BUSINESS
LAW
MODULE
FOR IMM/BBA, IAC, ICM, SAIM, CIS & ZAAT STUDENTS.
BY
INNOCENT MAJA
EDITED BY: ELIAS TAFADZWA MADZIMURE
1
,PREFACE
Ever since I began to lecture Business Law at Trust Academy, I was bothered and
disturbed by the dearth and scarcity of study material for this course. The desperation of
the students, their participation in class together with the labour I invested in looking for
and convivially studying the materials in order to teach this course have all compelled me
to come up with this study guide.
This module is not intended to be and is not, neither can it be, an exhaustion of
the Business Law Course. It is a mere study guide intended to provoke much
study of Business Law.
My prayer is that it may cure the reader‟s ignorance on this course. One writer once said
“The purpose of education is to replace an empty mind with an open one.” May the
God of the Christian Bible bless you and give you enlightenment and wisdom as you flip
through the pages of this module.
**Any reference to masculinity (he) also imports a feminine meaning(she).
April, 2003
Innocent Maja [contact – 023 895 124]
(Lecturer of Business Law at Trust Academy)
ACKNOWLEDGEMENTS
I am indebted to the God of the Christian Bible, through his Son Jesus Christ – the
Messiah, who is the quintessential fountain of my limited wisdom.
2
,CONTENTS
Chapter Topic Page
1 The Legal System 4
2 The Law of Contract 12
3 Contract of sale 23
4 Law of agency 33
5 CREDIT AGREEMENT 38
6 INSURANCE 41
7 NEGOTIABLE INSTRUMENTS 45
8 PARTNERSHIP 52
9 LABOUR 54
10 SECURITY 61
11 COPYRIGHT 66
12 CONSUMER LAW 73
13 LEASE 77
14 INTRODUCTION TO CORPORATE LAW 83
15 INSOLVENCY 101
3
, CHAPTER 1
THE LEGAL SYSTEM
What is a Legal System?
It is the sum-total of law and the way it is made and enforced and the institutions that are
involved in law-making and enforcement.
What is law?
Law refers to a system of rules and regulations that govern human conduct and societal
relations and are enforced by the state.
Note – there are many rules and regulations that govern societal conduct but not all of
them are law. What qualifies them to be law is the element of state enforceability. It is
pertinent to note that a rule or regulation cannot qualify to be law because of its
effectiveness or goodness but only because the state says it is law. Hahlo and Kahn1
convincingly contend that:-
“Law itself, in the strict sense, is the only body of rules governing human
conduct i.e. recognized as binding by the state and if necessary enforced. This
does not mean that there are no sanctions as far as other practical laws are
concerned. There is the conscience of the individual, pressure or public
opinion, social approval or disapproval. But only law in the strict sense is
enforced by the courts of law or some other organ of the state.”
Of course, Natural Law Theorists like Cicero, Aristotle, Justinian, St Thomas Aquinas,
Grotious, John Locke, Finnis, Fuller (etc) contend that every law should conform to some
higher principles of justice, morality etc., for it to be valid. This school of thought is
based on the Latin maxim “Lex ir usta non est lex” (An unjust law is no law at all). The
idea of a higher law is still used by judges in our day in resolving controversial cases
which raise moral questions. For instance, in Corbett V Corbett,2 the court held that a
marriage between a man and a person who had undergone a sex change was a nullity
since it was against the natural and biological determining order of a marriage. Also in
Myres V Leviton,3 it was held that “There is no person who quite takes the place of a
child‟s mother. There is no person whose presence and natural affection can give the
child the sense of security and comfort that a child derives from its own mother.”
Natural law therefore presupposes that for a law to valid, it should conform to some
higher moral or just standards. This means that apart from state enforceability, laws
should be moral or just. An unjust or immoral law, though passed by the state, is not a
law at all.
It is arguable that the natural theory‟s conception of law is misleading because not all
laws are moral or just4. For example a person cannot be held personally responsible for
failing to help a person in need (e.g. a drowning person or one involved in an accident).
1
In their book, “An Introduction to South African Law” Pages 3-4.
2
1977 IP 83.
3
1949 (1) SA 203 @204.
4
The concept of justice is elusive a subject to debate.
4
LAW
MODULE
FOR IMM/BBA, IAC, ICM, SAIM, CIS & ZAAT STUDENTS.
BY
INNOCENT MAJA
EDITED BY: ELIAS TAFADZWA MADZIMURE
1
,PREFACE
Ever since I began to lecture Business Law at Trust Academy, I was bothered and
disturbed by the dearth and scarcity of study material for this course. The desperation of
the students, their participation in class together with the labour I invested in looking for
and convivially studying the materials in order to teach this course have all compelled me
to come up with this study guide.
This module is not intended to be and is not, neither can it be, an exhaustion of
the Business Law Course. It is a mere study guide intended to provoke much
study of Business Law.
My prayer is that it may cure the reader‟s ignorance on this course. One writer once said
“The purpose of education is to replace an empty mind with an open one.” May the
God of the Christian Bible bless you and give you enlightenment and wisdom as you flip
through the pages of this module.
**Any reference to masculinity (he) also imports a feminine meaning(she).
April, 2003
Innocent Maja [contact – 023 895 124]
(Lecturer of Business Law at Trust Academy)
ACKNOWLEDGEMENTS
I am indebted to the God of the Christian Bible, through his Son Jesus Christ – the
Messiah, who is the quintessential fountain of my limited wisdom.
2
,CONTENTS
Chapter Topic Page
1 The Legal System 4
2 The Law of Contract 12
3 Contract of sale 23
4 Law of agency 33
5 CREDIT AGREEMENT 38
6 INSURANCE 41
7 NEGOTIABLE INSTRUMENTS 45
8 PARTNERSHIP 52
9 LABOUR 54
10 SECURITY 61
11 COPYRIGHT 66
12 CONSUMER LAW 73
13 LEASE 77
14 INTRODUCTION TO CORPORATE LAW 83
15 INSOLVENCY 101
3
, CHAPTER 1
THE LEGAL SYSTEM
What is a Legal System?
It is the sum-total of law and the way it is made and enforced and the institutions that are
involved in law-making and enforcement.
What is law?
Law refers to a system of rules and regulations that govern human conduct and societal
relations and are enforced by the state.
Note – there are many rules and regulations that govern societal conduct but not all of
them are law. What qualifies them to be law is the element of state enforceability. It is
pertinent to note that a rule or regulation cannot qualify to be law because of its
effectiveness or goodness but only because the state says it is law. Hahlo and Kahn1
convincingly contend that:-
“Law itself, in the strict sense, is the only body of rules governing human
conduct i.e. recognized as binding by the state and if necessary enforced. This
does not mean that there are no sanctions as far as other practical laws are
concerned. There is the conscience of the individual, pressure or public
opinion, social approval or disapproval. But only law in the strict sense is
enforced by the courts of law or some other organ of the state.”
Of course, Natural Law Theorists like Cicero, Aristotle, Justinian, St Thomas Aquinas,
Grotious, John Locke, Finnis, Fuller (etc) contend that every law should conform to some
higher principles of justice, morality etc., for it to be valid. This school of thought is
based on the Latin maxim “Lex ir usta non est lex” (An unjust law is no law at all). The
idea of a higher law is still used by judges in our day in resolving controversial cases
which raise moral questions. For instance, in Corbett V Corbett,2 the court held that a
marriage between a man and a person who had undergone a sex change was a nullity
since it was against the natural and biological determining order of a marriage. Also in
Myres V Leviton,3 it was held that “There is no person who quite takes the place of a
child‟s mother. There is no person whose presence and natural affection can give the
child the sense of security and comfort that a child derives from its own mother.”
Natural law therefore presupposes that for a law to valid, it should conform to some
higher moral or just standards. This means that apart from state enforceability, laws
should be moral or just. An unjust or immoral law, though passed by the state, is not a
law at all.
It is arguable that the natural theory‟s conception of law is misleading because not all
laws are moral or just4. For example a person cannot be held personally responsible for
failing to help a person in need (e.g. a drowning person or one involved in an accident).
1
In their book, “An Introduction to South African Law” Pages 3-4.
2
1977 IP 83.
3
1949 (1) SA 203 @204.
4
The concept of justice is elusive a subject to debate.
4
