Introduction
Business law is set of laws that regulate and control diverse commercial transactions in order to provide a level ground for businesspersons coupled with delivering quality goods and services to the consumers (Meadow, Allan & Bamptom 2006, p.45). Without business law, some businesspersons would compromise transactions to suit their needs for at times, greed for material things overrides logic and ethics too. Business law regulates and controls commercial transactions such as contracts, management of corporations, and operation of limited companies, formation of partnerships, insurance, tendering, and many other transactions. Although business law may explicitly stipulate and virtually offer all provisions, there are ambiguous clauses that need interpretation. Due to the ambiguities and uncertainties in the statutes that lead to absurd interpretations, the United Kingdom has established three persuasive precedents that aid in the interpretation viz. literal rule, golden rule and rule of the mischief (Mead, Allan & Bamptom 2006, p.7). Persuasive precedents are prior legal cases that are not binding to courts but aid and guide lawyers in making consistent rulings. This essay examines how persuasive precedents work in statutory interpretation of the golden rule.
Persuasive Precedents
Golden rule emanated from Grey v Pearson (1857) and River Weaver Commissioners v Adamson, which set persuasive precedents in the interpretation of statutes (Baughen 2004, p. 284). Since literal rule interpretations result into absurdities, golden rule provides for the modification of grammatical and ordinary sense errors in order to avoid absurdity and enhance consistency. According to River Weaver Commissioners v Adamson (1877), the interpretations of the statutes should objectively focus on the contextual and ordinary meanings to reduce inconsistency and absurdities (Baughen 2004, p. 284). In view of this precedent, the decisions of the Privy Council are not binding but persuasive to the courts. For instance, earlier the decisions of the Privy Council were binding to all courts in Australia. The binding precedents conflicted with the high court rulings due to the misinterpretation of the law. Gillies notes that, according to Privy Council Act 1968 and 1975, the Privy Council decisions are no longer binding but persuasive to all courts (2004, p. 17).
On the other hand, obiter dicta are persuasive because lawyers analyze the persuasive and binding precedents to give their recommendations (Gillies 2004, p.19). In support of the golden rule application, lawyers have made numerous landmark rulings that have strengthened the River Weaver Commissioners v Adamson (1877), which is a persuasive precedent. Out of the landmark rulings, lawyers give their obiter dicta, which have persuasive effect on subsequent rulings. For example, Lord Reids viewed the golden rule as a cardinal principle that guides lawyers in interpreting statutes in order to enhance consistency in the justice system (Bronaugh 1991, p. 215). In the light of this insight, it is clear that the obiter dictum complements the persuasive precedent of golden rule. The obiter dicta enhance the application of persuasive precedent in order to avoid subjective and ambiguous precedents that contradicts the law. For example in United Kingdom, the opinions of the supreme or higher courts are persuasive to the lower courts thus considered obiter dicta (Gillies 2004, p.18).
Persuasive effect of Precedents
Although persuasive precedents are worth applying, dissenting judgments do arise regarding their validity. The dissenting judgments seek to overrule the validity of the persuasive precedents and establish new precedents that deem valuable (Abbot, Pendlebury & Wardman 2007, p. 86). For instance, in the golden rule case, River Commissioners v Adamson (1877), dissents can overrule that the precedent is invalid because it gives lawyers undue prerogative to interpret the law according to their own wishes. Other dissenting lawyers argue that application of precedents in the justice system restrict lawyers from making independent judgments, thus reasonably ineffective in giving justice (Abbot, Pendlebury & Wardman 2007, p.33). The dissenting judgments provide a platform where lawyers explore both binding and persuasive precedents in order to invalidate ineffective precedents and set up new ones that would enhance justice in the society.
Decisions of courts from other countries can form persuasive precedents that influence landmark rulings in a country. Due to globalization, many countries have common and similar interpretation of the constitution by following the persuasive precedent of River Commissioners v Adamson (1877) (Baughen 2004, p. 290). In this case, the interpretation of the constitution will follow international precedents set by powerful countries with credible justice system; consequently, the golden rule as stipulated in River Commissioners v Adamson (1877) is an international precedent. Peter Gillies, a professor of law and the head of business law department at Macquarie University, Australia, argues that the persuasive effect of precedents in Australia and United States depends on hierarchy of courts, the nature of the case, dissenting opinions and status of lawyers (2004, p.17). Although the persuasive effect of precedents depends upon the hierarchy of the courts, the lower courts can also set persuasive precedents by observing proper legal principles in their rulings.
Conclusion
Business law is very imperative in ensuring that commercial transactions are lucrative to promote the growth of economy. Despite the fact that there are laws, at some instances ambiguous clauses do occur. United Kingdom regards three precedents as essential in interpreting ambiguous clauses, the literal rule, golden rule, and mischief rule. The golden rule as stipulated by the River Commissioners v Adamson (1877) is a persuasive precedent that guides in the interpretations of business statutes. The Privy Council decisions and Supreme Court obiter dicta are also persuasive precedents that reinforce other precedents. The persuasive effect of precedents in a country depends on the hierarchy of courts and prestige of the lawyers, while on international scale it depends on the strength of the justice system.
Recommendation
Economic growth of a country relies on the businesses that exclusively depend on the prevailing legal structures. Business law provides a healthy legal environment for the growth of business but inherent ambiguities in the statutes prevent proper interpretation and implementation of provisions. To address this, golden rule as stipulated in the River Commissioners v Adamson (1877) should guide lawyers in making favourable interpretations that will enhance or set new precedents. Privy decisions, obiter dicta, dissenting opinions, local and international courts’ rulings give persuasive precedents that are imperative in building a better legal environment for businesses.
References
Abbot, K Pendlebury, N Wardman, K 2007. Business Law. Cengage Learning, New York.
Baughen, S 2004. Shipping Law. Cavendish Publishing Limited, Great Britain.
Bronaugh, R 1991. Precedent in Law. Oxford University Press. New York.
Gillies, P 2004. Business Law. Federation Press, Australia.
Mead, L Allan, W Bamptom, K 2006. Fundamentals of Ethics, Corporate Governance and Business Law. Butterworth Heinemann, New York.