Business Law: Common Law vs Statutory Law

This report discusses the differences between common law and statutory law in the context of business law. It explores the principles of common law, such as the doctrine of judicial precedent, and the advantages of statutory law, including its written form and ability to be modified. The report concludes that while common law has its limitations, statutory law provides a more effective framework for governing commercial transactions.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business law is that part of legal system which comprises of statues and rules applicable
on commercial transactions in order to make it easy for organisation to carry the activities. It
provides a legal support and make every action lawful which is right in the eyes of law and
people (James and Thomas, 2019). The provisions of business law should be followed without
any contravention as there are punishments and fines for contravention or breaches. This report
emphasizes on judge made law which is also known as common law. There have been number of
disputes on its application based on different perspectives which have been discussed in the
report. Also, comparison has been conducted with the statutory law.
MAIN BODY
Legal system in a country refers to the body of laws and statues that are applicable on the
activities of an individual as well as the transactions being carried by different types of
organisations. Every legal system is mainly divided into several categories such as civil and
criminal law, public and private law etc. These have their individual features together with their
application which may differ from each other. Similarly, there is one more category which is
common and statutory law.
In simple terms, common law is known as judge made law cause it is decided by the
judges sitting in a courtroom based on the precedent. These are made on the doctrine of judicial
precedents which means that previous judgement forms the basis for future judgement. The
situations of current case are examined against that of a case occurred in the past. According to
this doctrine, time should not be wasted in making a judgement for a case which is similar to a
previous case. It is fluctuating as changes are being made on a constant basis in order to increase
the effectiveness (Beatty, Samuelson and Abril, 2018).
On the other hand, statutory law comprises of statues that are available in written form
and passed by the legislative bodies in a legal system. The enforcement and administration of
law is done by executive who are responsible for looking after the execution and implementation
throughout the country. Statutory law are strictly construed by courts. In simple terms, the
application is to be made according to the meaning as provided in the act. It cannot be a matter of
interpretation according to different judges. This is the reason why it is available in written form
so that word to word application can be made.
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Both of these laws i.e. common and statutory are made for governing the actions done by
a person as well as organisations. This is the main element which is common in both the laws.
However, there can be number of differences as well which defines the scope and how each one
of them is applicable for the benefit of the citizens and businesses. Common law is completely in
the hands of the judges and there is no intervention from the parliament. Every judge interpret
the law in their own way for the application. This results in the disputes and differences as there
is no common ground or interpretation which can be applicable for particular circumstances
(Pound, 2018).
Judges use their common sense and facts while listening to the prior cases to decide
whether the judgement can be applied in the current case or not. One of the best example is
United Kingdom which works on common law. It does not have a written constitution therefore,
there are always high chances of different perspectives. Hence, it relies on common law and no
statutory law is followed to the great extent. The origin of common law is from English legal
system wherein the judgement passed in the previous cases are applicable to the current or future
cases with similar circumstances.
Common law is applicable in United Kingdom and many other countries because it
greatly follows the doctrine of judicial precedent which states that the lower courts are bound to
follow the judgement of the superior courts without any issues. It believes that judges at higher
level are excellent at interpreting the laws in their right sense. Furthermore, it can save a lot of
time and energy if the case comprises of similar circumstances which have occurred in the past.
In this type of law, the final decision is right by simple majority or unanimously.
It is not always easy to achieve complete approval of all the judges on one single
judgement. Furthermore, every judge can have individual perception which may or may not
related to what other judges think about one particular decision. This gives rise to the conflicts
and the time to pass a decision gets increased. This reduces the overall efficiency of the legal
system which greatly follows the common law. Each individual is different and the way a law is
being interpreted can be completely different. This is the main reason why it is necessary to
reach a common conclusion in the law so that other people can follow the judgement in the exact
meaning that has been derived by the judges (Llewellyn, 2016).
Every legal system comprises of different roles for the government. It is divided into
three categories i.e. executive, legislative and judicial. Each one of them comprises of their roles.
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Legislative role refers to the actions that are carried to make laws which can be applicable within
the country and compulsory for the people to follow without any breach or mistake. In United
Kingdom, there are legislative bodies who are specifically made for or looking after the laws
which can be required by the country for increasing its effectiveness. House of Lords and house
of commons are legislative bodies responsible for providing bills in the Parliament which can be
transformed into acts.
The main role of legislative body can be seen in making statutory laws. But in common
law, there is no intervention of such bodies as the absolute control is in the hands of the judges
deciding the case. There is no involvement of house of commons or House of Lords. This is the
reason why common law may not be effective enough to be implemented within the country.
This makes it mentally for a nation to have balanced amount of power in the hands of legislative
bodies and the judges making the laws (Merrill, 2018).
Also, common law does not take effect with retrospective dates. This means that if a law
is being made at current date, then it will be implement from such a date only. There is no
implementation of the same for any previous dates. However, statutory law gives the option of
implementing the laws with retrospective effect so as to correct the actions that have been taken
in the past. This is one of the major drawback of the common law which restricts its scope.
Sometimes, it is necessary to implement the law with a back date to reduce the loss or increase
the efficiency.
Common law is entirely based on the opinions of judges which may or may not be in
favour of putting it into retrospective effect. Also, no inferior courts can change the decision as
passed by higher courts unless and until the higher court itself overrule it. This main create a
conflict between the lower court and high Court on the basis of their own interpretation.
Therefore, there is no chance of making the law of work with retrospective effect. It also lacks in
clarity in majority of cases. It is also not available in any written form which can make it useful
for making changes in it (MacCormick and Summers, 2016).
United Kingdom does not have a written constitution. In simple words, it can be said that
the constitution is partially written. Statue laws have been made on the written portion of the
constitution for its implementation within the country. Whereas, common law is not based on
any constitution. It does not have any relevance with it because the constitution is a matter of
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Parliament which comprises of legislative bodies and common law is entirely in the hands of
judges who provide interpretation of each and every law.
Therefore, it is very necessary to have a complete written constitution which can be
codified so that numerous laws can be made for the benefits of individuals as well as
organisation. Is is possible in statutory law after passing a bill through a number of stages along
with trials. Does provide a chance to assess the errors or areas of improvements so that desired
results can be obtained. Furthermore, it limits the chances of adverse outcomes because before its
implementation, major considerations are given by the expertise before the finalisation of a bill
and converting it into an act (Loveland, 2018).
Statutory law can be modified by passing another statutory law. This makes it easy for
the legislative bodies to implement the law with retrospective effect and achieve the results from
a back date. Along with this, it also avoids any such recommendation by the experts which may
not be in the interest of public. On the other hand, common law or does not take into
consideration any such aspect and the decision can only be modified by a higher court. There is
no involvement of any inferior courts. This may make the lower court bound to implement the
judgement even if it does not support the judgement passed by the higher courts.
This is a prime reason which shows the forceful implementation of the interpretation
made by the judges. By looking at this, existence of legislative bodies become a matter of
importance as they are specifically for the purpose of making laws which can provide suitable
solution in a matter of dispute. In addition to this, every law is presented as a bill by highlighting
the points which are to be implemented once it becomes an act. During this time, new elements
or points can be added without much hassle.
There is no such option available in common law. In common law, the judgement is
modified once it is passed by the court. There are high chances of errors also not all the judges
can be agreed to specific judgement. There can be different perception which should be taken
into account before finalising one particular judgement based on the previous cases. New
addition is possible only when the law is written so that a comparison can be formed with the
previous one (Bankowski, MacCormick and Marshall, 2016).
Statutory law give the opportunity to make amendments in the written law by taking the
approval from various legislative bodies and expertise. This is finally accepted by the parliament
for the benefit of the general public. Any amendments in the statutory law is also bring into the
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notice of the legislative bodies as well as the public so that their perception and consideration can
be taken into account. Furthermore, it is also implemented with retrospective effect which is very
desirable by the wider public.
CONCLUSION
From the above report, it can be concluded that business law is a type of legal system
which includes provisions for the commercial transactions. It can be included in common law
which works on doctrine of judicial precedent. This principle states that future judgments are to
be made on the previous cases with similar circumstances. However, there are certain limitations
which may not support the implementation of common law as compared to statutory law.
Statutory law provide every law available in written form. It emphasizes on existence of a
constitution which deals with fundamental rights of the people as well as the organization that
are residing or available in a country.
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REFERENCES
Books and Journals:
James, N. and Thomas, T., 2019. Business law. John Wiley & Sons.
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Essentials of Business Law. Cengage
Learning.
Pound, R., 2018. The spirit of the common law. Routledge.
Llewellyn, K.N., 2016. The common law tradition: Deciding appeals (Vol. 16). Quid Pro Books.
Merrill, T.W., 2018. The Supreme Court's Regulatory Takings Doctrine and the Perils of
Common Law Constitutionalism. J. Land Use & Envtl. L. 34 p.1.
MacCormick, D.N. and Summers, R.S., 2016. Interpreting statutes: a comparative study.
Routledge.
Loveland, I.D., 2018. Constitutional law. Routledge.
Bankowski, Z., MacCormick, D.N. and Marshall, G., 2016. Precedent in the United Kingdom.
In Interpreting Precedents(pp. 315-354). Routledge.
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