Corporate and Business Law (Global) · Business, political and legal systems

Sources of Law and Legal Systems for ACCA LW

Updated 11 October 2026 · Fact-checked

Sources of law are where legal rules come from: legislation, case law (judicial precedent), custom and international law. A legal system is the framework that uses them. Common law systems rely heavily on precedent, civil law systems on codes, and religious systems on sacred texts. Identify the source or system from the clues given.

Understand Sources of Law and Legal Systems

Law has to come from somewhere. A source of law is the place a rule is found and the reason it binds people. Most business law questions ask you to name the source or match a rule to its source.

Legislation is law made by a law-making body, such as a parliament. It is written, usually the highest ordinary source in a country, and can create new rules or change old ones. Delegated legislation is made by a body or minister under powers given by a parent statute.

Case law is law developed by judges when they decide disputes. Under judicial precedent, courts follow earlier decisions of higher courts on similar facts. Custom is a long-established practice that people accept as binding. It is a minor source today, but business and trade customs still matter. International law comes from treaties, conventions and accepted state practice between countries. A treaty usually binds a state only once the state has agreed to it, and often it must be brought into national law to apply in domestic courts.

A legal system is the whole structure of rules, courts and methods in a country. In a common law system (for example the UK and many former British territories), judges' decisions are a major source and precedent is central. Legislation still matters a great deal. In a civil law system (for example France and Germany), the main source is a comprehensive written code. Judges apply the code and earlier decisions guide them but do not strictly bind them. In religious legal systems (for example Islamic law), the law is based on sacred texts and religious teaching. Some countries use a mix of systems.

The exam tests whether you can recognise the system from a short description and state the key difference: where does the main authority sit, in judges' decisions, in codes, or in religious texts?

Key formulas to remember

Main sources of law: Legislation | Case law (precedent) | Custom | International law; Learn the four. Check which one the scenario describes.
Common law system: Main feature = judicial precedent + legislation; Judges' decisions bind lower courts. Law develops case by case.
Civil law system: Main feature = comprehensive written codes; Judges apply the code. Precedent is persuasive, not strictly binding.
Religious legal system: Main feature = sacred texts and religious teaching; Authority comes from religious sources, for example Islamic law.
Delegated legislation: Parent Act → power given → rules made by another body; It is law made under authority of a statute, not by the legislature directly.

How to solve Sources of Law and Legal Systems questions

Use this method for any question on sources of law or legal systems.

1Read the scenario and underline clues: a written code, a court ruling, a long practice, a treaty, or a religious text.
2Decide whether the question asks for a source of law or a type of legal system.
3Match each clue to its source: statute or code means legislation, a judge's ruling means case law, a long accepted practice means custom, a treaty means international law.
4For a system question, ask where the main authority sits: precedent (common law), codes (civil law), or religious texts (religious system).
5Check the exact wording: words like 'main', 'primary' and 'binding' change the answer.
6Eliminate options that describe a different source or system, then choose the best fit.

Quickest way: Clue-matching shortcut

When to use it: Section A objective questions and Section B multi-task questions where time is short.

Spot the key word: code, precedent, custom, treaty, or religious text.
Link it at once: code = civil law, precedent = common law, religious text = religious system.
Reject any option that says the opposite, such as judges strictly bound in a civil law system.
Pick the answer and move on.

Common mistakes in Sources of Law and Legal Systems

Saying civil law means the law about private disputes
The word 'civil' also appears in the civil versus criminal split.
Fix: Here 'civil law' names a legal system based on codes. Private disputes are a separate classification of law.
Saying precedent strictly binds judges in civil law systems
Students assume all systems work like their own.
Fix: In civil law systems, earlier decisions are persuasive. The code is the main authority.
Thinking common law systems have no legislation
The name suggests law made only by judges.
Fix: Common law systems use both precedent and statutes. Statutes can override case law.
Treating a treaty as automatically binding inside a country's courts
International law sounds supreme.
Fix: Treaties bind states that agree to them, and often need national legislation to apply in domestic courts.
Ignoring custom as a source
It seems outdated.
Fix: Remember custom as one of the four sources. It must be long established and accepted as binding.

Worked examples

Example 1

A country has a comprehensive written commercial code. Judges apply the code to disputes, and earlier court decisions are used only as guidance. Which type of legal system is this, and what is its main source of law?

Show the solution

Clue: a comprehensive written code.
Clue: earlier decisions are guidance only, so not strictly binding.
These features match a civil law system.
The main source is the written code, which is a form of legislation.

Answer: A civil law system, with the written code as its main source.

Example 2

Explain how a common law system differs from a civil law system.

Show the solution

State the common law feature: judges' decisions form a major source and precedent binds lower courts.
Add that legislation also exists and can change case law.
State the civil law feature: the main source is a comprehensive written code.
Add that judges apply the code and precedent is persuasive, not strictly binding.
Conclude with the contrast: common law develops case by case, civil law starts from the code.

Answer: Common law relies on binding judicial precedent alongside legislation. Civil law relies mainly on comprehensive codes, with precedent being only persuasive.

Exam tips

Match the clue word to the source or system before reading the options.
Watch for 'main' or 'primary' in the question. It points to the dominant source in that system.
Do not mix up the civil law system with civil as opposed to criminal law.
Expect system questions to describe a country's features without naming the system.
For short written parts, give the feature and its contrast in separate sentences.

Practice questions from Business, political and legal systems

Sources of Law and Legal Systems in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Sources of Law and Legal Systems: frequently asked questions

What are the main sources of law in business law?

The main sources are legislation, case law (judicial precedent), custom and international law. Legislation and case law are the most important in most countries. In the exam, identify the source from clues in the scenario.

What is the difference between common law and civil law?

Common law relies on judicial precedent, with judges' decisions binding lower courts, alongside legislation. Civil law relies mainly on comprehensive written codes, and judges treat earlier decisions as guidance. This is the contrast the exam usually tests.

What is a religious legal system?

It is a system where the law is based on sacred texts and religious teaching. Islamic law is a common example. Some countries combine religious law with other systems.

Is international law binding on every country?

Generally a treaty binds the states that agree to it. Often a country must also pass its own legislation before the treaty applies in its domestic courts.