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Compliance in business: consistency and respect of rules that describe the activities of a company. Very

 Interaction between managers and lawyers needed

Law affects politics, society, economy (businesses), International relations

A) Law and society

Relationship S/L: dynamic process and mutual interaction (evolution with S)

 Set of rules influencing societies, L Defines S and vice-versa, Protecting the society, Remedy to anarchy,
Factor of progress

Relativistic approach: legal systems reflect society (Changes in social values => law changes)

Law as a driver to social change: pushes changes + endorses social changes

B) What is law?

Law: set of rules that govern and guide actions and relations among and between persons, organizations,
and governments, according to the principle of effectiveness and backed by public force if needed.

Purposes and functions of law

• Setting predictable standards

• Ensuring order
• Preventing and resolving disputes
• Protecting liberties and rights

C) Law and business

Creates a framework for B: substitute for trusting the people you are dealing with

‘A deal is a deal’ (pacta sunt servanda): (civil) law of obligations enforced between private parties

Law enforcement without agreement

 criminal law = prosecution
 civil law = delict
 administrative law

D) Internal and external stakeholders

Inside company (Managers, Employees, Agents, Advisers)

Outside company (Govs, Owners, Customers, Communities, Environment, Animals, Suppliers, Creditors)

Internal stakeholders

CORPORATE GOVERNANCE: key success factor for business growth:

• Corporate governance: mechanisms, relations, and processes by which a corporation is

controlled and is directed; involves balancing the many interests of the stakeholders of a

• CG framework:
(1) explicit and implicit contracts between the company and the stakeholders for distribution of
responsibilities, rights, and rewards
(2) procedures for reconciling the (sometimes) conflicting interests of stakeholders in
accordance with their duties, privileges, and roles
(3) procedures for proper supervision, control, and information-flows to serve as a system of

 Organisational structure

LABOUR LAW: major competitive element in the business environment. It mediates the relationship
between workers, employing entities, trade unions and the government.

• Regulates the supply of labour force within the enterprise;

• Defines the working conditions;
• Ensures basic rights in terms of safety and social security.
 Strong influence in defining a key factor to set up and run Business and to establish the relevant
cost of human capital.

External stakeholders

Multiple legal areas influence relationship between enterprise and external stakeholders:

 Contract law: suppliers, customers, industrial partners;

• Insolvency law: creditors;
• Consumer law: customers and consumers;
• Financial law: capital raising;
• Company law: owners;
• Environmental law: mandatory requirements regarding the environmental protection;
• Public law: relations with public authorities (public tenders, concessions, public subsidies, etc.)

E) Law above States?

United Nations (since 1948), successor to the League of Nations (1919-1945)  Governed by UN Charter
“Improvements” to be made:
 Security Council with permanent members
 UN peacekeeping forces – in theory own army for UN
 Recognition (or not) of new States
 “Binding” settlements – backed up by sanctions (trade and non-trade) - sanctions on individuals

European Union: Relies on effectiveness and voluntary balance, States can rely on it to go to war

F) Law between the states

Fundamental rights for individuals (sometimes for companies) BUT NOT for countries (States)
International “law”? Problem = enforcement without the use of force
Basis of international law = Treaty (contract between nations) UN Treaties, EU Treaties…