The law will both support and limit the way in which business works.
Laws do vary from place to place; but certain things tend to be common to law everywhere.
When dealing with any legal system, it is important to check that you are aware of the laws that will impinge on YOUR business directly e.g. local laws, state and national laws and international laws.
In today’s global economy, it is also important to check that if you are exporting to other countries, that you are aware of the laws of the importing country as well as the laws of your own country. International law is a tricky area, so if you are not sure, it is best to seek legal advice.
LEGAL SYSTEMS
Legal systems of the world are usually based on three basic systems:
1. Common law
2. Religious law
3. Civil law
We are not going to go into this in great detail here, but just briefly summarise this:
Common Law is the systems of laws that are based on decisions in cases by judges. Also, every system will have a legislature that passes new laws and statues. Common law is practised in England, Wales, Australia, Ireland, United States (except Louisiana), Hong Kong, Canada, Africa etc.
Religious Law refers to the idea that religious documents or systems can be used as a legal source. The way this is done varies from country to country. Examples are Islamic Sharia law and Jewish Halakha law. These are the main kinds of religious law, as well as canon law used by some Christian groups. Sometimes they are used mainly for moral guidance, whereas in others they may be used as a basis for a country’s legal system.
Civil Law is the most common system of law in the world. It is recognised as the most authoritative form of law generally and is based on codex (books of law) and statute, which is passed by the legislature and can amend the codes in the codex. Civil law tends to be interpreted rather than developed by judges. Countries with civil law include Angola, Brazil, Turkey, Vietnam etc.
Or combinations of the above - for example: Nigeria has a mixed system of common law and religious law.
The legal system of each country is obviously shaped by their history and culture. But there are some commonalities. Many laws are common everywhere. For example, laws that protect you in many ways include:
- People cannot steal from you.
- People cannot harm you or mistreat you in any way.
- Laws restrict or control your activities in many ways.
Here are some examples:
- You cannot steal from or mistreat or mislead others (employees, customers, competitors).
- You need to keep appropriate financial records and if requested make them available to authorities to scrutinize.
- You may need to have licenses to undertake certain activities as part of a business.
- You must pay taxes.
So as a business person, you have to ensure that you treat your employees and customers well. And employees and customers should also do the same - they should not steal from you or harm you.
TRADING ACROSS BORDERS
You need to understand the laws that are relevant in your jurisdiction to your business and to other jurisdictions, if you are working or supplying goods and services to other countries or jurisdictions. Think about animals - there is a trade in animals, where pets are transferred from country to country. Purebred race horses or dogs may be sold to different countries, but often there are restrictions on this. For example, the UK used to have a rule that pets would have to be in quarantine for six months before entering the UK. In 2012, this law was changed and animals are allowed in, providing they meet certain criteria. So anyone trading across borders should be aware of the laws - to ensure that they are not breaking them.
This may sound a bit over the top, but think of it from your business point of view also. If your goods are found to breaking the law in some way, they may be confiscated. You may not get them back. Your customer does not get them. So you lose a sale and also your products.
If there is duty to pay for exporting a product and if you are not aware of this, it could add extra costs to your goods, thereby reducing your profit margin on a sale. This is just one example.
Taking legal action is difficult at the best of times within the same country - going across international boundaries is even more complex. When you trade across international borders, make sure a written agreement is in place and agreed upon, which determines what law applies. Be in a position to prove this agreement if need be.