What Law Is: Legal Areas and the Rule-Principle Model

Legal Aspects of Technology Management - NIT Northern Institute of Technology Management, Hamburg · part of my Technology Management MBA · study notes for revision.

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The seminar does not begin with a definition. It begins with a handful of questions thrown at the room: which main areas of law do you actually know, which of them describe the state acting on the citizen as a sovereign, which one is about punishment, which one covers what private people and companies do among themselves, and where do international law and intellectual property law belong in that picture? The point of asking first is that most of us already carry a rough map around in our heads, and the session is going to correct and sharpen it rather than build it from nothing.

The answer that emerges is small enough to memorise in a minute: there are three main areas, public law, criminal law and civil law (also called private law), and they are told apart by who is standing opposite whom. Then comes the harder and more interesting half of the session, the rule-principle model, which explains what a legal norm even is. Law turns out to be built out of two different kinds of norm. Principles state a goal in an unrelativised way and have to be weighed against each other when they clash. Rules are definitive: they say that a particular action is commanded, forbidden or permitted, and you either follow them or you do not.

The last part of the section is the practical one. Law reaches you through three channels - statutes made by parliament, case-law made by courts, and contracts made by the parties themselves - and inside a statute the sentences do different jobs. Some create a claim, some merely define a term, some attach a legal consequence such as liability. Learning to see which is which is what turns a wall of legal text into something you can work with.

Tip

The one idea to carry through. Classify by the relationship, not by the topic. A single field such as IP law or international law does not sit in one box: the parts that regulate states or provide for punishment belong to public law, while the parts that regulate what two parties agree - a licence, for example - belong to private law. And when you argue a case, you weigh principles against each other for these particular circumstances, then come back down to the rules, because only a rule tells you definitively what must be done.

1 · The questions the session opens with

Everything in this chapter is an answer to one of these. It is worth trying them cold before reading on, because the gaps you find are exactly what the rest of the session fills.

Which main legal areas do you know?Which areas show the state acting on the citizen as a sovereign act?And which in the sense of a punishment?Which field covers natural persons or legal entities acting among themselves?Where do International Law and IP Law belong?

Two vocabulary items are worth fixing straight away, because the fourth question depends on them. A natural person is a human being. A legal entity is an organisation, a company for instance, that the law treats as a person in its own right so that it can own things, make contracts and be sued. The question is therefore asking which body of law governs the dealings of ordinary people and companies with each other, as opposed to their dealings with the state.

2 · The division of law: public, criminal, civil

Public lawthe state faces the citizen and acts as a sovereign

Criminal lawthe state’s answer to wrongdoing: punishment

Civil lawprivate parties, natural or legal, deal with each other

The three main legal areas. The dividing line is the relationship between the parties, not the subject matter of the dispute.

Area	The relationship it governs	Examples from the session
Public law	The state and the citizen, with the state acting from above in a sovereign capacity	Agreements in international law, insofar as they regulate the relationship between two or more states
Criminal law	The state again, but specifically where an infringement is answered with a punishment	Statutes that provide for punishment when an industrial property right is infringed
Civil law, also private law	Natural persons and legal entities among themselves, on an equal footing	Purchase contracts, licence agreements, and generally the agreements companies make with each other

The word that does the work in the public-law definition is sovereign. The state is not one party among equals there; it is exercising authority over you, and the law of that relationship is a different law from the one that applies when you and another company negotiate a price. Criminal law is the sharpest form of that vertical relationship, because the consequence attached to the breach is punishment rather than, say, compensation.

3 · Where international law and IP law actually sit

This is the part of the opening quiz that catches people out, and the honest answer is that both fields sit in more than one box at once. You classify the individual norm, not the label on the textbook.

The public-law side state authority

• Agreements in the field of international law partly regulate the relationship between two or more states, and to that extent they belong to public law
• The same goes for statutes that attach a punishment to the infringement of an industrial property right
• Common feature: a state is acting on someone, either on another state or on an offender

The private-law side party against party

• Both fields also contain standards that regulate what private parties agree between themselves
• The session’s own example is the licence agreement: rules that govern licensing belong to private law
• Common feature: two parties on an equal footing, each free to agree or not

International law and IP law each straddle the divide. Ask what the specific norm regulates - states and punishments, or agreements between parties - and the classification follows.

For technology management this is more than a filing detail. The same patent produces public-law questions (how the state grants and polices the right, what punishment follows an infringement) and private-law questions (what your licence agreement says, what happens if the licensee does not pay) at the same time, and they are handled by different rules, different procedures and often different lawyers.

4 · The rule-principle model: two kinds of norm

The session spends several slides here, which is the signal that it matters. A rule-principle model is a combined explanatory model: it explains how law works out of the combination of principles and rules. The central claim is that a legal decision can be justified by balancing principles, and that certain rules then function as optimisation imperatives which refer back to the result of that balancing. Rules and principles are two types of norm, and the difference between them is described as qualitative, not a matter of degree. A principle is not simply a weaker rule.

Principles the goal level

• Norms that contain an ideal, unrelativised ought about what the goal should be
• They do not yet tell you what to do in this specific case
• Several of them can be in force at once and can point in opposite directions
• When they collide, they are weighed against one another

Rules the action level

• Norms that contain stipulations of obligation capable of justifying a concrete judgement
• They contain a determination within what is legally and actually possible
• They are definitive: the commanded, forbidden or permitted action can either be followed or not followed
• Structurally they have a factual element plus a legal consequence, the consequence following from the fulfilment of the factual element

The qualitative difference. Principles say what ought ideally to be achieved; rules say what is now commanded, and admit of no half measures.

The class is asked at this point to name principles it knows, and then to name the kind of rules that come out of such principles. That pairing is the exercise: a principle on its own decides nothing, and a rule that has lost sight of its principle is hard to interpret sensibly.

5 · When principles collide there is no fixed order of precedence

It is characteristic of principles that when two opposing ones collide, one of them takes precedence over the other under circumstances that have to be specified in more detail. There is no stereotypical rule of precedence waiting in a drawer. Which interest has to take a back seat depends on the specific circumstances of the individual case, so the answer to the priority question genuinely varies from case to case.

The session's own illustration

Take the principle you must not kill and the principle you must save human lives. Both are valid, and in an ordinary week they never meet. Now put them in one situation: an assassin is holding hostages, and shooting the assassin is what saves the hostages. Neither principle has been repealed, and neither is generally stronger than the other. In these circumstances the duty to save the hostages is given precedence, and the outcome of the weighing is the action that follows.

The lesson to carry into commercial work is that an argument built only on a principle is never finished. Somebody on the other side of the table can always produce a second principle that is just as valid, so the real work is showing why, given these particular facts, yours should come first.

6 · From the level of principle down to the level of action

The weighing does not stay in the abstract. When several principles collide, the balancing takes place at the level of principle, and that weighing leads automatically to the level of action, where the application of rules determines the definitively valid commandment, the ought-commandment that actually binds you.

Two principles collideboth valid, pointing in opposite directions

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Weighing at the level of principlewhich interest steps back, given these exact circumstances

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The level of actionrules are applied to fix the definitively valid commandment

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A definitive outcomethe action is commanded, forbidden or permitted, and it is either followed or not

The two levels of the model. Principles are weighed; rules decide. The weighing is what makes the rule applicable, and the rule is what makes the answer definite.

Three properties of rules follow from this, and they are all worth remembering as a set:

• A determination inside the possible. A rule fixes something within the area of what is legally and actually possible. It does not demand the impossible or the merely ideal.
• Definitive character. Because the rule names a commanded, forbidden or permitted action, there are only two states of the world: the action was followed, or it was not. There is no partial compliance the way there is partial realisation of a goal.
• Factual element plus legal consequence. A rule pairs a set of facts with a consequence that follows once those facts are fulfilled. It is always a question of the right measure, and the intended legal consequence - liability for damages, for example - occurs whenever a rule of conduct is violated.

That last sentence is the one to underline. The consequence is not a discretionary punishment handed out by whoever is annoyed; it is attached to the rule in advance and it follows from the breach.

7 · Where law comes from, and a note on legal cultures

The session lists three kinds of law, each traced back to who made it.

Statutory law the legislative authority

Made by parliament. The written statutes.

Case-law the judicial authority

Made out of judgements, as a further development of the law by the courts.

Contracts the parties themselves

Made by natural persons or legal entities for their own relationship.

Three sources, three makers. The third one is the one you can actually influence, which is why the contract chapters matter so much for a manager.

The session pauses on the observation that legal cultures differ in how they lean on these sources. Germans have a reputation for being obedient to written law, whereas the British are described as having few laws and obeying spoken law. The stereotype is not the lesson; the lesson attached to it is that wherever a company operates, it has to stick to the agreements it makes. Whichever tradition you are in, the contract is the piece of law you wrote yourself, and it will be held against you.

Caution

These notes stay inside what the session covered. The deck lists the three kinds of law without ranking them, so I have deliberately not written down a hierarchy of legal sources, and I have not extended the international-law point beyond what section 3 says.

8 · How a lawyer reads a statute: norm types and the a + b + c = d structure

The class is handed three real pieces of legal text from the law of sale and asked what they actually mean. Paraphrased, they say roughly this:

The provision, paraphrased	What kind of norm it is
A contract of sale obliges the seller to hand the object over to the buyer and to procure ownership of it for the buyer, and obliges the buyer to pay the agreed price and to accept the item	It sets out the mutual obligations, so it is the claim basis each side relies on when demanding performance from the other
Under an international sales convention, the seller is liable for a lack of conformity that already exists at the moment the risk passes to the buyer, even if the defect only becomes visible later	A legal consequence, namely liability, hanging on a factual element with a precise cut-off moment
Ex Works means the seller has delivered once it places the goods at the buyer’s disposal at its own premises or another named place, and it does not have to load them onto a collecting vehicle or clear them for export	A definition of a delivery term, which then feeds into the obligations elsewhere

That is exactly the classification the session gives. The types of norm in civil law are:

Rights, that is claim basesDefinitionsLegal consequences, for example liability

And a claim basis has a logical structure that you can write out like an equation:

requirement a

requirement b

requirement c

legal consequence d

Requirement plus requirement plus requirement equals legal consequence. Every requirement has to be met; if one fails, the consequence does not arrive.

Apply it to the conformity provision above and the reading becomes mechanical. The requirements are that there is a lack of conformity, and that the lack already existed at the time the risk passed to the buyer. Meet both and the legal consequence is the seller’s liability, and it explicitly does not help the seller that nobody noticed the problem until later. This is the habit worth building: find the claim basis, split it into its requirements, check your facts against each one separately, and only then look at the consequence.

Worked example

A German machinery firm sells a machine to a buyer abroad on Ex Works terms, and the machine contains a mechanism the firm has protected as an industrial property right. It also licenses that same mechanism to a second company. One everyday situation, and it touches every box on the map.

The question in the situation	Which area of law	Why
Does the buyer owe the agreed price, and did the seller deliver correctly?	Civil law	Two legal entities acting among themselves on an equal footing, under a contract they made
Is the seller liable because the machine lacked conformity when the risk passed?	Civil law	Same relationship, and the norm attaches a legal consequence, liability, between the two parties
What must the buyer do about export or import formalities the state imposes?	Public law	The state faces the company as a sovereign, not as a contracting partner
A competitor copies the protected mechanism and a statute provides for punishment	Criminal law, on the public side	The consequence attached to the infringement is punishment by the state
The licence agreement over the same mechanism	Civil law	IP law also contains standards regulating licence agreements, and those belong to private law
A treaty between the two countries regulating trade between them	Public law, in its international form	The agreement regulates the relationship between two or more states

The principle collision inside it. Suppose the machine turns out to have a defect. Two principles pull in opposite directions. On one side, the principle that a party should be free to limit the effort and risk it takes on, which is what a seller relies on when it agrees to hand over goods at its own factory gate and go no further. On the other side, the principle that a buyer should actually receive what was promised and should be protected against harm from a defective machine. Neither principle is generally stronger than the other, and there is no stereotypical rule of precedence to look up. Which one steps back depends on the circumstances: how the defect arose, and above all when it existed.

How rules resolve it at the action level. The weighing leads straight down to the rules, and the rules are definitive. The Ex Works definition settles the seller’s side: delivery is complete when the goods are placed at the buyer’s disposal at the named place, and the seller need not load them or clear them for export. The conformity rule settles the buyer’s side: if the lack of conformity existed at the moment the risk passed, the seller is liable, and the fact that it only surfaced afterwards changes nothing. Notice the shape of the answer. The principles told us what was at stake; the rules told us what is commanded, and the legal consequence, liability for damages, follows automatically from the violation rather than from anybody’s sense of fairness.

Apply it to your project

1. Write the question down as a concrete situation, not as a topic. Not data protection or IP, but who is doing what to whom, when, and under which document. The classification depends entirely on the relationship, so a vague question cannot be classified at all.

2. Name the two sides. Are you looking at a state acting on you from above in a sovereign capacity, at a state answering an infringement with punishment, or at two parties, natural persons or legal entities, dealing with each other as equals? Those three answers are public law, criminal law and civil law respectively.

3. Classify the norm, not the field. If the matter is IP or international, expect it to split. The parts about states and about punishment go to the public side; the parts about what you agreed with somebody, a licence for instance, go to private law.

4. Find the source. Is the answer in a statute made by parliament, in case-law developed by the courts, or in a contract that you or your predecessors wrote? If it is in a contract, that is the part you can still negotiate next time.

5. Sort the sentences you are reading. Is this a claim basis giving somebody a right, a definition of a term used elsewhere, or a provision attaching a legal consequence such as liability? Reading a definition as if it were a claim is a common way to reach the wrong answer.

6. Break the claim basis into its requirements and test each one against your facts on its own: a plus b plus c equals d. If one requirement fails, stop, because the legal consequence does not follow.

7. If two valid principles pull against each other, say so explicitly and weigh them for this case. There is no fixed order of precedence, so your argument has to be about these particular circumstances.

8. Come back down to the action level before you decide anything. Only a rule tells you definitively whether the action is commanded, forbidden or permitted, and the intended legal consequence follows whenever the rule of conduct is broken.

Key terms

Term	What it means in plain words
Public law	The law of the relationship between the state and the citizen, where the state acts as a sovereign rather than as an equal party
Criminal law	The area where an infringement is answered by the state with a punishment
Civil law, private law	The law governing what natural persons and legal entities do among themselves, on an equal footing
Sovereign act	The state exercising authority over you from above, as opposed to negotiating with you
Natural person	A human being, as the law sees them
Legal entity	An organisation such as a company that the law treats as a person, so it can own, contract and be liable
Norm	A single binding statement of law; the model says there are two qualitatively different kinds, principles and rules
Principle	A norm containing an ideal, unrelativised ought about the goal, which has to be weighed when it meets an opposing principle
Rule	A norm containing a stipulation of obligation that can justify a concrete judgement, and that is definitive
Optimisation imperative	The function certain rules perform when they point at the result of the balancing of principles and require it to be realised
Collision of principles	Two valid principles pointing opposite ways, resolved case by case with no stereotypical rule of precedence
Level of principle	Where the weighing happens, before anything definite has been decided
Level of action	Where rules are applied to determine the definitively valid commandment
Factual element	The set of facts a rule describes; fulfil it and the legal consequence follows
Legal consequence	What the law attaches to the fulfilled factual element, for example liability for damages
Claim basis	A provision that gives someone a right, structured as requirement plus requirement plus requirement equals legal consequence
Statutory law and case-law	Law made by parliament as the legislative authority, and law developed out of judgements by the judicial authority

Test yourself

1. Name the three main legal areas and say, for each, which relationship it governs.
2. Where does international law belong, and where does IP law belong? Explain why the honest answer to both is not a single box.
3. What is a rule-principle model, and what exactly is the qualitative difference between a principle and a rule?
4. Two principles collide. How does the law decide which one wins, and what does the session’s own hostage illustration show?
5. Explain the move from the level of principle to the level of action, and state the three properties of rules that make the outcome definite.
6. Name the three kinds of law by who makes them, the three types of norm in civil law, and the logical structure of a claim basis.

Answers

1. Public law governs the relationship of the state to the citizen where the state acts as a sovereign. Criminal law governs the state’s response to an infringement in the form of punishment. Civil law, also called private law, governs the dealings of natural persons and legal entities among themselves as equals.
2. Both straddle the divide, so you classify the individual norm rather than the field. Agreements in international law that regulate the relationship between two or more states belong to public law, and so do statutes providing for punishment when an industrial property right is infringed. But insofar as either field contains standards regulating what parties agree between themselves, licence agreements being the example given, those parts belong to private law.
3. It is a combined explanatory model built from a combination of principles and rules: a legal decision can be justified in a balancing of principles, while certain rules function as optimisation imperatives referring to the result of that balancing. The difference between the two types of norm is qualitative, not a matter of strength. Principles contain an ideal, unrelativised ought about the goal; rules contain stipulations of obligation that justify concrete judgements and are definitive.
4. One principle takes precedence over the other under circumstances that must be specified in more detail, and there is no stereotypical rule of precedence: which interest steps back depends on the specific circumstances of the individual case, so the priority decision varies. The illustration sets the principle that you must not kill against the principle that you must save human lives, and resolves it in that situation by shooting the assassin to save the hostages.
5. When several principles collide, a weighing takes place at the level of principle, and that weighing leads automatically to the level of action, where applying rules determines the definitively valid ought-commandment. The three properties: a rule contains a determination within what is legally and actually possible; it has definitive character, so the commanded, forbidden or permitted action is either followed or not; and it consists of a factual element plus a legal consequence that follows from the fulfilment of that element, with the intended consequence, for example liability for damages, occurring whenever a rule of conduct is violated.
6. Kinds of law: statutory law made by parliament as the legislative authority, case-law developed out of judgements by the judicial authority, and contracts made by natural persons or legal entities. Types of norm in civil law: rights, that is claim bases, definitions, and legal consequences such as liability. A claim basis is structured as requirement plus requirement plus requirement equals legal consequence, that is a + b + c = d.

Revision summary

Tip

The one-minute recap

• Three main legal areas: public law (state to citizen, sovereign act), criminal law (infringement answered with punishment), civil law or private law (natural persons and legal entities among themselves).
• International law and IP law do not sit in one box. State-to-state agreements and punishment provisions sit on the public side; the standards regulating agreements between parties, such as licence agreements, sit in private law. Classify the norm, not the field.
• The rule-principle model is a combined explanatory model of principles and rules. A legal decision can be justified by balancing principles, and certain rules act as optimisation imperatives that refer to the result of that balancing. The two types of norm differ qualitatively.
• Principles contain an ideal, unrelativised ought about the goal. Rules contain stipulations of obligation that justify concrete judgements.
• When principles collide, one takes precedence under circumstances that must be specified more closely. There is no stereotypical rule of precedence; it depends on the individual case. Illustration: you must not kill against you must save human lives, resolved by shooting the assassin to save the hostages.
• The weighing at the level of principle leads automatically to the level of action, where rules determine the definitively valid commandment. Rules fix something within what is legally and actually possible, have definitive character so the commanded, forbidden or permitted action is either followed or not, and consist of a factual element plus a legal consequence which follows from fulfilling that element. It is always about the right measure, and the consequence, for example liability for damages, occurs whenever a rule of conduct is broken.
• Three kinds of law by maker: statutory law from parliament, case-law from judgements, contracts from the parties. Wherever a company operates, it has to keep the agreements it makes.
• Three types of norm in civil law: rights or claim bases, definitions, and legal consequences such as liability. A claim basis reads as a + b + c = d, requirement plus requirement plus requirement equals legal consequence.

Next: Contract Law → - the twenty points a commercial contract has to settle.