Assessment: Civil Obligations This Module

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Civil Obligations

This module discusses the nature of civil obligation law in three different countries: Australia, Germany and China. The module begins by explaining what civil law entails and then describing the specifics of civil obligations in the three countries mentioned.

What is a Civil Obligation?

The law of civil obligations fills the gap that criminal law creates. Civil law regulates whether or not individuals can be compensated by other individuals or companies for losses. One person sues another. One person's actions cause another person to lose something, and the civil courts decide upon the penalty for the accused and the remuneration for the plaintiff -- compensation for the victim is the focus.

Notes: Contracts are excluded from civil obligation laws, and civil liability/penalties exist in both common law and civil law countries.

Liability

The development of civil liability has mostly occurred under common law systems.

There are four major categories of liability in the civil law: negligence; defamation; trespass; and nuisance. They can be broadly defined as:

Negligence -- failing to take reasonable action or care in doing an act or making an omission. As a result of the negligence, someone else suffers. To be negligent, the defendant must be proven to have caused the loss. Causation does not have to be direct. An example -- a person fails to clean their floor properly and someone suffers an injury from a slip and fall. The wrongdoer did not inflict direct injury but can be held responsible.

A person suing under common law for negligence must prove three things:

The wrongdoer owed them duty of care

The wrongdoer breached the duty of care they owed

The victim suffered loss as a result

Defamation -- wrongdoing that affects a person's reputation. A person's right to their reputation has been recognized for centuries. A person who negatively affects another's reputation is liable for defamation, unless:

The material published was true and for the public benefit

It was a fair comment on a public matter

Trespass -- theft or assault. Can include trespass to the victim's person or property -- assault, threat of assault, or false imprisonment. Trespass also includes actual trespass to the victim's land without permission or theft of goods.

Remedies for Civil Liability

Nuisance -- interfering with the victim's right to enjoy their property. The interference must be substantial and unreasonable. Several factors are relevant:

Whether the defendant's actions have benefit to society

Whether the interference was unreasonable

The character of the neighbourhood. Is the defendant's behavior normal for the neighbourhood?

Would it have been practical to take precautions against interference? If it could have been easily avoided, the defendant is more likely to be found liable.

The degree of harm to the victim

Negligence, defamation, trespass, and nuisance all are fault-based. They concern something the wrongdoer has done (or failed to do) that caused harm.

An exception to the proof of fault is when an employee is injured at work. A statutory fund pays for the damages even without proof of fault.

Kinds of Loss

There are three major categories of loss: personal injury; property damage; and economic loss.

Compensation

In Australia, the general remedy for civil liability breaches is financial compensation to the victim. Compensation is available for: medical expenses, lost of past/future income, pain and suffering, and loss of enjoyment of life.

Germany

The German civil code says that if one person injures the life, body, health, freedom or property of another they must compensate the victim. The loss must fit into these five categories. In contrast to Australian law, German law does not provide for the general compensation of economic losses. The defendant must be in a position to protect the victim from risk and danger and the defendant must have acted intentionally or negligently.

German law also allows for compensation from a person who "inflicts harm on a person in a manner which offends good morals" -- this law is broad enough to cover many circumstances.

The German Civil Code (BGB) doesn't provide provisions for no-fault liability. Other German statues, however, cover these areas and include harm caused through rail operations, dangers from the transmission and supply of energy, cars, aircraft, animals, medicines, etc.

The general remedy for the breach of civil codes is restoration to the victim, easier of course when the damage is to property and not a person. The victim can demand money instead, according to the BGB.

China

China's civil law (1987) sets out the general principles for civil liability in that country. If one person wants to make a civil claim against another, they must prove the other person was at fault. The law specifically recognizes property damage and personal injury. Injury to reputation is handled separately. Purely economic loss or damage is not mentioned in the civil codes but is handled elsewhere, and often under the discretion of judges. An interesting provision of the law allows for the division of the liability of no one is found to be at fault.

Remedies in China include: an order to cease; elimination of dangers; return of property; restoration of the original condition; compensation for losses; payment of breach, etc. Interestingly, a person who damages another's reputation may be required to help restore the person's reputation.

Summary of Module 5 -- Business Organisations

This module deals with the ways corporations and businesses are organized in several different countries: Germany, Delaware, U.S., Saudi Arabia and China. The module deals with only one kind of organisation -- the modern corporation, which can include universities, governments, and even churches.

Germany

In Germany, corporations are divided into two types: limited liability companies (GmbH) and stock companies (AG). In October 2004, a third option became available, the SE (Statute for a European Company), a form available to members of the European Union. In order to be an SE, the company must have cross-border activities. SEs must be a limited liability company. There is a complicated registration process in Germany, mostly involving tracking money and assigning officers. Management of a GmbH requires managing directors, a stockholder's meeting and a supervising board. The directors are the legal representatives of the company; the shareholder's meeting is the supreme legal body; and the supervisory board (comprised of three members) is responsible for overall management and representation of the company. SE companies can choose between a one-tier (administrative only) and two-tier (management and supervisory tiers) management structure. In general, liability for German companies lies with the company itself.

Delaware

Since the late 1800s, Delaware has been an attractive place for companies to file their papers of incorporation. More than 50% of stock-exchange listed corporation and more than 60% of the largest corporations in the United States are incorporated in Delaware. Why Delaware?

Delaware only imposes a small annual "franchise tax" on each business

A company need not be located in Delaware to incorporate there

Delaware has no regulation of maximum interest rates

Delaware has no state income tax

No new regulations can be made except when a bill is passed through the legislature

Delaware has a separate, expert court for corporate law matters

Saudi Arabia

In Saudi Arabia corporations are regulated by the Companies Regulation, which was created by Royal Decree in 1965, amended in 1982 and 1996. The regulation demands a personal connection between the business owners. This requirement exists because of the entanglement between the secular needs of doing business and Islamic Sharia law. The religious law prohibits a corporation from having a separate legal identity.

China

The Company Law is the set of rules under which Chinese corporations are formed. Though the history of Chinese companies goes back to 1870, the first provisions for private ownership were not approved until 1993. The Company Law's most recent revision available was made in 2006. Like Germany, there are two types of companies that can be created -- limited liability company and joint stock company.

Summary of Module 6

This module addresses the complications of dealing transnationally -- doing business in more than one jurisdiction. There are several issues:

Which court can hear the dispute?

Which law applies in resolving the dispute?

Will both countries involved agree to abide by the decision?

Common Law Rules

Perhaps the most important question is which law applies when resolving a transnational dispute? The module notes that it is acceptable for Australian courts to apply the law of another country to resolve a dispute. It is up to the court.

Contract Disputes

In contract disputes, the basic rule is that the 'proper law of the contract' applies -- that is, the court relies upon the parties' intention when they drew up the contract. Which law did they think was going to apply in case of a dispute? If the parties did not expressly state their preference in the contract, the courts will try to infer what the intention was. The exception is if the countries chose a country to deliberately avoid the laws of another one. This finding is especially likely if the country chosen for… [END OF PREVIEW]

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