EXAMPLES ON LAW AND ECONOMY

 

LAW IMPACTS ON ECONOMY

1.     PROTECTING CONSUMER AND INVESTORS:

a.      Securities Act of 1933 in the United States: This act was enacted in response to the stock market crash of 1929 and aimed to protect investors from fraudulent or misleading information in securities offerings. The act—also known as the "Truth in Securities" law, the 1933 Act, and the Federal Securities Act—requires that investors receive financial information from securities being offered for public sale. This means that prior to going public, companies have to submit information that is readily available to investors.

b.      SECURITY EXCHANGE BOARD OF NEPAL (SEBON): Securities Board of Nepal (SEBON) was established by the Government of Nepal on June 7, 1993, as an apex regulator of Securities Markets. It has been regulating the market under the Securities Act, 2006. As an apex regulator of securities and commodity exchange markets of Nepal, SEBON's mandate is to protect investors, develop fair, efficient and transparent markets for efficient mobilisation of capital and discover price of commodities required for economic development of the country.

 

2.     REGULATING COMPETITION:

A.     United States v. Microsoft Corporation: In the late 1990s, Microsoft dominated the market for personal computer operating systems with its Windows operating system. The company also developed its own web browser, Internet Explorer, and integrated it into Windows. This integration made it difficult for other web browsers, such as Netscape, to compete.

The U.S. Department of Justice filed an antitrust lawsuit against Microsoft, arguing that the company had violated antitrust laws by using its monopoly power in the operating system market to stifle competition in the web browser market.

It helped to establish the principle that companies with monopoly power must allow competition to thrive in related markets. As a result, Microsoft agreed to a settlement that required the company to share its application programming interfaces (APIs) with third-party developers and to allow computer manufacturers to install other web browsers on their machines.

B.     Competition Promotion and Market Protection Commission (CPMPC): In Nepal, the Competition Promotion and Market Protection Act was enacted in 2007 to promote and protect competition in markets. The law established the Competition Promotion and Market Protection Commission (CPMPC), which is responsible for investigating and penalizing anti-competitive practices, such as price-fixing, abuse of dominance, and collusion.

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3.     LEGAL FRAMEWORK FOR ECONOMIC ACTIVITY:

•        The Income Tax Act in Nepal was enacted in 2002 to provide a legal framework for the taxation of income in Nepal. The law lays down rules and regulations for the assessment and collection of income tax, including the types of income that are taxable, the rates of tax, and the procedures for filing tax returns and paying tax.  

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• The Patents Act in India: The Patents Act, 1970 in India provides a legal framework for the protection of intellectual property rights. The law lays down rules for the granting and enforcement of patents, which protect the rights of inventors and encourage innovation. This legal framework has encouraged innovation and entrepreneurship in India.

• ENFORCING CONTRACTS: Contract Act of Nepal, 2056 (1999) provides a legal framework for the enforcement of contracts in the country. The law lays down rules for the formation, interpretation, and enforcement of contracts, including rules for offer and acceptance, consideration, and performance of contracts.

ECONOMY IMPACTS ON LAW

1.     Creation of New Laws:

American Recovery and Reinvestment Act (ARRA) of 2009: American Recovery and Reinvestment Act (ARRA) of 2009, was passed by the U.S. Congress and signed into law by President Barack Obama in response to the global financial crisis of 2008.

The financial crisis had caused widespread job losses, a decline in economic growth, and a collapse in the housing market, among other problems. The ARRA was designed to stimulate economic activity and create jobs through a combination of tax incentives, infrastructure investments, and other measures.

2.     IMPACT ON LEGAL DECISIONS:

विशेष आर्थिक क्षेत्र(The Special Economic Zone Act): The Special Economic Zone Act was passed in response to the need for increased investment and job creation in Nepal, particularly in the manufacturing and service sectors. The Act was designed to attract foreign investment and stimulate the creation of new businesses and jobs in Nepal.

3.     Influence on Legal Disputes

Economic conditions can also influence the nature of legal disputes. For example, during an economic downturn, there may be an increase in contract disputes or bankruptcy filings as individuals and businesses struggle to meet their financial obligations.

4.     Influence the Enforcement of Laws

Economic factors can also influence the enforcement of laws. For example, in times of economic hardship, law enforcement agencies may prioritize enforcing laws that target economic crimes, such as fraud or embezzlement.