Classification of Law

 In International Commercial Law

The difference between a legal system that is based on common law and that is based on civil law, as mentioned, is largely one of approach. Under a common law system the law develops incrementally, with rules being laid down case-by-case. To this extent, it is said to be inductive in nature, that is, working from the particular instance to the general rule. It should be noted that the legal systems based on common law are not identical, each has developed its own legal principles on case-by-case. Just because a legal system is categorized as a common law system does not mean it will have no statutory code; indeed in the USA by enacting, for example, the Uniform Negotiable Instruments Law (1896) and the Uniform Sales Law (1906) the American states unified an codified parts of the American Common Law. In the main, both Uniform Laws followed British models. Is this to imply that the American states, at the time, preferred British commercial law (e.g. Sale of Goods Act 1883, Bills of Exchange Act 1882, etc.) to any other commercial law? If only because Uniform Commercial Code (1958) Article 2 on Sales and Article 3 on Commercial Papers diverged from British models, the answer is not self-evident.

Interestingly, when in 1973 the United Kingdom joined the European Community, that legal system was based upon civil law, and according to the European Communities Act 1972 directly effective European law is automatically incorporated into UK law. In result, civil law principles might be said to have become influential in the United Kingdom in recent years, despite English common law origins.

Concluding, it should be clearly indicate that one means of classifying the law is to divide it into matters of public law and matters of private law.

Public law[1] includes constitutional law[2], administrative law[3] and criminal law[4]. In each of these areas, society or „the people” are directly involved. Their interests are represented by a governmental institution, agency or official whose obligation it is to see that justice is accomplished and the ends of society fulfilled.

For this reason it should be noted that the public law provides a major portion of the legal environment of business.

Private law encompasses those legal problems and relationships which exist between individuals, as contrasted with those in which society is involved. Private law is traditionally separated into:

  • the law of contracts[5];
  • the law of torts[6];
  • the law of property[7];
  • the law of business relations[8] (see: table 1.5.).

It should be added that another important classification or distinction in law is the one between substance and procedure.

Substantive law defines the legal relationship of people with other people, or as between them and the state. Thus, the rules of contract law are substantive in nature.

Procedural law deals with the method and means by which substantive law is made and administered. In other words, substantive rules of law define rights and duties, while procedural rules of law provide the machinery for enforcing those rights and duties (see table 1.1.).
Table 1.5. Subdivisions of the classifications of legal subjects

The law of contracts

The law of property

Procedural law

Sales of goodsCommercial paperSecured transactionsBank deposit and collectionsCreditor’s rightsConsumer protectionDebtor protection Real propertyPersonal propertyLeasesBailmentsWillsTrust and estatesMortgages PleadingsEvidenceTrialsAppealsCivil procedureCriminal procedureProbate procedure

Source: R.N. Corley, O.L. Reed, P.J. Shedd, „The Legal Environment of Business” (8th ed.); McGraw-Hill Publishing Company, New York (8th ed.), 1990, p. 10.


[1] Public law Deal with the organization of government and with its relation to the people. Strictly speaking public law is a theory of law governing the relationship between individuals (citizens, companies) and the state, and is called constitutional, when it regulates the relations between the various divisions of the sovereign power; and administrative , when it regulates the business which the state has to do.

[2] Constitutional law deals with the relationship between the state and individual, and the relationships between different branches of the state, such as the executive, the legislative and the judiciary. In most legal systems these relationships are specified within a written constitutional document. However, in the United Kingdom of Great Britain and Northern Ireland (UK), due to historical and political reasons there does not exist one supreme, entrenched written document. The UK has an unwritten constitution – the constitution of this state is usually found in statutes, such as the Magna Carta, the Petition of Right, the Bill of Rights, and etc.

[3] Administrative law refers to the body of law which regulates bureaucratic managerial procedures and defines the powers of administrative agencies. These laws are enforced by the executive branch of a government rather than the judicial or legislative branches (if they are different in that particular jurisdiction). This body of law regulates international trade, manufacturing, pollution, taxation, and the like. This is sometimes seen as a category of civil law and sometimes seen as public law as it deals with regulation and public institutions.

[4] Criminal law defines offenses against the state and prescribes punishment for their commission. In other words, criminal law involves the state imposing sanctions for defined crimes committed by individuals or businesses, so that society can archive its brand of justice and a peaceable social order. This differs from civil law in that civil actions are disputes between two parties that are not of significant public concern.

[5] The law of contracts is concerned with the rights and duties arising out of such promises as the law will enforce or otherwise recognize. Related to the law of contracts is the law of persons, which deals with the extent to which various classes of persons (e.g., minors, mental incompetents) are subject to the rights and duties normally recognized in the law.

[6] The law of torts obligates a person who has committed a private wrong other than a breach of contract to make compensation for the wrong. In other words, tort law is a body of law that addresses and provides remedies for civil wrongs not arising out of contractual obligations. A person who suffers legal damages may be able to use tort law to receive compensation from someone who is legally responsible, or liable, for those injuries. Generally speaking, tort law defines what constitutes a legal injury. Tort law spans intentional and negligent acts. It should be also remember, that the equivalent of tort in civil law jurisdictions is delict. The law of torts can be categorized as part of the law of obligations, but unlike voluntarily assumed obligations (such as those of contract, or trust), the duties imposed by the law of torts apply to all those subject to the relevant jurisdiction. To behave in „tortuous” manner is to harm another’s body, property, or other rights. Once who commits a tortuous act is called a tortfeasor.

[7] The law of property deals with the ownership, possession, use, and disposition of things. The law of sales, of secured transactions, and commercial paper (negotiable instruments) is a blend of contract law and property law. Stated differently, property law is the area of law that governs the various form of ownership in real property (laud as distinct from personal or movable possessions) and in personal property, within the common law legal system. In the civil law system, there is a division between movable and immovable property. Movable property roughly corresponds to personal property, while immovable property corresponds to real estate or real property, and the associated rights and obligations thereon.

[8] The law of business relations includes the law of agency, of partnerships, and of corporations and deals with the relations between agent and principal, two or more partners, and persons participating in the operation of a corporation.

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