Business Law & Sources

7/23/2019 Business Law & Sources

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Business Law

1. Define Business Law. Or What is Business Law?

Business : its meaning and scope in brief

There are various kinds of activities going on in our society and business constitutes

one of them and for its governance, the roe of aw comes into the scene.

Business aw can be divided in two !arts for our understanding.

a" Business # b" Law

$n a wider sense, the word ‘business’ means work, efforts and acts of !eo!e, whichare connected with the !roduction of weath.

%unctionay, by business we mean those human activities, which invove

!roduction or !urchase of goods with the ob&ect of seing them at a !rofit. $nessence, therefore, business concerns with !roducing and seing for !rofit or it may

be said to be any activity, which makes, distributes or !rovides any artice or

service, which other members of the community need.

Business being an a embracing term, it incudes trade, commerce and industry.

Business may, therefore, be cassified into two broad categories'1" $ndustry ( concerned with the !roduction of goods

)" *ommerce +incuding trade" concerned with distribution of what is

!roduced.

Business and its relation with law

The term -aw means and incudes different things in different societies. /so thedifferent schoos of thought have defined -aw from different anges. But above a,

the definition of -aw must cover a as!ects so as to be a !erfect definition.

-Law is a dynamic conce!t and being a socia science, the sco!e of aw has been

aways changing. Therefore, it is a very difficut for a definition of aw given at a

!articuar time to remain vaid for a times to come. 0eneray s!eaking, the

foowing definitions give an overa view of aw.

-Law according to the Oford 2ngish Dictionary means 3rue made by authority

for the !ro!er reguation of a community or society or for correct conduct in ife4.The term basicay denotes rues and !rinci!es either enforced by an authority or

sef(im!osed by the members of a society to contro and reguate !eo!es behavior

with a view to securing &ustice, !eacefu iving and socia security.



%rom the !rimitive age to this modern age, in one or the other form, there has been

the eistence of aw. But with the advancement of the time, the necessity of new

aws has been arising. Two decades ago, had any one ever thought about thenecessity of aw to govern the wides!read use of com!uters and its associated

!robems ike cyber crimes which are !revaent now?

The civii5ation has given the word a mutidimensiona character. $t has aso given

rise to different kinds of activities, which demand different sets of rues and

reguations and not uniform one. 6ence there are severa branches of aw, such as*onstitutiona Law, $nternationa Law, *rimina Law, Business Law, *ivi Law etc.

/s one of the branches of aw, -Business Law in this modern age, hods a very

im!ortant !ace. %or our understanding, it may be defined as that branch of aw,which com!rises aws concerning trade, industry and commerce.

With the increasing activities and the com!eities of the business word, the sco!e

of business aw has greaty widened. $t s!eciay incudes the aws reating to*ontracts, 7artnershi!, *om!anies, 8egotiabe $nstruments, $nsurance, $nsovency,

$ncome Ta, /rbitration, 9ae of 0oods etc. 2very !erson engaged in economic andcommercia activities must be famiiar with the basic !rinci!es of these eisting

business aws. 6ence the im!ortance of the business aw is growing every day.

The deveo!ment of aws is directy !ro!ortiona to the stage of the deveo!ment of

a country. $n the deveo!ed countries the aws are fuy deveo!ed. Whereas in the

deveo!ing and under deveo!ed countries ike 8e!a the aws are sti at a

deveo!ing stage. The necessity of new aws goes !arae with the deveo!mentstage of a country.

The main characteristics of Business Law are as follows:

• Business Law is !rimariy a branch of civi aw. They are simiar in many

as!ects ike com!ensation, !ro!erty etc.

• Business Law basicay reguates a the matters reated to industry, commerce

and trade.

• Business Law gives e:ua treatment to a the !ersons incuding individuas or

firms or cor!orate bodies invoved in business. The aws are a!!ied without

any discrimination among them.

• The roe of Business Law is to maintain !eace, order, security and uniformity

in the business community and create a good environment.

• Business Law is dynamic in nature. $t kee!s on ada!ting changes that take !ace in the business word.

• Business aws are reguatory as we as !unitive. ;ioation of business aws

may invite severe !unishment incuding fines and im!risonment.

The role or functions of Business Law are as follows

• Defines and creates awareness about the rights, duties and iabiities of the

business !ersons, institutions and the government agencies.



• <eguates industry, trade and commerce.

• <eguates the different business activities in the state.

• 7rotects rights and interests of business communities.

• Brings uniformity in the conduct of the businesses.

• 2ncourages business communities by !roviding faciities.

• 7rovides guideines to the business firms in carrying out their businesses.

• 7rovides mechanisms for settement of dis!utes through &udicia and non

&udicia ike mediation, conciiation or arbitration.

• 7unishes those who vioate the rues and reguations !rescribed by the aws for

the !ro!er governance of the business activities.

• *reates harmony among the different sectors of the business.

• =eans for the creating a !ositive environment for the !ros!erity of business.

Sources of Business Law

• / source means an origin or resource or cause from where aw originates. The

term -sources of aw has severa meanings. The genera meaning of the word-source is origin. There is a difference of o!inion among the &urists about theorigin of aw.

• The sources of business aw differ from country to country. 2s!eciay an

underdeveo!ed country ike 8e!a where the cor!orate history is very short,

it is difficut to determine the sources.

Sources of business law are as follows:

a) Custom and usage

*ustom or usage of a !articuar trade aso guides the courts in deciding

dis!utes arising out of business transactions, but such a custom or usage must

be widey known, certain and reasonabe. $t aso must not be o!!osed by anyaws. $t shoud not aso o!!ose any moraity and !ubic !oicies. 9uch business is obigatory to that !articuar !ace which makes business !erson

accustomed.

b) Statute laws

When a bi is !assed by the !ariament and seaed by the >ing, it becomes an

/ct or 9tatute. 9tatutory aws are the outcome of demands of !eo!e and

need of the time. They are made after fufiing a series of discussions by theawmakers e.g. *ontract /ct )@A, /rbitration /ct )@AA, *om!any /ct )@AC

etc.

c) Judicial decisions or case laws

udicia decisions are usuay referred to as !recedents and are binding on acourts having &urisdiction ower to that of the court, which gave the &udgment.

They are generay foowed by those of com!etent &urisdictions in deciding

simiar issues. 6owever the !recedents must be re!orted cases in the record of the 9u!reme *ourt. udicia decisions are aso caed case aws.

d) Commercial agreements, treatises or conentions

This is the most im!ortant source of modern business aw. $nternationa business organi5ations are more active in nationa, regiona and internationa



trade, ike 0/TT, WTO, 2E and 9/%T/. These biatera and mutiatera

treatises and biatera agreements between the nations and conventions among

the nations are very sources of business aws e.g. $ndo(8e!a Transit Treaty, 8e!a $ndia Trade Treaty etc.

e) !nglish mercantile law

2ngand was eading country in the area of commerce and trade. 8e!a ismuch infuenced by $ndia which was under the rue of 2ngand for more than

hundred years. 9ome of the favourabe aws as introduced by the 2ngish

!eo!e to $ndia were argey ado!ted by our 8e!aese ega system aso.

"ther laws which come into operation:

1. *om!any /ct )@AC B.9, 6=0(8

). 8e!a <astra Bank /ct )@AF B.9., 6=0(8

C. Bank and %inancia $nstitution Ordinance )@1 B.9., 6=0(8G. 7ro!erty Ta /ct )@GH B.9., 6=0(8

A. %oreign 2m!oyment /ct )@G) B.9., 6=0(8. 2cise Duties /ct )@AF B.9., 6=0(8

H. 2ssentia *ommodities <eguation /ct )@1H B.9., 6=0(8

F. %oreign 2change <eguation /ct )@1I B.9., 6=0(8I. Back =arketing and other 9ocia *rimes and 7enaty /ct )@C) B.9., 6=0(8

1@. 9tandard =easurement and Weighing /ct )@)A B.9., 6=0(8

11. %ood /ct )@)C B.9., 6=0(8

1). *o!y <ight /ct )@AI B.9., 6=0(81C. 7atent Design and Trade =ark /ct )@)) B.9., 6=0(8

1G. $ncome Ta /ct )@AF B.9., 6=0(8

1A. *ustom Duties /ct )@1I B.9., 6=0(81. 9ecurities 2change /ct )@G@ B.9., 6=0(8

1H. 8e!a /gency /ct )@1G B.9., 6=0(8

1F. *hid Labour +7rohibition and <eguation" /ct )@A B.9., 6=0(81I. 7rohibition on $nvestment in %oreign *ountries /ct )@)1 B.9.,

6=0(8

)@. 8egotiabe $nstrument /ct )@CG B.9., 6=0(8

)1. Bonus /ct )@C@ B.9., 6=0(8)). 6ote =anagement and Li:uor 9aes and Distribution +<eguation" /ct )@)C

B.9., 6=0(8

)C. Labour /ct )@GF B.9., 6=0(8)G. $nsurance /ct )@GI B.9., 6=0(8

)A. 8e!a Juaity *ontro /ct )@CH B.9., 6=0(8

). $nsovency /ct )@C B.9.)H. 9ecured Transaction /ct )@C B.9.



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Business Law & Sources