially binding but are nevertheless influental: Universal Declaration of Human Rights (1948) - UN

Legal capability

Jogképesség, to have rights and duties, regardless of race, sec, age or nationality.

Legal capacity

The ability to have rights and duties is different from the capacity (cselekvőképesség) to create and dispose of rights and duties. This capacity is reserved to persons with some experience and full intellectual abilities. (age)

Legal persons/corporate bodies

The law confers the capacity to have rights and duties as well to artificial creations, so called legal persons or corporate bodies. (with the exception of those based on human nature), they are even subject of "Human Rights".

Legal persons may be created under Public Law (eg. the State, National Insurance, Broadcasting Corporations) and under Private Law (associations, charitable societies, public limited companies, private limited companies, co-operatives): corporations. Once a corporate personality comes into existence its legal identity is separation and indepenedence from its members. Corporations may sue and be sued; hold and dispose of land and other property. They also may form themselves and become members of corporations.

Business corporations

Public limited liability company, the private limited company and the co-operative

Competence (hatáskör)

The structure of the kinds of juridical acts that can be performed by particular agents. If a person or organization attempts to perform a juridical act for which such it lacks the relevant competence, the act in question will not normally be null or void.

Scope

Refers to the horizon in which legal norms apply. This can be territorial, personal and temporal.

Therefore, it makes most sense to talk about ‘criminal law in Hungary valid and in force on February 14, 2025’, rather than criminal law in general.

Rights

Interests that are protected by law; rights can be disposed of by the right holder. Three different kinds of rights (rights regarding an object, personal rights, obligational rights).

Obligations

Rights closely correspond to obligations: Under a contract, the seller is under an obligation to deliver what he has sold. The buyer has a corresponding right to delivery. This right is only directed to the seller and is therefore a right regarding a person. Such a right is also called a “claim”.