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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007

Prelude This work presents the lecture notes on all the relevant Business Law topics as indicated in the course outline and which the students, subjects to this course, are intended to learn over the stretch of the respective semesters and it is intended to aid students to avail themselves of the guidelines to this course, usefulness of which it is assumed, would help them create a definite scope on what they have to learn when they do their library materials exploration. In no way is this work destined to be an exhaustive and all-in-one facility for every matter in Business Law required of students to gain knowledge of in this course. Students are called upon to refer to the Library Materials cited by the Instructors in the class as well as those provided in the course outline for a better understanding and an ever lasting, well packed satisfaction.

Kisilwa, Zaharani

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007

According to the course outline, the first part of our course will deal with the conceptualization of the term law reduced in the words Introduction to General Principles of Law in which case the following elements will be discussed; /0

Definition and nature of law

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Genesis and development of law

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Classification of law

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Sources of law

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Law and business

1.1 DEFINITION AND NATURE OF LAW In the realm of the legal theory, the word law is a complex term which is capable of multiple definitions and has for a long time been subject of legal writers arguments. However simply stated, the term law presupposes presence of rules that affect the daily lives and activities of peoples.

These rules emerge in different ways, though in most cases there must be a consensus, as to whether or not such rules are desirable. On being widely accepted this rule will become law when a class of persons who are in power (the government, for instance in present day societies) in any given society enforces it.

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007

The enforcement of a rule makes it a legal rule which status is a condition precedent before it gains the title of law in its real sense. It follows therefore that not every rule that has been consented to by the members of a particular society is legal; many of these rules fall way short of being legal rules. Paul Denham (see references at p.g. 17 of this work) furnishes an instance of these non -legal rules which he names as conventions and in his own phraseology he states as follows:

‘It is a convention that a man will normally take his hat off in a church. But it is a legal rule that one person shall not hit another.’ Or that it is just a convention that the young will normally

respect the elders. But it is a legal rule that the young or any other person should not abuse another.

You should be able to distinguish between legal rules and non-legal rules. Non legal rules, when they are breached there may never be enforcement.

Due to this, then, the law may be defined as: ‘The complete body of all those individual rules that bind the society together’

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 The definition of law may also include ‘the process by which these rules are created and applied’

Collectively, the development of these rules, their substance (content), and the application together make up a legal system [Denham]. This includes the process of making of these rules by the relevant organs, interpretation of the rules by courts of law and enforcement by the police and other organs charged with that duty; all of these are subject to presence of the rules. If there were no rules what would the courts interpret or the police enforce?

1.2 GENESIS AND DEVELOPMENT OF LAW Genesis How did the law begin for the first time? Who brought it? When was it and why? These are the basic questions one might ask himself.

As it has been shown above, law began as a rule (s) set by people in a given society to govern their conducts. The law becomes more important when the relations between persons in a given society are complicated. Usually as the society develops the relations of production turn out to be more or less of conflicting interests . To understand better this statement I would , by way of illustration, adopt the “desert island analogy” given

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 by Gregory Allan in his article titled , The origin of law [refer to pg. 17 for full reference]

He states with my own emphasis that :

“if one man lives alone on a desert island, he has no use for any law to guide his conduct in which case he can do whatever he pleases without causing any injury to any other soul. He thus needs no law.”

The situation would be different if another man showed up on the same island. There would be the two of them now. When two persons live together, it is certain that there will be disagreements on certain matters and they will always have arguments. It is likely that the stronger man will take advantage of his strength to dominate the weaker man who in turn will be submissive. This delicate situation entails requirement of law to guide them so that no one of them may be disadvantaged.

Whatever the case Gregory Allan states: “…In the end they will either agree on certain rules of behaviour or conduct.” These rules of

behaviour become customarily binding to the present as well as the men who later become the members of that society.

If there was this agreement, why is that only a section of the members of the public become the makers and enforcers of the law?

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 This has to do with the influence the development of a society has had on the development of the law. In its development the human society has passed through five stages namely, communalism, slavery, feudalism, capitalism and socialism.

During the era of communalism the nature of life the members of these societies were leading was such that they worked together and shared out the fruits of their labour on equitable basis. During this time technology was rudimentary (low) and man only struggled to produce for his subsistence.

Later better technological tools were discovered and those who seized the early advantage of the advent of this technology began to produce enough food not only for subsistence but also for surplus. The power of surplus food made them prominent and superior over others. It was the powerful that later dominated the less powerful, it was them who later made the rules and the weaker followed.

That was the beginning of the so called centralized governments which later turned out to be the makers and enforcers of the laws they made. This is the reason why it is the governments that make law to day. You will agree with me that it takes one to have enough resources to gain power.

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 DEVELOPMENT OF THE LAW IN TANZANIA In Tanzania, like it is in most of the Common Wealth Countries, the original law is customary law which developed from rules of conduct set by the indigenous societies to govern their behaviors such as marriage, contracts inheritance etc. There are about 120 tribes in Tanzania; every one of them had a set of its own customary rules necessary to govern their way of life.

However the dominant law in Tanzania is not customary law, why is this so? The answer is simple: because our country has been, at some time, the subject of colonial rule.

Though there were two colonial masters in our country namely Germans and the British I am inclined to discuss the latter (British) only since their influence in country is greater than that of the former (Germans).

The British who ruled Tanganyika from 1818-1961 imposed the nature of their Legal System to Tanganyika which we still use to day. Before going further into the effect of this imposition to Tanzanian Law let me offer an insight into the English Legal System, in brief so that you may know what kind of system Tanzania has adopted and what is the extent of this adoption.

NATURE OF THE ENGLISH LEGAL SYSTEM

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 The laws which were applicable to England before it was brought to Tanganyika was based on two major sources, namely Judicial Precedent and codification (acts of parliament/ statutes)

1. Judicial precedent: This refers to application of a decision by judges, reached in a particular case to a similar case that arises later, if the facts of the two cases are materially the same.

What law did the judges in English Courts apply in deciding these cases? They applied common law [comprises of a body of customary laws of England, similar to customary laws of Tanganyika before the coming of the British] and Equity [a body of rules devised by the English courts on the basis of fairness and good conscience to remedy the short comings of the common law]

These two laws i.e. Common law and equity were, before 1873, administered by different courts namely Courts of Common law of England and Courts of Equity respectively. In 1873 a law was passed; the Judicature Act of 1873. This law united the two courts and created the Court of Appeal and the High Court of Justice which could apply both Common Law and Equity.

2. Codification (Acts of Parliament/ Statutes)

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 Codification refers to the process where by the various rules of law are created by the parliament and laid down in books of law called statutes.

This is the model of English Law which was imposed on Tanganyika during the British rule. I hope you have gained a clear insight into the kind of legal system that our country has adopted.

THE EXTENT OF APPLICATION OF ENGLISH LAWS TO TANZANIA Before the coming of the British, the indigenous population as it has been illustrated above, mainly used customary laws. When the British came these customary laws began to apply subject to English law highlighted above which was dominant then. This means the English Law was received in Tanganyika.

July 22nd 1920 is a very important date in Tanzania. It is referred to as the reception date. It was the date on which the extent of application of English Law to Tanganyika was declared by the British Colonial Government by the Tanganyika Order in council of 1920 which met at the Court of Buckingham Palace.

THE TANGANYIKA ORDER IN COUNCIL OF 1920

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 This is an order which defined the scope of application of English laws as well as laws of other countries to our country:

WHAT WAS THIS DECLARED LAW? The Colonial Government on behalf of his majesty King of England declared 1. The substance of Common Law (that which used to be applied by the courts of law in England as shown above) 2. Principles of Equity (that which was applied by the courts in England as shown above) 3. Statutes of General Application.

As the laws that would apply to Tanganyika.

OTHER LAWS WHICH WERE DECLARED APPLICABLE TO TANGANYIKA By s. 13 (a) (9) the Tanganyika Order in Council declared that any Ordinance which by s. 13 (a) (1) the governor of the Tanganyika territory is allowed to pass may apply to the territory (i.e. Tanganyika) any Act or law of the United Kingdom, or of any legislature of India, or of any Colony or Protectorate, subject to any exceptions and modifications which may be deemed fitting.

WHAT IS THE IMPLICATION OF THIS APPLICATION? It implies that English laws would, by this declaration, apply to Tanganyika as they were standing by 22nd July 1920 and other laws adopted from other countries would apply subject to modification, so that they suit the local environment. This means all cases

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These Lecture notes have been prepared by: Kisilwa, Zaharani, Business Law Instructor at the Institute of Accountancy Arusha 2007 decided by the Common Law and Equity Courts before 1920 apply to Tanganyika and all those which were decided by the English courts above 1920 are persuasive to local courts.

WHAT ARE OTHER LAWS APPLICABLE TO TANGANYIKA APART FROM THE ENGLISH LAW? By s. 13 (a) (1), the governor of Tanganyika acquired a legal authority to apply to Tanganyika the Indian Contract Act of 1872 whose application to Tanganyika ended in 1961 and its place was taken by the Law of Contract Ordinance of 1961, Cap 433 hereinafter called the LCO.. Therefore with minor modifications this Act has, since its

application, been the relevant Act directly providing for the matters pertaining to contracts in Tanzania. The substance of this act is the same as that of its counter part, The Indian Contract Act of 1872. In law they are called statutes in parimateria. The LCO, 1961, with the general revision of the laws in Tanzania, is now referred to as the Law of Contract Act, Cap 345 of 2002.

In 1961, a Law known as the JUDICATURE AND APPLICATION OF LAWS ORDINACE [JALO] was passed with the view to restrict application of customary laws in Tanganyika. By s. 11 this law declared that these customary laws would only apply when they did not conflict with the general laws of the land.

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